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janch

More signs of cracking in the world's biggest housing bubble

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We like to highlight that although Sweden’s property bubble is not the longest running (that accolade goes to Australia at 55 years)

Surely a bubble cannot last 55 years?

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24 minutes ago, iamnumerate said:

It says

Surely a bubble cannot last 55 years?

A bubble goes on until it pops, who knows how long that can be. Australia had incredible luck in that China buys (used to buy) everything they've got. I'd say that luck has run out now.

 

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9 minutes ago, Funn3r said:

A bubble goes on until it pops, who knows how long that can be. Australia had incredible luck in that China buys (used to buy) everything they've got. I'd say that luck has run out now.

 

You would be a bit upset if you had STR in Australia 54 years ago..

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37 minutes ago, iamnumerate said:

It says

Surely a bubble cannot last 55 years?

To be fair it is not mean that property has been in a bubble state for 55 years, just that there has been no significant period of price drop to imply a correction. 

If the value is correct then we are not in a bubble.

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1 minute ago, Freki said:

 

To be fair it is not mean that property has been in a bubble state for 55 years, just that there has been no significant period of price drop to imply a correction. 

If the value is correct then we are not in a bubble.

That makes more sense, thankyou.

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When I was in Melbourne in 2001 I wouldn't describe the market as in a bubble. I wasn't exactly taking much notice - but in terms of what you earned and what a place close to town bought you ? Seemed vaguely reasonable as far as I can remember.

Then again so did shopping and buying a beer back then. By all accounts today its eye watering for nearly everything.

Progress. Love it.

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On 12/12/2017 at 2:04 PM, iamnumerate said:

It says

Surely a bubble cannot last 55 years?

mass immigration constrains demand, lax credit creates demand.

the bond market has been on a bull run for the last 40 years, now THAT'S a bubble!...it is many orders of magnitude higher than stock market capitalisation

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1 minute ago, oracle said:

mass immigration constrains demand, lax credit creates demand.

the bond market has been on a bull run for the last 40 years, now THAT'S a bubble!...it is many orders of magnitude higher than stock market capitalisation

edit....mass immigration creates(not constrains)

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On 12/12/2017 at 2:04 PM, iamnumerate said:

It says

Surely a bubble cannot last 55 years?

Try Googling Herengracht Index.

eg https://hotelivory.wordpress.com/2010/08/29/a-very-long-view-on-house-prices/

"over a 380 year period the real (ie inflation adjusted) house prices have only doubled, which corresponds to an annual average price increase of something like 0.1%.  And that’s with a starting point just at the start of the Dutch golden age. With a different starting point one could just as well get a 0% or even negative annual price change."

Within this period, house prices went through various bubbles, sometimes lasting decades, but they always reverted to the long run trend of zero real growth.

It is the same with the UK.  In the long run, the real return is zero.

Compare this with the bogus 2.6% Nationwide real growth trend:

http://www.housepricecrash.co.uk/indices-nationwide-national-inflation.php

It is easy to see that we have been in a mega bubble for over 20 years and require a real price correction of 50-75% in house prices.  With the coming deflation, nominal falls will even exceed this.

What cannot be seen from the graph is that even when the data started, house prices were above their long term trend.  The UK has been in bubble territory for the entire lifetime of the average UK citizen (and baby boomer).  This is why the bubble is so epic.  Nobody knows any different - but prices will revert to mean eventually....

 

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Crash cancelled...there is no bubble supposedly, clearly fact.

http://www.yourmoney.com/mortgages/house-price-crash-imminent-ask-experts/

Love the results from a Google search of house price crash.

proper analysis there on that soap box...usual 'arguements/ beliefs' wonder what sort of declines they need to see before accepting the crash is underway??

 

 

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13 hours ago, Loving The Crash said:

Try Googling Herengracht Index.

eg https://hotelivory.wordpress.com/2010/08/29/a-very-long-view-on-house-prices/

"over a 380 year period the real (ie inflation adjusted) house prices have only doubled, which corresponds to an annual average price increase of something like 0.1%.  And that’s with a starting point just at the start of the Dutch golden age. With a different starting point one could just as well get a 0% or even negative annual price change."

