It's Different Here ... Prices Won't Crash

[Guest]

Aahh yes but you see St Ives is different, there is a LOT of demand from wealthy second home buyers!

(Until the ban on second home owners came in)

Aahh yes but you see Aberdeen is different, there is a LOT of demand from wealthy oil and gas workers!

(Until the oil price popped)

Aah yes but you see Croydon is different, there is a LOT of demand from London commuters!

(Until the glut of new builds hit the market)

Aahh yes but you see London is different, there is a LOT of demand from wealthy Chines/Russian investors!

(Until brexit/economic woes/currency restrictions kicked in!)

Aah yes but Sussex/Surrey/Berkshire is different, as there is a LOT of demand from people moving out of London, or downsizing for retirement

(Until they realise they can't sell their london place, or larger family houses for crazy prices)

So, no, no. Nowhere is different.

[Diver Dan]

Belfast is different because of the "peace dividend". All that inward investment means that prices simply cannot fall. Edited September 2, 2016 by Diver Dan

[Paul77]

It is different because the government is doing whatever it can to support HPI, including printing money to finance HTB. So, unless they change the direction, we won't see a crash on a bigger scale.

btw. even Aberdeen is still way overpriced with asking prices +25% compared to 2007/2008 peak.

[Bruce Banner]

It was exactly the same circa 2008.

"Yes, you're right, prices are falling, but this is 'Nameatown', prices will not fall here because......".

[eek]

It is different because the government is doing whatever it can to support HPI, including printing money to finance HTB. So, unless they change the direction, we won't see a crash on a bigger scale.

btw. even Aberdeen is still way overpriced with asking prices +25% compared to 2007/2008 peak.

In the case of Aberdeen it is different round there. Structural economic changes mean that there is a very long way to go Edited September 2, 2016 by eek

[TheCountOfNowhere]

In the case of Aberdeen it is different round there. Structural economic changes mean that there is a very long way to go

As the man says...its no different from anywhere else....things are a-changing

[winkie]

When people can no longer make working for an income work for them they have no other alternative but to make their home work for them...from money they have never worked for.

[spyguy]

As the man says...its no different from anywhere else....things are a-changing

The most likely person to buy your house will be someone local to you area, not some London banker.

How many locals are actually working FT?

How much are locals earning? Whats 4 times the median wage?

[canbuywontbuy]

It is different because the government is doing whatever it can to support HPI, including printing money to finance HTB. So, unless they change the direction, we won't see a crash on a bigger scale.

btw. even Aberdeen is still way overpriced with asking prices +25% compared to 2007/2008 peak.

This is a good point in the longer term. The biggest surprise for me is how the government, EAs, surveyors, builders and banks all seem to be content with record-low sales volumes. In any other market, low sales = financial ruin. I am stunned that businesses in the housing game aren't campaigning for lower prices to get the market moving again. Better even to make the SAME money with more sales because it's a more robust model than lots of money from few sales.

[Funn3r]

This is a good point in the longer term. The biggest surprise for me is how the government, EAs, surveyors, builders and banks all seem to be content with record-low sales volumes. In any other market, low sales = financial ruin. I am stunned that businesses in the housing game aren't campaigning for lower prices to get the market moving again. Better even to make the SAME money with more sales because it's a more robust model than lots of money from few sales.

I find it very scary when a group (and some of the groups named above could be characterised as composed of provenly greedy and rapacious individuals) says and does very little in the face of adverse economic policy. Why are they so quiet?

Why is the pensions industry not "doing a BTL" and yelling loudly that their business model is being undermined? Why are they not having publicity campaigns and threatening to sue the BOE?

[Blod]

Maybe it is different this time.

Housing Crisis© is a now a meme. Every single party is going to solve the affordability gap by building more overpriced homes. None dare verbalise the truth, we need lower prices, not more overpriced rabbit hutches.

The sentiment toward housing contained in the Autumn Statement I feel will be pivotal. Either they fudge it or make changes to tackle this, that would destroy sentiment.

[spunko2010]

The most likely person to buy your house will be someone local to you area, not some London banker.

How many locals are actually working FT?

How much are locals earning? Whats 4 times the median wage?

I'm constantly amazed on my lunchtime walks how many people are in during the day. It must be half of all houses.

