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How Would You Predict The Next Crash

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No matter what anybody says, there are lots of people on this forum waiting patiently for the market to bottom whether it be for profits or the purchase of a family home

Wth all the knowledge input into this site, its such a useful resource for those in the property game of the future.

Where do you see the market in 5,10 or 20 years time?

Do you believe in harrison's 18 year cycle?

Are you familiar with drBubb's idea's?

Will we be the next japan?

Will the lending ever get so loose?

More importantly, what would you say were the 5 main elements that made the summer of 2007 the peak? Was it one pin or several all acting at once to pop that bubble. Don't say cheap money or stupid lending (we all know that) - be more specific and relate this to how you would see the next boom and bust emerging. Would it be the same situation as in a de ja vous scenario?

What were the red flags to look out for the next time around?

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Do you believe in harrison's 18 year cycle?

Are you familiar with drBubb's idea's?

Will we be the next japan?

Will the lending ever get so loose?...

What were the red flags to look out for the next time around?

Harrison's 18 year cycle is no more accurate a way of predicting property prices than asserting that house prices double every seven years.

The clearest and most significant indicator in the 1980's property cycle that the market had over heated was lenders offering absurd income multiples or stupid deposit levels. And this repeated itself as sure as eggs is eggs this time around as well.

As soon as anyone offers more than 4x salary or no longer requires a minimum deposit of 10% it's time to run for the hills as it's indisputable evidence that money supply is out of control, and a crash is inevitable.

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correct me if im wrong but have 4x income loans not been around since 2001/2?

So if i had sold at that stage - i would have missed out 5 years of massive growth?

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correct me if im wrong but have 4x income loans not been around since 2001/2?

So if i had sold at that stage - i would have missed out 5 years of massive growth?

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Careful, because next time, you might end up saying things like "the market is different this time - it's ooookaayyyy......"

How many people this time round thought that, without spiralling interest rates and high unemployment, the market was safe?

There will always be bubbles and there will always be things to pop them.

:ph34r:

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Personally, I thought house prices were far too high way before the 2007.

Then, as many others, I began to believe that "maybe this time it was different" :rolleyes:

In 2005 I nearly bought a flat near Shooters Hill (where they are currently building a load of "luxury apartments" :rolleyes: )

When I was trying to get a mortgage I was only offered a suspect self-cert or northern rock style 125% mortgages. I listened to my inner-self and gave up hope of home owning unless I was either left a few quid or prices dropped.

I think I will know in future when price are over-inflated. I don't think I'll be able to call the bottom though.

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correct me if im wrong but have 4x income loans not been around since 2001/2?

HSBC's grad package had them in '98. Had I not been more concerned with trying to get out from under a mountain of Uni debt at the time, I'd have taken them up on it.

As far as warning signs of a crash are concerned, I don't really think there can be any. When you consider this time around, essentially the whole housing and debt structure has collapsed under it's own weight. However, had we had a serious economic shock before that, it may well have gone a lot earlier. In fact, I'd say we were "lucky"* to have not had such a shock for such a long time. For example, it may be that the next nasty to hit us is may be something approximating "peak oil"**, in which case it's futile looking at housing-related indicators. Chuck into that mix the (albeit remote) possibilty of a genuinely effective terrorist attack, the breakup of the Euro, or maybe even the EU itself, major domestic problems in one of the BRIC lot (okay, not the'B', but the others.. who knows?), or even the imposition of a sincere but ultimately disasterous tax change of some sort, and there are any number of potential nasties that are almost impossible to accurately signpost in advance.

In short, predicting crashes is a bit like predicting when your cat will die. It will, on average, live for about 15 years before it keels over. However, it might live a longer if it's lucky, or it might get run over in the dark by an HPCer*** in a Mondeo on the dual carriageway between Hoddesden and the A10 and die before it's time. It'll die when it's due, unless something else happens, in which case it won't.

* Hell, I'm turning in the Beeb!

** No, please, not in this thread. For what it's worth, I am a peak-oiler of sorts, just one who believes there's a necessary condition of "can't make substantial cuts in use with ease", which we haven't even remotely met yet, and with advances in alternative energy technology, may never meet. We shall see.

*** If any of you used to, up until a couple of years ago, own a large ginger cat and live in the Hoddesden area, I appologise. I'd dipped my lights to let someone pass, and didn't see it until it was too late. Suffice to say it was quick, and probably substantially better than 99.9% of human deaths, albeit not especially dignified.

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Purely by the % of 24 year old estate agents called Wayne with gelled hair, an Audi TT, a watch that is too big for their wrist, holding a bottle of Moet et Chandon whilst sitting in their hot tub in the shed.

That's my "We've peaked" indicator.

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That's my "We've peaked" indicator.

