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silver surfer

Will Hpi Ever Return?

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Reading Mervyn King's replies to the Tereasury Select Committee it seems the era of unfettered lending might be over for quite some time. Without free and easy credit I wonder if UK house price inflation will ever return in the explosive style of the 1980's or the last ten years?

Maybe we're entering a period where house prices will slowly sink back to long term norms, but then simply stay there for the next generation or two, simply rising in line with real salaries? Maybe the thirty year property future for the UK will look like Germany over the last thirty years?

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Reading Mervyn King's replies to the Tereasury Select Committee it seems the era of unfettered lending might be over for quite some time. Without free and easy credit I wonder if UK house price inflation will ever return in the explosive style of the 1980's or the last ten years?

Maybe we're entering a period where house prices will slowly sink back to long term norms, but then simply stay there for the next generation or two, simply rising in line with real salaries? Maybe the thirty year property future for the UK will look like Germany over the last thirty years?

Hi surferdude.

I would say that on balance, it depends.

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Nah, we'll have it all over again. If, as I suspect will happen, the bust "undershoots" the where-it-should-be level, we'll see a few years of trough then prices will adjust up to that level pretty sharpish, thus creating the single biggest of driver or house price inflation... which is house price inflation itself.

Think about it like this. The whole apparatus of the last boom - securitisation, buy-to-let, Pebblian lending standards - required rising house prices to function. In any other environment, they dead in the water. Without HPI, securitisation would have always appeared the dodgy bet we know it is now, lending standards would have been kept tight (no "who cares, the asset will have risen by £30k when they default anyway"... same applies to securitization), and BTLers would have been forced into approaching the whole shebang from a proper, businesslike angle - no "oh, I'm in it for capital gains" to mask the underlying dicklessness of their investments.

So yes, we'll see it again. How big the bubble gets is anyone's guess, and what wierd and wonderful positive-feedback Thingies we'll see come along to help inflate it is, right now, unforseable. However, it will be back.

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Reading Mervyn King's replies to the Tereasury Select Committee it seems the era of unfettered lending might be over for quite some time. Without free and easy credit I wonder if UK house price inflation will ever return in the explosive style of the 1980's or the last ten years?

You are of course refering to a Japanese style scenario ...

Maybe we're entering a period where house prices will slowly sink back to long term norms, but then simply stay there for the next generation or two, simply rising in line with real salaries? Maybe the thirty year property future for the UK will look like Germany over the last thirty years?

Or Japan, where property has risen in line with wages - ie negatively! :lol:

Incidentaly, like many, I made a small fortune during dotcom (right time, right place, right funds, right information (ie as little as possible :P )), but circa 2000 a die hard income investor who was always chirupping about his "divis", with whom I shared a mutual respect, largely because I introduced him to the concept of the gilt-earnings yield ratio, declared : "TMT won't bounce back." As much as I was prepared for a massive rout in the sector, I couldn't imagine how he could ever be right. After all, technology was and is the future. Vodaphone for instance was widely touted as being on the verge of becoming the international payment system of the future - a multinational clearing system / bank to replace all banks. BUT incredibly he was right. Even the mighty Vodaphone, king of techno zeitgeist (texting, vid capping to YT etc), languishes at less than half its peak, whilst its cashless society dreams are stuck in the carpark, both literally and metaphorically.

The mechanism for long term depreciation is there and we have prototypical examples. So who really knows? "Ever" is a really long time. "Ever see it again" is always < one lifetime. Which did you mean?

Edited by Sledgehead

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Guest tenant super
Reading Mervyn King's replies to the Tereasury Select Committee it seems the era of unfettered lending might be over for quite some time. Without free and easy credit I wonder if UK house price inflation will ever return in the explosive style of the 1980's or the last ten years?

Maybe we're entering a period where house prices will slowly sink back to long term norms, but then simply stay there for the next generation or two, simply rising in line with real salaries? Maybe the thirty year property future for the UK will look like Germany over the last thirty years?

It's an 18 year (or so) cycle - I refer you to Fred Harrisons boom and bust. It seems this is the period that allows fear to overcome greed to overcome fear...

I plan to retire somewhere in the middle of the cycle after the next one. ;)

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It's an 18 year (or so) cycle - I refer you to Fred Harrisons boom and bust. It seems this is the period that allows fear to overcome greed to overcome fear...

I personally have problems with cycles of that magnitude. Firstly, because data goes back only a handful of cycles, statistically, they are of limited significance. Secondly, whilst I sympathise with the idea that man has an immutable emotional nature, I also recognise that nurture is making very different creatures of us.

My intuition tells me that living patterns can perturb behaviour. Japanese property prices have forced children to delay their flight from the nest. Instead of being surrounded by hapless peers 24/7, they have had to return home to parents facing annuity rates of 1% on pension pots whacked by stock market declines, living in houses that lose 4% of their value year after year. That's gonna rub off!

Edited by Sledgehead

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aybe we're entering a period where house prices will slowly sink back to long term norms, but then simply stay there for the next generation or two, simply rising in line with real salaries? Maybe the thirty year property future for the UK will look like Germany over the last thirty years?

No way.....Britain does boom and bust better than anyone else (even the yanks) and we always bounce back. We dont learn cause we love it. Hell we invented the South Sea Bubble, since then we've just learned to find a bigger baloon and keep inflating. We'll do it all again no doubt.

Edited by thefinalbear

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Guest tenant super
I personally have problems with cycles of that magnitude. Firstly, because data goes back only a handful of cycles, statistically, they are of limited significance. Secondly, whilst I sympathise with the idea that man has an immutable emotional nature, I also recognise that nurture is making very different creatures of us.

