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TheCountOfNowhere

'unprecedented' uncertainty

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From the Foxton share price thread, worthy of it's own thread tho.

Foxtons hit by fall in profits as 'unprecedented' uncertainty hits property market

 

http://www.standard.co.uk/news/london/foxtons-profits-fall-amid-unprecedented-uncertainty-for-property-market-a3597306.html

 

Yet another negative headline, what possibly can it all mean :rolleyes:

 

I personally think the headline should be precedented certainty as we all saw it coming and we all know what's coming next.

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2 minutes ago, TheCountOfNowhere said:

I personally think the headline should be precedented certainty as we all saw it coming and we all know what's coming next

I wish you could meet some of my better half's London-based friends. Her recent coffee mornings and spoken observations on the cracking UK ( especially London) housing market have been met with studied indifference and complete confidence that nothing will change, HPI will continue and if an incipient HPC did start, the government will step in and correct things as they have no other alternative. 

She quoted a phrase back to me that I'd previously quoted to her about British aircrew in Bomber Command in WW2: the most common phrase told to oneself before takeoff on an air-raid over Germany being " It can't happen to me". 

Not enough people have actually experienced a HPC to have this as part of the common British experience. And that leads to a tremendous insouciance. Its very annoying. 

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7 minutes ago, Society of fools said:

I wish you could meet some of my better half's London-based friends. Her recent coffee mornings and spoken observations on the cracking UK ( especially London) housing market have been met with studied indifference and complete confidence that nothing will change, HPI will continue and if an incipient HPC did start, the government will step in and correct things as they have no other alternative. 

That's some level of stupidity !!!

How f**king naive are these people.

 

 

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2 minutes ago, TheCountOfNowhere said:

How f**king naive are these people

To them its simple Bayesian analysis. The House price that goes up on day 1 makes it more likely that the House price will go up on day 2, then day 3, day 365, day 1365. 

I remember reading somewhere, I think it was in that book Black Swan, that Bayesian analysis would lead a Turkey being fattened up for Christmas to wake up on Christmas eve thinking that it would be just another day, when it fact, it is the end my friend......

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Yes, yes, but.... In this era of PPI refunds, QE, various flavours of help-to-buy, BTL, bank bailouts, permanent deficit and increasing debt, GDP tied to house prices - I'm getting increasingly sure that the current establishment will do anything, *anything*, to avoid a crash. I think they'd rather see a scorched-earth economy to protect the delusions of your friend's coffee mornings. 

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14 minutes ago, RentingForever said:

Yes, yes, but.... In this era of PPI refunds, QE, various flavours of help-to-buy, BTL, bank bailouts, permanent deficit and increasing debt, GDP tied to house prices - I'm getting increasingly sure that the current establishment will do anything, *anything*, to avoid a crash. I think they'd rather see a scorched-earth economy to protect the delusions of your friend's coffee mornings. 

They'll do more to avoid their scrawny little necks aren't hung from lamp posts if you ask me.

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13 minutes ago, RentingForever said:

Yes, yes, but.... In this era of PPI refunds, QE, various flavours of help-to-buy, BTL, bank bailouts, permanent deficit and increasing debt, GDP tied to house prices - I'm getting increasingly sure that the current establishment will do anything, *anything*, to avoid a crash. I think they'd rather see a scorched-earth economy to protect the delusions of your friend's coffee mornings. 

If the tories do that, they can say goodbye to power for a good while after... ;-) I don't think there is the political will for this kind of 'save-it-at-all-costs' mentality.  Or so I hope.

It's actually worrisome to me whilst the mainstream media have clearly turned a corner, just how coordinated the turn of attitudes appears.

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8 minutes ago, blackhole said:

If the tories do that, they can say goodbye to power for a good while after... ;-) I don't think there is the political will for this kind of 'save-it-at-all-costs' mentality.  Or so I hope.

It's actually worrisome to me whilst the mainstream media have clearly turned a corner, just how coordinated the turn of attitudes appears.

It's been evident for several months now.

