Jump to content
House Price Crash Forum
FollowTheBear

Sentiment Seems To Be Turing On Here Yet Again...

Recommended Posts

A few days ago a bullish poster "who is not down south" began a thread about how many of the regulars on here were losing faith. I get the feeling things have changed back to bearish very quickly, what with the US rate rise and the admissions from the media and VIs that things are not all that well outside their fantasy land.

:D

Share this post


Link to post
Share on other sites

yes, i'm one of the ones who's less bearish.......Previously thought nominal prices would drop 20% as wages rose 20% over say 5 years.....but now I'm predicting stagnation as salaries rise 20%........This is how housing markets correct themselves in the absence of any economic nasties.........

Share this post


Link to post
Share on other sites

yes, i'm one of the ones who's less bearish.......Previously thought nominal prices would drop 20% as wages rose 20% over say 5 years.....but now I'm predicting stagnation as salaries rise 20%........This is how housing markets correct themselves in the absence of any economic nasties.........

Yes, this is my theory too. So what you may well have is a "real" crash but we may not see the falls in nominal prices we hoped for.

Share this post


Link to post
Share on other sites

I would say I am equally bearish, but still certain of where the market is going. Surprised by the recent upturn, but I don't think it will be sustained - it's a suckers rally. It will probably make the coming downturn more sudden when it comes - hopefully later this year with an interest rate increase!

Share this post


Link to post
Share on other sites

many are not as fickle as you suggest

we have reasons for what we believe, and not just wild emotion

Really? I've posted three times in the last week asking for such reasons. No replies at all.

It seems to me those turning away from bearish predictions have one really, really good reason for doing so: prices are not falling as predicted by the bears. Actually they continue to up.

Don't get me wrong. Of course there will eventually be a downward correction. There are lots of general reasons why that must be the case. The real debate is about when.

So, let's hear some specific reasons why these people are wrong:

(i) Oxford housing economists using a multi-factor model of house price change say small increases over the next few years. Why specifically are they wrong?

(ii) Fred Harrison (really an important figure in the housing bear case) says rises for another two years. Why specifically is he wrong?

(iii) Demographic analysis says no crash until 2010. Why specifically is that wrong?

HPC cannot credibly go on predicting a crash this year if this turns out to be wrong month after month. It will eventually discredit the position altogether. So let's try and have some debate about what the realistic time-scales are. This matters. Even a stopped clock gets the time right twice a day - but it's not a good tool for keeping to your appointments.

Share this post


Link to post
Share on other sites

Really? I've posted three times in the last week asking for such reasons. No replies at all.

It seems to me those turning away from bearish predictions have one really, really good reason for doing so: prices are not falling as predicted by the bears. Actually they continue to up.

Don't get me wrong. Of course there will eventually be a downward correction. There are lots of general reasons why that must be the case. The real debate is about when.

So, let's hear some specific reasons why these people are wrong:

(i) Oxford housing economists using a multi-factor model of house price change say small increases over the next few years. Why specifically are they wrong?

(ii) Fred Harrison (really an important figure in the housing bear case) says rises for another two years. Why specifically is he wrong?

(iii) Demographic analysis says no crash until 2010. Why specifically is that wrong?

HPC cannot credibly go on predicting a crash this year if this turns out to be wrong month after month. It will eventually discredit the position altogether. So let's try and have some debate about what the realistic time-scales are. This matters. Even a stopped clock gets the time right twice a day - but it's not a good tool for keeping to your appointments.

I think you miss the point.

HPC is not an organisation.

HPC does not form a single opinion and release it on the world.

HPCers have many differing opinions.

From my point of view, I am getting a bit bored of the technical analysis and the poring over every house price related press release.

I now no longer trust any of the indices (except to a degree the LR figures), so why bother getting in a fret about obviously biased media coverage and obviously tweaked stats??

What I do find interesting still is the financial discussions, and how these could affect the market.

Stop looking for backward indicators of an HPC, start looking at the forward indicators that tell you its coming. No point in seeing it after its happened.

The market may continue to rise for a while yet (in some areas). Its surprised me already that it has got this far... it could easily continue for a while.

But I have a feeling it won't be much longer, my area saw 5% YOY falls according to HaliWide last year. I suspect this year will also see similar falls, maybe even larger falls by year end.

All I know for sure is that I could pay at least 10% less than I would have had to in 2004 for the same house (although I know this is not true of all areas).

