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sam

Are Plateau's Now Housepricecrash Friendly

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Ok, here we go, put on the thicker layer of skin, prepare to see the word troll half a dozen times, but there is something that really puzzles me.

Why is it that the graph on the home page is now showing a distintive plateau, when many on here said it was never going to happen.

I could maybe except that it is just a little rest befor the plunge begins, so what would make you lot a little nervous. If it was to get to twice the length it is now, three times???, or are plateau's now an exceptable part of a property crash :)

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Guest Fiddlesticks

Ok, here we go, put on the thicker layer of skin, prepare to see the word troll half a dozen times, but there is something that really puzzles me.

Why is it that the graph on the home page is now showing a distintive plateau, when many on here said it was never going to happen.

I could maybe except that it is just a little rest befor the plunge begins, so what would make you lot a little nervous. If it was to get to twice the length it is now, three times???, or are plateau's now an exceptable part of a property crash :)

It bothers me a bit as well. May someone with a knowledge of other markets and charting give us a similar scenario from the past.

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It doesn't bother me. I'm wondering how long they can spin it out. Mesmerising - like watching Wiley Coyote's legs rotating, just off the cliff. (Remember, the "soft-landing" being touted would show that graph slowly declining (over a decade or so) down to the 3.5 times earnings norm, as earnings catch up - not a plateau. This is just the biggest ever hyperinflationary bull market ever seen, turning. Magical.)

It took some pretty significant increases in interest rates to pop the previous bubbles and stop the previous peaks on this graph in their tracks and reverse them sharpish. Here we have had very little in the way of interest rate rises (a reduction in fact is our more recent occurrence!) yet the near vertical climb has stopped in its tracks on its own accord under sheer weight of debt and affordability. We are poised for something - I think rates at 5-6% would be enough to do it (may be not this year but soon enough).

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It doesn't bother me. I'm wondering how long they can spin it out. Mesmerising - like watching Wiley Coyote's legs rotating, just off the cliff. (Remember, the "soft-landing" being touted would show that graph slowly declining (over a decade or so) down to the 3.5 times earnings norm, as earnings catch up - not a plateau. This is just the biggest ever hyperinflationary bull market ever seen, turning. Magical.)

Interesting though if you look at the last boom/crash, houses were a reasonable price in say 86 booked and returned to a reasonable price by 94 so really there was probably a period of say 88-92 where people got ripped off buying house. So for 4 years people payed well over the odds this probably represent no more than 2 million people at the most. So this time the longer the flatline goes on the more people are getting ripped off, will be interesting to see how many people this time have really committed themselves to such a huge debt with little hope of selling for a profit. If 5 million say get dragged into overpaying it really could have a devastating efect on consumption patterns and the economy.

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I used to be an Electronic Engineer and know a bit about filter design.

Imagine the house price curve is a filter response curve, with prices being signal level and time being frequency. When you design a filter, if you want a steep filter cut-off against frequency, you end up with ripples in the pass-band (the 'plateau' part of the curve). The more ripples there are, the steeper the drop is when it eventually rolls over. The overall shape is determined by the interaction of the parts of the filter that pull the curve up at one frequency and those that drag it down at another.

I think the price ripples are being caused by many things, not least the differences in price trends around the country, waves of sentiment passing out from London, the flight to quality, or other factors which play out at different times. The key part is the different timings... up until recently, it seems that some factors were pulling prices down whilst others dragged them back up - overall it's not really gone anywhere.

The interesting part comes if there are more factors causing a downswing than up - if that carries on for a few months, I think the downswing factors will feed of each other and things could unravel faster than seems possible at the moment.

We shall see...

Edited by jenko3000

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Interesting though if you look at the last boom/crash, houses were a reasonable price in say 86 booked and returned to a reasonable price by 94 so really there was probably a period of say 88-92 where people got ripped off buying house. So for 4 years people payed well over the odds this probably represent no more than 2 million people at the most. So this time the longer the flatline goes on the more people are getting ripped off, will be interesting to see how many people this time have really committed themselves to such a huge debt with little hope of selling for a profit. If 5 million say get dragged into overpaying it really could have a devastating efect on consumption patterns and the economy.

