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Dr Teeth

Will A Correction Still Occur?

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Having had to justify my stand to my family for 3 years now, that we should sit tight and and not buy until after a hpc, just lately I find myself having some concerns that the correction may not come.

This is all despite having lived through two corrections, and on the strength of this experience sold a flat and banked the cash 3 years ago.

There are several new angles on the old paradigm:

1. The economy, despite being dreadfully talked up by the spin, just does not appear to be at the end of a cycle that will trigger a bust.

2. In the previous bust we were just not so well informed, having to rely on brief journalistic research whether good or bad. Now we have the Internet and everyone can reseach the economy in depth almost immediately. I feel there is an army of informed and educated buyers out there, ready to step in and buy property when they see conditions are right, therefore largely nullifying any effects of a crash.

3. Attitudes have shifted. For example, my feeling is the increased number of bankrupcies just annouced is more to do with an attitude change, rather than an imminent collapse of the economy. There just isn't the stigma attached to bad debt that there used to be 20 years ago. This stigma removed, people will do their research (using the Internet!) and if bankrupcy is the best option for them, they will now take it.

4. House prices are actually being given the option to stabilise. If I'm correct previously house prices peaked and then crashed. This time they appear to have stabilised (which I'm basing on some organisations saying prices have risen a % or two, and others saying they've dropped). Where is the trigger for the crash? It appears the domino effect is missing this time.

5. New entrants to the European Union. Who can blame citizens of the poorer newly added eatern countries making their way to the UK. Regardless, they will need to be housed and this is surely going to have some effect on demand, and therefore price.

My real concern is that this time we cannot rely on the experiences of the past, and to afar greater degree than we've actually admitted.

Any comments?

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The tools and technologies we have in place today have contributed to this mess. 20 years ago it would be impossible to get a complete view of a companys books. Today I can instantly view my companies worth.

Same with lending. In the past, if you wanted to get a mortgage, get in the queue and wait. Now, I can pre-approve your mortgage instantly. In fact, I won't just pre-approve you for the mortgage, I can pre-approve you of loans that you didn't even know existed! And that is how the economy is working at theis present time.

We are in unchartered waters. I can't recall a more debt driven economy ever. Our attitude is spend now, borrow from tomorrow. I'm sorry, debt has to be repayed. And just because you can go bankrupt, doesn't mean that the debt doesn't affect the economy. It has to be paid by someone, somewhere (normally the bank itsself by writing it off). The net outcome? Look to the last crash.

House prices are being given the option to stabalise? Absolute ********. There's never will be a soft landing. Do you think share prices have the option to stablise? Why would the housing market be any different?

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It looked bleak and never ending misery in the 90's when the Tory's were clinging onto power

That eventually ended - as will this - it's the younger generation who hasn't lived through a rough period who thinks it's going to go on forever - plus the suckers who believe the current media spin

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Boom and Bust has characterised the economy since Roman times. As the writer of Ecclesiastes put it:

There is nothing (nothing) new under the sun.

When they say its different now they are simply forgetting that the economy runs in cycles with upturns as well as downturns.

There is nothing (nothing) new under the sun, a time to spend and a time to save, a time for HPI and a time for HPC, turn turn turn......

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There's never will be a soft landing.

How do you know this ? Past indication is not necessarily an indicator of the future.

Do you think share prices have the option to stablise? Why would the housing market be any different?

Why the obsession between house prices and shares ? Two totally different things. Chalk and cheese. Supply and demand, sentiment and cheap credit are the drivers behind house prices. How do you know it won't continue for ever - or at the worst stagnate ? But crash ? What would be the driver of this ? Sensible answers please, comets, plagues, pestilence and famines are not really sensible answers.

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With hardly any increase in average wages in the whole 8 years that labour have been in power what the hell is there to stabilise the situation..............

House prices have more than doubled in that same time period..............

This low inflation environment is going to put paid to people ever getting anywhere near as much as previous generations have done...............

We have lost something like 25% of our manufacturing jobs under labour (far more than under any previous government)...............

We are now importing a greater proportion of our gas and petrol from abroard and hardly producing any ourselves................

Everywhere you look foreign countries are aggresively raising their interest rates because they realise that inflation is rearing its ugly head but we want to pretend that none of that is happening...................

We have a bloated public sector that employs 1 in 5 of our workforce and has been repeatedly told to drasticly slim down its numbers because they are unsustainable......................

Huge rises in insolvencies and profit warnings are coming thick and fast now...............

