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DavidGold

Model Of The Property Cycle

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This is a theoretical model of the property cycle which combines ideas from various sources. It is work in progress as I still have a number of sources to review for information. I am particularly interested in comments/experiences from 1989/90 when the market last topped, and the mid 1990's when the market bottomed in real terms. Also application of economic & investment theory re. cycles & behaviour. Tell me what you think...

Word 97 format: will open in Wordpad.

Model_of_the_Property_Cycle_v1.doc

Model_of_the_Property_Cycle_v1.doc

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Now available in .pdf format:

Of course, if you don't want to increase your understanding of what's going on...

Very good, I would say we are "bouncing" between 3 and 5 at the moment, if that is possible.

Edited by BubbleTurbo

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you've obviously taken some time to construct a viable for/against agrument for the housing cycle.

the other factor I believe you need to include is the relationship between housing and other markets in their respective cycles.they are linked and the performance/underperfomance of one will have a bearing on the outcome of another.

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Great to see some new analysis on HPC.

I'm not sure of the scope of you've defined for this analysis, but I don't think you can exclude the relationship to the wider economy.

It's late and I have to be at work early, but something like this:

Housing market booms, consumers feel wealthier, and savings levels go down the pan.

Increased consumer spending and tax free borrowing against assets enhance spending.

The ensuing consumer boom improves job prospects, govenment tax receipts increase, goverment borrowing falls.

Interest rates drop as a result of lowering government borrowing and foreign investment improves, attracted by the easy money.

Jobs are easy to come by, goverment is happy, everyone enjoys the gravy train.

Then the housing market begins to slow, consumers start to worry and reduce discretionary spending.

Unemployment starts to rise as boom-related jobs disappear.

Consumers start to fret, and the savings rate begins to increase.

As jobs disappear, goverment tax receipts start to fall.

Government increases borrowings, forcing up market interest rates.

Foreign investor's get scared, start to abandon the currency.

Government is forced to raise interest rates at an alarming rate.

Asset prices fall, jobs disappear, and everyone is miserable.

Just in time for the cycle to start again.

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Very good, I would say we are "bouncing" between 3 and 5 at the moment, if that is possible.

Are you 'avin a giraffe.

Shades of gray I know but have your read the Halfax report offered on this site. Prices are down. and will continue to be this way. O.K. off my high horse now. 4-6 in my guess. Although I believe some people will still never believe the fact during and after like last time.

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you've obviously taken some time to construct a viable for/against agrument for the housing cycle.

the other factor I believe you need to include is the relationship between housing and other markets in their respective cycles.they are linked and the performance/underperfomance of one will have a bearing on the outcome of another.

I agree there can be relationships - important ones - but I still think it is possible for the housing market to behave cyclically by itself. One area where I have alluded to other markets is speculators finding other markets more attractive as house price inflation falls, reducing demand.

Do you have some other examples?

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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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