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Robbrent

Some Random Thoughts

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Random Thought No 1: I have been popping in and out of this forum as a guest and a member for quite some time now, I understand the frustration felt by many of the members that we have not seen a full blown crash yet, it’s pretty hard to figure out. But as sure as night follows day it will happen, why? Because it always has done, and always will do, those who say “it is different this time” have failed to read their history books.

Random Thought No 2: I was talking to a guy today at work who told me he had made 12K on a house over the last year; I asked him if he was able to get his hands on the money right now? Tried to explain about the global carry trade and forthcoming interest rate rises etc, he just looked blank, I would not describe him as a bull, as most bulls I know can at least give a reasoned argument (however wrong) but people of this type are convinced that wealth built from housing assets is real tangible wealth it is nothing of the sort.

Random Thought No 3: It’s been so long since we had a housing asset crash that most people (bears included) forget what it is actually like, it’s not nice and it’s not pleasant, as a goodly proportion of wealth in this country is tied to the value of property, it follows to reason that when property prices collapse they tend to take a good proportion of the economy down with them as well. The result is more unemployment, more insecurity for those in jobs, repossessions, endless sob stories on the telly night after night about people who got to deep for their own good and expect everyone else to chip in to help them out, as if!

Random Thought No 4: Don’t just blame the current government, they were in place at the right time in history to reap the global whirlwind of “easy money” anyone who thinks the Tories would have done much different is living in cloud cuckoo land, one is busy spending money on it’s own vested interests, the other is giving money to people who don’t really need it, the effects are broadly similar, they are both at the mercy of worldwide events and things beyond their control, anyone here remember the Lawson boom? Also remember that the Tories kick-started this kind of thing many years ago, I say a plague on both your houses!

Random Thought No 5: The bigger the bubble the bigger the burst, unless I am reading the wrong information the economic fundamentals have not changed so much in this country as to warrant such high prices, sure employment has been steady over the last couple of years, but much of this has been of the back of huge public spending, which is now being trimmed far more brutally than you could ever imagine, the cull of middle management and made up jobs in the NHS is only the start, many Local Authorities are making jobs cuts. Don’t be fooled if you work in a sector and you don’t think public spending effects you, it has pretty far reaching consequences.

Random Thought No 6: I expect a few months of market stagnation, some falls and may be even a few rises, also expect lot’s of ramping like this from Yorkshire

Property prices across West Yorkshire are forecast to rise significantly over the next five years.

the average cost of a home in the area is predicted to increase overall by 8.9 per cent by 2010.

And the view is generally supported by estate agents in Keighley.

continued...

Linda Sheard, at the Solicitors Property Shop, in North Street, said prices could rise still more.

She said: "I'm sure they will rise by 11 per cent in the next five years, the 8.9 per cent figure seems quite conservative. We are seeing a rise in the older character properties and I don't think the figures are far out of line at all."

Grant Williams, from Whitegates, in Keighley, said: "The report is quite conservative there's nothing radical in terms of the figures. Everything rises with inflation and these figures are realistic."

Detailed research carried out by the Your Mortgage consumer magazine predicts that property prices in certain parts of West Yorkshire could rise by over 11 per cent over the next five years.

For example, Kirklees will see a substantial growth rate of 11.2 per cent by 2010.

Calderdale could rise by 8.5 per cent and Bradford and Leeds by 7.9 per cent. The figures have been sourced using a wealth of data, including regional and national population trends, employment forecasts and current expected levels of housing stock.

Andy Stewart, consultant editor of Your Mortgage, said: "Never has the phrase location, location, location' been so pertinent. The British love affair with the housing market continues apace and with so much personal wealth tied up in residential property it is good to see such a healthy forecast in the West Yorkshire region."

They are desperate to fan the flames to squeeze every last drop out of this, after all in a crash the VI’s lose everything, for what is an estate agent in most cases a glorified sales rep.

Random Thought No 7: I dislike intently the new breed of landlord, mainly because the havoc they have wreaked in the housing market, and for that peculiar brand of smugness, unfortunately for them BTL is just a passing fad, many will end up losing the lot in the near future. However I don’t blame them for wanting a little security after the damage to pensions in the last few years, but what is it about financial fads for time immemorial that blinds those taking part to the risks, I don’t know perhaps its greed.

