OzzMosiz Posted January 12, 2016 Share Posted January 12, 2016 I am sure this has already been posted, but I wanted to put it in it's own thread: https://uk.finance.yahoo.com/news/uk-house-prices-crash-global-141910551.html House prices have broken free from reality and defied gravity for far too long, but they are an asset like anything else, and there are six clear reasons a nasty correction looms in the coming year . Global asset price crash Asset prices around the world soared as central bankers embarked on the greatest money printing experiment in history. While much of that money flowed into the stock market, a great deal also found its way into house prices. What we are now witnessing on trading screens around the world is the unwinding of the era of monetary excess, and house prices will not escape the fallout. The end of easy money began when the US stopped its third quantitative easing programme in October 2014. That date marks the point the US balance sheet, or amount of money in the system, stopped rising, having soared from $800bn in 2008 to more than $4 trillion. Without an ever-increasing supply of money the world economy is now slowing sharply. The first assets to be impacted by the downturn were commodities. The price of things such as oil are set daily in one of the largest and most highly traded markets across the world and as a result it is highly sensitive to any changes in demand and supply. Admittedly there are also supply-side factors impacting the oil price, but the weak demand from a slump is still a major factor. The next asset to fall was share prices. There was a delay of about 12 months because even though shares are also traded daily, their value depends on the profits of the company, and the impact of the commodity collapse took about a year to feed through. Ticking time-bomb .... .... Rest can be read from the link Quote Link to comment Share on other sites More sharing options...
TheCountOfNowhere Posted January 12, 2016 Share Posted January 12, 2016 (edited) The telegraph link was posted 2 days ago but not the yahoo one. All good bear food. 2016 really is (already) proving very very intersting. Anyone reading that will be thinking twice about buying a house anywhere Edited January 12, 2016 by TheCountOfNowhere Quote Link to comment Share on other sites More sharing options...
OzzMosiz Posted January 12, 2016 Author Share Posted January 12, 2016 TheCount, with global markets unraveling and oil at a 11 year low, this could end up being worse than 2007. Quote Link to comment Share on other sites More sharing options...
Si1 Posted January 12, 2016 Share Posted January 12, 2016 Interest rates to fall to cushion the recession then, or rise to defend the pound? Quote Link to comment Share on other sites More sharing options...
OzzMosiz Posted January 12, 2016 Author Share Posted January 12, 2016 Interest rates to fall to cushion the recession then, or rise to defend the pound? Can't go much lower and the remit from the BoE is primarily to protect the pound (I think)! Quote Link to comment Share on other sites More sharing options...
Si1 Posted January 12, 2016 Share Posted January 12, 2016 Can't go much lower and the remit from the BoE is primarily to protect the pound (I think)! In which case they may be irrelevant. Raising them to protect the pound chokes off the economy thus crashing the pound. Lowering them crashes the pound anyway. Quote Link to comment Share on other sites More sharing options...
pig Posted January 12, 2016 Share Posted January 12, 2016 The fact they've been ramping prices instead of tryung to 'stabilise' does that make things worse ? Are we falling to a relative or absolute level ? Quote Link to comment Share on other sites More sharing options...
crashmonitor Posted January 12, 2016 Share Posted January 12, 2016 (edited) As someone who would rather like the house prices to crash (less than 30% of Equity in property) I don't think we are there yet. I can't speak for London which may have done its thing now, but we are talking about a northern provincial market that in most cases hasn't moved much now for twelve years since the beginning of 2004. But to summarise the Market at the moment.... (1) Record low volume (2) Record high sold to stock ratio (3) A noticable spring bounce in prices for the first time 12 years. (4) The what the f**k factor creeping into the asking prices after a bit of boiling frog since the 2012 bounce where rises have been bearly noticable. (5) Deflation making interest rates even lower. Reminds me a lot of 2003 when Brent crude was struggling around $30 and FTSE 100 went into meltdown, meanwhile house prices reached maximum velocity between January-April 2003 jumping about 10%-15% in one quarter in my area. It won't do that this time because we are mired in deflation, but it will probably reach new inflation adjusted highs by the summer. You've got to be pretty blind not to see the change if you are living in the N Midlands at the moment. A bit of a delayed ripple from the action the south has already seen. Edited January 12, 2016 by crashmonitor Quote Link to comment Share on other sites More sharing options...
