Friday, Oct 02, 2009

Oo-er (2)

BBC: House prices 'back to 2008 level'

UK house prices have now recovered to the same level as a year ago, according to the latest Nationwide figures. The average price of a home last month was equal to September 2008, it said. The building society said that UK house prices rose by 0.9% in September compared with August, the fifth consecutive monthly increase.

Posted by mark wadsworth @ 07:38 AM (6701 views)
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76 Comments

1. phdinbubbles said...

Rage inducing statement of the day:

"While prospective first-time buyers have been helped by continuing low mortgage interest rates, lenders have been criticised for demanding large deposits, which are still preventing many from getting on the housing ladder."

Friday, October 2, 2009 07:45AM Report Comment
 

2. smugdog said...

Does this mean that we are still on the capitulation part of the graph as stated previously by many. I'm still confused!

Friday, October 2, 2009 07:56AM Report Comment
 

3. paul said...

Definitely a 'return to normal' moment.

Friday, October 2, 2009 07:58AM Report Comment
 

4. japanese uncle said...

These efforts of rigging will end up nothing as unemployed people will never afford to buy houses, full stop.

Friday, October 2, 2009 08:08AM Report Comment
 

5. flashman said...

I usually avoid criticising the almighty chart because it is something of an HPC sacred cow. The idea that a market would conform to a standard chart template is a rather silly notion. I realise that the chart salves the bearish soul but to believe in its' validity is to believe in some kind of celestial predetermination. Do we really believe that fiscal policy, legislation, taxation, disease, scientific progress, social trends, war and natural phenomenon couldn't divert the chart from its course? The chart is nothing more than a rough representation of one of a thousand possible outcomes.

Friday, October 2, 2009 08:19AM Report Comment
 

6. flashman said...

We shouldn't get too worked up by September figures. September completions represent deals done in the hight of the optimistic late Spring/early Summer period.

Mortgage approvals are the most reliable short term leading indicator. Mortgage approvals fell slightly in August and so I await with interest, the house price figures from October/November. I don't expect too much movement but I am very interested in the mortgage approval figures from this month. I expect something significant from Octobers' approval figures and therefore some proper house price falls in Jan/February.

Friday, October 2, 2009 08:20AM Report Comment
 

7. smugdog said...

In the words of great composers Haircut 100

"Where does it go from here? Is it down to the lake, I fear?"

Friday, October 2, 2009 08:23AM Report Comment
 

8. will said...

The main winners here are the Banks. (did anyone see Question Time last night regarding Bankers bonuses? Our politicians are utterly useless other than Charles Kennedy)

Asking prices have recovered, but I can't stop thinking of all those people who haven't sold their homes for years.

The shortest House Price Crash in modern history - I think not.

I will wait to see what happens when interest rates start to rise, then the party will begin.

Friday, October 2, 2009 08:24AM Report Comment
 

9. happy mondays said...

@ Smugdog, i like your style, as for your taste in music though, sucks..But i'm sure you are taking the rise..
Here's a more apt tune,

Scared beyond belief way down in the shadows
And the perverted fear of violence
Chokes a smile on every face
And common sense is ringing out the bells
This ain't no technological breakdown
Oh no, this is the road to Hell.

Chris Rea

Friday, October 2, 2009 08:25AM Report Comment
 

10. techieman said...

smug - doesnt th next line say "ha ha ha ha ha ha"? then "here we go". I age=ree and disagree with Flash at the same time. The chart is too prescriptive but the general shape is probably about right. For a long time i have said that this move back up will probably be bigger and take longer than most expect. It sucks in some bears and sends them over the rainbow to the bull side. Of course it is possible for the retracement to go any% Of the initial downmove, or even create a double top.... now even that sounds bullish (sorry guys its not meant to be - im still mr. bear).

It does make people question their bear stance - and allows the bulls to be more aggresive in questioing it... which adds to the fun of the fair - or should that be "unfair"?

Friday, October 2, 2009 08:36AM Report Comment
 

11. quiet guy said...

