Not Going To Be A Crash, Going To Take 20 Years Drip Drip

[Si1]

Government won't let it happen, even if the long term cost is onerous, they will soften the falls and they will be long term instead, no sudden crash

[Ultra Fox]

Maybe. They invent the rules as they go along and the house always wins.

[winkie]

Government won't let it happen, even if the long term cost is onerous, they will soften the falls and they will be long term instead, no sudden crash

That can't happen when many only hold it whilst they deem it to be making money or an income, those that buy property like you would a stock or share, lump of gold or masterpiece.......anyone buying to live in it and pay for it as a home a place to live a bolthole whilst working will hardly care what the value of it is while using it....if it goes down their next home will be cheaper, less debt required, own it faster....investment property is generally off loaded because of a fall in growth, income or because of taxes attached to it can only be a good thing for potential owner worker occupiers.

[Si1]

That can't happen when many only hold it whilst they deem it to be making money or an income, those that buy property like you would a stock or share, lump of gold or masterpiece.......anyone buying to live in it and pay for it as a home a place to live a bolthole whilst working will hardly care what the value of it is while using it....if it goes down their next home will be cheaper, less debt required, own it faster....investment property is generally off loaded because of a fall in growth, income or because of taxes attached to it can only be a good thing for potential owner worker occupiers.

Baby boomers with property investments will liquidate gradually as they retire gradually and interest rates go up gradually

[Si1]

And of course government won't rock the boat as long as baby boomers have the vote

[Si1]

Funnily enough Bertie Ahern the Prime Minister of Republic of Ireland thought this too in 2006 --- soft landing was the only possible outcome -- then prices dropped 50 - 60% in the next couple of years and Bertie is now in the wilderness of politics.

Interesting, we aren't in the euro, but other triggers could be lurking

[cybernoid]

The best laid schemes of mice and men ...

Crashes would never happen if it was up to 'them'.

There will be an absolute *stampede* for the exits when this turns… all that foreign investor money in london can exit very quickly. The buy to letters don't live in their tens of properties, they can also exit very quickly. We are someplace new. Buy to let itself is a relatively new phenomenon. The drag that used to exist on the market where a seller would need to find someplace else to live has gone for a large number of properties.

We have MMR and rising base rates in the short term. And a more liquid market.

What 'they' cant control is the mob mentality that got us here in the first place. Don't know about you, but Im standing well back.

[Si1]

The best laid schemes of mice and men ...

Crashes would never happen if it was up to 'them'.

There will be an absolute *stampede* for the exits when this turns all that foreign investor money in london can exit very quickly. The buy to letters don't live in their tens of properties, they can also exit very quickly. We are someplace new. Buy to let itself is a relatively new phenomenon. The drag that used to exist on the market where a seller would need to find someplace else to live has gone for a large number of properties.

We have MMR and rising base rates in the short term. And a more liquid market.

What 'they' cant control is the mob mentality that got us here in the first place. Don't know about you, but Im standing well back.

I'm standing back as if from a 20 year old unexploded bomb

[Dorkins]

The government's going to lose its grip on the tiger's tail at some point. £550bn pa tax revenues, rising cost of pensions+working-age benefits+healthcare+debt interest, £5tn stock of residential housing. The amount of money they can afford to throw at artificially supporting house prices is tiny compared to the market forces which are at work.

[winkie]

And of course government won't rock the boat as long as baby boomers have the vote

There are more people between the age of 16 and 50 than over the age of 50.

[Killer Bunny]

Again with 'as int rates rise'. Too funny. They'll hover near 0 for the next generation

Edited July 6, 2014 by Killer Bunny

[bomberbrown]

Despite some quite plausible contrary indicators, I'm also now of the mindset that we will now follow Japan's lost decades lead. A generation of falling prices, more prominent in London since this is where most of the madness has been of late.

[“Nasty Piece of work”]

"They" don't let it happen. Whilst "They" will do whatever they can, and "They" really are this arrogant, it really is not in their Power. "They" are co-drivers, at best.

[winkie]

The value of the currency is as important as the value of what it can buy.

[Si1]

Despite some quite plausible contrary indicators, I'm also now of the mindset that we will now follow Japan's lost decades lead. A generation of falling prices, more prominent in London since this is where most of the madness has been of late.

This

And stagnating living standards

And frustrated ambitions as career options dwindle

[Hechnical Titch]

The best laid schemes of mice and men ...

Crashes would never happen if it was up to 'them'.

There will be an absolute *stampede* for the exits when this turns… all that foreign investor money in london can exit very quickly. The buy to letters don't live in their tens of properties, they can also exit very quickly. We are someplace new. Buy to let itself is a relatively new phenomenon. The drag that used to exist on the market where a seller would need to find someplace else to live has gone for a large number of properties.

We have MMR and rising base rates in the short term. And a more liquid market.

What 'they' cant control is the mob mentality that got us here in the first place. Don't know about you, but Im standing well back.

+1

BTLers are only 'in it for the long term' if things are looking rosey.

Once prices dip they'll be rushing down to the estate agents.

[cybernoid]

Again with 'as int rates rise'. Too funny. They'll hover near 0 for the next generation

Maybe I guess. The stated 2.5% is close to 0% and that will screw plenty.

What was the mechanism for prices falling in japan with their base rates kept low?

[R K]

Government won't let it happen, even if the long term cost is onerous, they will soften the falls and they will be long term instead, no sudden crash

Pretty obvious the plan is to slowly deflate property (in real terms - nominal it'll keep increasing obviously) over the next credit cycle, possibly even 2 credit cycles. So somewhere around 15 years for 1 cycle or perhaps up to 30 years for 2 cycles. It's going to be around 2 cycles before the boomers start dying off in significant numbers in any event.