Indeed, IMO plateaus make for larger falls. The chancellor actually further inflated the bubble with his interest rate cut. Many people bought then that wouldn't have otherwise, right at the peak of the market. In that respect Brown is culpable or a blunderer. We may yet look back on the ERM IR hikes in 1990 as a fortunate, quick and relatively painless exit from the last bubble.

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here is my theorie. as I remember britain and australia were the first to experiment with higher interest rates a few years ago, they had 4% or 5% while the rest of the world still had 2%. so therefore price increases came to a halt in these countries first. the past two years worldwide house prices were still rising, while the markets in britain and australia were flat. this plateau is basically the waiting period until the rest of the world catches up. only now global monetary tightening begins and the stage is set for all markets to fall :rolleyes:

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my feeling is that its about time we got rid ogf that graph - why are we doing the VIs work for them/?? it gives the wrong idea when people come to this site, the last thing we need is prices graduely easing off

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my feeling is that its about time we got rid ogf that graph - why are we doing the VIs work for them/?? it gives the wrong idea when people come to this site, the last thing we need is prices graduely easing off

Really!!!!!

And how do you see the purpose of this site

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Really!!!!!

And how do you see the purpose of this site

this site is a place where people can see thruogh the vi spin, they would love to see a flat line on that graph but we all know thats not whats going to happen

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Guest wrongmove

this site is a place where people can see thruogh the vi spin, they would love to see a flat line on that graph but we all know thats not whats going to happen

:P

With all respect 65243, we don't have a clue what is going to happen. But burying our head in the sand just makes us into spinning VIs too. The graph is reality (by one measure) and just ignoring it isn't go to change anything.

Back to Sam's OP - I remeber when Nationwide published a prediction that prices would just go sideways after the huge rises. How we laughed !! (me included). Only a handful of bulls thought that this was likely. But it seems that the bulk of people now believe that IRs in the 3-5% range and high employment levels are here to stay. If this is true, then HPs at 6x (single) income are probably also here to stay. Back in the late 80's people were paying 5x income when IRs were 8 or 9%. It was only high unemployment and the big recession that followed that brought out the forced sellers. I see no reason it should be "different this time".

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Ok, here we go, put on the thicker layer of skin, prepare to see the word troll half a dozen times, but there is something that really puzzles me.

Why is it that the graph on the home page is now showing a distintive plateau, when many on here said it was never going to happen.

I could maybe except that it is just a little rest befor the plunge begins, so what would make you lot a little nervous. If it was to get to twice the length it is now, three times???, or are plateau's now an exceptable part of a property crash :)

Well IMO it's quite simple.

We've recently seen the biggest HPI bubble in history. We are currently at the top of the biggest plateau in history, and shortly we will witness the biggest HP crash in history.

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Ok, here we go, put on the thicker layer of skin, prepare to see the word troll half a dozen times, but there is something that really puzzles me.

Why is it that the graph on the home page is now showing a distintive plateau, when many on here said it was never going to happen.

I could maybe except that it is just a little rest befor the plunge begins, so what would make you lot a little nervous. If it was to get to twice the length it is now, three times???, or are plateau's now an exceptable part of a property crash :)

Sam,

The famous Nationwide graph is adjusted for inflation and that's what makes it look so dramatic. The plateau is because HPI is keeping up with inflation although I do suspect that it may gently turn down (I really hope it does) over a period of time but not much of a fall in nominal prices.

I think unless you can buy a good asset, it may be worth avoiding the market though.

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Guest wrongmove

The famous Nationwide graph is adjusted for inflation and that's what makes it look so dramatic. The plateau is because HPI is keeping up with inflation although I do suspect that it may gently turn down (I really hope it does) over a period of time but not much of a fall in nominal prices.

The graph below is the cash or nominal price over time (not adjusted for inflation). Bit less dramatic looking - notice how in the two 70's "crashes", prices actually rose - i.e. nominal prices plateaued then too. Of course inflation was much higher then.

nomlin.png

post-210-1151395228.png

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:P

With all respect 65243, we don't have a clue what is going to happen. But burying our head in the sand just makes us into spinning VIs too. The graph is reality (by one measure) and just ignoring it isn't go to change anything.

