Monday, August 6, 2007

$100/barrel this year, $150+ by 2012.

Updated World Oil Forecasts, including Saudi Arabia

A prediction here of $100/barrel by this autumn and a steady increase to $150/barrel by 2012 are the relevant points to house prices. Basically, an interest rate of 5.75% was predicated on oil dropping back to $40-50/barrel. Sustained higher oil prices will feed through into prices and wage demands and will require significant fiscal tightening, both from central banks and the money markets. Liquidity will dry up and the cost of remaining cash soar. Asset prices (houses) must fall accordingly once buffers (when landlord and householder bank accounts run dry).

Posted by planning4acrash @ 05:20 PM (497 views)
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22 thoughts on “$100/barrel this year, $150+ by 2012.

  • david20040_0 says:

    If oil went to $150 a barrel the economy would collapse and oil would make a massive drop. There is no way oil will hit $150.

    The real story today is housing going up to 300k by 2012 for an average house.

    Maybe this site should shuit down because it really does look like waiting for any sort of a crash is a waste of time now.

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  • planning4acrash says:

    Tell you what David, how’s about you leave and we’ll follow and turn out the lights (not), how’s about that?!

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  • david20040_0 says:

    I am for real, if prices rocket again from 200k to 300k by 2012 there really isn’t any point trying anymore, who on earth can save that fast?

    It is really starting to seriosuly depress me, will this boom ever end?

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  • save100k in 4 years? simple!

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  • David,

    You have just answered your own question. If no one can afford it, then no one can buy it.

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  • planning4acrash says:

    “In 2Q2007 oil (total liquids) supply, just less than 85 mb/d, was greater than oil demand. However the IEA is forecasting oil demand of about 88.5 mb/d in 1Q2008. This means that to meet forecast 1Q2008 demand, supply must increase by 3.5 mb/d! This explains why the IEA keeps on asking OPEC to increase production. It is highly unlikely that OPEC will be able to increase production by 3.5 mb/d in six months and consequently the next six months will be exceptionally volatile for the oil markets”. Quote from one of the posts on the thread. It seems that these predictions can be tested in a very short period. Watch the Autumn and early 2008 oil markets to get a better picture of what’s happening. $90-100/barrel is not out of the question.

    Paul. How can UK house prices inflate by 40% from over a trillion if private equity companies can’t sell debt to take over AAA rated companies that cannot themselves sell debt to re-finance their debts?! With the markets effectively closing in a number areas, and real estate stocks going down, why would investors hedge their bets on mortgages at this stage?! Particularly low grade junk mortgages, i.e. BTL on 100% to 110% mortgage with self cert, or 6x+ salary self cert (and a bit), which have been driving the market so far in terms of salary multiples in recent years?

    And Paul, I don’t think people here have a political agenda in terms of house prices crashing. I’ve been looking at both sides now and there doesn’t seem to be much out there from a wide range of sources that support your point of view, except poorly researched vested interest articles. That is the observation, which some may well disagree with, maybe you should put your money where your mouth is and buy a load of properties?! Or head down the bookies and put a bet on it?! We’ll know soon who’s right!

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  • David, the game is not about saving it’s about borrowing and short of hyperinflation in this country the average house will never hit £300K based on average wages which are falling in real terms as well as rising interest rates and commodity prices.

    Once you are a little older and wiser you will realise this.

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  • David, if I was a hairdresser I could predict that based on current hair lengths, and the rate at which hair grows, the price of haircuts could be ten times the current rate!

    That would be silly though, and not very analytical. Just like this report today. It is not based on facts it is based on the recent credit boom, idle extrapolation and god-willing attitude from the writer. I could also extrapolate the price of oil and predict that based on recent values, oil will be $6000 per barrel in 2012.

    But again, that would be silly.

    So stop being a hysterical teenager and look at the underlying data.

    If it sounds like hype, has no supporting data apart from idle specualtion (past performance is no guarantee of future gains remember) then it’s a turd with icing presented as fact.

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  • bidin'matime says:

    David20040_0 said…
    “…if prices rocket again from 200k to 300k by 2012 …who on earth can save that fast?”

    Precisely! That’s why they cannot rise that fast! As prices have risen (and now IRs) they have absorbed every last drop of spending power of new entrants to the market, leaving hardly anyone who could now buy in. Like any bubble, it depends on new money coming in and all that is now drying up – so the bubble must burst.

    The BTL ‘investors’ have propped it up, but even they are realising that it’s mugs game buying somewhere that you rent out at a loss in the hope of future capital gains.

    It’s nearly run its course and soon we shall see the spiral go into reverse. Save your money now and look forward to buying that house in 2012 for a lot less than today’s price.

