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Hear That Hissing Sound?

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Good article in this week's economist stating that on an economic valuation, UK (and Aussie) prices are set to fall by some distance if they are to reach 'fair value' (the article implies by up to one third).

The article doesn't call whether the fall will be in terms of a long stagnation or a sudden crash, but implies the probability lies with the latter scenario. It makes no mention of SIPPS and the fact that the sudden volte face by my friends at the Treasury might be seen, in retrospect, as the final trigger for a crash. Interesting stuff.

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Good article in this week's economist stating that on an economic valuation, UK (and Aussie) prices are set to fall by some distance if they are to reach 'fair value' (the article implies by up to one third).

The article doesn't call whether the fall will be in terms of a long stagnation or a sudden crash, but implies the probability lies with the latter scenario. It makes no mention of SIPPS and the fact that the sudden volte face by my friends at the Treasury might be seen, in retrospect, as the final trigger for a crash. Interesting stuff.

Here's the link!

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Good article in this week's economist stating that on an economic valuation, UK (and Aussie) prices are set to fall by some distance if they are to reach 'fair value' (the article implies by up to one third).

The article doesn't call whether the fall will be in terms of a long stagnation or a sudden crash, but implies the probability lies with the latter scenario. It makes no mention of SIPPS and the fact that the sudden volte face by my friends at the Treasury might be seen, in retrospect, as the final trigger for a crash. Interesting stuff.

I thought the tone suggested they were having doubts compared to the last article in then edition with a falling brick on the cover.

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Economist Quote: -

"Commentators in Britain and Ireland like to talk about the housing market “stabilising” after years of froth. But when you are teetering on a high wire, stability is difficult to maintain. Without a decline in prices, it could take as long as a decade, at current rates of consumer-price inflation, for British property prices to get back to fair value. A decade of falling real prices is not something to relish."

As for "a decade of falling prices" this isn't how the end game will play itself out.

The reality of the situation, fueled by hysterical speculation and wreckless indebtedness is that the Bust will be far faster and far deeper than even the Economist dare to indulge.

Not long now folks!

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The reality of the situation, fueled by hysterical speculation and wreckless indebtedness is that the Bust will be far faster and far deeper than even the Economist dare to indulge.

What makes you say this? Any particular reasoning?

One thing that came to my mind upon reading your post was that if things got talked up so easily and public sentiment allowed such massive HPI then it makes sense that the eventually the same will work in the opposite direction... well with the exception of TV property shows :D

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The verb "stabilize" is used frequently in articles suggesting that there will not be a HPC. Has anyone ever seen a graph that depicts stabilized prices when there has been a run up in the price of any commodity that has exceeded all historical statistics?

The only thing that has stabilized is the conisistency in the VI propaganda that suggests prices are not falling despite the dramatic fall in the number of sales and record levels of new properties coming onto the market.

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What makes you say this? Any particular reasoning?

One thing that came to my mind upon reading your post was that if things got talked up so easily and public sentiment allowed such massive HPI then it makes sense that the eventually the same will work in the opposite direction... well with the exception of TV property shows :D

The massive HPI of recent years was driven by cheap credit, massive speculation on prices continuing to rise indefinitely and a deep desire by the public to believe that the increasing value of their homes had provided them with free cash in the form of mortgage equity withdrawal or in the case of new buyers, an infalable investment opportunity.

Not so.

Speculative bubbles eventually drive off new participants and eventually the bubble bursts, the cycle ends and true value re-asserts itself back into the market.

This my friend is what we have been watching unravel over the past 12 months.

The next 12.......Oh dear!

Edited by Culpability Brown

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What makes you say this? Any particular reasoning?

When are some of you going to get it. The levels of debt in the UK are unseen before in our history. The British house-holder is maxed out on mortgages and other credit. There are only so many kitchens, TVs, fridges, cars, etc, that people need and the penny is begining to hit home how much debt people have got themselves into.

Now, conveniently, the lenders are begining to reign in lending.

Now, conveniently, taxes are on the rise and their full affect will really not hit home till about the middle of next year - by which time Brown will most likely have added more taxes.

Real inflation is rising.

Whether you believe it or not Britain, economially speaking, is not an island. Interest rates are on the rise globally and, most importantly for us, the US rates are set to rise. Britain's rates are currently artifically low and there is no way that these low rates can be sustained when the rest of the World is raising theirs.

It is a bubble. It is a big bubble.

In fact, it is such a huge bubble that it has four storeys, hotel porterage throughout and a big sign above the doorway saying "This is a BIG bubble!" (Apologies to Blackadder).

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The only thing that has stabilized is the conisistency in the VI propaganda that suggests prices are not falling despite the dramatic fall in the number of sales... [Realistbear]

It's the fact that prices are not falling fast enough that causes the fall in the number of sales: turnover is constrained by a high seller reserve ratio (seller's private valuation / market valuation).

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  • 301 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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