Regarding Flashman's comment about our worship of The Graph, I am drawn to this part of Nationwide's report:

"the high incidence of ‘accidental landlords’ is a fairly unique set of circumstances that complicates the future outlook for house prices."
(http://www.nationwide.co.uk/hpi/historical/Sep_2009.pdf)

Personally speaking, I'm astonished and dismayed at the UK's appetite for debt considering the general state of our economy and the number of economic commentators who are warning us about deflation.

Bah! Humbug! :(

Friday, October 2, 2009 08:38AM Report Comment
 

12. andrew said...

The HPC does not happen at internet speed, it is a slow moving event. Prices fell in 2008 and now many people simply cannot sell now because they are either in negative equity or very close, this has skewed the sales figures and prevented the next round of price falls from happening and being registered. Other potential sellers simply will not sell until it is beyond any doubt that prices can only go one way. With no real movement in the housing market we have stagnation with the only group with anything to loose being the sellers, there still are no real first time buyers not because they are stubborn and could buy, but refuse to at these prices, they simply can not afford a house or flat.

If you can afford to wait 3-5 years, then I don't see what the panic is about.

Friday, October 2, 2009 08:41AM Report Comment
 

13. little professor said...

HOUSE PRICE CRASH CANCELLED!!!

(Not really)

Friday, October 2, 2009 08:44AM Report Comment
 

14. techieman said...

Flash - quick comment - re point 1. the cash incentive - first it would be an unbelievable event because of the PSBR, second they have tried that in a few guises in the US.

As for "the" chart being a false god - next you will be saying ALL charts are a false god!!! Now go wash your mouth out with soap you naughty naughty boy!!! :-).

Friday, October 2, 2009 08:48AM Report Comment
 

15. flashman said...

I fully expect to be struck down by the bear god for criticising the chart but allow me to give two examples of government policy that could pervert the course of "the chart"

1. The government decides to make mortgage payments tax deductible and offers a cash incentive to FTB'ers. The return to normal would certainly forget to turn back

2. The government decides to give tax incentives to builders and releases 10% of the green belt. This would alter the chart to the downside, no matter what part of the cycle it was in

Obviously these are only two examples from an almost infinite selection but surely you can see that the chart is a false god?

Friday, October 2, 2009 08:53AM Report Comment
 

16. justwatching said...

'Good News' from Haliwide = from page website & teletext 'News' from BEEB.

'Bad News' from LR buried. Not even close to first page of either.

I wonder why that is?

Don't worry folks, HPC never really stopped. LR managed two whole consecutive months of positive figures.

Friday, October 2, 2009 08:57AM Report Comment
 

17. techieman said...

See how physic i am - my comment on 15 was posted @ 14 before you made it!!! - Whats happening here?

Friday, October 2, 2009 08:59AM Report Comment
 

18. flashman said...

techie: I think you may have missed my point. My examples are not expressions of my belief in what will actually happen. My point is that interventions like the ones I listed @5 and @15 can and will happen.

To believe in charts is to believe in celestial predetermination. A religious man would accuse the chartist of belittling God's ability to influence the universe or of the blasphemous claim that they have the ability to second guess God's plan.

A heathen like me would claim that the chartist believes in destiny to the extent that our future choices can not alter our outcomes

Friday, October 2, 2009 09:21AM Report Comment
 

19. smugdog said...

As Flash so rightly points out in his two examples@ 15, some neat legislation could in theory, keep the party going well into the night. This may well have a more dramatic and direct effect than generally flooding the banks with QE. Let's hope Gordon isn't reading this blog!

Friday, October 2, 2009 09:26AM Report Comment
 

20. flashman said...

smuggie: My second example @15 would crash the market.

Friday, October 2, 2009 09:28AM Report Comment
 

21. M. Simpson said...

Charts .. percentage growth ..etc. I read Moneyweek from 2000 onwards and I'm almost sure they consistently said 'don't invest in property, it's about to fall' Well look at us now!! Property prices could almost halve and you would have still done better than putting your money into a pension. It would be interesting to here what other people thought of merryn somerset-webb advice through this financial crisis.

Friday, October 2, 2009 09:33AM Report Comment
 

22. tyrellcorporation said...

