Roland Posted August 25, 2004 Share Posted August 25, 2004 I have been away for a month so I may be a bit out of touch, but I can't help returning to a subject which I have mentioned before and that is the apparent desire of some people to believe that the major lenders and certain pundits are in some kind of diabolical cabal to distort the figures and lie about what is going on. They are not. Take hometrack. They are now forecasting annual house price inflation in 2004 to be 5%. That sounds extremely bearish to me. Why? Because so far this year prices have already risen by 10% according to most surveys. So a forecast of 5% annual by December 2004 actually marks a fall from the current level - on a national average basis , which is of course a very rough and ready way of looking at things. I have no problem with agreeing with this. What if this rate of afall of say 5% every six months contrinues for the next year or so before it recovers? Is it a crash? It depends. I think it is, but then I sold my house a month ago and will be ecstatic if we get thsoe kind of falls. But for most people who bought their houses three, four, five or more years ago that is not a disaster. It will not even put many of them in negative equity. Those small number of people who bought in the last two years with little personal equity will face negative equity if prices fall 20%. But even then it will only cause them a problem if they become forced sellers before prices recover. What I am trying to get at here is that I think what is going to happen is that the market bulls are going to be able to call it 'stagnation' (because the fall merely wiped out the last two years and very few people actually went out of pocket) meanwhile people like myself will still be able to call it a crash because we sold at the peak, watched prices fall 20% and then bought a bigger house. I have read the thread which rather pointlessly tried to define a crash. That is very interesting to economists. What matters to most of us I suspect is can we buy a bigger house/a house at all by waiting for prices to fall? As a convinced bear I am sorry to say this to some other bears, but I think there is a chance that people who STR'd two years ago will not get the fall they need to make up their loss. That does not mean there is not going to be a 20% fall in house prices from this summer's peak. Quote Link to comment Share on other sites More sharing options...
Red Baron Posted August 25, 2004 Share Posted August 25, 2004 I think you are being very naive; the reason Hometrack, Rightmove and all the other vested-interest propagandists appear to be talking down expectations is to deter the BOE from further IR rises which they know will toll the death bell for the current (ludicrous) boom, and accelerate the long overdue crash. These vocalists represent the lenders, the estate agents, the surveyors, the valuers, the legals, the TV presenters, and every other Tom and Dick parasite who makes a 'turn' out of property transactions. These are highly manipulative predators who have done increasingly well out of the current property madness and are utterly without conscience when it comes to persuading innocent FTBs to make foolish commitments to grotesquely over-priced property. However, just wait - these animals will become the first to talk the market down with vendors when their commission fees are threatened by a market which will very shortly turn and bite them goddam hard. I have posted many times on this forum regarding my predictions; these remain - a 25-40% crash in house prices. Are you reading this Kirsty? Have you ever thought about your duty of care to your viewers? Quote Link to comment Share on other sites More sharing options...
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