We have unemployment figures balloning and growing larger month on month...................

Rant over

Edited by miser

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There may be another round of panic buying for the next 6-12 months or so, but a correction is inevitable.

The period of credit expansion will come to an end. The tide of liquidity underpinning house prices with go out to sea.

Right now I think the tide is still coming in though. I'm not banking on a correction this year, there's just too much money knocking around.

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Having had to justify my stand to my family for 3 years now, that we should sit tight and and not buy until after a hpc, just lately I find myself having some concerns that the correction may not come.

This is all despite having lived through two corrections, and on the strength of this experience sold a flat and banked the cash 3 years ago.

There are several new angles on the old paradigm:

1. The economy, despite being dreadfully talked up by the spin, just does not appear to be at the end of a cycle that will trigger a bust.

2. In the previous bust we were just not so well informed, having to rely on brief journalistic research whether good or bad.

3. Attitudes have shifted.

4. House prices are actually being given the option to stabilise.

5. New entrants to the European Union.

Any comments?

Chin up! mate.

1. rising interest rates in US and EU. Rising unemployment. People saving/paying off debt rather than spending.

2. When the corner turns, the free flow of info will help speed it along.

3. Debt more acceptable = more debtors = more repossessions to pull market down.

4. Then you'll see your deposit grow in value while prices stagnate - come back in 10 years and buy then.

5. Mistaken thinking - you are confusing 1. the demand for housing with 2. the demand for purchasing houses.

Migrant workers and expats from new EU countries are more likely to rent than to buy while they are establishing themselves. They are likely to no sizeable deposit and to be working for low-ish wages - so if they really are a factor, then it will stimulate rents rather than prices.

But get your tin hat on - when the housing market crashes in the West (US, UK, Aus, Fr, Spain, Eire etc.) there's going to be a very very nasty recession.

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1. The economy, despite being dreadfully talked up by the spin, just does not appear to be at the end of a cycle that will trigger a bust.

Read the papers today?

2. In the previous bust we were just not so well informed, having to rely on brief journalistic research whether good or bad. Now we have the Internet and everyone can reseach the economy in depth almost immediately. I feel there is an army of informed and educated buyers out there, ready to step in and buy property when they see conditions are right, therefore largely nullifying any effects of a crash.

Yep, that's why the only remaining, motivated buyers out there - investors -have been staying away. It's getting more dificult to get BTL mortgage approvals nowadays and the returns are poor and risky for new entrants in comprison to other investments. Income multiples for FTB's are impossible. They are using the internet and finding out the figures don't add up.

3. Attitudes have shifted. For example, my feeling is the increased number of bankrupcies just annouced is more to do with an attitude change, rather than an imminent collapse of the economy. There just isn't the stigma attached to bad debt that there used to be 20 years ago. This stigma removed, people will do their research (using the Internet!) and if bankrupcy is the best option for them, they will now take it.

Depends whether the loaning firms want to take massive hits on their stock prices and face disciplinary action by the FSA for unsound practices. For the individual, you still will have a poor credit history for many years and face much stress, humilation and anxiety. ?!?! DO you want to reconsider that view or do you propose that knowingly entering into potential bancruptcy situations is a good way to go for the individual, for business, for society? Do you think that treating bankruptcy like a parking ticket is a mature and responsinble way for adults to behave?

4. House prices are actually being given the option to stabilise. If I'm correct previously house prices peaked and then crashed. This time they appear to have stabilised (which I'm basing on some organisations saying prices have risen a % or two, and others saying they've dropped). Where is the trigger for the crash? It appears the domino effect is missing this time.

Debt levels seem to be doing the trick. Sterling has been edgy of late. You say 'peak'. A bubble is easier to identify than the bust stage. That is why it is boom and bust. You know it's coming, it's just when is the dificult part to get right down to the week, day and month of the year. People were talking about a bubble and burst for a few years into the late eightees, many people saw it coming, only a few got the tming correct to within a couple of months. You can't really make that call until you look back, later on, with more complete figures, stories and reporting. And if prices have just 'peaked', it is too early to say 'stabalise'. You can apply that term three or four years down the line, when looking back at this time in history because the majority of 'spin' figures we are fed are backward reported anyway and selective. Follow the links here for what that means if that sentence doesn't mean anything to you.

5. New entrants to the European Union. Who can blame citizens of the poorer newly added eatern countries making their way to the UK. Regardless, they will need to be housed and this is surely going to have some effect on demand, and therefore price.