TheCountOfNowhere Posted January 12, 2016 Share Posted January 12, 2016 TheCount, with global markets unraveling and oil at a 11 year low, this could end up being worse than 2007. I've no doubt it will be "worse" than 2007. The government actions to save the banks will make it "worse" for the people who have bailed them out, i.e. US "worse" is the new "better" though. Quote Link to comment Share on other sites More sharing options...
TheCountOfNowhere Posted January 12, 2016 Share Posted January 12, 2016 (edited) (3) A noticable spring bounce in prices for the first time 12 years. It's still winter !!! Edited January 12, 2016 by TheCountOfNowhere Quote Link to comment Share on other sites More sharing options...
dgul Posted January 12, 2016 Share Posted January 12, 2016 In which case they may be irrelevant. Raising them to protect the pound chokes off the economy thus crashing the pound. Lowering them crashes the pound anyway. I think they want the pound to be a bit lower, so IMO we'll see a hit to the pound before they raise rates. The question is how much of a hit to the pound. Most people wouldn't notice until it hits them in the head so I'd expect limited action until we get close to dollar or euro parity. Which probably means dollar parity if the euro sinks with us. [This would support house prices somewhat, as measured in £. So ex-London we'd possibly see prices hit in £ only when they get round to raising rates.] Quote Link to comment Share on other sites More sharing options...
crashmonitor Posted January 12, 2016 Share Posted January 12, 2016 It's still winter !!! Not in our new f%%ked up climate.....daffodils in full bloom. Quote Link to comment Share on other sites More sharing options...
zugzwang Posted January 12, 2016 Share Posted January 12, 2016 An ever-increasing supply of money is irrelevant. Empirically, it's the second derivative - the credit impulse or acceleration - that most closely corresponds with changes in GDP. Thus, even when the money supply is shrinking GDP growth can be +ve. Quote Link to comment Share on other sites More sharing options...
zugzwang Posted January 12, 2016 Share Posted January 12, 2016 In which case they may be irrelevant. Raising them to protect the pound chokes off the economy thus crashing the pound. Lowering them crashes the pound anyway. Sterling slumps to five year low as manufacturing performance 'worse than anyone expected'.* http://www.telegraph.co.uk/finance/economics/12094473/Pound-plunges-to-five-year-low-as-manufacturing-performance-worse-than-anyone-expected.html Sterling plunged to a five-and-a-half year low against the US dollar on Tuesday, as the UK's manufacturing sector shrunk unexpectedly. Manufacturing production dropped by 0.4pc in November according to Office for National Statistics (ONS) data, compared to a 0.7pc fall in the wider industrial sector. The fall in industrial output was worse than any of the 30 analysts polled by Reuters had anticipated. There figures were described by Michael Hewson, chief market analyst at CMC Markets, as "unambiguously rubbish". Falling production of pharmaceutical items, which dropped by 4.9pc in November, was responsible for the brunt of the fall in manufacturing, the ONS said. Jake Trask, a currency analyst at UKForex, said: "Combined with soft growth figures and Brexit fears, these results will likely dampen any expectation of a UK interest rate rise in the near future". *Not true. We've all been expecting it to be dire on HPC! Quote Link to comment Share on other sites More sharing options...
OzzMosiz Posted January 12, 2016 Author Share Posted January 12, 2016 Count, you will be happy to hear that those hugely priced houses in my area, I am now finally seeing some drops from the peak. Still hugely over valued but I am happy enough with over 50% equity. For the record I want prices down (for my own selfish reasons). So I am a bull and a bear at the same time (in a strange way) Quote Link to comment Share on other sites More sharing options...
