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The Denial Phase Is Over


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I believe today marks the "official" end of the denial phase.

The majority of property commentators, including Wriggelsworth (hometrack), Shipside (Rightmove) and Bannister (Nationwide) have all performed extrodinary U-turns from complete denial to acknowledgement that prices may (Bannister) or will (Shipside) fall. Nationwide figures, which seem to have leaked out and are predicted to show -0.5% in November, are likely to confirm the trend.

The "consensus view", which only 6 months ago was continued price rises at a lower rate, now seems to settle on a 20% fall over the next two to three years. This is called a "correction" or some other non-c words, which is funny, because falls of the same magnitude in the late 80s/early 90s are today commonly referred to as the "early 90s crash".

Why are these commentators now suddenly changing their mind. Well, for once, because they always do. They never actually predict anything, they only react to the current market and then state the obvious. Fear of legal liability might also play a role, especially at the lenders (because they could be on the hook for mis-selling mortgages in the knowledge that the market is overvalued). The main reason is that they are all aligning themselves for the next phase in sentiment, which follows the denial phase. After the denial is over, which it now is, sentiment changes into the "inevitable" phase, where essentially everyone says that they had known all along that the fall was inevitable.

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ur spot on m8 - but to be honest economists who have vested interests will try and sooth the pain of the fall by comments like "Oh its going to only be a modest fall" or "It'll only take prices back to 2003!" etc..the only reasons they do that is to keep customers coming and purchasing more loans, hence squeezing the customers out of every penny they can, whilst it lasts!

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economists who have vested interests will try and sooth the pain of the fall by comments like "Oh its going to only be a modest fall" or "It'll only take prices back to 2003!" etc..the only reasons they do that is to keep customers coming and purchasing more loans, hence squeezing the customers out of every penny they can, whilst it lasts!

Too right. We should be prepared for another rampant epidemic of bull propaganda as Spring approaches, in a last-ditch effort to spin the market for the last time and eke out the last fleeces from the FTB sheep before it all goes to hell in a handcart.

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We should be prepared for another rampant epidemic of bull propaganda as Spring approaches, in a last-ditch effort to spin the market for the last time and eke out the last fleeces from the FTB sheep before it all goes to hell in a handcart.

Possibly.....but remember that by the time we get to spring we will have had almost 6 consequtive months of worsening news. This will be very difficult to paint a rosy picture and fool people into thinking that things are getting better....

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Guest Charlie The Tramp
as sentimment re IR's has changed, looks like theyre heading up.

And it has taken these so called financial wizards all this time to discover that. :P

5.5% after the General Election if the Magician can hold out. :D

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"Fears of a housing market crash were calming today after figures from the Bank of England showed an easing rather than a full-scale drop in activity."

Someone needs to tell the BOE, I dont think they know that prices are on the way down, perhaps Blunkett has fast tracked his guide dog into a BOE advisors role.

Or perhaps he hasn't noticed the HPC as he's too busy having a ROMP with his EX-Lover

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And it has taken these so called financial wizards all this time to discover that. :P 

5.5% after the General Election if the Magician can hold out. :D

IMHO - the denial phase is only *starting* to come to an end. We will know that it is truly at an end when the BBC stop denial and start to admit the possibility of a "correction" "slump" or whatever friendly spin word for "crash" that they can think of.

By the way... no one can of course predict future interest rates. But one possible scenario is a much greater series of rises as the US current account deficit is remedied by a downward re-valuation of the dollar. It is not impossible that interest rates might one day be 7% again in this country, and possibly within the time frame of a housing "correction"

5.5% would suit me for a start. Each .25% upwards revision makes me relatively richer in a noticeably way. .75% would be very pleasant indeed. Bring it on...