 

 

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3 minutes ago, TheCountOfNowhere said:

It's been evident for several months now.

 

 

Certainly since the election.

Presumably the Tories have done some analysis (I guess they must do some !?!) of the election results and why they did SO badly with the under 40 demographic in England must lead them to the conclusion that the price of housing (OO and rented) needs to fall relative to income...

Better to get it out the way at the start of the parliamentary term rather than later .... if they manage to last that long.

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Just now, skomer said:

Certainly since the election.

Presumably the Tories have done some analysis (I guess they must do some !?!) of the election results and why they did SO badly with the under 40 demographic in England must lead them to the conclusion that the price of housing (OO and rented) needs to fall relative to income... were keeping it hush hush until the election was out the way,

Better to get it out the way at the start of the parliamentary term rather than later .... if they manage to last that long.

 

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42 minutes ago, RentingForever said:

Yes, yes, but.... In this era of PPI refunds, QE, various flavours of help-to-buy, BTL, bank bailouts, permanent deficit and increasing debt, GDP tied to house prices - I'm getting increasingly sure that the current establishment will do anything, *anything*, to avoid a crash. I think they'd rather see a scorched-earth economy to protect the delusions of your friend's coffee mornings. 

QE isn't working, young kids coming through now are loaded with debt and the next cohort coming through will have that debt ratcheted up as fees can now go up with inflation each year. The cohorts coming out in 5 years time will be loaded with close to 70K debt, at some point they'll change that 9% above 21K as a repayment to a higher percentage. The whole thing has ceased up an epic bubble if there ever was one. Best to let the whole thing correct down

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8 minutes ago, Talking Monkey said:

QE isn't working, young kids coming through now are loaded with debt and the next cohort coming through will have that debt ratcheted up as fees can now go up with inflation each year. The cohorts coming out in 5 years time will be loaded with close to 70K debt, at some point they'll change that 9% above 21K as a repayment to a higher percentage. The whole thing has ceased up an epic bubble if there ever was one. Best to let the whole thing correct down is working as intended.

 

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The Tories are pushing this through the media. 

Currently, housing is their biggest issue as 50% home owners and 33% of non-home owners vote for them. 

As more and more people struggle to get on the ladder the Tory vote disappears so they are pushing the idea of an upcoming crash to bring prices back into people's plans.

I don't think they actually WANT a crash - just the suggestion that it might happen - same as they have been hinting at interest rate rises but without the intention o do anything to them in order to shore up the pound.

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8 minutes ago, ThePrufeshanul said:

The Tories are pushing this through the media. 

That would be my guess too.  The government quick clearly ( as we saw in EU/Indy Refs ) have a major influence on various parts of the MSM.

Quote

Currently, housing is their biggest issue as 50% home owners and 33% of non-home owners vote for them. 

As more and more people struggle to get on the ladder PYRAMID the Tory vote disappears so they are pushing the idea of an upcoming crash to bring prices back into people's plans.

I don't think they actually WANT a crash - just the suggestion that it might happen - same as they have been hinting at interest rate rises but without the intention o do anything to them in order to shore up the pound.

The need a crash, without it they wont win an election for decades and Corbyn will make life difficult for the establishment.

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1 hour ago, Society of fools said:

To them its simple Bayesian analysis. The House price that goes up on day 1 makes it more likely that the House price will go up on day 2, then day 3, day 365, day 1365. 

I remember reading somewhere, I think it was in that book Black Swan, that Bayesian analysis would lead a Turkey being fattened up for Christmas to wake up on Christmas eve thinking that it would be just another day, when it fact, it is the end my friend......

Jim Rickards talks about Bayesian probability quite a bit in his books as well.

https://en.wikipedia.org/wiki/Bayesian_probability

Edited by Errol

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Ok so there is a crash, a big crash.

I graduated in the year 2000. In my adult life living in an expensive city there has been a grand total of 2 years where prices stopped rising, and even fell a bit. 

Just this week I viewed a house near me (we would like a bigger house), I was met with crowds of people at the viewing with people going 10% over the massively inflated asking price.