Si1 Posted January 12, 2016 Share Posted January 12, 2016 As someone who would rather like the house prices to crash (less than 30% of Equity in property) I don't think we are there yet. I can't speak for London which may have done its thing now, but we are talking about a northern provincial market that in most cases hasn't moved much now for twelve years since the beginning of 2004. But to summarise the Market at the moment.... (1) Record low volume (2) Record high sold to stock ratio (3) A noticable spring bounce in prices for the first time 12 years. (4) The what the f**k factor creeping into the asking prices after a bit of boiling frog since the 2012 bounce where rises have been bearly noticable. (5) Deflation making interest rates even lower. Reminds me a lot of 2003 when Brent crude was struggling around $30 and FTSE 100 went into meltdown, meanwhile house prices reached maximum velocity between January-April 2003 jumping about 10%-15% in one quarter in my area. It won't do that this time because we are mired in deflation, but it will probably reach new inflation adjusted highs by the summer. You've got to be pretty blind not to see the change if you are living in the N Midlands at the moment. A bit of a delayed ripple from the action the south has already seen. I've not noticed a bounce in middling scummy areas I look at in Leeds, the odd kite flying aspirational project only that I've seen Quote Link to comment Share on other sites More sharing options...
spunko2010 Posted January 12, 2016 Share Posted January 12, 2016 Not in our new f%%ked up climate.....daffodils in full bloom. Off topic but I heard that that they are actually the 'last' flowering plant, not the first, strictly speaking. So they always tend to flower in winter. By flowering in spring (i.e. after March 20th) they are actually "late". Anyway... Quote Link to comment Share on other sites More sharing options...
Cosmic Apple Posted January 12, 2016 Share Posted January 12, 2016 Off topic but I heard that that they are actually the 'last' flowering plant, not the first, strictly speaking. So they always tend to flower in winter. By flowering in spring (i.e. after March 20th) they are actually "late". Anyway... Daffodils should be out for St Davids day, March 1st. Were when I was a lad (90s). Quote Link to comment Share on other sites More sharing options...
This time Posted January 12, 2016 Share Posted January 12, 2016 Daffodils should be out for St Davids day, March 1st. Were when I was a lad (90s). When I was growing up in Dublin (80s/90s) they used to bloom in the week before St Patrick's day (17th of March). Quote Link to comment Share on other sites More sharing options...
nickincash Posted January 12, 2016 Share Posted January 12, 2016 As someone who would rather like the house prices to crash (less than 30% of Equity in property) I don't think we are there yet. I can't speak for London which may have done its thing now, but we are talking about a northern provincial market that in most cases hasn't moved much now for twelve years since the beginning of 2004. But to summarise the Market at the moment.... (1) Record low volume (2) Record high sold to stock ratio (3) A noticable spring bounce in prices for the first time 12 years. (4) The what the f**k factor creeping into the asking prices after a bit of boiling frog since the 2012 bounce where rises have been bearly noticable. (5) Deflation making interest rates even lower. Reminds me a lot of 2003 when Brent crude was struggling around $30 and FTSE 100 went into meltdown, meanwhile house prices reached maximum velocity between January-April 2003 jumping about 10%-15% in one quarter in my area. It won't do that this time because we are mired in deflation, but it will probably reach new inflation adjusted highs by the summer. You've got to be pretty blind not to see the change if you are living in the N Midlands at the moment. A bit of a delayed ripple from the action the south has already seen. Nice usage! Quote Link to comment Share on other sites More sharing options...
winkie Posted January 12, 2016 Share Posted January 12, 2016 Houses are also assets right. http://www.theguardian.com/business/2016/jan/12/sell-everything-ahead-of-stock-market-crash-say-rbs-economists Quote Link to comment Share on other sites More sharing options...
crashmonitor Posted January 12, 2016 Share Posted January 12, 2016 Nice usage! I wish, grammar and spelling not my strong point. Quote Link to comment Share on other sites More sharing options...
long time lurking Posted January 12, 2016 Share Posted January 12, 2016 It's still winter !!! The early bird ...you know the rest Quote Link to comment Share on other sites More sharing options...
Tapori Posted January 13, 2016 Share Posted January 13, 2016 When it does go under, anyone bearish will be like: Quote Link to comment Share on other sites More sharing options...
Stateless Posted January 13, 2016 Share Posted January 13, 2016 Count, you will be happy to hear that those hugely priced houses in my area, I am now finally seeing some drops from the peak. Still hugely over valued but I am happy enough with over 50% equity. For the record I want prices down (for my own selfish reasons). So I am a bull and a bear at the same time (in a strange way) I don't 50+% equity is enough to protect you much from what is coming! No mortgage and then you might be safe? Quote Link to comment Share on other sites More sharing options...
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