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Rightmove Predicts Housing 'soft Landing'

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If you determine a soft landing as flying down the runway with the wheels getting ripped off, ploughing into the terminal and bursting into flames, then you got it correct.

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Guest grumpy-old-man
If you determine a soft landing as flying down the runway with the wheels getting ripped off, ploughing into the terminal and bursting into flames, then you got it correct.

:lol::lol::lol:

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There has only really been one hard landing in UK - the end of the last boom in the late 80s.

Earlier booms ended with stagnant prices while (rampant) inflation brought prices and incomes back to historical norms. i.e. soft landings.

I hate to admit it, but the above is correct.

I'm off to boil my eyes.

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Guest Shedfish
Trying to engineer a soft landing is like trying to "engineer" a bridge made out of crisps :P

:lol:

not even pringles would work

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Guest Winnie
I hate to admit it, but the above is correct.

I'm off to boil my eyes.

You forget the speculative put here - the army of BTLs will have to pull if there is no capital appreciation. And oh yes....sentiment is shifting. The difference is we are all watching a massive precedent in the US and Spine. Brits know their houses are crazily overpriced, they know this is coming to us....

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Guest wrongmove
I hate to admit it, but the above is correct.

I'm off to boil my eyes.

Please don't do that - past performance is not always a good guide to the future. We don't have rampant wage inflation at the moment, for example.

But typically, it is true to say that housing booms end in soft landings.

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Rightmove move are in the business of selling houses, wouldn't it be refreshing if Mr Ed Williams spoke his truth and said "I wouldn't touch the property market right now with two barge poles sellotaped end to end". but that would never happen as we live in the real world with real share holders to please.

At moments like these I'm reminded of the likes of Mr Enron Key Lay god bless his sole who said right upto the end "No I'm not smoking crack when I said I would still invest in our shares", at the time they had fallen 70% from their peak.

Edited by Jimmy2Times

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There has only really been one hard landing in UK - the end of the last boom in the late 80s.

Earlier booms ended with stagnant prices while (rampant) inflation brought prices and incomes back to historical norms. i.e. soft landings.

Agree. But with Brown announcing he wants to keep public sector pay at CPI or less, around 1.5%, do you see the type of inflation we had in the 60's and 70's coming back ? I don't, so something will have to give. We'd price our workforce in the private sector out of many markets if inflation soared.

If rampant inflation does return (and I mean 8-10% a year, as opposed to the RPI of 5% now), then Brown and co. will be out of a job. It will also upset quite a lot of borrowers, as I'd expect interest rates to rise further as a result.

So, soft landing- possibly. Hard landing - better than evens bet. All in my opinion, of course.....

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Please don't do that - past performance is not always a good guide to the future. We don't have rampant wage inflation at the moment, for example.

But typically, it is true to say that housing booms end in soft landings.

I know I know, but I have long thought that the most effective way out for the powers that be would be to weaken the currency and allow inflation to bail people out. We’re not seeing that at the moment, but it wouldn’t take much (a couple of judicious cuts) to spark general inflation, and this could be done without reigniting the housing market in the medium term if sentiment is badly damaged by a small period of falls.

Basically, the BoE are in a pretty strong position to enable people to honour their debts without pushing values higher. I know that BTL etc will get killed, and that there will be a flood of certain property types to the market (but I don’t want a flat, do you?), but an extended period of moderate inflation and static house prices would mean that people would (just) be able to hang on to their homes.

To kill inflation we need rates to be up around 8% or more, and with the debt burden as it is, people simply can’t bear that sore of monthly commitment.

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Guest Winnie
Please don't do that - past performance is not always a good guide to the future. We don't have rampant wage inflation at the moment, for example.

But typically, it is true to say that housing booms end in soft landings.

Wrong move and wrong thinking again. :lol:

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Earlier booms ended with stagnant prices while (rampant) inflation brought prices and incomes back to historical norms. i.e. soft landings.

Very, very true. The pressure has either been relieved by general recession, or a bout of serious inflation. Whilst I can't stand the phrase "it's different this time"... it's different this time, in that there is almost direct, almost apolitical link between inflation and interest rates, so it's difficult to see how the possibility of inflation going for even a light jog will be allowed without Mr. King pushing interest rates up.

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Guest wrongmove
Wrong move and wrong thinking again. :lol:

Care to elaborate?

