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...there is a blip where prices fell slightly but went up slightly. This has not happened before. Please debunk the significance of this before I get worried that it is different this time!

Yep I'd noticed that too. All other peaks went straight down and continued for some time. This time it went down and up. I'm thinking this is due to the extensive marketing and spin going on.

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Yep I'd noticed that too. All other peaks went straight down and continued for some time. This time it went down and up. I'm thinking this is due to the extensive marketing and spin going on.

I think it's down to relatively benign economic conditions (unemployment may be up, but only compared to historic lows, etc). As long as this continues then house prices may remain firm.

There are storm clouds on the horizon though. Next few months should be telling...

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Maybe the teensy weensy little drop WAS the crash and now we are off on the next upturn??

Ohh ye.. They’ll keep going up, everything is in place.

World interest rates = rising

Unemployment = rising

Consumer debt = rising

Fuel bills = rising

Bankruptcies = rising

Repossessions = rising

And don’t forget houses are now only 6.5x more than the average salary – as apposed to 4.5x before the last crash.

Yeeee boom time.

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Guest

Government interference (SIPPs) until 3 months ago. Was a major expectation at the very least.

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There was a detailed thread on this a couple months back. It was attributed to a characteristic of a market that is about to suffer a severe fall. I think the gist of it was that the market falls as professional speculators realise the top of the market has been reached, pull out and prices fall causing the first trough. Amateurs then rush in (the amateur BTL crowd) to take their place, there is a boom again as everyone thinks the market is recovering and causes the second peak and then the whole thing freefalls.

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Apparently there has been a lot of speculative buying going on (like stocks and shares).

A theory put forward in a couple of threads is that this might be a "double-top".

The punters are testing a failing market and is usually followed by a fall.

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...there is a blip where prices fell slightly but went up slightly. This has not happened before. Please debunk the significance of this before I get worried that it is different this time!

Not sure if you are referring to the graph that was on the home page. But it could be forming a head and shoulder pattern - used in technical analysis to identify classic reversal patterns. If interested here is description:

http://www.incademy.com/courses/Technical-...s/10/1032/10002

Is it different this time, yes, I think speculation is far greater with far higher volumes of cash sloshing around. I think from a psychological point of view people have lost touch with reality and value. You have to wait for this to play out, but I would not be surprised to see the market recovering slightly and forming the right shoulder as above. If it does then it gets very interesting.

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Things very rarely ever happen exactly the same way twice, if they did predicting them would be easy.

Consider the different shapes of the '79 and '89 peaks...

Don't get too hung up on the details, all you need to believe is that the current prices are unsustainable in order to see where they will go in the future. If you think they are sustainable well... go buy yourself 20 BTL's right now and brag to all your pals about being a millionaire.

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Not sure if you are referring to the graph that was on the home page. But it could be forming a head and shoulder pattern - used in technical analysis to identify classic reversal patterns. If interested here is description:

http://www.incademy.com/courses/Technical-...s/10/1032/10002

Is it different this time, yes, I think speculation is far greater with far higher volumes of cash sloshing around. I think from a psychological point of view people have lost touch with reality and value. You have to wait for this to play out, but I would not be surprised to see the market recovering slightly and forming the right shoulder as above. If it does then it gets very interesting.

There's also the possibility of a 'double top'

http://www.incademy.com/courses/Technical-...p/12/1032/10002

More difficult to predict but, according to the above, high volumes on the first top and lower ones on the second suggest a real double top. Isn't that what we have with UK house prices? If genuine, it also precedes a sharp fall.

I agree with your comments about the psychology. They have been underpinned by continuing loose and easy credit. But how much longer will that last?

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All of what you say would be true, if ... we were in a bubble, but we are not. A bubble is characterised by the fact that it is not underpinned by any kind of fundamentals.

The fact is that todays house prices are underpinned by the fact that prices are affordable as a function of take home pay. Its at the top end of affordable which would suggest that we can't have run away boom time, but they are affordable none the less.

This means that you will need to see significant rises in IRs to get your crash - these are not on the horizon.

So, this time it is different, prices are where they are for a reason, and they are staying there for a reason - go figure it out.

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Yep I'd noticed that too. All other peaks went straight down and continued for some time. This time it went down and up. I'm thinking this is due to the extensive marketing and spin going on.

I think the basics of whether people can afford houses will have a lot more effect on what will happen in the property market than the shape of the curve.

Have a look at the curve for the dotcom bubble. It goes up, crashes noticably, recovers, goes up and down a bit, then starts the crash property, punctuated with suckers rallies all the way down.

http://en.wikipedia.org/wiki/Dot-com

The press reports describe the price rises as "London led". Who is buying in London and why? If this is the effect of bonus money finding a home, literally? Certainly in many parts of the country prices are stable or falling, so there's no consistent move in prices.

What happened in Scotland?

Billy Shears

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With all this talk of "double-tops" and "head-and-shoulders tops" people seem to be forgetting something.

These are descriptions of price patterns that can only be observed after the top in question has already occurred.

Describing something after it has happened is quite different from explaining it, and very different from predicting it.

Edited by bob2

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Guest Fiddlesticks

Last time we had a discussion of that graph I seem to recall someone who understood it better than me pointing out that it should be on a logarithmic scale.

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Log scale? Depends on what you want to show.

If you're into making money off of things, a log scale is useful because £100 -> £200 is a 100% increase (doubling your money) whereas £200 -> £300 is only a 50% increase. If you buy in at £200, you'll need to see £400 to have doubled your money.

