Thursday, May 11, 2006

Surprised Estate Agents!?

Telegraph: Housing market boom stuns estate agents

The strength of the housing market this year has come as such a surprise to Britain's largest estate agent group, Countrywide, that its "financial results have exceeded our own internal expectations".

Posted by cupidstunt @ 10:15 AM (619 views)
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1. Talking_rot said...

As much as I would like a crash to occur, this does not come as a surprise. Economic conditions remain benign. Until economic conditions take a turn for the worse, then there will be no crash.

There are plenty of risks facing the economy but some risks do occur and some do not. A HPC is not guaranteed. Perhaps a crash is likely to occur when a significant minority of indebted home owners are forced to sell their home and accept a lower price then they otherwise would have done. A home owner who has to sell because the repayments are no longer affordable, but can hang around waiting for a good price is not in a forced sale situation.

It is time to watch:
1) Strength of Sterling
2) Interest Rates and Inflation
3) Unemployment Levels
4) A decline in Government Spending
5) A decline in government revenues
6) A decline in the carry trade in Japan
7) Inflation in China and India
8) USA Balance of payments

Any others? That's a lot to watch and a UK HPC will need a combination of the above before it will occur.

Thursday, May 11, 2006 10:31AM Report Comment

2. denzil said...

Technically what is a crash?

Thursday, May 11, 2006 11:49AM Report Comment

3. Moosetea said...

After 90% drop in profit the year before, this year must be looking better.

Thursday, May 11, 2006 12:23PM Report Comment

4. Wistow said...

Should anyone look back at the data around the time of the last crash, they will see that the pattern emerging is almost identical. Significant growth for a few years, then slow but steady growth for a year or two, 87/88. Early 89 quarterly growth goes through the roof with the highest increases within this particular boom. End of 89, growth slows for a quarter. Next quarter no growth, then downwards for the next 6 years. A relative of mine who owns a house building company told me very recently that he is worried that the trend (with the exception of interest rates) is almost identical, most notably in buying trends. Should interests rates rise, significant property deflation will follow. I reckon we are in about early 1989 at the moment.

Thursday, May 11, 2006 12:41PM Report Comment

5. denzil said...

>>Should anyone look back at the data around the time of the last crash, they will see that the pattern emerging is almost identical.

Yes, being old enough to remember the last correction characteristics of the cycle are very similar. The causes of the last correction were different than this but time will tell whether the crazy multiples that have been lent to people will tip the balance at a much lower level.
I fail to see any evidence that a correction can be avoided.

Thursday, May 11, 2006 01:00PM Report Comment

6. Ohhyesitwill said...


Interest rates in the euro zone, the rise in IR in the US, and one I think people overlook, the impact of smaller percentage increases to people with big lending multiples and average to huge credit card debts.

Oh and possibley the biggest one, perception, when more and more people hold back on buying because they think it will crash, it will crash.

Thursday, May 11, 2006 01:28PM Report Comment

7. Bidin'matime said...

Like Denzil, I remember the pattern last time very well spring 1989 went mad, then downhill after that. This is very familiar. Whether there are forced sales or not, when people stop buying, prices can only come down.

Thursday, May 11, 2006 01:33PM Report Comment

8. Harold said...

Having looked through the property pages of my local newspaper (in Hertfordshire), I cannot remember seeing so many properties c.150-300K up for sale (BTL bracket, perhaps?). There seems to be a real jump here - not in prices - but volume on the market. Anyone else see a similar pattern? Only time will tell if they sell.

Thursday, May 11, 2006 01:48PM Report Comment

9. Ticktock said...

IRs will have to rise well above the current 'market consensus' both here and in the States, they are just breaking the news slowly to avoid 'shocks'
The U.S (and its collonial outposts) have a choice. Huge recession and accompanying deflation (like japan), or keep printing money and devalue all western fiat currency,while hoping nobody will notice (too much)
Most people compare the value of a fiat currency to another fiat currency, and we here dailey that the pound is either up, or down, against the dollar, or the the euro etc.
What If they are all falling at the same time? Small movements between each, are of little relevance if they are all falling off a cliff together!

Thursday, May 11, 2006 01:50PM Report Comment

10. Markd said...

I still do not understand how all this talk of a buoyant market sits with the 5.67% drop in prices in Greater London shown in the Land registry report figures on this page for the last quarter-can anyone explain why this is not receiving more prominence?

Thursday, May 11, 2006 01:56PM Report Comment

11. Ticktock said...


Because prop-per-tee is so important to the UK economy (which is why some feel that it wont be allowed to crash) 'Bad news' for one is seen as 'bad news' for the other, and 'bad news' is expertly filtered by..... well, we all know all the various V.I's by now dont we?

Thursday, May 11, 2006 02:58PM Report Comment

12. Markd said...

Thank you Ticktock-there certainly must be something funny going on because even though this drop relates to a relatively short period if it had been as publicised as all the other figures we see bandied around (which appear to suggest the opposite, based on sales in the real prime areas of central London) I dare say it would have created a degree of panic.

Thursday, May 11, 2006 03:58PM Report Comment

13. Magnifico said...

Cast your minds back to around this time last year, prices were beginning to fall and we were holding on tight for the crash ahead. Public perception towards house prices was negative and some big players had started to offload.
Situation now: a house price graph that look more and more like the one on Chris Parker video ( the one endorsed by Krusty and co.).
I live in hope still...

Thursday, May 11, 2006 10:07PM Report Comment

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