I suspect you may be referring to money illusion, as pointed out by YK above. But to consider money illusion, you also need to consider the high gearing most of us use to by property.

We can't just put £200k in the bank to make sure we hold real value, we can only typically put say £20k.

For most of us, no negative equity means soft landing, IMHO.

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Guest An Bearin Bui

wrongmove, housing booms of the past may have ended in "soft landings" but only because inflation wiped out the difference between wages and house prices eventually. Since the 1980s that hasn't been the case and housing markets that have experienced boom conditions have always been followed by crashes worldwide. Here's a table of more recent housing booms and their outcomes:

Netherlands, 1978–85 -50%

Finland, 1989–95 -46%

Japan, 1991–present -43%

Norway, 1987–93 -39%

Switzerland, 1990–2000 -39%

New Zealand, 1980–85 -37%

Denmark, 1978–82 -36%

Sweden, 1979–85 -35%

(From Prof Morgan Kelly at UCD: http://www.ucd.ie/economics/staff/mkelly/p...s/housing1.pdf)

Housing booms only end in soft landings when wages and consumer price inflation rise to be back in line with historic norms. That happened in the 1960s / 1970s but hasn't happened recently because central banks have made it their mantra to tackle inflation at all costs. Employers are also spoilt now as wages in the private sector have suffered only stagnation or decline (outside of finance) over the last 10 years and in a globalised economy employers can keep it that way.

Also, the entire baby boom generation is due for retirement in the next few years and they have always run things to suit themselves - if they see their pension savings wiped out by inflation they'll be pretty angry so any govt that allows inflation to get out of control will not be long in power. People focus on those who are indebted in the UK but in reality there are a lot of people out there, particularly the largest single age-group aged 50-65, who have no debts and a lot of savings, pensions funds and other assets: they'll be pandered to as they have more political clout unlike the indebted 20-somethings with 100% IO mortgages.

So I'd conclude that the only politically acceptable response would be to fight inflation. Already we're hearing criticism of the BoE for not having tackled inflation sooner and more effectively. If they cut rates again, it won't be for long as inflationary pressures are already building (food, oil etc). Put it this way, do you see the government and BoE allowing a situation to arise where by 2010 the average salary in the UK is £60K? Nope, I didn't think so but that's the level salaries would have to rise to for house price / wage ratios to return to the norm (c.£60K house price vs. c.20K average salary in the 1990s).

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Guest wrongmove
wrongmove, housing booms of the past may have ended in "soft landings" but only because inflation wiped out the difference between wages and house prices eventually.

<snip>

I agree. I even pointed this out myself.

My posts made no predictions about the future. I was just stating that, in the past, landings tended to be soft (due to rampant inflation), so calling a soft landing "typical" was probably justified.

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Guest An Bearin Bui
I agree. I even pointed this out myself.

My posts made no predictions about the future. I was just stating that, in the past, landings tended to be soft (due to rampant inflation), so calling a soft landing "typical" was probably justified.

OK, that's cleared that up then - for a minute there I thought you were a Rightmove press officer moonlighting on HPC.co.uk... <_<

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http://business.timesonline.co.uk/tol/busi...icle2360384.ece

a typical soft landing? anyone able to cite other examples?

Exactly on cue. So predictable. This was the exact same "prediction" given by the former (former) chief economist of the US National Assn. of Realtors. David "Mr. Realestate" Lereah resigned after his multi-state advertising program in all the top newspapers saying "now was a good time to buy" was ignored. The crash happened anyway.

"Soft landings" follow soft HPI. Hard landings follow the kind of HPI we have seen in recent years.

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Guest Shedfish

the language used by VI commentators has a certain chronology to it

- stellar performance

- robust growth

- in line with expectations

- below average increase

- gentle inflation

- below general inflation

- almost static

- static

- soft landing <- (we are here)

- bumpy landing

- hard landing

- c-c-c-c... can't say it

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A soft landing only for those with money illusion.

From a homeowner perspective, does it really matter? The value of the house is eroded in real terms but so is the value of the debt, you're no worse off if things just stagnate.

Okay rents are generally a bit lower at present, but the debt stays constant so that gap narrows. And you get the security of your own home, you can do stuff to it etc.

A material nominal drop would be really ******ing annoying, a real drop's irrelevant. Admittedly it's more relevant for investors, but who cares about them?

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