The log scale would have the same vertical distance between 100 and 200 as 200 and 400.

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All of what you say would be true, if ... we were in a bubble, but we are not. A bubble is characterised by the fact that it is not underpinned by any kind of fundamentals.

The fact is that todays house prices are underpinned by the fact that prices are affordable as a function of take home pay. Its at the top end of affordable which would suggest that we can't have run away boom time, but they are affordable none the less.

This means that you will need to see significant rises in IRs to get your crash - these are not on the horizon.

So, this time it is different, prices are where they are for a reason, and they are staying there for a reason - go figure it out.

IMupNorth -- do you think sentiment / speculative factors are playing a role?

frugalista

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theres an interesting thread a few days ago about the speculation over classic cars and how some ferrairs reached £400K.

In the end there was no end user. Only speculators.

Today quite possibly there are no end users to many new build apartments. BTL landlords cannot find tennants to cover the mortagage. We are in this situation now, and there will be professionals landlords who have sold, and only amatuear speculators (with less buying ability) coming in causing the second upswing.

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...there is a blip where prices fell slightly but went up slightly. This has not happened before. Please debunk the significance of this before I get worried that it is different this time!

To my untrained eye, the double top or twin peaks, indicate a major change in the

way HPI was measured (unannounced by the VI’s although part of their disclaimer)

It also shows the point at which the economy has gone tits up!

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IMupNorth -- do you think sentiment / speculative factors are playing a role?

frugalista

Yes, but a small role, when BTL only accounts for 8% of lending, then it will have an effect but only a small one compared to the other 92%. Whether you call BTL 'speculative' though is open to debate. People after all are trying to invest probably for the longer term, by getting somebody else to buy a house for them, which they anticipate will be worth something in 25 years time.

No doubt there may be some BTL investing for the short term, but they are fools as it doesn't stack up unless you've got rampant house price inflation, which we haven't had for the last 2 years.

As for sentiment, well sentiment is still positive and it won't change until IRs go up to 5.5% and starts giving people real financial pain. Sentiment has been bolstered by all the property programmes - i.e. you're sexy and cool if you are moving house, or doing one up, or just even redecorating.

Immigration will also have played a part, as people have to live somewhere, whether they are poor or not - I couldn't guess a % to immigration though, but I think it is probably small.

By far the biggest factor in all this, which I think counts for 90% of the price rises, and thats low IRs. When they start rising, and rising properly then wake me up cos until then I might as well go to sleep until they do. Well apart from the need to spread realism on here, so as to stop all the false building of hopes on every piece of news that is issued.

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Yes, but a small role, when BTL only accounts for 8% of lending, then it will have an effect but only a small one compared to the other 92%. Whether you call BTL 'speculative' though is open to debate. People after all are trying to invest probably for the longer term, by getting somebody else to buy a house for them, which they anticipate will be worth something in 25 years time.

No doubt there may be some BTL investing for the short term, but they are fools as it doesn't stack up unless you've got rampant house price inflation, which we haven't had for the last 2 years.

As for sentiment, well sentiment is still positive and it won't change until IRs go up to 5.5% and starts giving people real financial pain. Sentiment has been bolstered by all the property programmes - i.e. you're sexy and cool if you are moving house, or doing one up, or just even redecorating.

A point I've tried to make before on the forum is that "speculation = BTL" is too narrow a definition of "speculation". This was my post.

If I say "property speculation" many people probably think of get-rich-quick types buying BTL flats to "flip" for a quick killing.

However, property speculation is really defined as follows:

buying or holding property based on the belief that the capital value will increase

If you think carefully about this, you realise that it encompasses far more than just amateur developer types. For example:

  1. FTBs panicked into buying in order to "get on the ladder"

  2. Owner occupiers moving, but keeping their previous property as an "investment"

  3. People at or near retirement age continuing to hold more property than they need

The anecdotal evidence on this forum seems to be that the above trends are at an all time high. This is property speculation. Remember, home ownership demand has two components:

home ownership demand = housing demand + speculative demand

When price rises fail to materialise, the speculative trends will fall away. When it becomes known that house price inflation has stopped, FTBs will not feel panicked, owner occupiers will not want to hang on to their previous property, retirees will want to downsize. Then the speculative demand component of home ownership demand will evaporate and the price will fall.

This was the thread

http://www.housepricecrash.co.uk/forum/ind...topic=25404&hl=

unfortunately the thread didn't really get its teeth into the issue I was interested in.

Given this broader definition of "speculation", do you think speculation is playing a significant role in property prices?

frugalista

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I don't think most FTBs are panicked into buying, I think for most of them it comes with the 'time is right' associated with settling down with girlfriend, and if I'm honest I think most of the pressure comes from the lady to do this.

I don't think most FTBs have any consciousness that prices might fall - they just afford it if they can and get on with it. They have no concept of 'if we wait 6 months prices will go down'.

If owners move but keep their old house, I suppose this is a kind of speculation but for most, they would see it as a long term investment rather than outright speculation. Perhaps some have done this over the past few years, but I honestly don't know of many. Although for me the thought of handing over 40% of any gain in CGT as it was no longer my PPR would piss me off. Much better to invest in the house you are living in !

As for people at retirement hanging onto their house - well I intend to do the same as its my home. I won't want to downsize until I'm b@ggered and have to move to a bungalow. So I don't really see this one as speculation.

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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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