Monday, October 1, 2007

LSR quarterly research out

House prices 'heading for fall next year'

Miss Choyleva was speaking after the publication of the latest Lombard Street Research/Daily Telegraph housing affordability barometer. The index has fallen 11.5 per cent in the past year alone to 85.3 points. Miss Choyleva said it was heading rapidly towards a dangerous level, where housing becomes so expensive it tees up a dramatic correction in prices.

Posted by sold 2 rent 1 @ 11:30 AM (2768 views)
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37 thoughts on “LSR quarterly research out

  • The index last October was

    This index is the best guide for future house prices.
    I believe that the index only has to hit 81 points for a crash to start (the same as 1974)
    We are so close now.

    Although the crash may have started it will be 6-9 months before it shows up in the land reg figures (like Ireland last year)

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  • what people fail to remember though is that there used to be 25% tax relief in the 80’s and 90’s up to £30,000(equiv of £90-100,00 now)…there was no sky,no mobile phones.utility bills were cheap.petrol was cheap,most people had one credit card and one property!

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  • the above graph is worthless…….all I know is that in the late 80’s ftbuyers could buy a property…….now they have no hope…..end of story….houses are at their most unaffordable ever in the history of houses.

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  • taffee – you are correct but this has been offset by more cases of both parents now working. This is why prices have gone so high.

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  • taffee – LSR have been the best guide to house prices over the last fews years.
    Their index should not be decribed as worthless – you should think again.
    The index is now at 85 and only 4 points from the crash limit set at 81 (the same as 1974)

    By the way, house prices do not have to rise for the index to hit 81. The index can also move down if IR go up, real incomes fall and a host of other factors.
    Maybe house prices have peaked but affordability will sink lower due to other reasons.

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  • they had dual tax relief in late 80’s and plenty of couples both worked so that doesn’t stack up.

    The present bubble(worst in history)is based on liquidity and buy-to-let(joke).

    Even my plumber has 2 buy-to-lets…….people face ruin and there is nothing they can do about it.

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  • I’ll tell you what doesn’t stack up.
    Plenty of people predicted a crash from 2002-2006 and got it wrong.
    This graph goes a long way to explain why prices kept rising and defying logic.

    Rest assured though. The graph is now showing a crash is now almost here.
    I think the UK HPC will be on a scale last seen in 1948-1955 (about 50% in real terms)

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  • David Smith's Sub Prime. . . says:

    Mmmmmmm I think HP’s will go on rising for ever…

    Love David Smith , 13 and a quarter..

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  • Thanks for this post.

    Affordability is the word on everyone’s lips at the moment. Lots of people I know just seem to be talking about paying bills etc. I know this is just anecdotal evidence, but there comes a time when you “keep joining dots up” and suddenly you have a picture!

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  • It’s only a matter of time…

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  • george monsoon says:

    The world will go into financial meltdown, long before the government allow houseprices to correct naturally.

    Notice I didn’t put “I think” or “maybe” before that comment. This is because GLOBAL economic disaster WILL happen first,. come on!!! do some proper research without using governent or VI produced indexes / figures. Why do you think I haven’t posted on here for ages. I have seen the light, and I am so convinced I have to share it with you guys just this once before I leave. Forget looking for a crash guys. This goverment, the US and probably most other developed nations are well aware that its over for the West I would be more concerned with how we are going to survive when everthing goes t#ts up. Its already happening ..

    First indicator – Without a police state, the goverment will not be able to control the civil unrest that will increase as people become “enlightnened to the true state of the economy, so we are seeing increasing power being passed to the Police, and as a result, can’t fart out of tune without supplying our DNA to the government.. !!

    Second indicator – Goverment is showing us blatantly false information about a boombing economy And only now, when the cracks in their argument are starting to make themselves clear via inflation, are they telling us that there is a “slight” problem with inflation..

    other indicators..

    Bailing banks out, without giving proper reason
    pumping money into the stock exchange to keep us afloat a few months longer.
    pushing alternate news stories to take our minds off the real agenda.