Random Thought No 8: I remember the time of the last crash for a long time property was an embarrassment never mentioned in polite conversation (it’s always like that after a bubble bursts read JK Galbraith, in fact I would force all bulls to read JK Galbraith) When this happens that is the time to buy, there will be plenty to chose from, because when lots of people invest they start to act like a herd of cows, they will all follow one another, also if you have the readies watch out for the repossessions, the bargains that were had at the time of the last crash were unbelievable!

Random Thought No 9: The next recession could be a long one and world wide in scope, people over exaggerate the power of China, they are dependant on the spending power of the west, when the west stops spending bang goes the economic miracle of China! Remember we have been here before, I call much of what I read on the world economy “Pop Economics” most of it written by journalists who have very little idea of the inter connectedness of the global economy.

Random Thought No 10: Bulls should not berate bears who post information that points to changing economic fortunes, alright most events won’t cause a crash in themselves, however the drip drip effect should not be under estimated, as this bubble has been going on for so long it’s tempting to think that it will go on forever (certainly that’s what your average Joe seems to think) the bigger the bubble the bigger the crash!

Anyway that’s enough random thoughts for today, just thought I would get them out of my system

:mellow:

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Cheers , as a surveyor (not in the domestic side of things i might add) this bubble has exercised my mind for quite some considerable time, I have refused to buy into it, much to the confusion of my family, I could afford to at a stretch but when I explain that actually I am quite happy terraced house, and a bloody good lifestyle, I do not wish to add my my money to this bonfire. Then people say well look at how much money you could have made, to which I reply as in one of the random thoughts, it's of no use unless I get my hands on it within an hour or two

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Random Thought No 9: The next recession could be a long one and world wide in scope, people over exaggerate the power of China, they are dependant on the spending power of the west, when the west stops spending bang goes the economic miracle of China! Remember we have been here before, I call much of what I read on the world economy “Pop Economics” most of it written by journalists who have very little idea of the inter connectedness of the global economy.

Good post.

On your #9: China has plenty to be getting on with internally which will keep economic growth and consolidation on track even if the west stops buying DVD players for a while. They are behaving like traditional mercantilists now (make hay while the sun shines) but a drop in global demand for their products will just give them more internal focus - bringing 1bn people (3x size of Europe) economically up into consumerist middle classes will continue to have a huge global impact. Trade flows both ways remember.

JY

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If you take a frog and drop itinto a pot of boiling water... it will jump out

if you take a frog and put it into a pot of tepid water and bring it to the boil it will stew to death..

such is the way with the heard insticnt and slow changing financial markets.

The economic cycle could not exist if it wasn't for the fact that the majority of people are capable of being surprised by it every time.

Every investment market goes up, and then comes down.. its how it has to be to work.. Money moves around. it cannot be created. Your house purchase was supplying the profit of the housing market to someone else. whatever money you make from the purchase is only at point of sale where your empty right hand collects the money as your left hand hands over the lease.

A recent buyer has not made money, they have supplied it.. and there is the rub..

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Random Thought No 4: Don’t just blame the current government, they were in place at the right time in history to reap the global whirlwind of “easy money” anyone who thinks the Tories would have done much different is living in cloud cuckoo land, one is busy spending money on it’s own vested interests, the other is giving money to people who don’t really need it, the effects are broadly similar, they are both at the mercy of worldwide events and things beyond their control, anyone here remember the Lawson boom? Also remember that the Tories kick-started this kind of thing many years ago, I say a plague on both your houses!

Great post. I agree with the above. The global trend was set with over accomodative IR following a succession of disasters that should have given us a recession (dot.com bust and 9/11). The availability of cheap money from Japan and the Fed's accomodative policies created huge asset bubbles. Gordon Brown tagged along with accomodative measures of his own and made things worse by allowing irresponsible lending and lowering of borrowing criterea. He fostered multiple home ownership when housing was becoming too expensive for the less well off and devastated local communities where people were priced out due to BTL and 2nd home ownership.

The result is that people are heavily indebted and IR are cycling up due to Japan calling in the cheap money while inflationary pressures build worldwide. We have had the boom and now its time for the bust. The same old same old.

Would the Tories have done anything different? Perhaps they may have been a little more astute with borrowing critera and foreseen the debt mountain that was forming. Gordon Brown's ambition to become PM may have caused him to sacrifice the long term health of the economy for his political goals. HPI and the illusory wealth it has created was a vote winner just as the crash will be a vote loser. If he doesn't get into No. 10 quickly his career is going to be over very soon.

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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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