With the general election looming it was hardly surprising the lending/stimulus spiggot would be jammed open for 12 months or so. The debate in the run-up to the election will shape the national psyche over the next 5 years or so. Every political party will be outlining plans for severe cut backs and radical trimming of the state payroll. Coupled with talk of tax rises (mostly stealth but could be VAT at 20%) I think consumers will retrench en-masse. We've bleated on about history repeating but I see closer and closer parallels now to the 1979 election which saw Maggie win and then a period of clearing up the financial cesspit left by a decade long Labour binge.

People aren't totally stupid, they know there's a sh*t-storm coming and that Labour have simply borrowed from the future to prop up today.

On a side note, I've recently had EAs phoning me up to see whether I'm still 'in the market' - this hasn't happened for 12 months or so. Also, a local EA posted through a flyer with the enormous headline 'name your fee!'. As I suspected and iterated a few months back, all the talk of green shoots by EAs will ironically put them out of business as everyone holds off for a return of the mania days.

Friday, October 2, 2009 09:34AM Report Comment
 

23. smugdog said...

I stand corrected Flash on the second point. The first is most likely and would keep the plates spinning until he is voted back in.

Friday, October 2, 2009 09:38AM Report Comment
 

24. mystie010 said...

Seriously guys, we need more headlines like this becuase then more people will put their houses on the market, and we all know what an oversupply of property means. Don't panic all the fundamentals are there for this whole thing to run out of steam - there's going to be another big bang. The BoE is going to boil the frog next year (Remember that old chestnut?) and then off you go again. Of course there is also the old addage if you can't beat them join them (i.e. I'm just off to buy my first development property, paint it a sickly cream colour and add beige carpets and then sell at a massive profit cos house prices only go up innit). But seriously this thing is going to go pop! only next time in a much bigger way. Then we can all party!

Friday, October 2, 2009 09:49AM Report Comment
 

25. Stammer said...

@10 it was more aye aye aye than ha ha ha, now the laughing dwarf well that was a different story
@9 Chris Rea should have been born a welshman and christened Di just to tip off would be buyers of his bilge

Friday, October 2, 2009 10:01AM Report Comment
 

26. Gringodave said...

Can anyone blame Labour for propping up the market? I can't, I would do the same. The problem is that I think they believe they can keep it propped up with sticks and glue indefinitely.

I think I've got another 4 years of waiting around before I think house prices will come down to a sensible level for me to buy. Until then I'm going to take advatange of these accidental landlords and get cheap rent! House prices always take a long time to come down as they always do...

Friday, October 2, 2009 10:06AM Report Comment
 

27. wdbeast said...

The report is not all bull and does contain some reasonable commentary

"There is usually a fairly strong correlation between housing turnover and house price inflation. Under normal circumstances, the current turnover rate would probably still be too low to be consistent with positive house price inflation. However, during periods when only a small proportion of the housing stock is available for sale, even a relatively low turnover rate can be consistent with increasing house prices. There is widespread evidence that this has been the case so far this year, which explains much of the rebound in house prices since the February trough."

This is pretty much what a lot of HPCers have been saying.

If it looks like a bull trap,
Smells like a bull trap,
Tastes like a bull trap,
Guess what!

Friday, October 2, 2009 10:17AM Report Comment
 

28. techieman said...

Flash

"To believe in charts is to believe in celestial predetermination. A religious man would accuse the chartist of belittling God's ability to influence the universe or of the blasphemous claim that they have the ability to second guess God's plan."

- god maketh man man maketh pricing.

A heathen like me would claim that the chartist believes in destiny to the extent that our future choices can not alter our outcomes

- Possibly you are right but that depends on 1. your time-frame. and 2. Your view as to whether markets determine actions or vice versa - i thought you were in the 1st camp, but yes the unforseen event can blow the chart out of the water - except of course when you use Elliott Wave - then you can just change the count accordingly ;-).

Friday, October 2, 2009 10:24AM Report Comment
 

29. flashman said...

techie: "god maketh man man maketh pricing"

If man is just Gods' mini me, then to predict mans pricing is to predict God's pricing. Obviously the folks who thought that he moved in mysterious ways, didn't have the use of a Gann fan :).

On an even less serious note, surely Fibonacci is the closest thing to blasphemy in the TA armoury. The mad wop thought he had decoded creation.

Obviously EW is excluded. God uses that for football scores.

