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Automotive Engineer

[Article] House Price Crash In The Mediah

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One of the strange things about bubbles is that people warn for years that they're going to burst, but when they finally do go pop everybody's taken by surprise.

Snack, crackle and pop!

That's the very nature of bubbles. People can see that things are getting out of hand quite early on, but the bubble just keeps blowing and blowing, and we keep inflating our expectations to match, until the new pricing level seems quite normal. And then comes the pin.

Nobody can predict accurately when the bubble will burst. For example, HousePriceCrash.co.uk, the housing market Cassandra's website of choice, was launched in October 2003 with urgent warnings of an imminent implosion. At the time, the average UK house price stood at £129,761, according to Nationwide. It now stands at £198,565. Yes, there was a brief dip in 2008, but the Bank of England quickly put a stop to that by slashing base rates to near zero. No-one at HousePriceCrash (or anywhere else) could have imagined that happening five years earlier.

Fathom this

As long as interest rates remain artificially suppressed, mayhem will probably be averted. But when they rise, watch out. Economic forecaster Fathom Consulting has warned that house prices could then plummet by almost half, as the "fragile arithmetic" supporting today's elevated prices unravels.

Prices have now surged to average 6.1 times earnings, a whisker away from the market's peak valuation of 6.4 times, which it hit directly before the financial crisis. It warns that house prices will need to plummet by up to 40% to come into line with the pre-2000 average of 3.5 times earnings.

Mind your heads

The warning signs are multiplying. The prime central London property market is grinding to a halt, with vendors forced to slash asking prices by up to 10%, according to Propcision. UK property transactions crashed 45% in April, latest figures from HM Revenue & Customs show. The main reason is the exodus of buy-to-let investors, scared away by the Chancellor's tax crackdown, which began 1 April with the new 3% stamp duty surcharge on purchases, and continues next April with cuts to higher rate tax relief on mortgage repayments.

Now Paul Smith, chief executive of estate agency chain Haart, is warning of "trouble in paradise" as buyers abandon the market due to sky-high prices. When even estate agents are predicting doom, you know that things are getting out of hand.

We're witnessing the end of property as an investment. Buy-to-let has been lucrative but is a bothersome way to grow your money. Property is expensive (see above), illiquid (it's hard to get your money in a hurry) troublesome (think maintenance, tenant troubles) and costly to buy and sell (stamp duty, conveyancing fees).

Look around

By contrast, you can buy and sell shares in seconds, with typical charges of just £10 a trade plus 0.5% stamp duty. You can drip-feed-in smaller sums and retrieve your money whenever you like. And unlike physical property, the roof won't leak, the electrics won't blow, and the tenants won't do a runner.

Of course the stock market may also crash, so you should never invest money you may need in the next five or 10 years, to give it time to recover. However, trading at around 15 times earnings the FTSE 100 is broadly in line with its average historical valuation, and it yields 4%.

You can reduce the risks of stock market investing by spreading your money across a range of solid blue chip UK companies, like the ones listed in this special wealth-creation report.

As this report shows, the top FTSE 100 stocks that could help you retire in comfort, are all ideally placed to deliver long-term wealth over the years ahead.

The Motley Fool's 5 Shares To Retire On don't just offer long-term growth, but juicy yields of more than 4% as well.

If you'd like to find out the identity of these five top companies, and how their shares could fuel your retirement, simply click here now for instant access.

http://money.aol.co.uk/2016/06/04/is-the-property-market-crash-finally-upon-us/

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A short dip...6 years.

Prices down 50% in real terms across large parts of the country.

Mayhem averted...no mayhem delayed.

Nevw read such nonsense for a while

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By contrast, you can buy and sell shares in seconds, with typical charges of just £10 a trade plus 0.5% stamp duty. You can drip-feed-in smaller sums and retrieve your money whenever you like. And unlike physical property, the roof won't leak, the electrics won't blow, and the tenants won't do a runner.

Long ad saying, don't buy a BTL new buy shares.

I wonder if the house market can crash without the stock market also crashing?

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Long ad saying, don't buy a BTL new buy shares.

I wonder if the house market can crash without the stock market also crashing?