I don't understand the mechanism that is keeping prices increasing so fast around me. I looked at getting a mortgage and on our, relatively decent, household income we could only borrow enough to buy half an average house around here. Yet every house sells and sells quickly. So where is the money coming from? 

Is it all really just sentiment about future direction of prices that dictates high prices? The anchoring effect of starting with a high price? If mortgage lending is already restricted, wage falling compared to inflation, BTL looking a lot less attractive then why is that tiny bungalow £400k rather than £200k? What will have to happen to make that price fall down again?

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4 minutes ago, Timak said:

Is it all really just sentiment about future direction of prices that dictates high prices? The anchoring effect of starting with a high price? If mortgage lending is already restricted, wage falling compared to inflation, BTL looking a lot less attractive then why is that tiny bungalow £400k rather than £200k? What will have to happen to make that price fall down again?

Good questions. And this is an even better one: 

 

5 minutes ago, Timak said:

So where is the money coming from?

A lot of the cash for property is coming from the financial models of banks, which tend, from what I know, to accrete on bubble valuations. This is why there are such staggering regional variations in Real Estate, without any fundamental obvious difference in the quality of life or even the cash on offer from jobs in various cities. 

Why, for example, to use the Australian context, is there a massive property bubble in Sydney, but none in Brisbane ? Switch to Canada, and why does one find a massive property bubble in Toronto, but none in Montreal ? 

A lot of this is due to variations on the margin, and I would posit it works like this: salaries are slightly higher in Sydney or Toronto than Brisbane or Montreal. Chinese money laundering investment is higher in Cambridge or Oxford ( known to Chinese people), than it is in Exeter or Canterbury. So houses rise slightly in value, and sell for slightly more, and banks record those figures.

Then there's a snowball, and there's accretion of higher valuations, which banks also record and lend against. Eventually, the valuations themselves attract outside speculators, some of them cashed up, and banks lend to them accordingly. 

In the end, property valuations end up as completely untethered from reality, rather than being based in how much local people are earning or should be paying for rent.( property prices should be based on what it costs to rent, after all) 

Then there's the political factor, which kicks in at this precise point. For whatever political reason you might care to pick, rather than letting the RE bubble burst, both governments and central banks then deliberately choose to have the housing bubble inflated. Interest rates are slashed to zero, QE is engaged in, HTB is brought in, and Housing benefit is paid out by the billions. 

Here's the effect: those who invested in the local property bubble early are protected by vested interests ( banks, policy makers, politicians), with every sinew of their being. Those who are late to the party, like you, are comprehensively f*cked. 

And the solution to this is nothing less than a overturning of the dominant ethos. All that would need would be a commitment to NON-INTERVENTION. And it will all fall down. 

If something cannot go on forever, it will stop

Stein's law. https://en.wikipedia.org/wiki/Herbert_Stein

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18 minutes ago, Timak said:

 

Is it all really just sentiment about future direction of prices that dictates high prices? The anchoring effect of starting with a high price? If mortgage lending is already restricted, wage falling compared to inflation, BTL looking a lot less attractive then why is that tiny bungalow £400k rather than £200k? What will have to happen to make that price fall down again?

"we cant really afford this house, but if we strench ourselves massivly... i mean who needs to buy food?.. we could just about buy it, might be slightly bigger than we need also, but say its 800k now, it will surely be 1.5 mill next year, then we can sell up and buy a smaller house outright, prices only ever go up, and the banks are willing to give us a £795,000 mortgage on 50 year terms, its like free money isnt it?!"

i think something along those lines is most buyers, especially those who dont earn enough for a nice house, theres a real 'im worth it' attitude going on. 

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2 hours ago, TheCountOfNowhere said:

That's some level of stupidity !!!

How f**king naive are these people.

 

 

trouble is they have been right for 40 years :lol:

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54 minutes ago, ThePrufeshanul said:

The Tories are pushing this through the media. 

Currently, housing is their biggest issue as 50% home owners and 33% of non-home owners vote for them. 

