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enworb

How Long Until You Admit Defeat

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So it hasn't quite gone to plan. Rich single people or average couples are still buying average properties. The government are doing all in their power to effectively prevent a recession. Causing a recession wouldn't look god on anyones CV.

If in 2 years prices drop 10%, prices will still be as they are now. Extremely difficult to afford.

If you can save more while renting than you would with a IO mortgage, good for you. But only if prices stagnate. Expecting house prices to crash because a handful of you are refusing to buy is a waste of time. Whoever can afford to buy is doing so.

And any threat of IR's going up won't have much of an affect in the short term. This will encourage more to buy while IR's are at their lowest and while fixed rate mortgages are not an expension option.So it could be 3 or more years before anything or anyone CAN discourage joe public from realising their ambitions of owning a home.

Please note: I am not being smug. A crash wouldn't make any difference to me. My next home would be more affordable. These are my just views of SE England but that's not to say it's the same everywhere else. I don't just read all the posts hoping to find answers. I am actively looking for a new house and have been following house prices in my area since I bought my first place in 2001.

All i'm saying is that you shouldn't put all your faith in joe public. It's going to need more than that but it could take a few years yet for anything to have an affect.

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So it hasn't quite gone to plan. Rich single people or average couples are still buying average properties. The government are doing all in their power to effectively prevent a recession. Causing a recession wouldn't look god on anyones CV.

If in 2 years prices drop 10%, prices will still be as they are now. Extremely difficult to afford.

If you can save more while renting than you would with a IO mortgage, good for you. But only if prices stagnate. Expecting house prices to crash because a handful of you are refusing to buy is a waste of time. Whoever can afford to buy is doing so.

And any threat of IR's going up won't have much of an affect in the short term. This will encourage more to buy while IR's are at their lowest and while fixed rate mortgages are not an expension option.So it could be 3 or more years before anything or anyone CAN discourage joe public from realising their ambitions of owning a home.

Please note: I am not being smug. A crash wouldn't make any difference to me. My next home would be more affordable. These are my just views of SE England but that's not to say it's the same everywhere else. I don't just read all the posts hoping to find answers. I am actively looking for a new house and have been following house prices in my area since I bought my first place in 2001.

All i'm saying is that you shouldn't put all your faith in joe public. It's going to need more than that but it could take a few years yet for anything to have an affect.

The resilience of the market to a crash was proven to me in 2005/6, when a simple .25% IR cut brought everyone back to the market, following a year of slight falls.

Years of -5 to +5% changes are my forecast

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Guest Bart of Darkness
How Long Until You Admit Defeat, It's been over 2 years now

Slightly over 1 year for me.

When I've reached my deposit target (approx. 1 year from now) I'll really have to consider whether to buy or not. Until then, watching the "miracle economy" trying to stay afloat should help pass the time.

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going to need more than that but it could take a few years yet for anything to have an affect.

Who cares if it takes a few years? I'm a potential FTB and I am absolutely not going to buy a house, even though I can. They are overpriced. Even a moron can see that. I could buy a Rolls Royce too, if I wanted. But I think it's too expensive.

The crash is going to come at some point. I don't care when. I'm not spending my money till I feel I am getting reasonable value. Millions of other FTBs feel just like me.

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So it hasn't quite gone to plan. Rich single people or average couples are still buying average properties. The government are doing all in their power to effectively prevent a recession. Causing a recession wouldn't look god on anyones CV.

If in 2 years prices drop 10%, prices will still be as they are now. Extremely difficult to afford.

If you can save more while renting than you would with a IO mortgage, good for you. But only if prices stagnate. Expecting house prices to crash because a handful of you are refusing to buy is a waste of time. Whoever can afford to buy is doing so.

And any threat of IR's going up won't have much of an affect in the short term. This will encourage more to buy while IR's are at their lowest and while fixed rate mortgages are not an expension option.So it could be 3 or more years before anything or anyone CAN discourage joe public from realising their ambitions of owning a home.

Please note: I am not being smug. A crash wouldn't make any difference to me. My next home would be more affordable. These are my just views of SE England but that's not to say it's the same everywhere else. I don't just read all the posts hoping to find answers. I am actively looking for a new house and have been following house prices in my area since I bought my first place in 2001.

All i'm saying is that you shouldn't put all your faith in joe public. It's going to need more than that but it could take a few years yet for anything to have an affect.

Well I must admit that after waiting for so long, and being so frustrated, I was beginning to wonder if a hpc would ever come.

But having read your post – I think I’ve seen the light, I’ll be buying a house before the weeks out.

Thanks for your help and expert guidance.