Bless you my son

Friday, October 2, 2009 10:34AM Report Comment
 

30. shining wit said...

Tinky Winky, Dipsy, Laa-Laa and Po have decided that the long expected property crash is over and we should all be grateful saving us all to Mssrs Brown, Darling, King and Blanchflower from a disastor worse than death itself...

Remember.... The fat lady is bound and gagged in a basement near Threadneedle Street!

"We all live in a yellow submarine.....
yellow submarine......."

Friday, October 2, 2009 10:37AM Report Comment
 

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32. mark wadsworth said...

What Titanic Captain says.

Mrs W & I are signed up to rent until next June and that is the end of that.

Friday, October 2, 2009 10:54AM Report Comment
 

33. luckyjim said...

Flashman

I have pointed out how ironic it is to scoff at Kirsty's supposed 'house prices always' comment yet have absolute faith in other simplistic rules.

Another example is the idea that there is a 'norm' for houses at four times average income and that we will eventually return to that. Why ? We spend more of our income on houses now and less on other things. We used to spend 30% of our income on food - now it's 15%.

Things change.

Friday, October 2, 2009 10:58AM Report Comment
 

34. 51ck-6-51x said...

Flash, said "...remove 10% of the greenbelt..."
- This would certainly affect prices - house prices inside the greenbelt would experience more downward pressure. However, I seriously doubt they would release greenbelt at the moment though!

Friday, October 2, 2009 11:02AM Report Comment
 

35. nomad said...

It must be worth pointing out that "accidental landlords" and their tenants are the sellers and buyers of a normal house market.

Anecdotally a plumber who was installing a shower pump yesterday - at my landlord's expense - does a lot of work for estate agents. He assures me that they are all very pessimistic and switching to managing rentals. This is in the Christchurch area which has been buoyant with retirees and downsizers.

Friday, October 2, 2009 11:02AM Report Comment
 

36. 51ck-6-51x said...

wdbeast
- I don't really want to find out what a bull trap tastes like.

Friday, October 2, 2009 11:06AM Report Comment
 

37. nomad said...

TC. Great rallying of the troops. Have you thought of becoming a sports coach or a sergeant in Afghanistan? ;-)

Friday, October 2, 2009 11:07AM Report Comment
 

38. mountain goat said...

Interesting how major discoveries bring up religious arguments condemning it. Be it, the earth revolves around the sun, evolution etc. Five waves is a discovery, an observation of a natural phenomenon. It takes a trained eye to spot these patterns (just like it did to see evolution) and obviously there are blips due to things like war rumours which lead to short term spikes or crashes. However, rather than being a superstition, it actually makes rational sense to me in terms of peoples trading behaviour. Five waves with the middle being the largest where there is a "recognition" that now is not the time to hesitate, buy of sell now. This recognition must be by both bulls and bears for a big move to happen. The first and last two waves are people testing each other out, looking into the whites of their eyes, the bear or bull squeeze etc.

Now with respect to housing ask yourself, have we had the "point of recognition"? Recognition that housing is in a unsustainable bubble caused by factors that no longer exist, since the credit crunch. This recognition needs to happen in the market players, i.e. Mr Average. Has this been recognized? I would say not. There is doubt, but this is clearly still the testing phase of the trend, bulls and bears squaring up. Sellers choosing to rent instead of sell, waiting for the market to recover. Buyers thinking we have had a bubble I will wait for this to play out.

Arguments about government intervention are useless unless we are about to have a Soviet Union style state run economy. Government intervention is like market manipulation, it can only be effective in the short term. The housing market and our economy depend on what most people do with their money, not government interventions.

Friday, October 2, 2009 11:08AM Report Comment
 

39. 51ck-6-51x said...

MG said, "Government intervention is like market manipulation, it can only be effective in the short term."
- Short is relative and unfortunately could easily be longer than one can afford to wait. ( JMK: "The market can stay irrational longer than you can stay solvent." )

luckyjim said, "Things change"
- Ah, the first of the three observational clauses of the wisest ever utterance recorded:
1. All composite phenomena are impermanent.
2. All conditioned phenomena are [ by nature ] unsatisfactory.
3. All phenomena are empty and selfless ( alt: All phenomena are empty of self-existence. )
4. Nirvana is true peace
- Siddhārtha Gautama ( aka The Buddha )

Friday, October 2, 2009 11:25AM Report Comment
 

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41. mountain goat said...