Back to Sam's OP - I remeber when Nationwide published a prediction that prices would just go sideways after the huge rises. How we laughed !! (me included). Only a handful of bulls thought that this was likely. But it seems that the bulk of people now believe that IRs in the 3-5% range and high employment levels are here to stay. If this is true, then HPs at 6x (single) income are probably also here to stay. Back in the late 80's people were paying 5x income when IRs were 8 or 9%. It was only high unemployment and the big recession that followed that brought out the forced sellers. I see no reason it should be "different this time".

Thanks wrongmove, my thoughts exactly, but i still think there will be a collapse at some point in the future(distant future).

Far to many people on this board are so blinkered that they cannot even see what they are doing, they moulding facts to fit their predictions of a short term property crash.

Now that it looks like we are getting a plateau, everyone has adopted this "Well i knew that would happen attitude", which is totally ******, like me they thought a plateau was out of the question, now why can't people on here be more honest.

There is even a reply to my original post that says something on the lines biggest HPI, biggest PLATEAU, biggest drop, WHAT!!!!! :lol:

Where on this board did anyone predict the biggest plateau before the fall before today.

For the good of this Country property falling in value is essential for it's well being, that is a fact in my eyes, but i am not convinced that the markets are going to do the job for us, WHY SHOULD IT. The markets are not moral and spiritual voice of the nation, they are just ruthless pulsating money making beings that have no feelings, that is our politicians jobs, and i am afraid they are just not listening.

Maybe once that plateau reaches twice the length it is now a few more of you might start listening, it just might get to a point where some of you if you have the balls will have to stop trying to be heard on HPC and march down downing street.

Today though you are all safely tucked away in your little cyber world causing zero trouble, the VI's just love it.

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I used to follow the FT Forum on house prices way back in 2003 / 2004. Very healthy debate then on whether there would be a plateau or not. Most bears thought not. Many "bulls" (ie the rest of the forum) thought there would be. Most cited the lack of forced sellers and the stickiness of the market on the way down as their primary reasons.

I remember 1 claim (which I never checked) that the UK housing market plateaued (sic) in the fifties in a time of low interest rates. Maybe the 70's, 80's and 90's are the anomally not the normality?

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I attach the good old Nationwide affordability graph with approximate interest rates labelled aong the way.

Makes interesting reading as it shows house prices are as unaffordable now as they were when interest rates were in double figures, so what would an increase in rates do to that graph now? That period of unafforability in the early 90s could look very small....

nationwide.jpg

post-2014-1151398834.jpg

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I attach the good old Nationwide affordability graph with approximate interest rates labelled aong the way.

Makes interesting reading as it shows house prices are as unaffordable now as they were when interest rates were in double figures, so what would an increase in rates do to that graph now? That period of unafforability in the early 90s could look very small....

Yes, although I think that affordability graph is a bit crude. I don't think it takes into account other factors like MIRAS, cost of living etc. Although I would like to see where the graph goes if rates got to 5%.

I don't know why lots of people here are saying the market has plateaued, from the Nationwide nominal graph you can clearly see falls until the summer, when rates went down and the media was convincing everyone more rates cut were forth coming. The market since has gone up.

In fact, looking at the graph the market (since the 90s) it was either going up, or going down. There was never a lengthy plateau.

The question is what will happen later in the year? It clearly won't go up at the rate is has been doing as that is unsustainable, although I expect a few more rises into the summer (from the lag of buying), then small falls later this year. The problem is I don't think those in power (BoE) can reduce rates to stop the market falling.

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Yes, although I think that affordability graph is a bit crude.

It may be crude but it is what Nationwide are using to tr to convince FTBs that now is not such a bad time to buy.

However, when interest rates are just crudely added to the chart all it does in my opinion is show that now is potentially the worst time to buy in recent history.....

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My guess is that it will snake within a band that is broadly horizontal until expectations of both interest rates and employment change.

I think if we have 2 rate rises within a 3 month period then house price inflation is dead and the correction will begin in earnest. Until we get 2 rate rises in close succession prices will continue to stagnate.

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  • 333 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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