Silly c0nt.

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Slightly over 1 year for me.

When I've reached my deposit target (approx. 1 year from now) I'll really have to consider whether to buy or not. Until then, watching the "miracle economy" trying to stay afloat should help pass the time.

You're lucky if you can save more than property is inflating where you are. It seemed like a buyers market where I am for most of the year but all of a sudden it's a sellers market again....and prices are inflating far more than potential buyers savings. Seemingly leaves then no answer, to buy now with a smaller deposit.

Well I must admit that after waiting for so long, and being so frustrated, I was beginning to wonder if a hpc would ever come.

But having read your post – I think I’ve seen the light, I’ll be buying a house before the weeks out.

Thanks for your help and expert guidance.

Silly c0nt.

You're welcome...I sense a hint of sarcasm.

Good luck with the house hunting :P

Edited by enworb

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Slightly over 1 year for me.

When I've reached my deposit target (approx. 1 year from now) I'll really have to consider whether to buy or not. Until then, watching the "miracle economy" trying to stay afloat should help pass the time.

The stock markets took a year longer than I expected before rolling over again. Now that they have started it is worth bearing in mind that prior to 2000 every fall in the stock market of 10% or more led to a decline in house prices starting on average six months later. If you needed any further confirmation then the Express turning bullish has got to be a highly bearish sign for housing; all bubbles need to reach a consensus of oppinion before they burst, Silver reached 98% bulls before it started to decline. Not long now imho.....

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The resilience of the market to a crash was proven to me in 2005/6, when a simple .25% IR cut brought everyone back to the market, following a year of slight falls.

Years of -5 to +5% changes are my forecast

Same here and that's why I concluded it wasn't actually worth renting for so many years. In this scenario you could possibly buy IO (effectively rent from bank) and still save. I think we will have our crash but in real terms and in nominal terms it may well be pretty dull.

IMO the real risk of the crash is being amplified by the recent HPI, I hope it slows to zero again soon.

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Guest Bart of Darkness
You're lucky if you can save more than property is inflating where you are. It seemed like a buyers market where I am for most of the year but all of a sudden it's a sellers market again....and prices are inflating far more than potential buyers savings. Seemingly leaves then no answer, to buy now with a smaller deposit.
If that were the case in my target area (S20) then I would certainly have to consider whether to either buy now or wait for prices to fall.

At the moment though, although houses appear to be selling, prices are not rocketing upwards. Plus I don't belive that the South Yorkshire region will weather a recession very well, so if we do get a downturn in the economy, we will be hit amongst the hardest.

Thankfully, all the companies I do business with are based in London.

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Just one word:

RECESSION

Oil prices, unemployment increases, global IR hikes, twin UK deficits, rising insolvency rates, US and Chinese economies slowing, HPC in the US, higher IR in ECB, softening house prices nationwide (Land registry data), increasing dependency on "time bomb" IO mortages, affordability pushed too far ...........

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Guest grumpy-old-man

So it hasn't quite gone to plan. Rich single people or average couples are still buying average properties. The government are doing all in their power to effectively prevent a recession. Causing a recession wouldn't look god on anyones CV.

If in 2 years prices drop 10%, prices will still be as they are now. Extremely difficult to afford.

If you can save more while renting than you would with a IO mortgage, good for you. But only if prices stagnate. Expecting house prices to crash because a handful of you are refusing to buy is a waste of time. Whoever can afford to buy is doing so.

And any threat of IR's going up won't have much of an affect in the short term. This will encourage more to buy while IR's are at their lowest and while fixed rate mortgages are not an expension option.So it could be 3 or more years before anything or anyone CAN discourage joe public from realising their ambitions of owning a home.

Please note: I am not being smug. A crash wouldn't make any difference to me. My next home would be more affordable. These are my just views of SE England but that's not to say it's the same everywhere else. I don't just read all the posts hoping to find answers. I am actively looking for a new house and have been following house prices in my area since I bought my first place in 2001.

All i'm saying is that you shouldn't put all your faith in joe public. It's going to need more than that but it could take a few years yet for anything to have an affect.

when faced with a choice or dilemma, I spend as much time as is required, find the right websites with knowledgeable people on the subject at hand, then I make an informed decision based on that.

The problem with using this method is you have to be a clever bugger & be capable of understanding it all.

So I now have a basic understanding of economics & a pretty good understanding of the housing market factors..........but most of all, I have experience & a very sceptical nature.