Ah but Sledgehead, what a story, and what optimism it provides for the future. I understand that nurture will feedback and distort the loop, we have seen this happening with the STR'ers. But it's the weight of opinion that counts, in terms of house prices the critical mass is wrapped in the delusion that prices will go on ever upward far outweighing the rational concerns of those who know its going to go pearshaped but not when.

Having faith in the cycle does at least allow one to keep the more hysterical posters preaching apocalypse at arms length, and it will allow a positive contrarian view when we our economy is in the depths of despair. Philisophically it's a good place to be at the moment, as it foretells that we will bounce back from the wreckage (I think that is a reasonable assumption) of a failed and nasty brand of capitalism.

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Almost no-one ever learns from history, so yes, I think we'll see it again. I reckon a good chunk of those burnt in the last bubble are the same ones who pumped this one up.

Once again, you can bet that "experts" in the media will be crowing "it's definitely different this time!"

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There will be another boom some time and some of us on here will probably be seriously considering BTL one day!!! But not at the moment. The next property boom seems a long way off the radar right now

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There will be another boom some time and some of us on here will probably be seriously considering BTL one day!!! But not at the moment. The next property boom seems a long way off the radar right now

nah - I think the point is that if this buyst extends over multiple decades then it hardly represents a wealth-accumulating opportunity to many of us before retirement

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People love get rich quick schemes and HPI is the mother of all get rich quick schemes.

ALL WE NEED IS A GET RICH QUICK SCHEME! After years of failed get rich quick schemes I know i'm going to get rich with this scheme...and QUICK!!!!

Homer Simpson.

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Reading Mervyn King's replies to the Tereasury Select Committee it seems the era of unfettered lending might be over for quite some time. Without free and easy credit I wonder if UK house price inflation will ever return in the explosive style of the 1980's or the last ten years?

Maybe we're entering a period where house prices will slowly sink back to long term norms, but then simply stay there for the next generation or two, simply rising in line with real salaries? Maybe the thirty year property future for the UK will look like Germany over the last thirty years?

Come on, of course it will return!

People always forget, or simply a new generation arrives without experience.

During the good times people become complacent, "it won't happen to me"

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Come on, of course it will return!

People always forget, or simply a new generation arrives without experience.

During the good times people become complacent, "it won't happen to me"

It's clear that betting on british banks share price has become the latest speculative craze, although

at a fraction of the scale of the housing speculation bubble. The idea of making huge percentages on property on the short-term is as dead as a dodo. Property as a long-term investment is still fine, buying vs renting is very persuasive in favour of buying only because of low IR's but that's not say that people will or be allowed to overstretch as previously seen.

Basically the housing bubble/boom was over in Q4 2007, people didn't realise properly until about 6 months later.

A few months after that and they realised that the bubble hadn't just stopped growing but was indeed deflating.

Now the belief amongst some is that we'll return to 2007 values and a quick bounce back within 12 months. The thing if people do pile in and we such things as gazumping, a great many people will sit back and think....shit, why did i pay so much for this 8" x 11" room where i'm sitting. Reality always overtakes the EA patter once day-to-day life in the 'dream home' and the sheeples ever expanding expectations continue to grow. More for less is what they will say, rather than must buy to not get left behind.

The bulls are neglecting one important factor. 2003 levels of pricing and borrowing were atleast 10 years ahead of what

was sustainable based on what people earn, so if 2003 prices weren't sustinable how bad were 2007 prices ??!??

the makeup of UK households, and how much they are able and WILLING to put aside, more cautious lending will all contribute to a flat line in prices once we determine what the 'market value' is. Those 2007 numbers in all aspects was basically the ceiling, it'll be very hard for any area to breach those levels even with rock bottom IR's.

I don't expect the formation of another housing bubble until atleast 2013. For the simple reason that the numbers just don't add up.

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We crave that roller coaster ride to to the top. We all jump on and feel like the fun will never end. Some jump off before the end fearing the downward trip and some bottle it and jump off half way.

On the way up we grab the plasmas and 4x4 cars that are easily in reach.

When we reach top we realise that the plasmas etc are just not worth this downward trip to hell that is facing us but for many it is too late.

We have very short memories and if this 18 year cycle is correct that Fred keeps banging on about then we must sit back and realise that 18 years is a bloody long time.

We will probably experience two 18 year cycles in our working lifetime and the last one that was here was during my no kids, no house, no worries stage of life when the most important prority at that time was the next shag.

Today is different for me and it is all a bit more serious but in 18 years I will hopefully have feathered my nest and secured retirement on the back of the next roller coaster.

I knew when to get off this one and I hope old age brings further wisdom.

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HPI will return in March.

I notice you haven't stated a year! If you're talking 2011 that might not be far off the mark, but don't expect double digit rises until the back end of the decade. That also answers the main question ... Hpi will return, but not for a while.

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i think HPI will return.

it always will.

as will 80% of the wealth belonging to 1% of the population.

as will 93% of the land being empty while were all crammed into ratboxes for an entires lifes work.

hahahah

no ta. not this time.

turn on, tune in, drop out.

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Hi surferdude.

I would say that on balance, it depends.

When there is no one left who thinks house prices will come back, that's when they will.

We have seen the reverse in action. When there seemed to be no one left who thought house prices could ever fall (except some esteemed members on hpc). That's when they fell.

That' my deep analysis of the situation.

Surer than night follows day, the market will come back. Markets have short memories.

And we should all think twice about quoting Japan. Their HP boom makes ours look trivial. The mother of all HP bubbles, that will never be matched (to say nothing of the inherent problems with the Jap market - insurance issues, low regard for old property, barriers to foriegn investment etc)

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  • 295 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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