    Do I sound paranoid? As far as I am concerned, until someone prooves me wrong, this is FACT.

    Please be constructive with any response to this, I need someone to proove me wrong because I really want to be wrong.

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  • Still-waiting says:

    You do sound paranoid. But just because you’re paranoid, doesn’t mean you’re wrong…

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  • You are not wrong……the trigger will be an unforseen event like a nuclear explosion or the like which will be the straw that breaks the camels back.

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  • The Capitalist says:

    My EA friend is suicidal – no viewings. no instructions to sell. His OTE earnings were in excess of £100k now he’s living on his basic of £35k…which I’m sure many of you will feel glad about but he’s one of the decent ones. The shakeout will get rid of the awful 20 something cocky bull merchants…1 in 5 must go IMHO.

    With stockmarkets, October is not a good month…1929 , 1987 and 2007?

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  • “Second indicator – Goverment is showing us blatantly false information about a boombing economy And only now, when the cracks in their argument are starting to make themselves clear via inflation, are they telling us that there is a “slight” problem with inflation.. ”

    George, I like the word ‘boombing’. Cross between bombing and booming. Sort of covers all eventualities!

    However – I think you do have a point.

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  • I think a 50% fall in property prices is reasonable maybe even 60 or 70%, it looks likely that the government will plunge interest rates in an effort to keep houseprices inflated, this won’t work and once they see the housing market is passed all hope they will turn their attention to saving the currency/economy and we’ll see interest rates of 20% +

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  • “I need someone to proove me wrong because I really want to be wrong”

    History is proving you wrong. There is no evidence to support your paranoid scare mongering.

    Why not produce some evidence?

    Your first Indicator, Police state, your ignorance insults those who do have to live in a police state, perhaps you wopuld rather live in Zimbabwe or Burma?
    2nd Indicator. where is the blatantly false info, is yours any better? Inflation can be a sign of strength and growth not impending global economic disaster.
    Bailing out banks? the banks business model wasn’t working, NOT impending global economic disaster
    Pumping money into stock exchange?, when did this happen? to keep us afloat a few months longer? any evidence for this?
    pushing alteranative stories to keep mind of the real agenda, what evidence, papers seem to be publishing what they like without state interference, see Burmas again.

    How can I not come to the conclusion that you are paranoid.

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  • planning4acrash says:

    The real danger isn’t in the UK, its that fascism arises in a state as it did in Germany after the last depression, the far right has gained ground in Europe, it could arrise somewhere again. WWII probably wouldn’t have happened without the great depression. This is why I’ve been so full on at Uncle Chris for pandering towards vaguely politically correct Daily Mail’esqe middle-class armchair National Socialism. For those who don’t know, Nazi-ism was National Socialism.

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  • Paranoia Blue says:

    I would totally agree with George Monsoon’s comments [post 11]

    The writing has been on the wall for a long time – ever since we moved from the gold standard, stopped producing virtually anything of any real value, depended on consumer spending to keep the wheels turning, sold out our futures for today’s excesses, voted in this government.. etc…

    However I would be interested to know what sort of time-frame you had in mind for total meltdown
    I think, perhaps, that things could limp along for quite some time yet.

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  • P4ac. You may be interested in reading some of Dietrich Bonhoeffer’s stuff. He was a German who stood against Hitler and encouraged others to do the same. His stuff is pretty deep, but has gained in popularity in recent years.

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  • the ball is starting to roll faster and faster. Originally i thought we would be heading for a bit of a reduction in house prices and a small recession, but it is starting to look like financial armageddon. i am wondering if this recession and HPC will be bigger than the last.

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  • waitingfor hpc says:

    Can’t vote tory, labour, liberal or green – only one left after that. I am fed up with what we have on offer at the mo.

