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Prepare For Bad News: House Prices Are Going To Drop

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Guest wrongmove

It's Anatole Kaletsky, so of course it is all absolute nonsense :P

Prepare for bad news: house prices are going to drop

Summer’s financial crunch will hurt homeowners

Anatole Kaletsky

"To judge by the number of worried questions I keep getting from friends and readers, there is still plenty of interest in the apparent financial crisis that has been dominating the business news since early August. One aspect that has not received much coverage so far is its impact on the British economy and the London housing market – and the political implications of those for Gordon Brown.

The latest twist, which focused my attention on the local repercussions of this international saga, occurred on Wednesday, when Mervyn King, the Governor of the Bank of England, sent an open letter to the House of Commons Treasury Committee. Mr King’s letter, characteristically lucid and dispassionate in its intellectual analysis of the crisis, had a more controversial subtext, which the Financial Times reflected in the opening sentence of its front-page report: “A clear divide between the world’s leading central banks over how best to respond to the credit squeeze emerged yesterday after Mervyn King warned that efforts by his counterparts in America and Europe to shore up the financial system could sow the seeds of a future financial crisis.”

In the collegial and understated world of international central banking, Mr King’s letter represented an almost unprecedented public critique of the European Central Bank and US Federal Reserve Board for having poured hundreds of billions of dollars and euros into their banking systems since early August to try to ameliorate the consequences of the financial blunders.

After weeks of intense lobbying for comparable action in London, Mr King’s message was defiant and blunt: whatever special treatment financiers may extract from New York or Frankfurt, the Bank of England would be no soft touch. It would stick to its normal procedures and would leave private lenders and borrowers to clear up the mess they had created. Unless the safety of money deposited in the banking system itself were threatened – and so far, there hasn’t been the slightest evidence of any such threat – Britain would ensure that the costs of the present crisis fell squarely on the shoulders of bankers and their shareholders, who could expect no help from the public purse. ........"

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Guest An Bearin Bui
It's Anatole Kaletsky, so of course it is all absolute nonsense :P

Prepare for bad news: house prices are going to drop

Summer’s financial crunch will hurt homeowners

Anatole Kaletsky

What a hypocrite - he was saying that everything was fine and dandy only last week!

Journalists have no shame... good to see bullish irrational exuberance turn to bearish realism though

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After tonights news - 5 guess they may well go up as the boe starts to hyperinflate our economy.

Which ultimately equals recession when companies F off to cheaper countries.

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If Mervyn King can stick to his guns he is doing the right thing; I read his paper and its very sound.

As tonight has shown, BoE will act as lender of last resort to protect depositors, but they will not be bailing out any speculative funds.

This does not lead to hyperinflation...

*We already had the hyperinflation*!!! It was in the form of the HPI. Now we get consumer retrenchment and the same mix of inflation in sectors like tax, transport, food and deflation in housing and all the consumer crap that people will realise that they really don't need as much as they thought. Overall the deflationary factor will outweigh the inflation.

It is the investments leveraged on the loans sold, based on the property, that will get shafted if MK has his way. For normal people it means living within their limited means, this means lower growth.

The Fed, BoE and ECB are all playing different roles

1) Fed is struggling to keep everyone afloat including the plutocrats

2) ECB is concerned about its banks that have been sold the crap

3) BoE is concerned not to bail out speculators, but to protect the economy

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It is the investments leveraged on the loans sold, based on the property, that will get shafted if MK has his way. For normal people it means living within their limited means, this means lower growth.

......For normal people it means living within their limited means, this means lower growth.

......what is normal......?......... :o:o:o the following?

8.2m British adults are in serious debt and 2.1m are struggling with repayments according to the latest quarterly research commissioned by Thomas Charles and conducted by YouGov. They found that 18% adults in Britain have £10k or more of unsecured debt, equivalent to 8.2 million adults. This is a rise of 30% on last year.

Recent research from MoneyExpert.com reveals that 2.48 million (7%) people - are "very concerned" about their ability to manage debt while another 24% are “concerned”. 25% adults with debts have increased the amount they owe in the past three months as they struggle to juggle their borrowing burden

Over two million British consumers (6%) cannot quantify how much debt they’re in, according to research carried out by Unbiased.co.uk. This trend seems worse amongst young people, with 41% of 18-24 year olds unaware of their current debt burden to within £500.