Share this post


Link to post
Share on other sites
Guest wrongmove

Stop looking for backward indicators of an HPC, start looking at the forward indicators that tell you its coming. No point in seeing it after its happened.

What forward indicators are these non-FTBer ? Serious question.

The only forward indicator I know of is mortgage approvals. They are strong and indicating quite sharp rises over the next few months.

I guess IR futures could be considered a forward indicator, but the yield ciurve is flat to inverted - no joy for bears there, either.

Share this post


Link to post
Share on other sites

Well I listened to all the hype on here and we duly put our place up for sale at a realistic asling price (10% over last price 2 years ago). Swamped with offers above asking so we took it off and put it on again higher. Guess what, swamped again and have now accepted an offer and there are still people trying to gazump.

However, the downside is that the place we are trying to buy is on at 20% over last price paid 6 months ago and we have offered 95% of asking and been told where to go.

Plus 2 friends who had their places on for a year (way too high IMO) have both just sold.

Sad but true the HPC has been delayed or cancelled.

Edited by Given Up

Share this post


Link to post
Share on other sites
Guest consa

Well I listened to all the hype on here and we duly put our place up for sale at a realistic asling price (10% over last price 2 years ago). Swamped with offers above asking so we took it off and put it on again higher. Guess what, swamped again and have now accepted an offer and there are still people trying to gazump.

However, the downside is that the place we are trying to buy is on at 20% over last price paid 6 months ago and we have offered 95% of asking and been told where to go.

Plus 2 friends who had their places on for a year (way too high IMO) have both just sold.

Sad but true the HPC has been delayed or cancelled.

This just goes to show that there is a lot more fools getting sucked into the bubble, suckers.

Share this post


Link to post
Share on other sites

That's the thing at the moment - very conflicting stories from all over the country, pick the ones that agree with your line of thought and everyone's happy! :)

Share this post


Link to post
Share on other sites

If people had just taken the time to listen to me, back when I was much more active on the forum, they would have bought when the market was much softer.

Instead they'll panic now, pay over the odds & take much longer for the market to catch up with them. Others will simply continue to be priced out.

Share this post


Link to post
Share on other sites

So, let's hear some specific reasons why these people are wrong:

(i) Oxford housing economists using a multi-factor model of house price change say small increases over the next few years. Why specifically are they wrong?

(ii) Fred Harrison (really an important figure in the housing bear case) says rises for another two years. Why specifically is he wrong?

(iii) Demographic analysis says no crash until 2010. Why specifically is that wrong?

In response to your above points.

1. Cameron, Muellbauer & Murphy's paper does claim that there is no evidence for a bubble. There are other studies that suggest the opposite. I have a couple of specific problems with their model, namely it relies upon the effect of nominal interest rates & ignores any comparison between house prices and rents.

2. Who is Fred Harrison? Why does he say rises for another 2 years.

3. What demographic analysis? Why does it say no crash and what about all other factors?

As I've said before, if you want to understand the scale of the bubble just compare rents to house prices. Today you can rent a house for less than 5% of its cost, that's less than the typical mortgage rate and ignores all other costs. In a healthy market the bare minimum for that figure should be 8%

Share this post


Link to post
Share on other sites

However, the downside is that the place we are trying to buy is on at 20% over last price paid 6 months ago and we have offered 95% of asking and been told where to go.

Yep that's the reality of media out put the likes of " And there's more good news, house prices are rising again" How an educated population cannot see through this debt enslavement by the banks in collusion with political parties bankrolled by property tycoons and the like, is beyond me.

Edited by Catch22

Share this post


Link to post
Share on other sites

Specifically, the reasons why I think there'll be a crash - by which I mean nominal falls of say 10% p.a. over a couple of years - are as follows:-

1. Although low interest rates mean that the cost of repaying debt is not particularly high at present, they also mean that the amount of debt is not eroded by wage inflation as previously. This means that for the forseeable future the buoyant housing market will remain susceptible to an economic downturn and/or higher rates. The "soft landing" case makes the assumption that there will be no economic downturn or higher rates in the next decade or so. This is a very rash assumption.