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  • Gents you don’t have to be a rocket scientist to understand the house price bubble. The average person will borrow as much as someone will lend them, why wait till tomorrow when you can have it all today and worry about it later. Most people in this country cannot do percentage calculations, so what does a 0.25% rise in IR mean when you can’t work it out? There is a slowdown occuring at the moment but poeples incomes haven’t changed much, and the BOE governer wonders why IR changes arn’t working. It’s simple UK plc stops working when people get spanked and banks stop lending them more money to pay increased IR charges and the extra necessaties (plasma tv etc). We are entering that period now. Please someone tell me I’m missing something other than a spell checker!!!

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  • P4C

    You are of course right about these risks, but I think you may need to narrow definitions a little bit more than just the conformity to a ‘National socialist’ label. Many, if not most, ‘left wing’ socialists are also ‘Nationalist’ to some extent (Castro/ Chavez etc.) but this does not make them Nazis. In fact they are they are probably the most vocal critics of ‘Fascism’.

    My point is that just because the Daily Mail et. el. may have both a mildly Nationalist, and a populist agenda, which could therefore be presented as ‘National Socialist’, this is a long long way from the type of National Socialism as practiced by the Nazis.

    Anyway, why fear FUTURE ‘State capitism’ ( The control mechanism of every past Fascist movement )…..we quite clearly already have that today!

    Here are a few other fascist tendencies –

    A tendency to further political and economic aims through the use of Military force
    A tendency to disrespect or ignore designated civil liberties where such freedoms hinder the broader objectives of the State
    Excessive control and manipulation of the National media/ National Narrative for political purposes
    The generation of a continual state of National ’emergency’ requiring urgent reform
    A tendency to ignore International law where such law clashes with the National interest
    The explicit, or implicit,removal of rights to free speech
    The explicit, or implicit, removal of rights of assembly
    Hostility towards Trade Union movements
    Hostility to certain ethnic or religious minorities

    You are right to be concerned.

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  • David Smith's Sub Prime. . . says:

    Nonsense about the rest of the doom laden prophecies, but I agree about HP’s theyare on their way down by about 30% (plus?). That will bring them down to a reasonable level and then the rest of the apparent fall will be due to stagnation that is all…

    Not good time for BTL’rs though…

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  • An economy isn’t really house prices or the stock market. Its people having jobs that produce goods, and companies trading and selling to the public. Add to that the investment that exists within western countries and that’s the basic backbone of any country. Also add to that education, and a sense of law and order…

    That’s why, when the chips are down, interest rates support industry before house prices. It may take the appearance of armageddon to get the politicians to get their heads straight, but eventually they will. And that’s why house prices will collapse before the entire economy goes to ^&*( (insert favorite four letter word here).

    Nazism was born in Germany after the 1st world war due to a recession caused by punitive taxes imposed on Germany by the rest of the world. It wasn’t a general depression.

    Armageddon will only happen if a large percentage of people suddenly become unemployed. What’s worse, massive unemployment or massive negative equity? The voters prefer massive negative equity.

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  • George,
    Thanks for sharing your heart (11 above). I really hope you are wrong.

    The signs say you are on the right track – I hope things work out for you in the coming mess. I tried Su’s recommendation of Dietrich Bonhoeffer’s stuff earlier this year, it’s worth a read.

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  • waitingforhpc

    I hardly think that voting for the monster raving looney party is going to solve anything, do you?

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  • Ahhhhh – good old Screaming Lord Sutch – sadly missed. I was tempted to vote for them just after I left school (long time ago), when the local candidate was campaigning on the basis of creosoting every fence post in the county so that people couldn’t sit on them. No wonder they banned creosote – a conspiracy to stop the MRLP getting in.

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  • Back to basics, Who can grow vegetables? who can raise cattle? who can protect their family? forget house think shelter. Think of what it would be like now to live without a fridge and no heating in your present home. How happy are millions of people who lose their pension (home) and security going to be?

    I think it’s all the more scary to those who know their history. Half of my family were occupied in WW2 I’m proud to say they misbehaved and were excedingly uncooperative as hosts. However, some horrible stories well worth not reliving. I’m not a pessimist but a realist, an optimistic realist!!! But it’s just looking really bad.