I love looking at historical data relating to housing & the economy, & when you show someone who is intelligent that graph on the front page of this site, their expression says it all. Especially when you ask them where do you think the blue line will go from there ? up or DOWN. Add to that the current war that is looming & the state of the world economy, BOJ cutting cheap money off. please repeat in BA's voice from the A-Team "I ain't no fool"

;)B):lol::lol::lol:

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Just one word:

RECESSION

Oil prices, unemployment increases, global IR hikes, twin UK deficits, rising insolvency rates, US and Chinese economies slowing, HPC in the US, higher IR in ECB, softening house prices nationwide (Land registry data), increasing dependency on "time bomb" IO mortages, affordability pushed too far ...........

Hey RB, what happened to bird flu?

That used to be one of your favourites...

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Patience comes to those who wait.

It ai'nt gonna happen over night, so while the credit is cheap, the bricks and morta will keep inflating just like a big bubble, then Poppppppppppppppppppppppppppp!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! You just did not see it coming, all of a sudden, credit ai'nt so cheap, and the believing public are not so believing any more, no one told us that rates can go up, we were told they would remain low for the period of our mortgage, shit, i cannot afford repayments, resssssssssssessssssssssssion???????? anyone!!!

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If in 2 years prices drop 10%, prices will still be as they are now. Extremely difficult to afford.

What made you reach to the conclusion that prices would drop by only 10% in 2 years?

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Hey RB, what happened to bird flu?

That used to be one of your favourites...

:D

I'm liking the humour on this fred. (Most people forget 'th' nowadays)

My reason is that Mr Average is actually becoming less educated. Therefore the average house that Mr Average can afford will have to decrease.

Trust me, this will be the reason.

Oh yes.

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Who cares if it takes a few years? I'm a potential FTB and I am absolutely not going to buy a house, even though I can. They are overpriced. Even a moron can see that. I could buy a Rolls Royce too, if I wanted. But I think it's too expensive.

The crash is going to come at some point. I don't care when. I'm not spending my money till I feel I am getting reasonable value. Millions of other FTBs feel just like me.

ditto :)

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Patience comes to those who wait.

It ai'nt gonna happen over night, so while the credit is cheap, the bricks and morta will keep inflating just like a big bubble, then Poppppppppppppppppppppppppppp!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! You just did not see it coming, all of a sudden, credit ai'nt so cheap, and the believing public are not so believing any more, no one told us that rates can go up, we were told they would remain low for the period of our mortgage, shit, i cannot afford repayments, resssssssssssessssssssssssion???????? anyone!!!

But then someone gets out a calculator and shows you that you would still have been better off buying a few years ago with a fixed rate loan...

Patience comes to those who wait.

What happened to 'good things' ?

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Just one word:

RECESSION

Oil prices, unemployment increases, global IR hikes, twin UK deficits, rising insolvency rates, US and Chinese economies slowing, HPC in the US, higher IR in ECB, softening house prices nationwide (Land registry data), increasing dependency on "time bomb" IO mortages, affordability pushed too far ...........

:lol::lol::lol:

The HPC definition of recession is GDP at +2.6%

:lol::lol::lol:

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It seemed like a buyers market where I am for most of the year but all of a sudden it's a sellers market again....and prices are inflating far more than potential buyers savings.

:lol::lol:

Now that's funny!

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The stock markets took a year longer than I expected before rolling over again. Now that they have started it is worth bearing in mind that prior to 2000 every fall in the stock market of 10% or more led to a decline in house prices starting on average six months later. If you needed any further confirmation then the Express turning bullish has got to be a highly bearish sign for housing; all bubbles need to reach a consensus of oppinion before they burst, Silver reached 98% bulls before it started to decline. Not long now imho.....

Excellent point re the nature of bull markets.

Who actually believes there's going to a sharp correction/crash? Even some die hard HPC ers are throwing the towel in.

Hardly anyone reckons it's going to happen. The concensus is that a "soft landing" has been achieved. This is music to my bearish ears and I'm feeling more confident by the week.

Oh BTW, America is entering a recession in Q1 2007 and we won't be far behind. And that old trick about printing more money has been done now so there's no escape :P

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There is still a possibility of significant interest rate rises to come and the ensuing depreciation in many asset classes including house prices that this would have. Apologies for the length of the article from Andy Xie at Morgan Stanley but it is an informative and well argued piece.

Andy Xie (Asia)

Global inflation accelerates: Global inflation is at a 10-year high. The sources of inflation are broad-based, including overheating in emerging economies, rising commodity prices and tight labor markets in developed economies. By virtue of its global nature, inflation is likely to be strengthened by all these factors and keep climbing.

Global monetary conditions remain loose: Although the global real policy rate has climbed above zero in the past two years, it is still close to zero versus more than 2% five years ago. Monetary conditions are not restrictive, and global inflation is likely to climb further in the absence of additional tightening.