There probably will be some correlation. But with stocks (1) you don't require leverage and to buy them all at once (2) timing isn't so crucial as you can drip in and invest when you have there money (3) you can diversify across different types of shares

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If there is a connection between shares and house prices then Friday's shocking US non farm payroll figure will cause concern. It now appears oddly that America isn't recovering as planned. Jellen will be forced to display yet again how weak they are by delaying a rate rise. Confidence is evaporating like morning mist and a true picture of the wreckage created by years neo classical economic theory's in action is emerging and it isn't pretty. We have borrowed all the future demand possible and the world's economies are empty.

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There probably will be some correlation. But with stocks (1) you don't require leverage and to buy them all at once (2) timing isn't so crucial as you can drip in and invest when you have there money (3) you can diversify across different types of shares

Problem with shares is that when 75% of all the banks lending goes into property it means there are diminishing sums left to spend in the real economy and shares are only good value when the state is going to print money or keep interest rates a zero.

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No one could have imagined that UK house prices would be higher in 2016 than 2010? What bs! Most of us suspected all along that Cameron and Osborne were just Blair and Brown in blue rather than red aprons.

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I wouldn't call it neo classical. I'd call it neo vote buying.

We pigs have the answers. You talk of pork-barrel economics by another name. But the best description of the bubble of the first years of this century came from the late, great Terry Pratchett, when he described the Pork Futures Warehouse.

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Nothing has changed. Does this belong with today's headlines... or 2006?

Rise of the fat cats: almost 50,000 Britons claim to earn £1million a year

Almost 50,000 Britons claim to be earning more than £1million a year, according to research out today.

There are 235,000 people who say they are being paid £200,000 or more a year – and 1.2 million workers say they take home in excess of £100,000 annually.

Many of the biggest earners are made up of super rich foreigners coming to live and work in the capital. The research was carried out by global currency business Centtrip.

Tony North, co-founder and managing director, said: "There is a growing number of mass affluent, high net worth and ultra-high net worth people living in the UK.

"This is being fueled by more UK citizens reaching this milestone, but also a growing number of people in this category coming to live in this country – in particular London – from overseas."

https://uk.finance.yahoo.com/news/rise-of-the-super-rich--almost-50-000-britons-claim-to-earn-%C2%A31million-a-year-134707521.html

Edited by zugzwang

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No one could have imagined that UK house prices would be higher in 2016 than 2010? What bs! Most of us suspected all along that Cameron and Osborne were just Blair and Brown in blue rather than red aprons.

Indeed. I said the nominal low was April 2009 in 2009.

Its really not that difficult. Crashes are value opportunities even if theyre relative value opportunities.

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Indeed. I said the nominal low was April 2009 in 2009.

Its really not that difficult. Crashes are value opportunities even if theyre relative value opportunities.

It is difficult because prices in my search area in southern England were coming down in 2013 and the HTB 1 and then HTB 2 were announced.

How the hell am i supposed to foresee these? Are you claiming to have the insight to know this was going to happen.

No one can predict what's going to happen next in this rigged market without inside information or being a lucky guesser.

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Indeed. I said the nominal low was April 2009 in 2009.

Its really not that difficult. Crashes are value opportunities even if theyre relative value opportunities.

Give that man a biscuit.

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Don't you all realise RK has got EVERYTHING finance-wise right?

Gold - well no.

Shares - well no.

Govt Bonds - well no.

Sorry. Misspoke. As he does every time he posts.

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No one could have imagined that UK house prices would be higher in 2016 than 2010? What bs! Most of us suspected all along that Cameron and Osborne were just Blair and Brown in blue rather than red aprons.

Before the GE in 2010 Cameron had an attack line that used the phrase 'four pillars'. I can't name all the pillars but remember just two, unsustainable government borrowing and an economy based house price inflation. The thrust of the attack was that Labour had only created an illusion of wealth by using these four corrupt pillars.

As you can imagine I would like to find his speech again.

The difficult in the run up to the GE of 2015 was that he had just carried on with their 'four pillars' so any reference to this was destroyed in the great Tory media clear out. The Labour party were in caught between a rock and a hard place. If they dragged this up it would damage the not only the Tories but also themselves so chose to just let it slide.

So there actually was a small possibility that Cameron would honour his words and tackle the true underlying problem.

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