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jacob

Vi Spin Is Good For You

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Many people here complain about VI manipulating news to support the market. Should they?

If you believe in market forces and animal spirit you probably agree that over the long term there is no way to prevent market prices to converge to some sort of equilibrium.

There are many possible roads to equilibrium. Gordon Brown and co. hope for a low volatility scenario with earnings growth rising while prices stagnates. Their recent move on SIPPs is probably an attempt to contain HPI.

But if you want to buy a house at the lowest possible price you should hope for a massive pick up in BTL and even stronger HPI. The best scenario is an even greater boom and bust. At this point in the cycle I personally favor VI spin. More people getting mortgages at 8 times annual income is good news for everyone strong enough to resist the temptation to buy.

Panic selling is what we should all hope for (unless you are a true socialist). The worst scenario is prolonged zero house price inflation.

Any comments?

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Many people here complain about VI manipulating news to support the market. Should they?

If you believe in market forces and animal spirit you probably agree that over the long term there is no way to prevent market prices to converge to some sort of equilibrium.

There are many possible roads to equilibrium. Gordon Brown and co. hope for a low volatility scenario with earnings growth rising while prices stagnates. Their recent move on SIPPs is probably an attempt to contain HPI.

But if you want to buy a house at the lowest possible price you should hope for a massive pick up in BTL and even stronger HPI. The best scenario is an even greater boom and bust. At this point in the cycle I personally favor VI spin. More people getting mortgages at 8 times annual income is good news for everyone strong enough to resist the temptation to buy.

Panic selling is what we should all hope for (unless you are a true socialist). The worst scenario is prolonged zero house price inflation.

Any comments?

I've found myself thinking similar thoughts over the past 2 months or so. I think you're right in that the more unsecured debt people get into and the greater multiples people stretch themselves to in purchasing a home, then the more precarious the situation becomes. Sharp falls would eventually follow such a situation, sparked by a relatively small dent in confidence (ie a an interest rate rise).

I do consider myself a socialist and I know that this scenario may fatally wound those who have made ill informed spending decisions, and I am especially concerned for young couples trying to make their way in life. However for the greater long term good of all I know that a HPC is necessary particularly for the restoration of a more balanced way of life in terms of the work/life balance and the for the good of children living in homes where both parents have little time to enjoy and nurture them.

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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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