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deano_54321

Does A 'blip' Start A Crash?

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Hello all,

I was just thinking (yes, it hurt :P ) and wondered if a simple small drop in house prices would kick off the crash.

Surely only a couple or three consecutive significant months of drops, say at 1-2% per month, would stop anybody thinking of buying a property to think again (including investors) and any current BTL's sell up quickly.

I am probably stating the obvious, but how is this going to take place? At the end of the day if EA's keep over-valuing properties they aren't going to drop. What will 'force' them to drop the valuations?

Dean

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No, a small drop will be perceived as a soft landing and thus a buying opportunity. Prices will ping up and down between two levels as a result of this until there is a breakout, hopefully to the downside.

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Looking at the graph on the front page, it looks as though this is happening now....

When it does finally break out, I wonder how severe the drop will be....

Dont panic! B)

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I think this depends on what happens after the drop.

Prices drop from summer 04 to summer 05, then once interest rates went down the media went crazy about further cuts. Add on the SIPPS spin and how this would boost prices, sentiment changed and everyone though the bottom had been hit. If interest rates wasn't reduced in Aug 05, I wouldn't have expected that bounce to happen.

The big problem for us bears is if interest rates are reduced when HPI hits YoY negative. The spin along with it would change sentiment again. Although, I can't see any chance to reduce this time without the markets dumping sterling.

Edited by Jason

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And just to add to the above post. When sterling is dumped, it will loose its value. There is a good case to argue that sterling is already over valued.

Now is the time to consider alternate currencies to put your hard earned money into to avoid it devaluing with sterling.

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And just to add to the above post. When sterling is dumped, it will loose its value. There is a good case to argue that sterling is already over valued.

Now is the time to consider alternate currencies to put your hard earned money into to avoid it devaluing with sterling.

Is the women on the avatar your wife or just wishful thinking??

Can you not come up with something more original... :rolleyes:

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A combination of factors will contribute towards a tipping point in sentiment. When a critical mass of people begin to feel that they are not actually as wealthy as they think they are, this will be the trigger. Watch the IVA and bankrupty figures for individuals and companies - and unemployment figures.

UK House prices are a symptom (albeit, a painful one, to many), not a cause of this - before they crash and burn, things have to get bad elsewhere in the economy. Credit squeezing by banks reacting to bad debt has to feed through, to the credit junkies, as does the recent quarter point hike in base rates. Another rise in October/November, together with mega rises in energy costs which won't feed through until everyone starts switching on the central heating over winter, is going to start hurting. The UK press is also slowly waking up to the fact that the CPI basket of goods is a con. Even some papers and TV programs are mentioning the 'C' word...

I don't really believe in a VI press conspiracy, in general they'll just go with the flow and journalists will try not to upset their editors - when that flow trends down they'll all start overreacting and competing to come up with with the worst doom and gloom stories. In a few years when there's no makeover programs on TV, and you're shunned in polite company for mentioning house prices, that'll be the time to come back to the housing market.

TLM

Edited by trompe le monde

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No, a small drop will be perceived as a soft landing and thus a buying opportunity. Prices will ping up and down between two levels as a result of this until there is a breakout, hopefully to the downside.

And, to add to this, while I am still not decided on whether the BBC reporting is biased or just sloppy/'populist': it would take at least a few months of falling prices consecutively for it to get any real coverage. Generally if prices rise the piece might get 3 minutes coverage, whereas if prices fall it tends to get either no coverage or just a very brief mention if that.

I *know* if we'd put in an offer of 195k for one of the four beds on this estate in 2003/2004 I'd have been laughed at and pointed at the asking price of 250k. Now, I can pick out one or two vendors who have had their home on the market since then who would give it serious consideration. That doesn't show up in the reporting however.

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A crash or correction will only be recognised by many after the fact by which time the trend is established. A blip is not a trend. I sold in late 2004 during a period of weak prices which may be seen as a blip in hindsight.

People will wait to see yoy < 0 before they believe prices are falling - it was close to that crossover last year.

JY

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this "blip" has a good chance of being the trigger.

why??

1)august IR hike.....will most likely feed through into house price indices by october.

2)last time we had HP drops,the BoE cut rates.....this time they are ready to RAISE them again,just as it's beginning to bite.

3)unemployment is rising,bankruptcies are rising...keep an eye on the divorce stats.I personally know 3 couples that have/are in the process of divorcing in the last year.

4)HIPS.....was widely posted they were being scrapped earlier this year.THIS IS NOT TRUE.Only the survey aspect is being removed.Energy efficiency reports are still needed by the vendor prior to any sale.EXPECT MORE NEWS ON THIS EARLY 2007.

5)immigration.For many people their job is either at risk,or their wage inflation is non existant......add rising utility bills into the mix and people have less money to spend in the shops.....WITH SO MUCH OF OUR ECONOMY BASED AROUND CONSUMERISM IT'S BOUND TO BE A NEGATIVE OUTCOME FOR RETAIL AND THE JOBS ASSOCIATED WITH IT.

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I would say that even price stagnation will lead to a hit on retail (no more MEW!) and therefore jobs, perceived wealth, the whole approach to property as a continual capital gains vehicle. Prices wont go up much more because there is a simple affordability issue at interest only level. IR's are not going down any time soon and people have borrowed as much as they are going to, hence the slowdown in HPI.

Price stagnation in itself for any period will lead to nominal falls imho.

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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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