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Realistbear

F. T. No Reason Whatsoever U K Will Not Crash Just Like The U S

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http://www.ft.com/cms/s/5500ce88-61f0-11dc...amp;_i_referer=

UK house prices

Published: September 13 2007 12:59 | Last updated: September 13 2007 12:59

It has always been a matter of when, not if. But those predicting the top of the UK housing market have looked rather silly as prices surged ever higher. Perhaps not for long. August data from the Royal Institute of Chartered Surveyors showed that more estate agents reported a decline in house prices than reported a rise, the first negative balance for 22 months. New buyer enquiries declined at the fastest pace in three years. The survey, based on interviews with estate agents, is at odds with more upbeat data compiled by mortgage lenders, and August is a slow month at the best of times. Even so, RICS is closely watched having accurately picked the end of the 1980s property boom.

With the US housing market in free fall, there are few reasons why the same should not happen in the UK. Price rises have been steeper, interest rates have jumped five times in the last year and consumers are just as indebted as in the US. While the UK economy remains robust, the outlook for growth is still closely tied to the worsening fortunes of the US. The average proportion of income that a household needs to service a mortgage is about a quarter. As in the US, the riskier end of the market is already in trouble: repossessions in the first half of 2007 are a third higher than a year earlier.

I think the journo has been reading some of my posts on HPC.co he says pridefully. :lol:

I have consistently maintained that bubble conditions are far worse in the miracle economy than in the US. We have more debt, higher priced houses, lower net wages, more HPI, higher IR, less diversified economy...Given that the US is our largest trading partner and the fact that we hold a lot of subprime debt there is no way we are gong to escape.

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http://www.ft.com/cms/s/5500ce88-61f0-11dc...amp;_i_referer=

UK house prices

Published: September 13 2007 12:59 | Last updated: September 13 2007 12:59

It has always been a matter of when, not if. But those predicting the top of the UK housing market have looked rather silly as prices surged ever higher. Perhaps not for long. August data from the Royal Institute of Chartered Surveyors showed that more estate agents reported a decline in house prices than reported a rise, the first negative balance for 22 months. New buyer enquiries declined at the fastest pace in three years. The survey, based on interviews with estate agents, is at odds with more upbeat data compiled by mortgage lenders, and August is a slow month at the best of times. Even so, RICS is closely watched having accurately picked the end of the 1980s property boom.

With the US housing market in free fall, there are few reasons why the same should not happen in the UK. Price rises have been steeper, interest rates have jumped five times in the last year and consumers are just as indebted as in the US. While the UK economy remains robust, the outlook for growth is still closely tied to the worsening fortunes of the US. The average proportion of income that a household needs to service a mortgage is about a quarter. As in the US, the riskier end of the market is already in trouble: repossessions in the first half of 2007 are a third higher than a year earlier.

I think the journo has been reading some of my posts on HPC.co he says pridefully. :lol:

I have consistently maintained that bubble conditions are far worse in the miracle economy than in the US. We have more debt, higher priced houses, lower net wages, more HPI, higher IR, less diversified economy...Given that the US is our largest trading partner and the fact that we hold a lot of subprime debt there is no way we are gong to escape.

LOL

It says there are few reasons, that to me means there may be reasons it won't happen here (however unlikely)

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http://www.ft.com/cms/s/5500ce88-61f0-11dc...amp;_i_referer=

I have consistently maintained that bubble conditions are far worse in the miracle economy than in the US. We have more debt, higher priced houses, lower net wages, more HPI, higher IR, less diversified economy...Given that the US is our largest trading partner and the fact that we hold a lot of subprime debt there is no way we are gong to escape.

At risk of repeating myself not only is the average US house half the price of the average UK house it is also twice the size. So we pay something like 4 times the price on a pound per square metre basis. Our boom has been much bigger then the US boom and the bust will be commensurate.

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The best it is saved for the subscriber version.... you will love this:

Prices may yet hover, but the common arguments advanced for property to avoid the fate of all asset bubbles are weak. Heavily restricted supply has not prevented Japanese house prices from falling by more than 50 per cent since 1990.

!!!

RB you might want to add that at the start

Edited by BrownField

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It's surprising how fast these things happen. Two weeks ago I said this and I repeat. We ar efacing the inevitable.

The speed that this HPC will happen will be an utter shock to everyone and probably more severe as more people are informed, buying will all but stop. Top stories on specialist news websites were available months ago and syndicated widely meaning that the warnings were available much earlier in the cycle. News papers finally caught on and started reported the credit crunch only about a month ago. Suddenly everyone knows about it. You are no longer the Leper at the dinner party. People ask your opinion and quite simply this fact that rather than 100* people in the country being well informed as was the 1990's suddenly there are thousands*. The slide will be fast, irreversible, shocking and probably be overcooked.

* arbitrary figures.

Ultimately this 'speed' will be good as actually it will probably save our economy. Repros will be higher than the 1990's mainly due to vulnerable borrowers in the market place that in the 1990's simply didn't exist. One major factor will also be the country 'tarts' who will scarper at the first sign of trouble. Perversely emigration may well be reversed as people will not be able to sell up and run. And yet with minimal government interference the vast majority will survive.

Country wide I reckon that repos this time could be as high as 500,000 over a period of two years of a HPC.

Of course if there is another major world event during the next 12 months this could well impact hugely. Otherwise the emerging world economies will help the UK ride out the storm.

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but RB, just yesterday afternoon you were saying that UK HPI had increased and was running at an annualised 24%.

I had my Synical Sam hat on! :lol:

It highlights the confusion in the market. LR Index publish huge HPI data--2% in one month and the next day RICS rain on their parade and say the opposite. I understand RM is to publish their reprort today and some say its down 2.6% in August.

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