Today in the UK:

* Consumers will borrow an additional £322m today

* The average household debt will increase by over £13 today

* 77 properties will be repossessed today

* 317 people today will be declared insolvent or bankrupt

* 2,750 County Court Judgements (CCJs) issued

* Bank and building societies will hand out £1bn in mortgages today

* Citizen Advice Bureaus will deal with 5,300 debt problems today

* The average car will cost £15 to run today

* More than 7,716 loan repayments are going unpaid every day

* The average home will cost £30 today to run

* Raising a child to the age of 21 will now set you back £23.50 daily

* The price of a typical house will increase by £44 today

* £500m will be withdrawn from cash machines today by 7.5m people across the UK

* 24.5m transactions worth £1.4bn will be spent on plastic cards today

* 1/3rd of all groceries we buy today will end up in the dustbin.

http://www.creditaction.org.uk/debtstats.htm

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And the bad news is......? :unsure:

...the popular press forget there are two sides to every scenario.....for FTBs and recent STRs this is welcome news....for people wondering if their children will ever be able to buy a house this is a glimmer of hope.....sanity at the end of the big bubble......the Rupert Times needs to speak for all....not just the BTLers.....and other speculators....... <_<<_<<_<

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......For normal people it means living within their limited means, this means lower growth.

......what is normal......?......... :o:o:o the following?

http://www.creditaction.org.uk/debtstats.htm

"* The price of a typical house will increase by £44 today"

This statement may not be entirely accurate IMHO. :P

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What a hypocrite - he was saying that everything was fine and dandy only last week!

Journalists have no shame... good to see bullish irrational exuberance turn to bearish realism though

Many will "change sides" now that the crash is so obvious it is no longer worth denying it. We will start to see a few "Neithers" go bear in the hours and days ahead.

But again, it will not be official until The Sun print "crash" on the front cover.

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Guest wrongmove
Many will "change sides" now that the crash is so obvious it is no longer worth denying it. We will start to see a few "Neithers" go bear in the hours and days ahead.

But again, it will not be official until The Sun print "crash" on the front cover.

:P

Yes RB, it's called getting your timing right.

(I'm still neither btw)

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...the popular press forget there are two sides to every scenario.....

Yeah, it's called democracy - 51% rule 49%. The majority are happy with the misery of the minority and their advocacy media love to shout about it. The worst kind of government!

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'House prices are going to drop'.......yes, but how much are they going to go up beforehand? That is the unknown. My guess based on the feelings from my computer desk this morning, not very much in most cases.

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Yeah, it's called democracy - 51% rule 49%. The majority are happy with the misery of the minority and their advocacy media love to shout about it. The worst kind of government!

However in the UK for the last 30years + house owners are in a much bigger majority and sit on both sides of the commons, a case of 70%+ rulling the 30% and half of that 30% dont give a sht either way, either council tennents or maybe intellectualy incompetent (happy???) to give a toss. However the newly found force of HPDeflation may well be the equal but opposite stick weve been waiting for.

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Guest grumpy-old-man
:P

Yes RB, it's called getting your timing right.

(I'm still neither btw)

the majority have seen this coming though for quite some time now WM.

I listened to them & then did my own research (DYOR for the newbies).

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What a hypocrite - he was saying that everything was fine and dandy only last week!

Journalists have no shame... good to see bullish irrational exuberance turn to bearish realism though

Teflon reporting-making sure nothing sticks!

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Guest wrongmove
the majority have seen this coming though for quite some time now WM.

I listened to them & then did my own research (DYOR for the newbies).

Hi GOM - check out my posts from the beginning of this forum (Aug 2004) until about Aug 2005. They are a matter of public record. I was as bearish as a beary thing - well ahead of the curve! So far ahead, it cost me lots of money by putting off a house purchase.

Then I realised that while it was probably going to happen, but it was going to take a lot longer that I had originally thought. I became a neither (short term neutral/bullish, long term bearish) - should be both, not neither!! For the last two years, my HPI predictions have pretty well correct, based mainly on watching demand in the form of approvals data (thanks spline and KoN).

I am now getting pretty bearish again, but still skeptical. IMHO, HPI will drop sharply from here, but I am not yet convinced it will go very negative - I am not advising people to STR, but I have been saying sell your second or third properties for a long time.

In a cyclical market, all viewpoints are correct at some time - the old stopped clock analogy, but permabears generally lose badly measured over the whole cycle. Even permabulls do better.

It's all about timing.

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