2. The Oxford report - which I've looked at but haven't read - is the produce of a gaggle of chart-nerds who previously told us there'd be the mother of all crashes and are now telling us there won't be. Specifically, you can't put sentiment on a chart. A rising property market sucks in capital and thus carries on rising; everyone thinks that property is the place to be. Once a market is perceived to be falling, sentiment turns. If sentiment ever turns in our property market you will see money leaking from it like a seive, and no amount of statistical analysis can predict where it will end up. As for this man Harrison, a man who tells you there's a crash every 18 years is about as worthy of credit as the man who tells you a major pop revolution takes place every 13. And besides, he has a book to sell.

Are there any signs of an economic downturn? You bet. Consumer debt is at a record high, and spending seems to be tailing off. The Government has a large budget deficit and its recent spending splurge is coming to an end. Because of inflationary fuel price increases and the rise of dollar rates the Bank of England finds itself on a narrowing ledge as far as monetary policy is concerned. IMO it won't go pear shaped any time soon; but the good times are slowly coming to an end.

Share this post


Link to post
Share on other sites

Take it easy people. The proof will be in the pudding. Do what you think is right.

I don't think sentiment is turning that much at all. Just a few people trying to sell the old "born again bull" sentiment.

It would be good if posters to the forums could not presume to speak for all of us.

Share this post


Link to post
Share on other sites

If people had just taken the time to listen to me, back when I was much more active on the forum, they would have bought when the market was much softer.

Instead they'll panic now, pay over the odds & take much longer for the market to catch up with them. Others will simply continue to be priced out.

I've got to the stage now where I'm not bothered I can't afford a flat / house anyway so why worry. 2 ways from here really anyone on under £40,000 single or £70,000 joint income can't afford a house, this is probably 70% of each new generation so eventually either only 30% will own their house or there will be a crash.

Of course their will be a chavisation of the populas as they get the free housing and can afford to breed where as the middle classes can't. But eventually people will riot vote in a government prepared to do something.

Share this post


Link to post
Share on other sites

yes, i'm one of the ones who's less bearish.......Previously thought nominal prices would drop 20% as wages rose 20% over say 5 years.....but now I'm predicting stagnation as salaries rise 20%........This is how housing markets correct themselves in the absence of any economic nasties.........

Will salaries continue to rise as they have in the past? Maybe not:

The outlook for trade salaries isn't rosy:

- e.g. I was talking to a builder's foreman this morning who told me that carpenters' daily rates have dropped by 1/4 in the past year, due to Polish immigrant labour. With the freeing up of services in the EU, trade wages will surely trend towards the continental average (i.e. downwards for the UK)

White collar workers aren't safe:

- e.g. As mentioned in a previous post, an accountant friend of mine is off to India soon to train 20 young indians to replace both him and his coworkers.

- e.g. Outsourcing's next target appears to be TV workers. Please see: http://*******.com/nkgru (undercutting western workers by 80%!!!)

Internet technology & Globalisation is causing an unprecedented economic shift towards the theoretical Perfectly Competitive Market for goods: http://en.wikipedia.org/wiki/Perfect_competition - Comparison shopping engines such as froogle.google.com are the final nail in the coffin of middleman & shopkeepers who trade standardised goods. Bye bye margins.

Consumption fuelled by HPI is the only thing that the UK economy had going for it. Now this equity fuelled boom has ended, a combination of European liberalisation, globalisation and internet technology means that there are seriously tight times ahead for UK plc. Combine this with (the apparently approaching) recession, and it's very easy to imagine bosses telling employees "Sorry there's no pay rise this year, be thankful you still have a job"

Share this post


Link to post
Share on other sites

Don't get me wrong. Of course there will eventually be a downward correction. There are lots of general reasons why that must be the case. The real debate is about when.

There has already been a downward correction in my corner of the SE. I'd be delighted to see another one.

(iii) Demographic analysis says no crash until 2010. Why specifically is that wrong?

What analysis?! Should I put this in my diary? I think a lot of this must be down to what constitutes a crash. If you're expecting overnight falls of 70% then no, there hasn't been a crash, and probably won't be, but what some here seem to forget is that not one of us knows exactly what the future holds.

Share this post


Link to post
Share on other sites

Apparently, it’s possible to chart HPI using a home made array of 1024 pairs of uncorrelated Tupperware containers, obviously with one set containing coffee grounds and the other tea leaves to give an impression of fairness and avoidance of bias (sceptics might say for cherry picking), and aggregating the statistical evidence of a crash in to a weekly time series. Unfortunately, the cost of hiring a full-time professional medium is rather prohibitive, so usually a neural-network image recognition thingy is used and trained against the Nationwide figures. All very convincing, although traditionalists often claim that Birch and Hazel twigs are much more reliable. ;)

Once investors realise that a machine like this could be very valuable – the price of historic pictures of coffee cups, and possibly old CCTV footage of busy coffee shops, could go through the roof. Hmm, better start buying now. :)

Edited by spline

Share this post


Link to post
Share on other sites

I think you miss the point.