    Where the he** has our country gone?

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  • I would like to pose a question if I may:

    Why is it always as we approach the end of the year stories start to emerge that next year ‘really will be the slowdown’ we have been expecting.

    I seem to remember this in 2006 in the run up to 2007.

    In December 2006, house prices dropped by 0.1% and many, including commentators in the Telegraph were predicting that at long last 2007 would signal the end of the house price boom.

    Isn’t this just the normal run of stories as we approach the end of 2007, that next year will be different?

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  • In the late 80’s I wrote to Toby Jessel Con MP for Twickenham. Having exchange all my sterling
    into German Marks, I advised him of the coming devaluation of Sterling (Black Wednesday). He
    telephoned me, but was not a happy man. Then the £ crashed and I cleaned up a small fortune.
    Some time later, I wrote to him to warn the Tory Government about the coming housing
    market crash, He telephoned me very unhappy.

    In February this year, I wrote to Sir Mervin King telling him to put up interest rates and advising
    him that his comitie’s decision where being made on the basis of false figures from ONS, FSA, etc., etc.,
    controlled by GB and TB. He sent me a 2 page reply and interest rates went up and up. I insisted
    that in order to save his and the BoE’s reputation that he should bring these and other office to
    account for their political manipulation and endangering the people of the United Kingdom. At the
    time, what I wanted to say to him was: Run for the hills and save yourself. I regret not saying that
    now. But how does one write to a knighted person. One always hopes that they can read between
    the lines and use a calculator, but it seems that everyone these days is to lazy and complacent to do
    a few bits of adding and subtracting. Two Christmas’s ago, I almost posted GB a calculator, but
    figured that his mind was too corrupted by power and his desire for a Knighthood to switch it on.

    It all too late now. When the house price crashed in the early 90’s several people I new topped themselves after loosing everything from their home to their families.

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  • In the late 80’s I wrote to Toby Jessel Con MP for Twickenham. Having exchange all my sterling
    into German Marks, I advised him of the coming devaluation of Sterling (Black Wednesday). He
    telephoned me, but was not a happy man. Then the £ crashed and I cleaned up a small fortune.
    Some time later, I wrote to him to warn the Tory Government about the coming housing
    market crash, He telephoned me very unhappy.

    In February this year, I wrote to Sir Mervin King telling him to put up interest rates and advising
    him that his comitie’s decision where being made on the basis of false figures from ONS and FSA
    controlled by GB and TB. He sent me a 2 page reply and interest rates went up and up. I insisted
    that in order to save his and the BoE’s reputation that he should bring these and other office to
    account for their political manipulation and endangering the people of the United Kingdom. At the
    time, what I wanted to say to him was: Run for the hills and save yourself. I regret not saying that
    now. But how does one write to a knighted person? One always hopes that they can read between
    the lines and use a calculator, but it seems that everyone these days is to lazy and complacent to do
    a few bits of adding and subtracting. Two Christmas’s ago, I almost posted GB a calculator, but
    figured that his mind was too corrupted by power and his desire for a Knighthood to switch it on.

    Its too late now. sa nuber of people I new the topped themselves having lost everything, their home and families.

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  • >>>Its too late now. sa nuber of people I new the topped themselves having lost everything, their
    home and families.

    Sorry, interrupted by a dry shaken martini, should read: A number of people that I had known in
    the late 80’s committed suicide having lost everything, their homes, families etc. One man in Wales
    went into the wood and turned his shotgun on himself for an £18000 tax man demand.

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  • George, (post 11) add this gem off the BBC to your list:-

    Phonecalls and texts to be logged – http://news.bbc.co.uk/1/hi/uk/7021647.stm

    Information about all landline and mobile phone calls made in the UK must be logged and stored for a year under new laws. Data about calls made and received will also be available to 652 public bodies, including the police and councils.

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