I beleive short term. Like the Spanish and Portuguese entrants in the late eightees. Came for a while, made some money and lived frugally on the basis of a high currency, most went back. Spain and Portugal are booming a decade later, better opportunites, better homes and house prices in native country (maybe not now, similar bubble problem in Spain now). The east of europe is infact a very pretty place in parts with some good property bargains and increasing economic opportunities. I think you need to go to places like Prague, Brataslava and Budapest for yourself to see that it is far from a backward hellhole. The Lativian prime minister infact was quoted to say, a year or so before entry to the EU, that he did not fear a mass exodus and brain drain because, when people experience poorer living conditions in a london inner-city combined with a high cost of living, any that do go will return sooner or later. Until the rebalance in the economy is complete within our debt and housing situation in the UK, I agree with him.

My real concern is that this time we cannot rely on the experiences of the past, and to afar greater degree than we've actually admitted.

So we should just throw away economics then? It is a non-valid discipline? (I speak as someone who started a career as a research engineer before I moved over to business roles). The study of Tulip bulbs in the Netherlands and Gold in the colonial Spanish Empire, many hundreds of years ago, are still used as reference texts in business seminars and economics market education. Doesn't matter though? They got it wrong? Maybe because a Tsunami happened over a year ago, it might happen again? Let's leave it there.

http://www.therockalltimes.co.uk/2004/12/2...atastrophe.html

tsunami catastrophe: UK house prices unaffected

Edited by boom_and_bust

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Having had to justify my stand to my family for 3 years now, that we should sit tight and and not buy until after a hpc, just lately I find myself having some concerns that the correction may not come.

This is all despite having lived through two corrections, and on the strength of this experience sold a flat and banked the cash 3 years ago.

There are several new angles on the old paradigm:

1. The economy, despite being dreadfully talked up by the spin, just does not appear to be at the end of a cycle that will trigger a bust.

2. In the previous bust we were just not so well informed, having to rely on brief journalistic research whether good or bad. Now we have the Internet and everyone can reseach the economy in depth almost immediately. I feel there is an army of informed and educated buyers out there, ready to step in and buy property when they see conditions are right, therefore largely nullifying any effects of a crash.

3. Attitudes have shifted. For example, my feeling is the increased number of bankrupcies just annouced is more to do with an attitude change, rather than an imminent collapse of the economy. There just isn't the stigma attached to bad debt that there used to be 20 years ago. This stigma removed, people will do their research (using the Internet!) and if bankrupcy is the best option for them, they will now take it.

4. House prices are actually being given the option to stabilise. If I'm correct previously house prices peaked and then crashed. This time they appear to have stabilised (which I'm basing on some organisations saying prices have risen a % or two, and others saying they've dropped). Where is the trigger for the crash? It appears the domino effect is missing this time.

5. New entrants to the European Union. Who can blame citizens of the poorer newly added eatern countries making their way to the UK. Regardless, they will need to be housed and this is surely going to have some effect on demand, and therefore price.

My real concern is that this time we cannot rely on the experiences of the past, and to afar greater degree than we've actually admitted.

Any comments?

1. Possibly, but the signs are not good.

2. The internet has not suddenly made Joe Bloggs a genius. Yes people can research the economy (if they can be bothered) but that doesn't mean to say they will make the right calls.

3. Bankruptcies are not pain free. The bank loses money and has to recover it else where (higher interest rates). Other creditors don't get paid, and some end up going out of business, and so the vicious circle begins.

5. The UK, Ireland and Sweden are currently the only countries where new EU citizens can work. But soon they will be able to work in nearby Germany. I think the big wave we had post-May 2004 was a one-off

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Having had to justify my stand to my family for 3 years now, that we should sit tight and and not buy until after a hpc, just lately I find myself having some concerns that the correction may not come.

This is all despite having lived through two corrections, and on the strength of this experience sold a flat and banked the cash 3 years ago.

There are several new angles on the old paradigm:

1. The economy, despite being dreadfully talked up by the spin, just does not appear to be at the end of a cycle that will trigger a bust.

2. In the previous bust we were just not so well informed, having to rely on brief journalistic research whether good or bad. Now we have the Internet and everyone can reseach the economy in depth almost immediately. I feel there is an army of informed and educated buyers out there, ready to step in and buy property when they see conditions are right, therefore largely nullifying any effects of a crash.