Within this period, house prices went through various bubbles, sometimes lasting decades, but they always reverted to the long run trend of zero real growth.

It is the same with the UK.  In the long run, the real return is zero.

Compare this with the bogus 2.6% Nationwide real growth trend:

http://www.housepricecrash.co.uk/indices-nationwide-national-inflation.php

It is easy to see that we have been in a mega bubble for over 20 years and require a real price correction of 50-75% in house prices.  With the coming deflation, nominal falls will even exceed this.

What cannot be seen from the graph is that even when the data started, house prices were above their long term trend.  The UK has been in bubble territory for the entire lifetime of the average UK citizen (and baby boomer).  This is why the bubble is so epic.  Nobody knows any different - but prices will revert to mean eventually....

 

Are you sure that prices in real terms have to stay the same?  A lot of services have gone up consistently in real terms and food has got cheaper (but some food more than others).

 

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1 hour ago, iamnumerate said:

Are you sure that prices in real terms have to stay the same?  A lot of services have gone up consistently in real terms and food has got cheaper (but some food more than others).

 

This book has UK data:

https://www.amazon.co.uk/gp/product/1907994017/ref=ox_sc_sfl_title_1?ie=UTF8&psc=1&smid=A3P5ROKL5A1OLE

There's a brief review here:

http://www.economist.com/node/21553459

(The long run ie over hundreds of years, trend in real house prices for the UK is a horizontal line, but it can slope slightly up or down depending on starting/end points.)

Whilst 95% of the UK is owned by around 1,000 people/institutions, there is plenty of land.  Plenty.  You only need to fly over the UK to see this.  Most of the land is highly unproductive and virtually free ie £1k to £2k per acre, but perfectly good for housing.  Even farmland is very cheap per acre.  Coupling that with cheaper building materials, better construction techniques, and more recently flat real wages, it is hard to find an argument as to why real house prices should rise over the long run.  The distortions we're experiencing at present are a combination of nimbyism, land hoarding, legislation, and yes, easy credit - ie transitory factors.

Prices for services tend to rise in line with real wages over time - the more labour dependent the service, the greater the correlation.  Food prices are cheaper because of more efficient production techniques combined with a surfeit of land ie for reasons similar to those for house production.

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Just now, Loving The Crash said:

This book has UK data:

https://www.amazon.co.uk/gp/product/1907994017/ref=ox_sc_sfl_title_1?ie=UTF8&psc=1&smid=A3P5ROKL5A1OLE

There's a brief review here:

http://www.economist.com/node/21553459

(The long run ie over hundreds of years, trend in real house prices for the UK is a horizontal line, but it can slope slightly up or down depending on starting/end points.)

Whilst 95% of the UK is owned by around 1,000 people/institutions, there is plenty of land.  Plenty.  You only need to fly over the UK to see this.  Most of the land is highly unproductive and virtually free ie £1k to £2k per acre, but perfectly good for housing.  Even farmland is very cheap per acre.  Coupling that with cheaper building materials, better construction techniques, and more recently flat real wages, it is hard to find an argument as to why real house prices should rise over the long run.  The distortions we're experiencing at present are a combination of nimbyism, land hoarding, legislation, and yes, easy credit - ie transitory factors.

Prices for services tend to rise in line with real wages over time - the more labour dependent the service, the greater the correlation.  Food prices are cheaper because of more efficient production techniques combined with a surfeit of land ie for reasons similar to those for house production.

What about population rise?

(BTW I am not saying it is desirable that prices rise, I think it could be stopped, whether it will or not is another matter)

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6 minutes ago, janch said:

more.........

http://www.zerohedge.com/news/2017-12-14/swedish-housing-bubble-pops-stockholm-apartment-prices-crash-most-june-2009

 

apartments in Stockholm now and a surge in supply which reminds me of London:)

Indeed, and this is what the pro-HPI cannot fathom, that once SENTIMENT turns, it's a race for the exit, which exponentially brings down prices. Takes (meat) balls of steel to sit it out and hope for a recovery.

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  • 407 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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