51ck-6-51x - I would argue that "The market can stay irrational longer than you can stay solvent." is one of the factors making up waves 1,2,4or5. Part of the testing process.

Now what was I saying about religious views. Do you practice or just read widely?

Friday, October 2, 2009 11:35AM Report Comment
 

42. flashman said...

mg: I think you might have badly underestimated the effect that government has on the housing market. The market has been perverted and manipulated beyond belief for almost 40 years. Legislation, land policies and unfairly biased tax treatments have had a huge and lasting detrimental effect.

The green belt policy alone has caused a massive constriction in house building and is responsible for a large dollop of our woes.

The Tories achieved their aim of increasing owner occupation (and partly caused the obsession with home ownership). Not content with causing this harmful social change, they reduced local authority provision while at the same time failing to increase the private rental sector. The Labour government gleefully encouraged the housing boom to cover up structural flaws in our economic and social fabric

As regards charts…most people feel the need to believe that our future can be predicted or that there is something guiding us. That’s why religion and technical analysis exist. There is nothing wrong with it, in itself, by this ‘weakness’ leaves people open to all sorts of skulduggery. Cycling or golf is a much healthier hobby

Friday, October 2, 2009 11:44AM Report Comment
 

43. Suisse-ste said...

I think that there might be a possability that the magic graph might be wrong this time - The demise of the pound. The prices for UK houses are suddenly 30% less than a year ago for expats like myself, and I'm half tempted to buy a property in the UK as an investment now. Especially when I consider that it will cost me 5 times the price for the same house here in the land of cheese and cukoo clocks...

In other words, the prices are the same as last year for you poor souls on UK money, but in 'real' money terms, all the property has lost 30% of its value by virtue it's valued in pounds!

Friday, October 2, 2009 11:47AM Report Comment
 

44. 51ck-6-51x said...

MG -
I think the bubble in the western world was in credit, the worldwide bubble was that of the savings / debt imbalance.
Credit got cheaper and cheaper and fuelled the housing bubble, but cheap credit was not the only ingredient, other factors played their part, and in some countries government policy contributed ( e.g. U.K. Spain, Netherlands, Denmark ).
We can see this as housing bubbles were not as large in some places, and in some areas may have fully deflated ( or even possibly over adjusted, e.g. U.S.? ).

Friday, October 2, 2009 11:50AM Report Comment
 

45. mountain goat said...

Flashman - I guess we will need to agree to disagree on the Gov intervention. Housing bubbles more or less synchronized around the western world. Different government policies.

Friday, October 2, 2009 11:51AM Report Comment
 

46. 51ck-6-51x said...

HPC mods - times have gotten screwed again.

MG my reply is above yours. posted @ '11:50AM'.

Friday, October 2, 2009 11:52AM Report Comment
 

47. mark wadsworth said...

Flashman, that is an excellent summary. Whether the rot set in with the TCPA 1947, the abolition of Schedule A taxation in 1973, the abolition of Domestic Rates in 1990 is a different topic. But the "housing market" is about as far from a free market as you can get. And it's just as bad for commercial buildings (but at least they still have Business Rates on those).

Friday, October 2, 2009 11:54AM Report Comment
 

48. flashman said...

Universally (worldwide) loose fiscal policy caused the global housing bubble. A classic example of government policy having a large effect on markets

Friday, October 2, 2009 11:58AM Report Comment
 

49. mountain goat said...

Governments can't make banks and people commit financial suicide by leveraging themselves dangerously. Manias, confidence and depression arise from human nature. Governments are bit players although they would like us to think otherwise. Wealth is moving from our aging population to youthful developing countries. Did anyone expect governments to stand by and do nothing? But if they had done nothing the bubble would still have happened because there was a lot of capital about looking for an investment home.

Friday, October 2, 2009 12:10PM Report Comment
 

50. 51ck-6-51x said...