As more and more people struggle to get on the ladder the Tory vote disappears so they are pushing the idea of an upcoming crash to bring prices back into people's plans.

I don't think they actually WANT a crash - just the suggestion that it might happen - same as they have been hinting at interest rate rises but without the intention o do anything to them in order to shore up the pound.

Has everyone forgot housing was 50% less before fooking HTB.  they should of left it alone 

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26 minutes ago, jiltedjen said:

"we cant really afford this house, but if we strench ourselves massivly... i mean who needs to buy food?.. we could just about buy it, might be slightly bigger than we need also, but say its 800k now, it will surely be 1.5 mill next year, then we can sell up and buy a smaller house outright, prices only ever go up, and the banks are willing to give us a £795,000 mortgage on 50 year terms, its like free money isnt it?!"

i think something along those lines is most buyers, especially those who dont earn enough for a nice house, theres a real 'im worth it' attitude going on. 

On what planet were the bankers not regulated in 2008.

We have one f**ked up system.  

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What has happened is that every area to finance the deposit has been used.Once interest rates went as low as they will go that pushed prices as high as they can go.Then step in the bank of mum and dad,grandma,uncle etc.The last stage of this cycle has seen people sucked in who werent part of it.Parents have used savings,lump sums from pensions,even equity removal from their own properties.The ironic thing is all they have done is made sure they lose even more equity.A parent funding a 25% deposit by borrowing 20% of their house value simply sees both go up in smoke when prices fall 25%.

Its been an incredible cycle this one.To go right to the end of the risk curve is very rare,but right to the end we have gone.Of course the worst day to be doing this in the last 40 years is today.UK housing in bubble areas is probably one of the worst investments anywhere in the world right now.Not only that,there is a serious risk that in 7-10 years interest rates will be getting close to early 1980s levels.Those women at London coffee mornings would think aliens showing up more likely.They are wrong.Given the magnitude of the downturn that's coming. It will likely exceed anything that's preceded it for 70 years.They would be better investing in the coffee after the crash.

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2 hours ago, RentingForever said:

Yes, yes, but.... In this era of PPI refunds, QE, various flavours of help-to-buy, BTL, bank bailouts, permanent deficit and increasing debt, GDP tied to house prices - I'm getting increasingly sure that the current establishment will do anything, *anything*, to avoid a crash. I think they'd rather see a scorched-earth economy to protect the delusions of your friend's coffee mornings. 

Scorched earth economy was pretty much the policy of G Brown before the 2010 general election to try to remain Prime Minister.  He failed but the coalition still found fresh areas to scorch and now the tories continue to look but seem to be running out of earth while general living standards continue their long term decline in real terms and that is gaining momentum now due to their failed policies over many decades.  

Indeed "they'd rather see a scorched-earth economy to protect the delusions of your friend's coffee mornings" and they'e proved that time and time again with the only thing that matters to them is their own self interest - but like everything else nothing lasts forever

Edited by billybong

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I bumped into my sister this week and she's the last bull to turn bearish on house prices especially in London where she owns (jointly) a £1.2million home in Peckham. Previously she owned two there (reluctant landlord on a £1.1million property in Peckham that she moved from - now sold). So I said to her 'that's great when are you going to put the house on the market' and she replied after she has spent £100k on a basement extension that planning permission has recently been granted. I retorted that she was mad and should just get it shifted asap. Still convinced they can add value against a backdrop of falling prices ?

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3 hours ago, TheCountOfNowhere said:

From the Foxton share price thread, worthy of it's own thread tho.

Foxtons hit by fall in profits as 'unprecedented' uncertainty hits property market

 

http://www.standard.co.uk/news/london/foxtons-profits-fall-amid-unprecedented-uncertainty-for-property-market-a3597306.html

 

Yet another negative headline, what possibly can it all mean :rolleyes:

 

I personally think the headline should be precedented certainty as we all saw it coming and we all know what's coming next.

 

Indeed - in fact the unprecedented uncertainty is unprecedented in its precedented certainty - or something like that.

People like Foxtons just won't ever say the collapse is inevitable.

Edited by billybong

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