Haldane / BoE believe the post 80s credit cycles last around 15 years. i.e. twice the 8 year business cycle. We'll have to see if that view changes post financial crisis.

BIS has them at 16-20 years but not materially different.

If they achieve the shorter of these durations then it'll be somewhere late 2020s, if not most of us will be dead before prices are back at 2.5/3.0 incomes.

If there's another 100yr crash a la 2008 they'll just pump them up again. Not expecting a crash like that again in my lifetime either though.

Edited July 6, 2014 by R K

[jasonpistol]

Maybe I guess. The stated 2.5% is close to 0% and that will screw plenty.

What was the mechanism for prices falling in japan with their base rates kept low?

i think japan was more to do with a declining working age population

over here we steal working age people from all over europe so its not an issue

although, if ukip have their wicked way...

[Venger]

Pretty obvious the plan is to slowly deflate property (in real terms - nominal it'll keep increasing obviously) over the next credit cycle, possibly even 2 credit cycles. So somewhere around 15 years for 1 cycle or perhaps up to 30 years for 2 cycles. It's going to be around 2 cycles before the boomers start dying off in significant numbers in any event.

Haldane / BoE believe the post 80s credit cycles last around 15 years. i.e. twice the 8 year business cycle. We'll have to see if that view changes post financial crisis.

BIS has them at 16-20 years but not materially different.

If they achieve the shorter of these durations then it'll be somewhere late 2020s, if not most of us will be dead before prices are back at 2.5/3.0 incomes.

If there's another 100yr crash a la 2008 they'll just pump them up again. Not expecting a crash like that again in my lifetime either though.

All sounds so easy.

Just front up some company buyers willing to borrow.

Hope you're not taking too complacent a view. Life itself can change things against VIs - we're not compliant Japan.

Blood and piss, the great British cocktail.

[Damik]

Despite some quite plausible contrary indicators, I'm also now of the mindset that we will now follow Japan's lost decades lead. A generation of falling prices, more prominent in London since this is where most of the madness has been of late.

Check RM changes for last 24h for Chelsea. 1/3 of all changes are price reductions, 5% to 10%. A big sell of for any price, just to get out.

[Dorkins]

Pretty obvious the plan is to slowly deflate property (in real terms - nominal it'll keep increasing obviously) over the next credit cycle, possibly even 2 credit cycles. So somewhere around 15 years for 1 cycle or perhaps up to 30 years for 2 cycles. It's going to be around 2 cycles before the boomers start dying off in significant numbers in any event.

The last plan was that the budget deficit would be almost gone by the end of this Parliament, look how that one turned out.

These people are not omnipotent.

Edited July 6, 2014 by Dorkins

[Billy Ray Valentine]

Pretty obvious the plan is to slowly deflate property (in real terms - nominal it'll keep increasing obviously) over the next credit cycle, possibly even 2 credit cycles. So somewhere around 15 years for 1 cycle or perhaps up to 30 years for 2 cycles. It's going to be around 2 cycles before the boomers start dying off in significant numbers in any event.

Haldane / BoE believe the post 80s credit cycles last around 15 years. i.e. twice the 8 year business cycle. We'll have to see if that view changes post financial crisis.

BIS has them at 16-20 years but not materially different.

If they achieve the shorter of these durations then it'll be somewhere late 2020s, if not most of us will be dead before prices are back at 2.5/3.0 incomes.

If there's another 100yr crash a la 2008 they'll just pump them up again. Not expecting a crash like that again in my lifetime either though.

Of course that's what they would like to happen. Personally I think there's not much chance of significant wage increase in the next decade.

Even if they suddenly managed by some miracle to stimulate wage inflation to the stated 4% YOY it simply wouldn't be enough to prevent prices falling nominally.

Say someone earning £25K, followed by 5 years of 4& YOY wage increases, that person would only be earning little more than £30.5k. Much of this wage inflation will likely be eaten up by other living costs. If house prices are going to keep rising nominally during the same time frame how does this make housing more affordable?

The Government are putting out such statements of projected wage inflation to try and calm fears over the bubble and it's possible bursting, surely? If you were concerned about a mass exit from London property from foreign investors in the face of recent regulations regarding mortgage limits in the capital then I'd imagine you'd try and put out a contrary view to try and temper the likely change in sentiment?

Also can't see how they can 'pump it up' again in the wake of another crash. All (or most) of the tools have now been spent?

[crash2006]

Government won't let it happen, even if the long term cost is onerous, they will soften the falls and they will be long term instead, no sudden crash

Hard crash is what is needed, the government have no choice how and when it happens, but it will happen as the economy and state can not afford housing benefits down the line, the past governments have collapsed the future system to benefit the current citizens between 80s and 2000. #They sold of social housing on the cheap did not replace the stock, wages are not keeping up with housing costs its becoming a nation on a credit card paying of the min.

[cybernoid]

nominal it'll keep increasing obviously

Another missive from the twilight zone, funny guy

Of course that's what they would like to happen. Personally I think there's not much chance of significant wage increase in the next decade.

Even if they suddenly managed by some miracle to stimulate wage inflation to the stated 4% YOY it simply wouldn't be enough to prevent prices falling nominally.

...

Also can't see how they can 'pump it up' again in the wake of another crash. All (or most) of the tools have now been spent?

Ive tried references to the real world and never got anywhere, good luck tho.