Jump to content
House Price Crash Forum
kingofnowhere

Property Market Set To Slump

Recommended Posts

http://physicsweb.org/articles/news/10/5/17/1

Property market set to slump

31 May 2006

It's a question that plays on the minds of millions of people around the world: when is the current rise in house prices finally going to cease? According to new calculations by a theoretical physicist in France, the answer is "soon". Based on an a analysis of historical house prices on the West Coast of the US, Bertrand Roehner of the University of Paris VII has concluded that prices have reached record levels and could soon be heading for a slump. And although the data come from just one region, property prices in many other developed countries may follow the same pattern (physics/0605133).

............

However, Roehner also stresses the limits of his and other such models: "Consider the London housing market," he says. "A year ago everybody (including myself) was convinced that the turning point had been reached and that prices would decline. In fact, over the last 12 months real estate prices in London have increased by 8%. What happened? As explained in a recent article published in the Economist, Gordon Brown [uK Chancellor of the Exchequer] has offered a governmental guarantee to banks and other lending institutions and devoted about $2 billion in subsidies to encourage buyers. Naturally, no model can take such events into account in advance."

Share this post


Link to post
Share on other sites

http://physicsweb.org/articles/news/10/5/17/1

Property market set to slump

31 May 2006

It's a question that plays on the minds of millions of people around the world: when is the current rise in house prices finally going to cease? According to new calculations by a theoretical physicist in France, the answer is "soon". Based on an a analysis of historical house prices on the West Coast of the US, Bertrand Roehner of the University of Paris VII has concluded that prices have reached record levels and could soon be heading for a slump. And although the data come from just one region, property prices in many other developed countries may follow the same pattern (physics/0605133).

............

However, Roehner also stresses the limits of his and other such models: "Consider the London housing market," he says. "A year ago everybody (including myself) was convinced that the turning point had been reached and that prices would decline. In fact, over the last 12 months real estate prices in London have increased by 8%. What happened? As explained in a recent article published in the Economist, Gordon Brown [uK Chancellor of the Exchequer] has offered a governmental guarantee to banks and other lending institutions and devoted about $2 billion in subsidies to encourage buyers. Naturally, no model can take such events into account in advance."

Hi KoN. Do you have link to that Economist article?

Edited by New Bear

Share this post


Link to post
Share on other sites

http://physicsweb.org/articles/news/10/5/17/1

What happened? As explained in a recent article published in the Economist, Gordon Brown [uK Chancellor of the Exchequer] has offered a governmental guarantee to banks and other lending institutions and devoted about $2 billion in subsidies to encourage buyers. Naturally, no model can take such events into account in advance."

WTF is that on about? Who exactly is GB subsidising and why?

Is he thick or something? - the whole thing is unsustainable and it is taking homeownership away from thousands who just 10 years ago might have had a chance.

Share this post


Link to post
Share on other sites

Nobody knows what's going to happen - IMO this is an profile raising exersize

Edited by dnd

Share this post


Link to post
Share on other sites
Property market set to slump
31 May 2006
It's a question that plays on the minds of millions of people around the world: when is the current rise in house prices finally going to cease? According to new calculations by a theoretical physicist in France, the answer is "soon". Based on an a analysis of historical house prices on the West Coast of the US, Bertrand Roehner of the University of Paris VII has concluded that prices have reached record levels and could soon be heading for a slump. And although the data come from just one region, property prices in many other developed countries may follow the same pattern (physics/0605133
).

The article refers to California as being the bellweather for the rest of the world's bubble markets as other markets have tended to follow the Pacific Coast State during the last several crashes over 40 years. IMO, the UK market mirrors CA very closely and the Great Crash lasted over the same time period and saw similar levels of correction. The Great Crash saw the UK lag CA by about 6 months and the same appears to be happening again as we enter the next crash.

In CA 86% of loans taken out since 2004 have been "creative" non-fixed and IO (broadly similar to the UK). When the market breaks out to the downside it should plummett nicely. CA has had 124% inflation since 1996 (the last year of the Great Crash) much the same as the UK.

Share this post


Link to post
Share on other sites
As explained in a recent article published in the Economist, Gordon Brown [uK Chancellor of the Exchequer] has offered a governmental guarantee to banks and other lending institutions and devoted about $2 billion in subsidies to encourage buyers. Naturally, no model can take such events into account in advance."

This wanton manipulation of the market has resulted in precisely the opposite of the intention and has pushed prices still further beyond the reach of FTBs. The 'Law of unintended consequences' surely?

Share this post


Link to post
Share on other sites

This wanton manipulation of the market has resulted in precisely the opposite of the intention and has pushed prices still further beyond the reach of FTBs. The 'Law of unintended consequences' surely?

I like this quote from the last paragraph:

But then perhaps the welfare of first-time buyers is not the government's only concern: maybe behind the hype for this scheme lies a desire to prop up the housing market, for fear of what may happen to the whole economy if it crashes.

Share this post


Link to post
Share on other sites

SO the reason it hasn't crashed is that you need a degreee in physics to work out that it will. :D

I like your logic. :) So the current strike by university lecturers is a deliberate attempt by the government to stop them marking exams and awarding physics degrees which might otherwise cause the housing market to crash. Cunning. :blink:

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.