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Houseprice Crash = Recession

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Hi

I'm not up on economics so I would just like to ask if we have a housepricecrash will it be the result of a recession, or will a housepricecrash cause a recession?

And can we have one without the other?

Basically I would love prices to come down but if this is accompanied by a recession then the job market will be unstable so I wouldnt buy anyway

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Unfortunately a HPC and Recession go hand in hand. A housepricecrash will be the cause of the recession (well, the debt levels are...) as people will spend less because they can't borrow as much.

Was it the chicken or the egg blah blah...?

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You can have a HPC without a recession.

You need to FORCE the government to tax BTL to make it virtually impossible for new entrants to want to buy.

Remove NEW BTL and the price of property will neatly adjust to suit current affordability levels for FTBs.

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Not so folks!!!

here's how it works.

HPC causes CONSUMERS to head into recession,true enough.

BUT:

that part of the economy which was written off some time ago,namely exports and manufacturing will bounce back.

...why would this be I hear you ask!!

in short,as consumers fail,so does the currency.As sterling weakens against the likes of the Euro,yen,dollar our exports become more competitive,and demand for such goods rises as a result.

net product=a "rebalancing" of the economy,and in GDP terms no recession,or at worst a very mild one with only a couple of Q's in very small -ve numbers.

the phrase has been used by the BoE on a couple of occasions,now you know what it means.

Pity joe average consumer won't see it like that,it'll look like a bloodbath for most of them,just like it did in the late 70's and early 90's.

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You can have a HPC without a recession.

You need to FORCE the government to tax BTL to make it virtually impossible for new entrants to want to buy.

Remove NEW BTL and the price of property will neatly adjust to suit current affordability levels for FTBs.

taxing btl's will cause a generic HPC affecting ordinary homeowners as well.

They will have a perception of less wealth and the inability to tap into their equity which will halt consumer spending and cause a contraction in consumption which will in turn cause a HPC.

HP deflation and Recession has not and will always be closely related regardless.

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in short,as consumers fail,so does the currency.As sterling weakens against the likes of the Euro,yen,dollar our exports become more competitive,and demand for such goods rises as a result.

And interest rates are put up to 'protect' the currency otherwise you import massive inflation as all the imported goods and commodities rocket in price.

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in short,as consumers fail,so does the currency.As sterling weakens against the likes of the Euro,yen,dollar our exports become more competitive,and demand for such goods rises as a result.

That assumes that other currencies like the Euro. dollar or Yen will not be falling either.

A slowdown in the world economy will not just affect the pound per se.

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The simple fact is that over the last decade NuLab have built an economy based around people selling houses to each other with borrowed money at ever higher prices. It's impossible for prices to drop substantially without causing a recession in such an economy.

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The simple fact is that over the last decade NuLab have built an economy based around people selling houses to each other with borrowed money at ever higher prices. It's impossible for prices to drop substantially without causing a recession in such an economy.

You´ve summed up Gordon´s miracle in just two succinct sentences !

Edited by Caledonian-Emigre

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That assumes that other currencies like the Euro. dollar or Yen will not be falling either.

A slowdown in the world economy will not just affect the pound per se.

these things have a habit of see-sawing.

Just as germany and japan were plumbing the depths of depression we were enjoying a consumer boom.

back in the 70's we were regarded as the "sick man of europe" while germany prospered and the likes of japan were flogging us the latest sony walkman,followed in the 80's with the roar of the tiger economies.....just at the same time we were enduring the miner's strike.

..only in it's latter stages did we have the emergence of "yuppies" and so the baton was passed from east to west......now time for a swap???????

if this scenario happens we will get much stronger euro/yen versus the pound.

cable is slightly different to these and tends to range-trade around $1.60,with the uppermost extremity sitting around $2USD per £GBP

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There won't be a HPC unless the Government decides to tackle real inflation by raising IR to uncomfortable levels to dampen borrowing/spending

IMO this won't happen - they'll rather let inflation rise and redefine the CPI/RPI rather than raise IR to the point where it would crash the housing market

I also think the BOE is in for a shock - people will not stop borrowing/spending and inflation will climb further - I just hope any correction is fast....

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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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