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sealaw2000

Are We Nearly There Yet?

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I've been a member here (albeit quite a quiet one) for an eternity and, frankly, its been a heart-breaking few years for a bear.

I have never seen the feast of bear information that greeted me as I headed into work this morning and as I conducted my daily review of the latest from my HPC fellow lifers.

Is this really it? Has sentiment finally changed?

Oh let it be....

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No...not yet. When we see MOM falls, mortgage applications drop below 90,000, and clearer signals about where we are headed.

Are the recent moves in markets coupled with the phenomenon we've witnessed over the last few months likely to lead to HPD? Im sure they will...but until we see the above, we aint there yet (although very damn close!)

not long now imo...not long now.

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My view is Yes!

When it starts to make the front pages of the papers then sentiment of the masses will shift. When this happens EA's will start lowering prices to get sales and the trickle will become a flood.

Oh look it made the front pages ;)

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My view is Yes!

When it starts to make the front pages of the papers then sentiment of the masses will shift. When this happens EA's will start lowering prices to get sales and the trickle will become a flood.

Oh look it made the front pages ;)

My view is that the virtuous cycle of growth with subdued inflation and low interest rates is about to turn into a vicious cycle of simultaneously falling growth and rising inflation and interest rates. This will be very painful.

Basically everything was ok as long as the Americans could keep buying enough Chinese goods so that the Chinese could buy enough bonds to keep IRs low while simultaneously lowering the price of goods and keeping CPI down.

Now American growth is stalling or possibly going into reverse, while Chinese inflation is taking off. Nasty nasty

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No...not yet. When we see MOM falls, mortgage applications drop below 90,000, and clearer signals about where we are headed.

Are the recent moves in markets coupled with the phenomenon we've witnessed over the last few months likely to lead to HPD? Im sure they will...but until we see the above, we aint there yet (although very damn close!)

not long now imo...not long now.

Agreed.

The other statistic that's well worth watching is unemployment. When that starts significant month-on-month rises, then we know it's the real deal. House prices can, as I'm sure we're all aware, do the most irrational things in a benign job market. However, when incomes start disappearing, then supply will increase as a result of repos from pretty sensible borrowers, not just from the highly leveraged margins.

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Agreed.

The other statistic that's well worth watching is unemployment. When that starts significant month-on-month rises, then we know it's the real deal. House prices can, as I'm sure we're all aware, do the most irrational things in a benign job market. However, when incomes start disappearing, then supply will increase as a result of repos from pretty sensible borrowers, not just from the highly leveraged margins.

I agree....but there is something different this time around as well. And that is the unique level of indebtedness of the average UK household. Will we see ripples from the moribund money markets into the pond of UK PLC? You bet we will...I think we are in for a very interesting 2008.

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No, never will be a crash Mr Brown said no more Boom and Bust. You are stupid if you don't believe him cos e is prime minister and everything innit? Mr King said no more increase in Interest rate either.

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Guest wrongmove
I've been a member here (albeit quite a quiet one) for an eternity and, frankly, its been a heart-breaking few years for a bear.

I have never seen the feast of bear information that greeted me as I headed into work this morning and as I conducted my daily review of the latest from my HPC fellow lifers.

Is this really it? Has sentiment finally changed?

Oh let it be....

All that has actually happened is that RICS have reported that slightly more members reported drops than rises in August.

This is actually quite normal - RICS is not seasonally adjusted, AFAIK, and August is usually a very slow month.

However, for those of us wanting a drop in house prices, this is the first little glimmer in an actual price index we have had for months. We are like smokers who have been on a long transatlantic flight and have finally got out of the airport.....

So we are going to damn well enjoy it!! :P

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This is the start of it IMHO.

- 5 interest rate rises and the sudden realisation that the BOE base rate is not the only factor in determining mortgage IRs

- Credit crunch + an already overstreched debt-laden population, used to an unending supply of cheap and easy credit

- Rising inflation on basic items like food and council tax that you cannot avoid paying

- An almost complete lack of FTBers

Add massively overpriced houses into the mix and oh dear....

Edited by redalert

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I dont think we are quiet there yet will be soon when loads of people come off low fixed rate mortgage deals and realise that their payments might be doubling and they cannot stump up the extra amounts needed to service the Mortgage as they are paying off so many other debts and there are also rising costs of food and other house hold goods which need to be paid for

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Guest barebear

Yes I think so . RICs has reported a first fall in houseprices since 2005 (Independent).Alistair Darling has blamed the banks for reckless lending (Telegraph). Lenders raising mortgage rates irrespective of the MPC. What else,massive sub-prime fallout still yet to be realised.

