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Correlation Between Savings Ratio And Hpi

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I read an article some time back showing how there was a direct link between the ratio of savings and HPI.

Just managed to find the article on the Fool website.

Why House Prices Are Sure To Fall

Two things are worth noting:

* When house prices rise strongly, the savings ratio tends to fall; and

* When the savings ratio starts to rise, house-price rises tend to slow down or prices drop.

Has anyone researched this further?

Interesting to hear any comments on it's validity!

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Yeah, it would be good to read some more articles from Cliff D'Arcy.

Look at Germany, very high savings ratio, very low house prices.

USA, no savings, housing bubble.

And we all know the level of savings in the UK...

Edited by BandWagon

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Low savings high house prices.

Low interest rates high house prices.

Low unemployment high house prices.

I see it like a pendulum one extreme to another. The "average" point is directly south LOL.

Get close to the average as a buyer and enter the market.

Mr Joe.

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Consumers appear to switch between "savings" mode and "spending" mode.

When economic times are good, consumers feel confident, spend and wind down their savings, just as they've done in the UK and USA.

When the economy turns, they have very little safety buffer, stop spending, and exacerbate the downturn.

What they should do is save during the boom years, and then have spare money to sustain them during the hard years.

But human nature doesn't seem to support this model.

Look at Germany, very high savings levels, high unemployment, and low house prices.

They're just about to switch into "spending" mode.

Guess which way the UK is going?

Edited by BandWagon

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Is Germany the second largest holder of Gold bullion in the world?

Mr Joe.

Sorry I'll add to my point. It would be easy for them to sell a wacking great amount without giving it away. Large reserves would remain. This real money might help kick start a brighter economy?

Englands BTL brigade invade German property market LOL

Edited by Mr Joe

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Germany the 2nd highest holder of gld bullion?

If so they would be well advised to cash it in to help their economy/balance of payments/high social welfare bill etc....

And, of course, they will do at some point.

Be careful people.#

Jst like the asians will drop the dollar if they need cash............(ahem)

Edited by needle

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  • 337 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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