HPC is not an organisation.

HPC does not form a single opinion and release it on the world.

HPCers have many differing opinions.

From my point of view, I am getting a bit bored of the technical analysis and the poring over every house price related press release.

I now no longer trust any of the indices (except to a degree the LR figures), so why bother getting in a fret about obviously biased media coverage and obviously tweaked stats??

What I do find interesting still is the financial discussions, and how these could affect the market.

Stop looking for backward indicators of an HPC, start looking at the forward indicators that tell you its coming. No point in seeing it after its happened.

The market may continue to rise for a while yet (in some areas). Its surprised me already that it has got this far... it could easily continue for a while.

But I have a feeling it won't be much longer, my area saw 5% YOY falls according to HaliWide last year. I suspect this year will also see similar falls, maybe even larger falls by year end.

All I know for sure is that I could pay at least 10% less than I would have had to in 2004 for the same house (although I know this is not true of all areas).

HPC not a unified opinion - yeah I know.

Stop looking at backward indices? I don't think so. Without them how could we know anything about the behaviour of the housing market? We couldn't say, for example, that prices crashed in 89-96 or that prices are cyclical. Nor could you have many of those interesting financial discussions and how they might affect the market because they usually involve looking back at earlier examples. Sounds like a fancy way of saying you don't want to test your view against the unfolding picture.

Look at forward indices? Definitely. But they don't as far as I can see give support to the idea of a crash this year. You never know though.

And to be clear, I'm not saying there won't be price correction or that I'm about to rush out and buy a house. I'm raising questions about timing and pointing out that from a bear point of view late 2005 and early 2006 have not been very encouraging.

Share this post


Link to post
Share on other sites

In response to your above points.

1. Cameron, Muellbauer & Murphy's paper does claim that there is no evidence for a bubble. There are other studies that suggest the opposite. I have a couple of specific problems with their model, namely it relies upon the effect of nominal interest rates & ignores any comparison between house prices and rents.

2. Who is Fred Harrison? Why does he say rises for another 2 years.

3. What demographic analysis? Why does it say no crash and what about all other factors?

As I've said before, if you want to understand the scale of the bubble just compare rents to house prices. Today you can rent a house for less than 5% of its cost, that's less than the typical mortgage rate and ignores all other costs. In a healthy market the bare minimum for that figure should be 8%

Thanks for this. Could you say why you think their arguments about nominal vs real interest rates, and rents vs prices are wrong? They do look at these points and argue that the rent argument is misleading and that empirically nominal rates have proved to be a better predictor in the looser credit climate since 1980.

Fred Harrison is a land economist and housing analyst. One of his books, predicting a crash, is featured on the HPC website. He was interviewed in the Telegraph yesterday, arguing that we are entering the final phase of the boom, which he calls "the winners curse", and that it will last two more years.

One of the thread contains a link to a paper making an international analysis of the relationship between demographic patterns, specifically the boomer generation, to house prices. It argues that this is a big underlying independent variable - as do the Oxford lot. US and UK patterns differ in the timing of the crash that the demographics suggest is coming. For the UK it starts in 2010. I'll post a link if I can find it.

Share this post


Link to post
Share on other sites

Have FTBer numbers picked up from their low of 7% yet? I've never recevied an answer as to how a chain can be sustained with no FTBer. And (as all the bulls tell us) BTLers only make up a small percentage so who the hell is buying right now?

A bit of a mixed bag of responses. For me, I'm more satisfied of the forthcoming crash than I have been since I sold to rent this time last year.

Edited by FollowTheBear

Share this post


Link to post
Share on other sites
Guest wrongmove

Have FTBer numbers picked up from their low of 7% yet? I've never recevied an answer as to how a chain can be sustained with no FTBer. And (as all the bulls tell us) BTLers only make up a small percentage so who the hell is buying right now?

The 7% figure is from RICs, IIRC. I think RICs figure has risen to 9% now. RICs is by far the lowest of all the estimates. I've seen figures as high as 28% from other organisations. It's probably better to base your predictions on the median figure, rather than the most extreme one, IMHO.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.