Global policy rate needs to rise by 2% or more: The rise in the global policy rate has to be 2% or more to return to neutral. To combat inflation, the rise needs to be considerably more. Rate hikes around the world will likely surprise on the upside.

Commodity speculation pushes up inflation: Low real interest rates encourage commodity speculation. Commodity inflation so far in 2006 may have injected two percentage points into the global inflation pipeline. Only higher interest rates can stop commodity speculation.

Central banks have to respond to the facts: Major central banks have been dovish in their recent statements (e.g., the Fed, the BoJ and the PBoC). However, regardless of the wishes of the central bankers, the facts will eventually catch up with them. The more dovish they are now, the higher the level at which inflation will peak and the greater the rate hikes that they will have to make.

Major central banks have surprised the market with their dovish statements (e.g., the Fed, the BoJ and the PBoC), despite data that show rising inflation and overheating. The dependence of the global economy on financial markets may have caused the dovish tendency, as central banks are concerned about any damage to economies from financial market adjustments to a hawkish stance.

However, dovish positions cannot change the fact that global inflation is at a 10-year high and rising. Although the global real policy rate is no longer negative, it is still close to zero. The economies of China and India and commodity markets are overheating, and if the global policy rate remains at such low levels, further overheating can be expected.

The dovish stance of the major central banks increases the risk of a global hard landing as it encourages overheating in the economies of developing countries and commodity speculation. This is likely to cause global inflation to peak out at higher levels than would otherwise be the case. There is also a risk that central bankers will suddenly panic when they realize that their low interest rate policies are completely out of sync with the facts; they may then overcompensate by raising rates sharply and trigger a crash.

Easy monetary conditions fuel inflation

Global inflation is at a 10-year high and probably reached an average of 2.9% for China, the Euro-zone, Japan, the UK and the US combined in June 2006, from an average of 1.2% in 2002. Recent data from all over the world suggest that the rising inflation trend is still intact.

The global inflation debate focuses on the source of inflation. The rise in oil prices is considered the main culprit. Rising rents are another. However, this sort of thinking misses the big picture. Inflation is picking up because of an easy monetary environment. The money stock in the world is too high for price stability.

Central banks have been able to keep monetary policy loose without worrying about inflation for a decade. Deflationary shocks (e.g., emerging market crisis, 9-11, China’s SoE reform and Japan’s banking reform) have kept inflation down despite the easy monetary environment. As the effects of these deflation shocks end, the current money stock becomes inflationary. The rise in oil prices, for example, just reflects excess money supply turning into inflation through strong demand or speculation.

Central banks around the world have been raising interest rates for two years. Gradualism in monetary normalization has made the tightening less effective. While the policy rate is rising, inflation is too. I estimate that the real policy rate is still about half a percentage point from the rate that would be sufficient to contain inflation and speculation.

Central banks are creating problems for themselves

Despite mounting evidence of high and accelerating inflation, major central banks have made dovish statements, which have confused financial markets. The BoJ talked down the prospect of further rate hikes after it first raised rates. The Fed keeps telling the market that inflation will come down even though this contradicts the facts. The PBoC increased the deposit reserve ratio by a mere 0.5% after a barrage of data showing an overheating economy.

Do central banks know something that the markets do not? I don’t think so. Central banks are sounding dovish because they are concerned about the knock-on effect on the economy of the response by financial markets to higher interest rates. Financial markets have become so large relative to the economy that their behavior determines economic strength. In particular, the property market has become another financial market as a result of financial innovations. Central banks are trying to manipulate financial markets to achieve a soft landing.

However, what central banks are doing may backfire. Their dovish stance fuels commodity speculation, which is a major source of inflation. As the real policy rate is close to zero, already rampant speculation will only get worse. The stance that central banks are adopting is just encouraging speculators to double their bets. While central banks try to manipulate financial markets to their advantage, the result could be much more inflation, which would force aggressive rate hikes and the possibility of a crash.

Inflation is likely to keep rising

Inflation is a monetary phenomenon. Deflationary shocks held back its effect on CPI inflation. However, products and services with supply constraints have incurred rapid inflation for years. From trophy properties, Ivy League education, fine Bordeaux wine to antiques, prices have inflated along with money supply. It just takes time for the inflation to spill into the broad economy.

The economies that previously caused deflation are now all experiencing rising inflation. The commodity boom has recapitalized the emerging economies that suffered crises five years ago. After using export income to repair their balance sheets, they are now spending money rapidly.

