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Market Theory?

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Hi all

I've been a lurker on-and-off for about a year so thought it about time I made a contribution.

Credentials first:

You'd probably describe me as a Bear as I am currently sitting out of the market and living in rented housing. Bought my first house at 21 for 18.5k so that dates me. Last house (my 3rd) was a modern 3 bed semi. Now aspiring for a 4 bed detached. Always bought for somewhere to live, not as investment. Bought the last house Jan 89...

You guessed it, naively bought at peak of the last cycle. Despite a decent deposit still wound up in negative equity for a few years. Had to move for work so had it let for a few years before selling, in hind-sight too soon, but didn't want the hassle any more. Any way, got some cash in the bank but there is still a gap between aspiration and what I wish to spend, but that is closing as we (married & 2 kids) save...

My thoughts - comments invited:

I believe house prices will fall; these things go in cycles, "plateaus" rarely, if ever, happen in markets, I've been there! But it won’t happen overnight, the Japanese market has been in slow painful decline for the best part of 14 years!

The average "lemming" only considers what they can afford in terms of monthly payments, rarely do they think beyond this (readers of this site excluded of course).

Once property becomes unaffordable in these terms people don't buy/get repossessed.

So interest rates are very important, but so are other cash calls, eg energy prices, tax's.

Confidence/sentiment also a huge factor, bubbles are caused through "over exuberance", when people forget common sense & economic fundamentals. Bubbles burst when sentiment turns...

How much money you have in your pocket and how secure you feel in your job are big factors for sentiment.

Wealth, when created, resists being destroyed, to avoid destruction it moves ie people/institutions are motivated to move wealth from poorly performing assets into better performing ones...

If we have a strong opinion, human nature dictates that we seek out similar opinions, but ignore counter arguments. We hear what we want to hear. But a balanced position is to listen to both sides.

All IMHO of course...



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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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