We need an IR cut now, if that happens again start packing to leave because it'll end in anarchy and total lawlessness.

Oh and the Macanns are innocent and being well and truly set up,bout time the government stepped in and told the portuguese pigs to back off !!

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Yes I think so . RICs has reported a first fall in houseprices since 2005 (Independent).Alistair Darling has blamed the banks for reckless lending (Telegraph). Lenders raising mortgage rates irrespective of the MPC. What else,massive sub-prime fallout still yet to be realised.

We need an IR cut now, if that happens again start packing to leave because it'll end in anarchy and total lawlessness.

Oh and the Macanns are innocent and being well and truly set up,bout time the government stepped in and told the portuguese pigs to back off !!

I have never forgiven that McGann geezer for that dreadful Dr Who feature film 12 years ago.

And Yes, we are there, just not round where I live yet. :(

People will look back in awe that nobody thought prices were heading for a fall when it was so obvious for all to see.

The Captain Darling and Merv comments are the coup de grace as far as I am concerned. Once the ar$e covering has started you know it is down the sh1tter, as you houng homies like to say.

As for hyper inflation, any country that beats the Aussies in cricket is alright by me.

Edited by bobthe~

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Is this really it? Has sentiment finally changed?

Oh let it be....

No not a chance, go go interest rate cuts, FED to drop by 0.5%, BOE by 0.25%, and way hey of we go again. Seen it all before.

Then again, oil and wheat at record highs, Chinese and Indian inflation accelerating, and huge debts to be paid in a fragile economic environment with rapidly tightenening credit, who knows. The fact that every bugger I know keeps banging on about there buy to let pension strongly suggests to me we are well into bubble land and it will go bang. But I have been wrong for the last three years.

Edited by gordonbrown

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No not a chance, go go interest rate cuts, FED to drop by 0.5%, BOE by 0.25%, and way hey of we go again. Seen it all before.

It would take a lot more than that. A whole generation of lenders have just discovered a thing called "risk" for the first time.

Human beings have a tendancy to assess risk based on their own personal experience. The vaste bulk of Brits aged early thirties and younger have known nothing but easy, cheap credit, a benign job market, low inflation*, one-way growth, and one-way house prices. Thanks to the protracted length (it's been reinflated enough times already) of the credit boom (and it's subsequent bubblification**), we have an entire generation who've never actually seen it go tits up. We find ourselves in a situation where the bench has been painted, the council have put a sign up, but people have still sat on it because they have never actually encountered the phenomenon of "wet paint".

Bubbles are generally fed by over-optimism. This time, we have another major driver - complete ignorance of risk.

* Yes, I know, so don't.

** I don't care. It's a lovely word. Just like 'badger'.

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I've been a member here (albeit quite a quiet one) for an eternity and, frankly, its been a heart-breaking few years for a bear.

I have never seen the feast of bear information that greeted me as I headed into work this morning and as I conducted my daily review of the latest from my HPC fellow lifers.

Is this really it? Has sentiment finally changed?

Oh let it be....

Yes, it's happening now.

The last crash is generally agreed to have started in Q3 1989, but if you take 1989 as a whole house prices were actually 25% up versus 1988! And that's about where we are now. There's still the last gasps of HPI momentum out there, but the crucial fundamentals (rising interest rates, negative media sentiment, extreme unaffordability, more restrictive loan requirements, worsening economic background, and general acceptance that buying into BTL today is a mistake) are all now firmly in place. I hesitate to say a crash is now inevitable, but it's 99.99% likely!

The big question today in my opinion is not if a crash is coming, but what the crash will look like. And here I part company from some of the more extreme voices on this forum.

I think we'll see nominal house price falls of about 20%. In an historical context 20% is extreme (since the second world war there's only been four years where we've seen nominal house price falls in the UK), but it's still far less than some of the more apocolyptical members are forecasting. Furthermore, 20% is an average, and I expect there will be a wide range around this average. Flats, London, and the less desirable property in each price band (anything from poor conversions to north facing gardens) will fall more than 20%. Conversely, family houses, anywhere outside London, and the more desirable property in each price band (ie the places we all want to live in) will fall less than 20%.

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