[spyguy]

I'm constantly amazed on my lunchtime walks how many people are in during the day. It must be half of all houses.

In my northern home area , Im not surprised by how many people dont work.

Dismantling tax credits will be a massive but neccessary shock.

[TheCountOfNowhere]

Aahh yes but you see St Ives is different, there is a LOT of demand from wealthy second home buyers!

(Until the ban on second home owners came in)

Aahh yes but you see Aberdeen is different, there is a LOT of demand from wealthy oil and gas workers!

(Until the oil price popped)

Aah yes but you see Croydon is different, there is a LOT of demand from London commuters!

(Until the glut of new builds hit the market)

Aahh yes but you see London is different, there is a LOT of demand from wealthy Chines/Russian investors!

(Until brexit/economic woes/currency restrictions kicked in!)

Aah yes but Sussex/Surrey/Berkshire is different, as there is a LOT of demand from people moving out of London, or downsizing for retirement

(Until they realise they can't sell their london place, or larger family houses for crazy prices)

So, no, no. Nowhere is different.

Are you subtly saying...those places are crashing hard and fast ?

[durhamborn]

I'm constantly amazed on my lunchtime walks how many people are in during the day. It must be half of all houses.

More than that in the North East as spyguy says.Very few people work full time up here now.When i see the media saying people wont retire until 70+ how i laugh.A large percentage of people in the North East retire at 16 when they leave school.A lot do 16 hours though at the nearest shop.Council workers and tax credits are the north east economy now.I was talking to an ex miner at the chippy last week and him and his wife were getting £560 a week between in sick benefits,more than he got as a face worker when they closed pit he said.Off to Benidorm for their usual 3 months winter holiday in November.

Houses prices will revert to fair value,like every other asset class always does.Always.That means probably small falls up here because they arent that much overpriced, maybe 20%,down south i think we are looking at 40%+ falls.It might take another bout of QE in the US first though before inflation finally pushes rates north.

[Guest]

Are you subtly saying...those places are crashing hard and fast ?

They're either crashing already, or the alleged reason for them being immune to crashes... can disappear overnight,

[AD14]

btw. even Aberdeen is still way overpriced with asking prices +25% compared to 2007/2008 peak.

Aberdeen's peak was 2014/15,

Asking prices may be generally at or near peak levels, still, but they don't always get that.

[VeryMeanReversion]

More than that in the North East as spyguy says.Very few people work full time up here now.When i see the media saying people wont retire until 70+ how i laugh.A large percentage of people in the North East retire at 16 when they leave school.A lot do 16 hours though at the nearest shop.Council workers and tax credits are the north east economy now.

Thanks for your posts DB. Every one of them is a motivation for me to work less and reduce my taxable income by stuffing it into pension where I might see some reward for my efforts one day.

[katchytitle]

More than that in the North East as spyguy says.Very few people work full time up here now.When i see the media saying people wont retire until 70+ how i laugh.A large percentage of people in the North East retire at 16 when they leave school.A lot do 16 hours though at the nearest shop.Council workers and tax credits are the north east economy now.I was talking to an ex miner at the chippy last week and him and his wife were getting £560 a week between in sick benefits,more than he got as a face worker when they closed pit he said.Off to Benidorm for their usual 3 months winter holiday in November.

Houses prices will revert to fair value,like every other asset class always does.Always.That means probably small falls up here because they arent that much overpriced, maybe 20%,down south i think we are looking at 40%+ falls.It might take another bout of QE in the US first though before inflation finally pushes rates north.

Fair value in a world where cash is becoming increasingly worthless and assets with any sort of yield are sought after. I agree that interest rates will go up at some point but with stupid politicans bought by bankers I see either a seismic sudden shift which damages the belief the masses have in the system or a complete change of the system through the G5/G8 manpulating their policies (as happened in 1985 with US dollar depreciation or in the 70s when Nixon came off the gold standard). We will have to hide our sins and losses will not be nominal but in real value. The innumerate cannot understand that value may have gone down if they paid for something for £50 today and £60 next year. The system depends on the uneducated losing out. Happens every cycle.

