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Concrete Jungle

While Trawling Through Google I Found The Following

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UK House Prices, Consumption and GDP

Apologies if this has been posted before, as I have not come across it. I thought it may be of interest to some posters on here. It can be viewed in Power Point instead of html.

BUMP - has been posted here a while ago (year or two). Andrew Farlow (the author) was my neighbour once upon a time. Bright chap and a very thoughtful economist. Anything written by him is well worth a read.

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Scary how accurate it is, considering only 50 powerpoint slides or a page of text. The savings ratio is from 2004, 3% nightmare, now at just above zero.

Interest rates may have too much to do and be unable to fall as far as the housing market might require:

If the pound were to weaken too quickly;

OR oil or commodities prices rise too strongly, feeding UK inflationary pressures;

OR the US were to suffer a fiscal crisis and sudden swing in sentiment forcing it to raise real interest rates much higher in defense;

OR UK government finances were to deteriorate quickly as lower confidence and economic activity reduced the tax yield.

Given current overvaluation, the real rate of return on housing for, say, the next 20 years is much lower than the historical average of about 2.5% (indeed, zero is within the 95% confidence interval for the 20 year real rate of return).
A breakdown?

Misleading causation.

Both driven by income expectations? Not directly observable.

Credit constraints?

US government has joined US citizens. Approx $450bn budget deficit per year.

Externally held portion of debt risen from 20% to 45%.

Problems with ‘depth’ of US mortgage markets.

Problems with US ‘lender of last resort’.

If sufficiently strong house price falls in one country (for example, rebalancing in the US will require

lower spending on housing consumption) or several countries generate a decline in consumption for

them, then it is more likely that consumption will fall in other countries too:

Real contagion (via consumption)

.

Financial contagion (via, in particular, mortgage bank and government balance sheets).

Equity-based bubbles less damaging than debt-based bubbles. Has mitigating the first, led to the latter?

See Farlow, “UK House Prices, Consumption, and GDP in a Global Context,” Section 6, for scenarios for correction.

Edited by maxwell

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In ‘turning’, or stagnant, housing markets price does not fall heavily at first; transactions do. The liquidity of the market and ability to ‘release’ equity falls.Those wanting to trade-down are heavily dependent on chains of buyers. Their ability to release MEW falls

If MEW plummets, there is no new flow into the stock of assets to generate new consumption flow. Less stabilizing?

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I've only read half and it is very interesting (with some delightfully prescient bullet points such as 'bailout' 'moral hazard'). If there is any chance you could post a powerpoint version I'd be grateful. I can't see any of the charts so I am missing a lot of the points being made.

Thanks for the post.

William

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Try using

Powerpoint

Or perhaps someone more knowledgeable than me can post the images in the thread.

Works a treat, all the graphs are showing it seems. Thanks.

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UK House Prices, Consumption and GDP

Apologies if this has been posted before, as I have not come across it. I thought it may be of interest to some posters on here. It can be viewed in Power Point instead of html.

This is fantastic. Even more so when I realised halfway through I hadn;t noticed the date, and it's JANUARY 2005!!!

They must have been lone voices back then.

READ THIS!! :o

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This is fantastic. Even more so when I realised halfway through I hadn;t noticed the date, and it's JANUARY 2005!!!

They must have been lone voices back then.

READ THIS!! :o

I decided to e-mail the PowerPoint link to the mortgage advisors and bank staff I know. I wonder if they enjoyed this or the money programme liar loan show most. Tomorrow I shall introduce them to the work of Fred Harrison.

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They must have been lone voices back then.

It was early 2005 when I started lurking on HPC, and there were many predicting the coming problems, and it appeared as if we were on the cusp of the collapse then... alas the bulls were given their last remaining comeback.. the "timing card". However what these bulls probably still don't realise is that they will be wishing us bears had been right in 2005 when they experience the increased depth of the coming depression caused the extra few years of prolifigate borrowing since then <_<

I like the last line...

Being better educated helps. Caricature of ‘optimists’ or ‘doomsters’, ‘experts’ or ‘pundits’ does not help.

How true and, for me, the collective on HPC.co.uk have been instrumental in this.

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great find, does however support increased rents, esp from the 90's graph but then BTL wasn't as big back then, nor was Leave to rent to let.

i'm still reading the rest but really like how withdrawal of credit was bought up early as a possible crash indicator and the global markets.

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Interest rates may have too much to do and be unable to fall as far as the housing market might require:
  • If the pound were to weaken too quickly;

  • OR oil or commodities prices rise too strongly

  • OR the US were to suffer a fiscal crisis and sudden swing in sentiment

  • OR UK government finances were to deteriorate quickly as lower confidence and economic activity reduced the tax yield.

Full House! :lol:

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  • 395 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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