Realistbear Posted December 21, 2006 Share Posted December 21, 2006 (edited) http://www.citywire.co.uk/News/NewsArticle...uKey%3dNews.IFA Davis echoes alarm on house prices Published: 07:00 Thursday 21 December 2006 Jonathan Davis, chairman of the London branch of the Institute of Financial Planning, has given a personal warning about the current dangerous state of the housing market. Speaking at the branch's annual dinner at the House of Lords, Davis highlighted the high-level cautions delivered recently by Mervyn King, governor of the Bank of England, and the Financial Services Authority retail chief Clive Briault. Last month Briault asked banks to consider how they would cope with the 'severe but plausible scenario' of a 40% crash in house prices and a third of mortgage defaults ending up in re-possession ..../ Davis pointed out that bear markets typically reduce by over a half of the preceding bull market advance..... He added: 'Let me ask you: in 400 years of recorded asset bubbles have you ever seen one deflate gently?' If you look at the Haliwide Chart the peak is followed by a trough 50% of the previous spike. Davis is correct. Edited December 21, 2006 by Realistbear Quote Link to comment Share on other sites More sharing options...
benjamin Posted December 21, 2006 Share Posted December 21, 2006 different this time though Quote Link to comment Share on other sites More sharing options...
Fancypants Posted December 21, 2006 Share Posted December 21, 2006 Jonathan who? never heard of him. Sounds like an utter charlatan. (nice one FP) Quote Link to comment Share on other sites More sharing options...
BenH Posted December 21, 2006 Share Posted December 21, 2006 (edited) Yes, agree with his sentiments, but WHAT will the trigger be RB ? None of these HPC warnings are in the main News media or newspapers... so as far as Joe Public are concerned, house prices are set to carry on going up... Edited December 21, 2006 by BenH Quote Link to comment Share on other sites More sharing options...
Willy Weasel Posted December 21, 2006 Share Posted December 21, 2006 Yes, it's very strange that someone who is just setting up a new IFA practice should hold himself out as an investment guru Quote Link to comment Share on other sites More sharing options...
Realistbear Posted December 21, 2006 Author Share Posted December 21, 2006 Yes, agree with his sentiments, but WHAT will the trigger be RB ? None of these HPC warnings are in the main News media or newspapers... so as far as Joe Public are concerned, house prices are set to carry on going up... IMO, it will not be IR on their own but the debt ceiling. The proverbial "camel's back" situation where a sufficient number of people simply begin defaulting on their mortgages that the number of properties coming back on the market lower prices and foul sentiment. Gordon will be forced to lower the debt ceiling with higher taxes and the global economy will take care of the rest through higher fuel and worldwide recession which will dent employment. If the stockmarkets hit another bust (when have they ever not hit busts?) the City will lose tens of thousands of employees and the knock-on effect on housing in the SE will be a significant trigger. Its building faster and the bubble is looking very thin as it wobbles dangerously. It has survived beyond 2005 when it should have burst due to the massive effort to keep money supply going through Gordon's printing press, the BoE's willingness to play along by keeping IR at least 2% the wrong side of accomodative and the irresponsible cut in IR in 2005 (Merv's historic error), the arrival of overseas Shylocks anxious to milk the Great British Public of their last dime before it all goes pear shaped. The forces of financial hell are lined up to keep the HPC from happening but, in the end, you cannot beat the market. Quote Link to comment Share on other sites More sharing options...
dogbox Posted December 21, 2006 Share Posted December 21, 2006 the number of properties coming back on the market lower prices and foul sentiment. What about the 'experience' factor? For the first time the masses have been through / witnessed a recent 'bust' experience and then experienced those 'bust' assests recovering, so this time round surely the prevailing attitude will be 'buy buy buy' the moment those assets drop 10% which in turn means falls will be modest. Quote Link to comment Share on other sites More sharing options...
Realistbear Posted December 21, 2006 Author Share Posted December 21, 2006 What about the 'experience' factor? For the first time the masses have been through / witnessed a recent 'bust' experience and then experienced those 'bust' assests recovering, so this time round surely the prevailing attitude will be 'buy buy buy' the moment those assets drop 10% which in turn means falls will be modest. Sadly, many of the repo victimes will have bad credit ratings and the banks will have tightened by that time. The EAs have been running that story in the US (The NAR--NAEA equivalent--even took at full page ads nationwide telling people it was great time to buy as prices had fallen 1 or 2%) suggesting its time to buy but the public ain't buying it. Most see the crash in terms of Great Crash 1 and the fact that it took 7 years to work through. Quote Link to comment Share on other sites More sharing options...