[durhamborn]

Fair value in a world where cash is becoming increasingly worthless and assets with any sort of yield are sought after. I agree that interest rates will go up at some point but with stupid politicans bought by bankers I see either a seismic sudden shift which damages the belief the masses have in the system or a complete change of the system through the G5/G8 manpulating their policies (as happened in 1985 with US dollar depreciation or in the 70s when Nixon came off the gold standard). We will have to hide our sins and losses will not be nominal but in real value. The innumerate cannot understand that value may have gone down if they paid for something for £50 today and £60 next year. The system depends on the uneducated losing out. Happens every cycle.

I agree,but thats the crux.People have chased yield to such a point the asset is double fair value (at least).People say its different,but it isnt.I think inflation is already in the system.I think the $ index will fall back to 80 and i think at some point in 2018 youl be able to buy TLT (20 year+ treasury ETF) for below 100 again.For me its clear where the risk is.Id rather own assets that will gain from inflation because i think the deflation trade is over,and everyone and his dog has already bought it.

I am a contrarian,and i have no idea on timescales,but i think Benjamin Graham was 100% right when he said "In the short run the market is a voting machine,but in the long run it is a weighing machine".

Id rather own the miners than anything overbought for deflation and the asset id want least if buying now would be a southern house.

[Fromage Frais]

This is a good point in the longer term. The biggest surprise for me is how the government, EAs, surveyors, builders and banks all seem to be content with record-low sales volumes. In any other market, low sales = financial ruin. I am stunned that businesses in the housing game aren't campaigning for lower prices to get the market moving again. Better even to make the SAME money with more sales because it's a more robust model than lots of money from few sales.

problem is I just don't see how even when price is taken out of the equation there is hardly anything for sale and the agents offices have the same sub 20 houses for sale all the time.

How can business be booming in sales with no product to actually sell?

All other agents are "overpricing to get a sale" and when they do the same it's "a great investment".

[TheCountOfNowhere]

I agree,but thats the crux.People have chased yield to such a point the asset is double fair value (at least).People say its different,but it isnt.I think inflation is already in the system.I think the $ index will fall back to 80 and i think at some point in 2018 youl be able to buy TLT (20 year+ treasury ETF) for below 100 again.For me its clear where the risk is.Id rather own assets that will gain from inflation because i think the deflation trade is over,and everyone and his dog has already bought it.

I am a contrarian,and i have no idea on timescales,but i think Benjamin Graham was 100% right when he said "In the short run the market is a voting machine,but in the long run it is a weighing machine".

Id rather own the miners than anything overbought for deflation and the asset id want least if buying now would be a southern house.

So in short....hold cash ?

[durhamborn]

So in short....hold cash ?

I never hold cash of more than three years expenses,but if i was renting waiting to buy id be cash yes.Iv adjusted my portfolio since Feb/March towards inflation assets.The big miners,mainly Anglo/BHP,gold ETF, GDXJ and Silver miners ETF ,SIL,Coal stocks ETF, KOL,Nautral gas ETF,FCG,Columbia ETF, GXG,Copper miners ETF,COPX,Norway ETF, NORW.and last few weeks Nigeria ETF,NGE.

I have a long term hold portfolio,but those sit alongside it (around 30%).I just think the $ index will fall because the Fed will keep printing and those assets will continue in strong bull markets,until inflation shows its hand and interest rates follow.

All just my own opinion.Anything could happen,but i like that inflation hedge.

[ARIMA]

I never hold cash of more than three years expenses,but if i was renting waiting to buy id be cash yes.Iv adjusted my portfolio since Feb/March towards inflation assets.The big miners,mainly Anglo/BHP,gold ETF, GDXJ and Silver miners ETF ,SIL,Coal stocks ETF, KOL,Nautral gas ETF,FCG,Columbia ETF, GXG,Copper miners ETF,COPX,Norway ETF, NORW.and last few weeks Nigeria ETF,NGE.

I have a long term hold portfolio,but those sit alongside it (around 30%).I just think the $ index will fall because the Fed will keep printing and those assets will continue in strong bull markets,until inflation shows its hand and interest rates follow.

All just my own opinion.Anything could happen,but i like that inflation hedge.

Ooh nice you might make a killing on that. And more importantly, if you don't make a killing, I'm not sure you'll lose much.