Tuesday, May 26, 2009

Is this the best the bulls can do?

Richard Donnell: The bullish case for property

The Director of Research at Hometrack predicts: "With further modest adjustments to prices at the lower end of the market, house prices are likely to have largely bottomed out within the next 12 months." After admitting the strength of the bearish position: the outlook for the economy – unemployment – the availability of mortgage finance, he puts forward three factors why "price falls may not be as bad as the most bearish forecasts" ie 50% drop from peak. 1. Owner occupiers set prices. (???) 2. Only when.first-time buyers feel confident to enter the market in significant numbers will there be a recovery. (???) 3. Rapid contraction in housing market liquidity (???). Can anyone see any logic here? Bulls please explain.

Posted by live4ever @ 01:07 PM (701 views)
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2 thoughts on “Is this the best the bulls can do?

  • I am not suprised that you have received silence from the bulls. In my opinion the only noise they can be making is of extreme pain as there is a shaft in every orifice, unemployment, lack of availability of finance, falling rents, falling transactions, increasing repossessions leading to falling prices. These things a happy bull doth not make.

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  • Richard Donnells article is factually incorrect. He states,
    “New-build flats, for example, have seen falls of up to 40 per cent as prices realign from their investor-driven highs.”
    I have seen a number of cases, where those flats have fallen in value, from their 2007 sold price by over 74%.

    His argumnet about liquidity is old hat. And the true argumnet is not liquidity, that is smoke and mirrors on his part.
    He chooses to ignore the fact that the banks are npt facing a liquidity problem, rather its an insolvency problem.
    I.E The banks may be hoarding, but they are not manking any money, and some are technically bankrupt.

    “Assuming a 15 per cent deposit is required to buy, then further falls of at least 10 per cent are needed in the price of one and two-bedroom properties before first-time buyers can come back to the market.”

    Total [email protected] Why would I buy a house that sold for £68k in 1999, that is now on the market for £220k?
    Even with a further 10% reduction?

    Average house prices rose from £80k in 1999 to £190k peak. I will rent rather than have some slimeball steal tens of thosuands off of me.

    I think you will find, with the onset of the internet Mr Donnell, most FTBers browse the web and EVERY comment, and opinion I see, is similiar to mine own.

    You are WRONG We are RIGHT.

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