dnd Posted December 21, 2006 Share Posted December 21, 2006 (edited) Yes, agree with his sentiments, but WHAT will the trigger be RB ? None of these HPC warnings are in the main News media or newspapers... so as far as Joe Public are concerned, house prices are set to carry on going up... Personally, I think it'll be the next election Gordies strategy is to win elections through HPI - so everything is geared towards it ATM - at ANY cost Once the election is over there is little political imputus to carry it on Either Gordie will have achived his goal of PM or Cameron will be in and he won't be able to sustain the PR machine needed to currently maintain HPI Edited December 21, 2006 by dnd Quote Link to comment Share on other sites More sharing options...
Als Posted December 21, 2006 Share Posted December 21, 2006 Sadly, many of the repo victimes will have bad credit ratings and the banks will have tightened by that time. The EAs have been running that story in the US (The NAR--NAEA equivalent--even took at full page ads nationwide telling people it was great time to buy as prices had fallen 1 or 2%) suggesting its time to buy but the public ain't buying it. Most see the crash in terms of Great Crash 1 and the fact that it took 7 years to work through. It's interesting to read peoples accounts who are over there observing the US situation. Sentiment definitely seems to be the deciding factor. When it turns it turns. Quote Link to comment Share on other sites More sharing options...
Realistbear Posted December 21, 2006 Author Share Posted December 21, 2006 Personally, I think it'll be the next election Gordies strategy is to win elections through HPI - so everything is geared towards it ATM Once the election is over there is little political imputus to carry it on Either Gordie will have achived his goal of PM or Cameron will be in and he won't be able to sustain the PR machine needed to currently maintain HPI Agree, without HPI Gordon would be nowhere. In the eyes of the public, HPI and consequently Gordon has been seen as a great blessing to the nation. That story is souring though as even the BBC's reporting of it seems to be less sanguine. The social cost is mounting and those stories are making the news. Quote Link to comment Share on other sites More sharing options...
misfit Posted December 21, 2006 Share Posted December 21, 2006 different this time though Rubbish - Don't be so naive Mortgages should be tested for affordability and this is clearly not happening. If it was happening banks would not be allowed to lend at crazy multiples thereby fuelling HPI which has become a self perpetuating extremely vicious circle. Banks should not be allowed to lend without proper safeguards similar to other European countries. The banks need closer regulation. If they were better regulated maybe they would not leave customers statements outside asking to be stolen by identity fraudsters instead of shredding them. They should also be stopped from adding a margin on to bank charges and increasing the amount you have to pay when moving from one mortgage provider to another with no warning. Quote Link to comment Share on other sites More sharing options...
benjamin Posted December 21, 2006 Share Posted December 21, 2006 Rubbish - Don't be so naive Mortgages should be tested for affordability and this is clearly not happening. If it was happening banks would not be allowed to lend at crazy multiples thereby fuelling HPI which has become a self perpetuating extremely vicious circle. Banks should not be allowed to lend without proper safeguards similar to other European countries. The banks need closer regulation. If they were better regulated maybe they would not leave customers statements outside asking to be stolen by identity fraudsters instead of shredding them. They should also be stopped from adding a margin on to bank charges and increasing the amount you have to pay when moving from one mortgage provider to another with no warning. shame you missed the irony, apparently Quote Link to comment Share on other sites More sharing options...
misfit Posted December 21, 2006 Share Posted December 21, 2006 shame you missed the irony, apparently In that case I apologise That is the problem with forums the tone can not always be determined. Quote Link to comment Share on other sites More sharing options...
Bobbins Posted December 21, 2006 Share Posted December 21, 2006 Yes, agree with his sentiments, but WHAT will the trigger be RB ? What was the trigger 1987 crash? People speculate on that, but there's no definite answer. If you could see the trigger coming, a speculative bubble would never exist. An asset bubble is like Buckaroo. You load that cowboy up, and then without warning.......... Quote Link to comment Share on other sites More sharing options...
MarkG Posted December 21, 2006 Share Posted December 21, 2006 If you could see the trigger coming, a speculative bubble would never exist. Indeed. Triggers are something people look for _after_ a crash to try to find a rational way to explain something that was irrational in the first place. Quote Link to comment Share on other sites More sharing options...
dnd Posted December 21, 2006 Share Posted December 21, 2006 Agree, without HPI Gordon would be nowhere. In the eyes of the public, HPI and consequently Gordon has been seen as a great blessing to the nation. That story is souring though as even the BBC's reporting of it seems to be less sanguine. The social cost is mounting and those stories are making the news. ...and the social cost is worsening due to real inflation, taxes, spending cuts (to pay for Gordies spending) and immigration Early election? Quote Link to comment Share on other sites More sharing options...