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  • David the boom has ended.The pain for a lot of people is going to begin very soon.The coverage we have seen today about house price predictions by a bunch of so called experts commissioned by people with a vested interest is all froth with absolutely no substance.If there are people out there who genuinely believe this “news” then i suggest they start buying up property fast as it seems such a good investment according to the “experts”

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  • david20040_0 says:

    The thing is I can actually see a boom in London till 2012 due to the Olympics. Imagine all the EAs banging on about how you can live in the heart of the Olympics etc.

    It is just so detached from reality now it is insane. If house prices did go up to 300k from 200k in 5 years that’s an increase of 20k a year.

    People when the average house price broke through the 100k barrier would never hit 200k but 5 years later it did.

    Every man and his dog is investing in property now, literally.

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  • david20040_0 says:

    2001 average house price goes through 100k, 2006/7 – 200k, 2012 – 300k?????? Every 5 years 100k?

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  • David the olympic games in London i am sure will be a great sporting event,but it aint gonna save the housing market.it may be a welcome distraction for all those poor buggers who have lost their jobs and homes.”Every man and his dog is investing in property now,literally” Yes but only the stupid ones, all the smart money was invested in 96 to 04. Actually it probably is possible to submit a morgage application nowadays for your pet dog and have it accepted.
    David, when are you and your pet going to start investing?

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  • david ,every 16 to 18 years a crash????????

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  • I just don’t get it. Who wants to live in England anyway. I’m only here to work hard and earn then i’m off. There’s just no quality of life here. England and LONDON especially is overated!

    My mate has just bought a house. I told him i thought it very risky but he kept harping on about the Olympics. Olympics do not matter however Crossrail does. We are clearly due a correction but i do think if they finally decide to invest in Crossrail the recovery from a downturn will be quicker than without Crossrail. (All be it 2018+)

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  • enuii is absolutely right. I have been in London for over a year now and I am leaving in the new year. London is just so over-rated. Houses are full of 6-12 immigrants so the bins are always full the day after collection. The main roads going out of London are full of 4x4s ferrying kids to schools because the middle class would rather die than send their brats to an inner city London slum.
    Even the so-called social life of London is fake. London puts sex on TV to promote its high-life image, in India this is not done, but there are over 1 billion Indians.

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  • Stay focused david , no matter what you read someone has to pay rent or a mortgage to support that kind of rise. Houses prices can only get so far ahead of pay rises before they snap back. They are looking pretty stretched now. One more interest rate rise and you will start to hear the snapping sound. Worst case scenario house prices cost a boat load more 2012 and we all earn city banker style salaries 🙂

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  • planning4acrash says:

    Yes, the Olympics. That will be a busy two weeks for the estate agents.

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  • @david20040_0

    “Maybe this site should shut down because it really does look like waiting for any sort of a crash is a waste of time now.”

    That made me smile. Sometimes I feel the same way. Buying a house with a multiplier factor of greater than x4 feels like betting at the casino. Even now, I find that my friends at work sincerely believe that there is no way property prices can fall – I think this is still the normal perception about property prices.

    Year after year we say it cannot go on … but it does!!

    The pressure to buy can be terrible. It’s like a loaded shotgun in your face. You see your smug property owning friends (some of whom may openly mock you for not buying in) revelling in their riches. You may be under parental pressure to buy in as well.

    IMHO, it’s probably best to live within your means and wait for more favourable circumstances … but I have been saying this for years.

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  • david20040_0… When you get drawn in by the BS from the general media and the real treasure that is ‘Working Lunch’ come to the house of sanity that is this web-site…

    Listen us… To focus your mind here is a real chestnut for you – I was listening to LBC today and they had some lady from a charity talking about the fact that the average London home will cost £500K in 2012, the interviewer and the guest discussed that only the very rich can afford this and that the government should build 3Mn homes ASAP… But they had shot down their own argument, by agreeing that only a small number of people can afford a home for £500K means that prices will not hit this level in this short time frame, prices will take another 20 to 30 years to get to £500K – if at all, with market will also have up’s and down’s on the way… The current cycle has peaked! Just wait…

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  • Sellnowbeforeitstoolate says:

    We sold our place in 2004. No regrets there. And I will not be jumping on the buying bandwagon until buying property becomes unfashionable . Historically, house prices seem to bottom out about two years following interest rate peaks, and the rate oil prices are growing and the knock on impact to inflation I think that we will probably going to see a continued increasing in interest rates for a while yet. For now, renting truly is good value for money, and saving your cash until it’s time to buy is my best advise.

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  • of course oil is going to be expensive, by 2012 demand much higher than supply, peak oil and all that..

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