Monday, December 3, 2007

Crash that ‘won’t happen here’ looms large

Crash that 'won't happen here' looms large

Larry writes "The UK is facing at best a painful correction in the property market and at worst a full-blown crash that could wipe about £50,000 off the value of the average home over the next few years. Why? Because none of the explanations for the UK being a special case really stack up".

Posted by becky @ 06:14 AM (1202 views)
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13 thoughts on “Crash that ‘won’t happen here’ looms large

  • The four most dangerous words in financial markets are supposed to be “it’s different this time.” But another four – “it won’t happen here” – come a close second.

    mwuau ahha ahhahahhhhah ahhah ahhahah ahh ah hahahahhh

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  • little professor says:

    A brilliant piece, demolishing all the usual VI arguments about why it will be different for the UK – immigration driving demand, green-belt planning restrictions restricting supply etc.

    A must-read.

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  • You’ve missed a w from your www, so the link is broken.

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  • £50k is a little conservative …..FTB’s will not step back in till average house is 3.5 times salary historically so where would that take us?More than £50k I’d guess

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

    Why do we have to wait 3 years? I am going to stamp and stamp and stamp until either I wet myself or the MPC lower rates to nil!!!

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  • I agree (and hope) that £50k is a little conservative but I guess he doesn’t want to appear too sensationalist and get labelled as part of the loony crowd.

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  • More wisdom from the Guardian, blowing though the stale air of the fatuous.

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  • Cheekie Charlie says:

    When the UK service sector, finance sector, and public sector jobs(thats 100% UK jobs market) start shrinking, the econoic migrants will move because that’s what economic migrants do! It happened in West Germany in the 1980’s and especially with the Pole’s it will happen again as Germany regains it’s past position.

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  • it_is_going_with_a_bang says:

    I could easily see 25% to 35% reduction over a couple of years.
    It’s not alot in terms of month to month levels is it?
    It only really covers price increases for the last few years.
    If prices go down 1% a month for the next 3 to 4 months then the general public ( herd ) will see and believe house prices are going down – then it will really get interesting.

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  • Absolutely iigwab

    Things are either going to die a sudden death, or they will try to die a slow death for a few months before dieing suddenly.

    I don’t think we have to wait any more than 6 months. I remember some bloggers suggested spring 2008 would be the point of the crash. I can’t remember exactly which bloggers (not me unfortunately), but it’s looking ever more likely that they will be spot on.

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  • House prices are ‘sticky’ when going downwards. I predict a long slow decline over about 5 – 10 years with the odd dead cat bounce thrown in. A quick crash would be marvellous but too good to be true.

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  • iigwab….

    Completely agree. It is the Herd that shape the market and the herd is starting to be fed a fair bit of negative news. The herd probably need this negative news to keep coming just a little bit longer which will then be enough to bring them out of there coma.

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  • I like this article from Larry Elliot.

    He’s speaking out against all of the broadsheet editors who dare not speak the current likelihood’s name – the ‘c’ word for fear of upsetting their advertisers who run their lucrative full page spreads every (insert broadsheet’s property section day of week here). A number of different commentators have been adding their pieces to the jigsaw – someone here saying that rental demand isn’t rising, someone there saying that immigration doesn’t have much of an effect, someone elsewhere saying that cheap credit is the real factor behind price rises.

    But Mr Elliot is the first mainstream journalist that I know of who has put it together and pointed out that the emperor has no clothes, and all of these arguments, even when all put together, just don’t stack up.

    Admittedly, a little bit late – Moneyweek’s John Stepek saw it a while ago, but you know the saying …

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