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Flat House Prices For 20 Years

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It may stagnate for a while. People will hope it will recover, when its clear it won't sentiment will change dramtically in my opinion and then down we go.

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It may stagnate for a while. People will hope it will recover, when its clear it won't sentiment will change dramtically in my opinion and then down we go.

If you had your crash in prices tonight, across the board, all property down by 20% then what do you think would happen?

I reckon it would be mayhem as everyone stampeded for the EA office this weekend.

What does mayhem bring?

Rising prices...

They'd go straight back up. (might take a few months but they would go back up)

What's that you said about sentiment?

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If you had your crash in prices tonight, across the board, all property down by 20% then what do you think would happen?

I reckon it would be mayhem as everyone stampeded for the EA office this weekend.

What does mayhem bring?

Rising prices...

They'd go straight back up. (might take a few months but they would go back up)

What's that you said about sentiment?

Right WaP, can you give us an example of a housing market that's ever done that?

Because we can give you lots of examples of housing markets that have crashed, and stayed in the doldrums for ages...

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Even if prices ''only'' mirror income growth then buying is a must as a medium to long term option....

In the short run (5years) prices won't go up though......Stagnation is the most likely.....

You see, if you buy ,you lock into today's prices and pay 5.5%pa of today's price ad infinitum to the lender The renter meanwhile will see his rent go up more or less in line with earnings.............

and will after a few years be paying more than the buyer whose payments are fixed........the buyer will also make a capital gain more or less in proportion to the growth in incomes....

This is why we should all buy in the next 7 or 8 years.......If there hasn't been a crash by then there never will be as incomes will be higher than now.....

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Even if prices ''only'' mirror income growth then buying is a must as a medium to long term option....

In the short run (5years) prices won't go up though......Stagnation is the most likely.....

You see, if you buy ,you lock into today's prices and pay 5.5%pa of today's price ad infinitum to the lender The renter meanwhile will see his rent go up more or less in line with earnings.............

and will after a few years be paying more than the buyer whose payments are fixed........the buyer will also make a capital gain more or less in proportion to the growth in incomes....

This is why we should all buy in the next 7 or 8 years.......If there hasn't been a crash by then there never will be as incomes will be higher than now.....

Or invest in productive assets that yield a much better return.

HPC mantra #3: Housing is not the only investment.

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Right WaP, can you give us an example of a housing market that's ever done that?

Because we can give you lots of examples of housing markets that have crashed, and stayed in the doldrums for ages...

You misread my post. Bad wording on my part. I'm referring to prices being 'magically' reduced from today's price to where the bears think they 'should' be.

The point aimed at OM is, that prices would go straight back up to roughly where they are now.

So why will 'sentiment' make them suddenly fall from today's price instead of stagnating?

It will take a big hike in rates to trigger a crash that has large nominal falls.

It could happen, but I don't see it somehow...

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If you had your crash in prices tonight, across the board, all property down by 20% then what do you think would happen?

I reckon it would be mayhem as everyone stampeded for the EA office this weekend.

What does mayhem bring?

Rising prices...

They'd go straight back up. (might take a few months but they would go back up)

What's that you said about sentiment?

Not so.

A rpice drop would bring more buyers into the market true.

It would also cause sellers to withdraw because they cant get prices that they been primed to expect.

Thus availability falls and prices rise, which cause sellers to sell, volumes to increase and prices to fall again.

But of course, there are declining numbers wishing to buy (population growth) and huge increases in houses to sell (new builds etc..). Someone, somewhere along the line has to swallow this imbalance.

Its a classic stalemate. This is what we see at the moment.

Buyers refusing to buy, sellers refusing to sell. Nobody wants to be left holdnig the baby.

Soon though, the speculative money will withdraw (no profits in stalemate) and prices will drift down to meet the OO market budgets - substantially lower than where they are now.

Anyone with half a brain realises that the current pressures on the consumer will reduce funds available to spend servicing mortgages.

So there it is then, more credit has to be extended on very favourable terms to an already hugely indebted population to make property purchases feasible....or house prices have to drift down to avoid a crash.

So Without a Paddle - do you advocate extended borrowing to reduce debts? Or would you prefer a HPC to bring the credit/property markets back to equilibrium?

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It could happen, but I don't see it somehow...

Of course you don't see it, that's part of the psychology of bubbles. You get used to the higher prices and they become a new benchmark. All around you people, the media, think it's a great investment. There are fortunes riding on it. How could everyone be so terribly wrong.

The human heart produces terrible investment strategies. Only the numbers tell the truth.

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Not so.

A rpice drop would bring more buyers into the market true.

It would also cause sellers to withdraw because they cant get prices that they been primed to expect.

Thus availability falls and prices rise, which cause sellers to sell, volumes to increase and prices to fall again.

But of course, there are declining numbers wishing to buy (population growth) and huge increases in houses to sell (new builds etc..). Someone, somewhere along the line has to swallow this imbalance.

Its a classic stalemate. This is what we see at the moment.

Buyers refusing to buy, sellers refusing to sell. Nobody wants to be left holdnig the baby.

Soon though, the speculative money will withdraw (no profits in stalemate) and prices will drift down to meet the OO market budgets - substantially lower than where they are now.

Anyone with half a brain realises that the current pressures on the consumer will reduce funds available to spend servicing mortgages.

So there it is then, more credit has to be extended on very favourable terms to an already hugely indebted population to make property purchases feasible....or house prices have to drift down to avoid a crash.

So Without a Paddle - do you advocate extended borrowing to reduce debts? Or would you prefer a HPC to bring the credit/property markets back to equilibrium?

I can see there are different ways of interpreting what I meant by the overnight correction.

Would I prefer a HPC? From a selfish point of view it would be fabulous for me.

From a realistic point of view I don't see it happening. You should ask Gordon Brown the question not me.

Dear GB.

Would you prefer to fight the next election (where you wish to be Prime Minister) on the back of a HPC or would you rather prop up the economy with a bit more govt borrowing and public spending whilst giving CPI targets to the BOE that keep IRs low and the electorate happy?

It's a tough one for him....

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This corresponds somewhat with a calculation that DrBubb made which was house prices not being back to 3.5x earnings until 2019.

Let's assume that this hypothesis is correct though. Does it make sense to buy now at very low interest rates - or rent and buy 5 years from now at higher interest rates ?

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This corresponds somewhat with a calculation that DrBubb made which was house prices not being back to 3.5x earnings until 2019.

Let's assume that this hypothesis is correct though. Does it make sense to buy now at very low interest rates - or rent and buy 5 years from now at higher interest rates ?

That's one helluva question.

If you've got the cash reserves, you gotta get off your ass and get investing in some stuff over this time period.

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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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