Is that not usually a mixture of screaming and groaning, followed by a B&H?

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Is that not usually a mixture of screaming and groaning, followed by a B&H?

I shall admit to a little groaning but I put it down to my age. The victim usually screams but it doesn't last long.

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we've had some good replies ober on the N.I version of this thread

They reckon that affordability didnt play a role after 2002 at all.

As liar loans sorted that problem

Do you think we will see the return of liar loans in the next 5 years? Or are they still out there?

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The canary in the coal mine for me was parental loans. Not a small sum towards a deposit but a huge (often MEWed) chunk of cash to go with their offspring's decent deposit and 5x salary mortgage - just to buy an ordinary FTB property. In my experience these 'loans' became prevalent after 2005 and clearly showed that the sums no longer added up for FTBs, even with crazy multiples or liar loans. This kind of behaviour is also the perfect embodiment of the 'can't lose with bricks and mortar' and 'get on the ladder before you're priced out for good' mentality. It's a clear indication of mania rather than rationality. This is what I mean:

According to A&L the average FTB was receiving £18,000 from their parents in the summer of 2006. By the beginning of 2007 this had risen to over £21,000.

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What were the red flags to look out for the next time around?

1. When the average house is valued at more than 3.5 times the average wage.

2. When the majority of reputable banks will lend six or seven times someone's salary.

3. When the number of programmes about doing up pwabadeez is greater than the number of news bulletins.

4. When the average dipshit/average wage in your office invests in BTL.

5. When the rate of increase in the average pwabadee is more than 10% a year.

When these things start to happen, you know a crash is on the way. But the most crucial one is this:

6. When the government and media say that pwabadeez will not come down in value and are safe.

THEN YOU SELL.

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I agree with a lot of people of here, namely that identifying a bubble is relatively simple, identifiying when it is going to pop is a different ballgame. I used to have arguments with people in 2003 when I used to say how overvalued the market was.

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Guest DissipatedYouthIsValuable

Red flags.

Northerners being able to holiday in places they can't point to on a map which don't just involve coach journeys.

This is when I'd predict peak credit looseness.

Edited by DissipatedYouthIsValuable

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1. When the average house is valued at more than 3.5 times the average wage.

2. When the majority of reputable banks will lend six or seven times someone's salary.

3. When the number of programmes about doing up pwabadeez is greater than the number of news bulletins.

4. When the average dipshit/average wage in your office invests in BTL.

5. When the rate of increase in the average pwabadee is more than 10% a year.

6. When Sue in reception self-certs and increases her salary by 500% to get a mortgage.

When these things start to happen, you know a crash is on the way. But the most crucial one is this:

7. When the government and media say that pwabadeez will not come down in value and are safe.

THEN YOU SELL.

Edited by Thucydides

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No matter what anybody says, there are lots of people on this forum waiting patiently for the market to bottom whether it be for profits or the purchase of a family home

Wth all the knowledge input into this site, its such a useful resource for those in the property game of the future.

Where do you see the market in 5,10 or 20 years time?

Do you believe in harrison's 18 year cycle?

Are you familiar with drBubb's idea's?

Will we be the next japan?

Will the lending ever get so loose?

More importantly, what would you say were the 5 main elements that made the summer of 2007 the peak? Was it one pin or several all acting at once to pop that bubble. Don't say cheap money or stupid lending (we all know that) - be more specific and relate this to how you would see the next boom and bust emerging. Would it be the same situation as in a de ja vous scenario?

What were the red flags to look out for the next time around?

:lol: You really think there's going to be another recovery/crash?

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11. When Derek (painter & decorator) and Deirdre are going to Australia and the Caribbean three times year.

12. when Derek and Deirdre have a conservatory put on the back of their semi that looks like St Petersburg Winter Palace.

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Spotting bubbles is very difficult - I thought property was overvalued in 2001!

And staying out of bubbles can mean missing out on huuuuuuuuuuge profits. People made fortunes out of the dot com bubble and the recent oil price rises (it's too early to be sure if this is a bubble!)

Besides, I maintain that without the credit crunch, house prices would just have stagnated for a while. There is still big demand for property, it's just that folk can't get mortgages.

The credit crunch was a sort of "black swan", and very few people predicted it. Likewise every previous oil price spike apart from the last one happened virtually overnight and nobody could have predicted when they would happen :ph34r: .

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Although my posts are slightly facetious, there are a couple of serious points. First, when these sorts of things are happening a lot, you know it's debt, and NOT payrises that is paying for it all. It's just not rational to conclude that suddenly everybody can afford brand new cars and expensive holidays.

Second, like someone said earlier - identifying these things is easy, but when will it pop? You might have said it would pop in 2003 and lost out on several years' growth.

Edited by Thucydides

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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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