Sunday, June 29, 2008

35% HPC – journey from denial through anger and depression to acceptance

A Victorian value we couldn't afford to lose

Economists at UBS have researched previous housing crashes around the world and concluded that they unfold in remarkably similar ways, over a three- to four-year period, a financial variant on Elisabeth Kübler-Ross's cycle of grieving. In a paper last month it judged too pessimistic to be released to the press, Capital Economics forecast a 35 per cent fall in house prices, with double-digit drops continuing through 2010 Also about the disdain for saving.

Posted by mken @ 07:09 AM (1320 views)
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8 thoughts on “35% HPC – journey from denial through anger and depression to acceptance

  • “Economists at UBS have researched previous housing crashes around the world and concluded that they unfold in remarkably similar ways, over a three- to four-year period, a financial variant on Elisabeth Kübler-Ross’s cycle of grieving, where the bereaved journey from denial through anger and depression to acceptance. Stage one is realisation, when people slowly become aware, after many years of housing gains, that tough times lie ahead. Stage two is capitulation, where distress and fear grip the market and stage three is acceptance, where the falls in value level off, prices regain some equilibrium and gradually recover in line with inflation.”

    I still don’t see any real fear out there hence I’d say we’re still stage one.

    “Similarly, respected consultant Capital Economics, in a paper last month it judged too pessimistic to be released to the press, forecast a 35 per cent fall in house prices, with double-digit drops continuing through 2010.”

    A pity. Frightening the sheeple is a bit cruel but necessary.

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  • voiceofreason says:

    I agree, it is going to be a long wait to the bottom.
    But a wait well worth taking though.

    35% off wipes out a 54% gain 🙂

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  • House price fall (nominal): 20% 30% 40% 45%
    Wipes off gains (nominal): 25% 43% 67% 82%

    Wipes off gains (real, 4yrs peak to bottom): 45% 63% 87% 102%

    HAHHHHHH HHH AH HHAHHAH AHHAHHAHAH

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  • converted lurker says:

    agreed still in denial phase. Her reference to savings is a bit muddled, why the surprise at such low levels? Debt/weatlh have been confused in this era of hubris. Any stats you care to examine have suggested that the average family have virtually no savings. Also any measurement of ‘savings’ has to be taken into consideration of a ‘personal balance sheet’ surely? “Oh, I have 20k savings, but owe the same on the credit cards and have a 20k unsecured loan and 2 cars on finance”…is a nonsense, another damaging form of denial…

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  • mark wadsworth says:

    The chart that she mentions isn’t online (unless I missed something) but that article is fatuous drivel.

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  • letthemfall says:

    I think this article makes several sensible points. It is perfectly true that savings rates are low in this country – we all know that from the data – and that part of the house price boom is driven by the questionable view that property is a fail-safe route to a wealthy retirement. And she is absolutely right about Equitable Life, a scandalous failure of regulation and a contemptible attitude of the Govt which is prepared to see peoples’ pension savings devalued through no fault of their own.

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  • Sorry to hear Mark (Wadsworth) describing the article as such as I enjoyed it and normally wholehearted agree with what Mark says. Speaking for myself I was the sort of person the article descibed i.e. loads of debt plus a failed business. However in the dark days of 2003 I started turning my life around and now have over half of my annual salary saved (a chunk of this being received from RBoS after they incorrectly took out a CCJ against me and I threatened to sue – the result was a cheque and a grovelling apology.)

    Right now I’m saving and renting – if for no other reason than to annoy Rosie Millard and her ilk. Roll on stage two of described cycle then I’ll start to annoy all the local estate agents with stupidly low offers…Childish, immature? OF COURSE but I’ve worked hard these past years and expect my money to buy the type of house that I’ll only leave horizontally in a pine box.

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  • The UBS analysts have been at work. I would have loved to ahve been a fly on the wall when the results were rpesented to the board. “And our conclusion therefore, mr CEO, is that we’re F****D”

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