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By the way... no one can of course predict future interest rates. But one possible scenario is a much greater series of rises as the US current account deficit is remedied by a downward re-valuation of the dollar. It is not impossible that interest rates might one day be 7% again in this country, and possibly within the time frame of a housing "correction"

By end of 2005 IMPO here in the UK. Certainly heading well that way. I've explainged my reasoning for this elsewhere in this forum but, basically, it is because Greenspan has clearly indicated of late that US IRs are on an upward path.

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Like most things in life, nothing is actually true until the official denial is issued.

Take David Blunkett for example, his job was quite safe, right up to the moment that Tony issued his 'full backing' for the Home secretary that is.

He'll be looking for a new job soon me thinks.

Similarly, I'd be looking for an alternative investment to buying property right now in the light of all this denial flying about. :lol:

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I believe the 'vested-interest EA' lobby has simply capitulated; unable to hold the market up any longer by spouting tripe they are now adopting a pragmatic attitude because it is clear to everyone that the market is falling.

They now know they have to 'go with it' and talk the market down to achieve sales commissions otherwise widescale bankruptcies will follow in the EA industry. I predict that the EAs will become the bears best friends in the coming months...........

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Just spoke to my bruv in the city apparently been a big sell off in the bond market as sentimment re IR's has changed, looks like theyre heading up.

Even more good news.

The bond market has risen strongly over the last few days. I reckon it was just profit taking, I think there are factors that will keep IRs in check i.e. weak $ and the knock on effect that a housing collapse will have on spending. Unless of course, inflation starts to cause problems.

Any thoughts? Would love to hear 'em.

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IRs are on the up. Sorry most people don't understand economics much, but IRs are mainly set by internal credit creation and any exposure to international financers. The way money supply has been increased in the past 5-6 years requires IRs to be between 5-7% for most of the during the next 10 years. They are on the low side at the moment. For long term mortgages (25 years) expect IR rate of 6%. Bond markets are a good way of finding out about future IRs. When BoE was increasing IRs this June, bond markets were predicting 5.25 at the end of the year. This month BoE inflation report showed a slight relaxation in IR expectancy and markets predict 4.8 or 4.9 by Feb. I personally think 5% by Feb and after that getting to 5.75 by end of 2005. Average for next 10 years is about 6%.

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IRs are on the up. Sorry most people don't understand economics much, but IRs are mainly set by internal credit creation and any exposure to international financers. The way money supply has been increased in the past 5-6 years requires IRs to be between 5-7% for most of the during the next 10 years. They are on the low side at the moment. For long term mortgages (25 years) expect IR rate of 6%. Bond markets are a good way of finding out about future IRs. When BoE was increasing IRs this June, bond markets were  predicting 5.25 at the end of the year. This month BoE inflation report showed a slight relaxation in IR expectancy and markets predict 4.8 or 4.9 by Feb. I personally think 5% by Feb and after that getting to 5.75 by end of 2005. Average for next 10 years is about 6%.

Ahhhh, of course. The all important money supply. Thanks, will give me food for thought.

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I agree - this does seem to be the official end to denial.

I like the word 'correction' for reduction. That slays me. Should we feel guilty when houses slump?

I always say beware cos I reckon there'll be a 10% drop, FTBs will wait for more, then they will start to temporarily go UP for a bit and panic all those waiting THEN the real crash will start.

I think we should all meet up and have a game of British Bulldog!

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Would be nice if the denial phase has ended. Gets a bit boring trying to tell people that the good times can't last forever and at some time in the near future that the money has to be repaid. And no you can't use your home equity to pay off your mortgage.... especially if prices drop.

Torachan

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davidjgay -

I agree the problem with being a prophet of doom is when you are proven right it suddenly becomes your fault. Yeah it's my fault that you paid to much for your house. It's my vote that John Howard is about to screw Australia. It's my fault that unfair dismissal laws are about to be "over-hauled".

So do we keep on our Bearish attitude towards Real Estate? Or should we become insurgents and follow some of the idea's on this thread such as making multiple low bids (gang up on the suckers)

Should we feel sorry for them?

Torachan

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  • 441 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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