MarkG Posted December 21, 2006 Share Posted December 21, 2006 Early election? Nah, unless he gets locked up over the 'cash for peerage' scheme, Blair will hang on until Brown is totally disgraced. Quote Link to comment Share on other sites More sharing options...
eric pebble Posted December 21, 2006 Share Posted December 21, 2006 http://www.citywire.co.uk/News/NewsArticle...uKey%3dNews.IFA Davis echoes alarm on house prices Published: 07:00 Thursday 21 December 2006 Jonathan Davis, chairman of the London branch of the Institute of Financial Planning, has given a personal warning about the current dangerous state of the housing market. Speaking at the branch's annual dinner at the House of Lords, Davis highlighted the high-level cautions delivered recently by Mervyn King, governor of the Bank of England, and the Financial Services Authority retail chief Clive Briault. Last month Briault asked banks to consider how they would cope with the 'severe but plausible scenario' of a 40% crash in house prices and a third of mortgage defaults ending up in re-possession ..../ Davis pointed out that bear markets typically reduce by over a half of the preceding bull market advance..... He added: 'Let me ask you: in 400 years of recorded asset bubbles have you ever seen one deflate gently?' If you look at the Haliwide Chart the peak is followed by a trough 50% of the previous spike. Davis is correct. A Lone [not loan!] voice in the wilderness -- probably will be bumped off like Socrates... Quote Link to comment Share on other sites More sharing options...
domo Posted December 21, 2006 Share Posted December 21, 2006 different this time though yeah, its a LOT worse just ask the yanks. 6 months in lets see. 10% fall in new home prices 3% fall in existing homes ghost towns plummeting EVERYTHING... oh wait! foreclosures are rising! Quote Link to comment Share on other sites More sharing options...
eric pebble Posted December 21, 2006 Share Posted December 21, 2006 (edited) yeah, its a LOT worse just ask the yanks. 6 months in lets see. 10% fall in new home prices 3% fall in existing homes ghost towns plummeting EVERYTHING... oh wait! foreclosures are rising! It's all in them 'ere graphs - ....they say it all........ http://www.housepricecrash.co.uk/graphs-in...nsolvencies.php http://www.housepricecrash.co.uk/graphs-av...house-price.php Edited December 21, 2006 by eric pebble Quote Link to comment Share on other sites More sharing options...
THE BALD MAN Posted December 21, 2006 Share Posted December 21, 2006 What was the trigger 1987 crash? People speculate on that, but there's no definite answer. If you could see the trigger coming, a speculative bubble would never exist. An asset bubble is like Buckaroo. You load that cowboy up, and then without warning.......... I do rememeber the mortgage interest relief changes spurring a huge rush to buy before the bubble burst. Quote Link to comment Share on other sites More sharing options...
Willy Weasel Posted December 21, 2006 Share Posted December 21, 2006 I've just done a quick calc based on the theory that bubbles lose 50% of their gains when they pop. I've used the Halifax data The low point appears to be Jan '96 with a figure of £60,638 I've taken Nov '06 as the high point at £188,172 The gain is therefore £127,534 50% is therefore £63,767 So if the market loses 50% of its gains it will fall to £124,405 which is halfway between the average price for February 2003 and that for March 2003. Quote Link to comment Share on other sites More sharing options...
Dylan Posted December 21, 2006 Share Posted December 21, 2006 It's all in them 'ere graphs - ....they say it all........ http://www.housepricecrash.co.uk/graphs-in...nsolvencies.php http://www.housepricecrash.co.uk/graphs-av...house-price.php They could do with being update, they're six months out of date. Quote Link to comment Share on other sites More sharing options...
subsidiser Posted December 21, 2006 Share Posted December 21, 2006 What was the trigger 1987 crash? People speculate on that, but there's no definite answer. If you could see the trigger coming, a speculative bubble would never exist. An asset bubble is like Buckaroo. You load that cowboy up, and then without warning.......... The 87 crash was a stockmarket crash. Stocks are more volatile than property. There was some indication that interest rates would go up dramatically before the downturn in house prices began in 89/90. I'm calling it a downturn but it was crash because it was quite a fast event by property standards - and in nominal terms too which is rare. Quote Link to comment Share on other sites More sharing options...
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