3. Attitudes have shifted. For example, my feeling is the increased number of bankrupcies just annouced is more to do with an attitude change, rather than an imminent collapse of the economy. There just isn't the stigma attached to bad debt that there used to be 20 years ago. This stigma removed, people will do their research (using the Internet!) and if bankrupcy is the best option for them, they will now take it.

4. House prices are actually being given the option to stabilise. If I'm correct previously house prices peaked and then crashed. This time they appear to have stabilised (which I'm basing on some organisations saying prices have risen a % or two, and others saying they've dropped). Where is the trigger for the crash? It appears the domino effect is missing this time.

5. New entrants to the European Union. Who can blame citizens of the poorer newly added eatern countries making their way to the UK. Regardless, they will need to be housed and this is surely going to have some effect on demand, and therefore price.

My real concern is that this time we cannot rely on the experiences of the past, and to afar greater degree than we've actually admitted.

Any comments?

Im glad to hear stuff like this.

You've waited for 3 years when there was no real evidence of a correction and now, with so many other bears your doubting it all.

Says to me that the end is nigh :)

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Past indication is not necessarily an indicator of the future.

Yes, but in this case, the cycle has repeated so many times I would say it is a reasonable indicator, would'nt you? The good times are here, make the most of it and bank some cash. The bad times won't be far away.

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How do you know this ? Past indication is not necessarily an indicator of the future.

VI spew out 'soft landing' and it has to be believed? I base my research on cycles and we're heading for a crash. I was right about the dot com bust and I daresay I shall be right on this.

Simple question. How can you predict what will happen in the future without historical data? We're not doing harry potter maths here.

Why the obsession between house prices and shares ? Two totally different things. Chalk and cheese. Supply and demand, sentiment and cheap credit are the drivers behind house prices. How do you know it won't continue for ever - or at the worst stagnate ? But crash ? What would be the driver of this ? Sensible answers please, comets, plagues, pestilence and famines are not really sensible answers.

No they are not two different things. A house became same as a share when people decided it could be traded in the same manner.

Did you by any chance read the papers today? 'Boom and Bust 2006'. FFS, get your head out of cuckoo land. The only 'sensible answer' you will be happy with is 'house price go up and up ..."

I sense desperation in your post. What's the matter - mortgaged to the hilt, given dodgy advice to your friends and if it all collapse you will by royally ******ed. Isn't that what happens in a pyramid scam?

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A piece in the DT today reported a study that showing that only one in ten investors could correctly identify the fastest growing asset class at the moment. They should be among the better informed people but they are not particularly knowledgeable. Compared to them people in general have no real idea what is happening in the economy and are highly susceptible to whatever the daily headlines are.

The world economy is witnessing a confrontation between inflationary pressures (caused by loose credit and a growing money supply) and deflationary ones (caused primarily by the shift in manufacturing to the emerging economies). Deflation will win in the end because credit relaxation and money supply inflation are unsustainable, have bad effects and will overwhelm the western economies, especially the US and UK. As the bad news (rising debt, rising bankruptcy, rising reposessions, no cuts in interest rates, credit tightening, rising unemployment, devaluing pound etc) begins to accumulate I think there will be an effect and a gradual shift in sentiment. IMO 2006 will be the year of gathering gloom, 2007 will be crunch time. Housing prices will be sticky but they will go down with the rest. It will be immensely painful. The best place to be is accumulating a deposit or nurturing an STR fund to move in when buying a house makes sense again. In the meantime spend the mortgae cost on renting a nice place, get some exercise and take up meditiation.

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I sense desperation in your post. What's the matter - mortgaged to the hilt, given dodgy advice to your friends and if it all collapse you will by royally ******ed. Isn't that what happens in a pyramid scam?

How can you sense desperation ? You have a fine talent there. I'm not mortgaged to the hilt thanks for asking and I certainly never give out advice to my friends, its simply not the done thing is it ? How do you know I will be royally (whatever expletive you used)ed ? - you assume far too much in your desperate attempts to pigeon-hole people.

Sorry for the delay in replying, but for some unknown reason my points of view seem to be delayed about 30 minutes before being displayed. Maybe my browser's cache isn't working properly - I can't possibly think of any other reason.

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There may be another round of panic buying for the next 6-12 months or so, but a correction is inevitable.

I think not!!.....most folks are struggling to meet payments on the utility bills and mortgage now.this is with oil at $70 per barrel....there are yet more rises in bills to come.

...I think people are FAR too complacent about housing,and shares....I have a feeling a reality check is just around the corner and is going to bite them on the ****!!!