China’s export prices have been rising for two years, according to Hong Kong’s data on Chinese imports. Rising prices of raw materials and increasing wages are contributing to this trend. China was a major force in limiting the inflation in tradable prices, which kept inflation low in OECD economies despite high services inflation. The changing trend in China’s export prices has a profound impact on the global inflation trend.

Japan’s consumption recovery should also add to global inflationary pressure. Japanese companies are converting temporary workers into permanent workers and are offering permanent jobs to first-time job seekers. This increases labor costs and boosts consumption. The Japanese economy is certainly not deflationary for the global economy.

The counterargument on all the above factors is that productivity is still high. When the money stock is too high (i.e., the money supply to GDP ratio is well above the historical average), accelerating productivity acts like a deflation shock, temporarily holding back the inflationary effect. However, ceteris paribus, the productivity growth rate is lower when an economic cycle has matured, as it has now. The effect is similar to the removal of a deflationary shock.

I expect a massive sell-off in bonds

Central banks, and particularly the Fed, seem to have become puppet masters for financial markets. Low inflation has made asset prices more dependent on liquidity than fundamentals. Therefore, a big chunk of global demand depends on inflated asset prices. This game works as long as inflation is not a problem. When inflation appears as it is now, central banks can no longer deal with the demand problem by simply pumping in liquidity.

Most central banks still do not believe that inflation is a serious problem, even though they pay lip service to it. They are waiting for the base effect from rising oil prices to taper off and believe that inflation will just disappear with time. I think this view is naive. Oil price inflation reflects excessive liquidity, which has pumped up demand and speculation. The latter will keep pushing up prices as long as the real interest rate is near zero and liquidity is plentiful.

Bond markets still believe that inflation is not a serious problem, a demand slowdown due to a cooling housing market and high oil prices will lower inflation, and central banks will cut interest rates in 2007. I believe that economic weakness would be insufficient to bring down inflation as long as the global real interest rate remains at such low levels. The world needs above-average real interest rates to keep the growth rate below trend for a prolonged period and reduce inflation.

The global macro economy is undergoing a transition from below-trend inflation and above-trend growth to above-trend inflation and below-trend growth. When the bond market accepts this, the bond yield could rise by 100bp or more, in my view.

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What made you reach to the conclusion that prices would drop by only 10% in 2 years?

It wasn't conclusive. I stated IF but I do think it's more realistic than the 40 - 50% crash that's been suggested.

Just giving an example and what little effect this scenario would have.

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But then someone gets out a calculator and shows you that you would still have been better off buying a few years ago with a fixed rate loan...

How with no deposit? :rolleyes:

The people on here who didn't buy when houses were cheaper either couldn't afford to or weren't old enough to. It's not a tricky concept. We're in a bubble. It will pop. Is popping in some areas.

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I'll never admit defeat. House prices will eventually show regular and healthy increases, enough for me to re-enter the small developer role that I did very well in 2002-5! I'm not sure what'll happen between now and that day, however, and despite the bullsh1t often printed on this website, 'the crash' has not started, and perhaps only Mystic Meg knows if or when it will.

So it hasn't quite gone to plan. Rich single people or average couples are still buying average properties. The government are doing all in their power to effectively prevent a recession. Causing a recession wouldn't look god on anyones CV.

If in 2 years prices drop 10%, prices will still be as they are now. Extremely difficult to afford.

If you can save more while renting than you would with a IO mortgage, good for you. But only if prices stagnate. Expecting house prices to crash because a handful of you are refusing to buy is a waste of time. Whoever can afford to buy is doing so.

And any threat of IR's going up won't have much of an affect in the short term. This will encourage more to buy while IR's are at their lowest and while fixed rate mortgages are not an expension option.So it could be 3 or more years before anything or anyone CAN discourage joe public from realising their ambitions of owning a home.

Please note: I am not being smug. A crash wouldn't make any difference to me. My next home would be more affordable. These are my just views of SE England but that's not to say it's the same everywhere else. I don't just read all the posts hoping to find answers. I am actively looking for a new house and have been following house prices in my area since I bought my first place in 2001.

All i'm saying is that you shouldn't put all your faith in joe public. It's going to need more than that but it could take a few years yet for anything to have an affect.

Edited by karen1000

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If that were the case in my target area (S20) then I would certainly have to consider whether to either buy now or wait for prices to fall.

At the moment though, although houses appear to be selling, prices are not rocketing upwards. Plus I don't belive that the South Yorkshire region will weather a recession very well, so if we do get a downturn in the economy, we will be hit amongst the hardest.

Thankfully, all the companies I do business with are based in London.

Bart - you need to clear out your PMs kiddo!

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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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