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Uk House Prices 'to Crash' As Global Asset Prices Unravel


OzzMosiz

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HOLA441

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

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HOLA442
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HOLA446

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.

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HOLA448

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 by crashmonitor
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HOLA449

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.

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HOLA4411

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.]

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HOLA4414

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!

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HOLA4415

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) :lol:

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HOLA4416

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

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HOLA4417

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...

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HOLA4418

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).

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HOLA4420

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!

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HOLA4425

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) :lol:

I don't 50+% equity is enough to protect you much from what is coming!

No mortgage and then you might be safe?

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