...I've rattled on about iran long enough,but the impact on the oil price has not been fully factored in....if action is taken,oil will be shooting up to $100-150+ per barrel.......that means £1.30 per litre petrol for the average man in the street(who commutes to work!!!)

.....which means roughly an extra £40 per month on petrol....let alone any corresponding rise in gas.

.....money which CAN'T be spent in B+Q.

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The simple fact of the matter is that for prices to remain at the current highs there has to be new money coming into the market.

Usually this money would come mainly from FTB's, and more recently BTL has contributed vast amounts to the property market.

I think with many people seeing their pensions not performing as well as they would like, and general VI media-spin talking up property a lot of money has entered the market from those who are buying a BTL to have INSTEAD of a pension, however I think this money has also tailed off.

So where will the new money come from now? Far fewer BTL's as people realise its nolonger viable with such high prices. Theres still some FTB's, but nowhere near enough because the simply CANNOT buy at current prices.

So where from here?.... IMO the new money into the market will have to come from FTB's - its just that prices will have to fall far enough for them to BE ABLE to buy....

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How can you sense desperation ? You have a fine talent there. I'm not mortgaged to the hilt thanks for asking and I certainly never give out advice to my friends, its simply not the done thing is it ? How do you know I will be royally (whatever expletive you used)ed ? - you assume far too much in your desperate attempts to pigeon-hole people.

What might have given it away was: 'Past indication is not necessarily an indicator of the future' and 'How do you know it won't continue for ever'.

Pigeon hole? :rolleyes: Why thankyou. And desperate as well. Tell me, what do you think happened during the last 'soft landing'?

Why don't you answer the core question I asked in my previous post?

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Having had to justify my stand to my family for 3 years now, that we should sit tight and and not buy until after a hpc, just lately I find myself having some concerns that the correction may not come.

This is all despite having lived through two corrections, and on the strength of this experience sold a flat and banked the cash 3 years ago.

There are several new angles on the old paradigm:

1. The economy, despite being dreadfully talked up by the spin, just does not appear to be at the end of a cycle that will trigger a bust.

2. In the previous bust we were just not so well informed, having to rely on brief journalistic research whether good or bad. Now we have the Internet and everyone can reseach the economy in depth almost immediately. I feel there is an army of informed and educated buyers out there, ready to step in and buy property when they see conditions are right, therefore largely nullifying any effects of a crash.

3. Attitudes have shifted. For example, my feeling is the increased number of bankrupcies just annouced is more to do with an attitude change, rather than an imminent collapse of the economy. There just isn't the stigma attached to bad debt that there used to be 20 years ago. This stigma removed, people will do their research (using the Internet!) and if bankrupcy is the best option for them, they will now take it.

4. House prices are actually being given the option to stabilise. If I'm correct previously house prices peaked and then crashed. This time they appear to have stabilised (which I'm basing on some organisations saying prices have risen a % or two, and others saying they've dropped). Where is the trigger for the crash? It appears the domino effect is missing this time.

5. New entrants to the European Union. Who can blame citizens of the poorer newly added eatern countries making their way to the UK. Regardless, they will need to be housed and this is surely going to have some effect on demand, and therefore price.

My real concern is that this time we cannot rely on the experiences of the past, and to afar greater degree than we've actually admitted.

Any comments?

Very reasoned post!!!

I think the only way to say that HPI will stabilise is if all other factors are stabilised.

Debt is out of control. High street sales are desperate to say the least. Car sales are at their lowest for years. FUELS are at ALL TIME highs. Hardly anyone is saving and even if they do the LOW IR's mean its not growing that fast. Bankruptcy is at an all time high. Unemployment is rising fast. Trade gap is getting wider.

Now tell me that buyers are confident!

Our economy is not strong, but it aint knackered. People will not buy with the future looking so bleak.

Its going to fall BIG TIME, the problem is knowing when. To put it in perspective using history. If you bought TODAY - it will take about 14 years for your house to get back to that price again after a slump. If you dont mind waiting 14 years and have no equity apart from what you have paid off your mortgage then go ahead.

TB

Edited by teddyboy

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If you bought TODAY - its will take about 14 years for your house to get back to that price again after a slump.

Of course that's assuming that wages in the UK will rise significantly over fourteen years when there are few jobs left here which can't be outsourced to China and India or replaced by cheap immigrants.

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Of course that's assuming that wages in the UK will rise significantly over fourteen years when there are few jobs left here which can't be outsourced to China and India or replaced by cheap immigrants.

Yep, 14 years is a long time esp if your only income is through your legit job

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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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