( from now on I think we'll have to post xxx, said "blah"... )

MG said, "Do you practice or just read widely?"
- No, I do not practice, but I believe the wisdom.
I believe I am fairly well read - but know there is always more.
I am an atheist through and through, ( now this may get confusing... ) but I know that there are, necessarily, unknown truths and hence that I may be wrong. Furthermore, I believe one may be wrong about pretty much anything ( think of Descartes malignant demon ), but that there is little point in being agnostic about almost everything due to this single known truth.
I think I should re-read Ayn Rand's works.
image from xkcd.com

Friday, October 2, 2009 12:14PM Report Comment
 

51. 51ck-6-51x said...

MG said "Governments can't make banks and people commit financial suicide by leveraging themselves dangerously. Manias, confidence and depression arise from human nature"
- Indeed - ( i ) certainly not, and ( ii ) you are right that bubbles may still occur without a state distorting markets, however the state does have a monopoly on the money supply and the base of the judicial system and may, therefore, put in place artificial support ( or the opposing distorters ) though such things as:
economic greenbelts ( such as the greenbelt itself );
barriers to market entry ( like those to set up a bank );
taxation status ( like waving tax on interest );
legislation ( like the requirements for repossession );
...and so on.
All these kind of things can make it less of a danger for people to take such a financial position and hence some will move from the set of people who would not have, to the set of people who will take that position, thus distorting the market in question.

Friday, October 2, 2009 12:34PM Report Comment
 

52. mountain goat said...

51ck-6-51x - but does government do what people want or do people do what government decides (in its wisdom)?

Friday, October 2, 2009 12:40PM Report Comment
 

53. flashman said...

666: Despite a religious upbringing, I am also an atheist. In school, I discovered Aristotle’s Nicomachean Ethics, which helped me make the transition. I always think of Aristotle’s work as the atheist’s bible substitute.

For those of you who haven't read his work, he believes that virtue is the mean between two vices: one of deficiency and one of excess. He leaves it to the reason of man to find the mean.

Mind you, I watched Coronation Street the other day and there is a bird in it (Tina??), who has caused me to think that there might be a god after all

Friday, October 2, 2009 12:41PM Report Comment
 

54. flashman said...

mg: The government took us to Iraq. I'm pretty sure the people didn't want to go. The government embarked on a bank bailout. Most people didn’t want it. Even when people consent to a government policy, they have often been hoodwinked as to the true agenda or the eventual ramifications.

Friday, October 2, 2009 12:51PM Report Comment
 

55. 51ck-6-51x said...

MG said, "does government do what people want or do people do what government decides?"
- most likely a bit of both, but the real questions are: What is the degree of corruption? Is it really possible to give the masses what they want?

Friday, October 2, 2009 01:17PM Report Comment
 

56. mountain goat said...

Flashman - sometimes governments get the public mood wrong. But in general the great politicians combine sensitivity of public mood with just a little wisdom and inspiration of their own. It is the former that makes them successful at the ballot box.

I view government as a necessary evil to keep the thugs of society in check. I do not credit them with shaping society, only implementing policies that the majority agree with. If they go against the majority mood for too long they fall out of favour quickly, as Blair did.

In terms of the housing/credit bubble I think irrational exuberance is to blame at the peak of the Western Capitalist era, Berlin wall came down, Glasnost, not greenbelt policies. I saw a TV documentary where many Russians believe that The Beatles caused the downfall of the Soviet Union by making them aware of freedom they wanted.

Friday, October 2, 2009 01:17PM Report Comment
 

57. cynicalsoothsayer said...

But Governments will do nearly anything to get re-elected, including rigging the housing market with artificially low interest rates.

Friday, October 2, 2009 01:30PM Report Comment
 

58. mander said...

House prices going up causes more depression and they risk destroying confidence in the market completely. And coming down to Earth the rest of the world has withdrawn their support to the house price inflation (helped by derivatives utopia) as people were becoming too lazy and so loosing competitiveness to Asia.

Next year will be going down the L in this recovery form: VL

Friday, October 2, 2009 01:36PM Report Comment
 

59. nomad said...

"sometimes governments get the public mood wrong. But in general the great politicians combine sensitivity of public mood with just a little wisdom and inspiration of their own. It is the former that makes them successful at the ballot box."

I've read that, mg, I've thought of our current leader and now I'm going off to have a little weep!

Friday, October 2, 2009 01:39PM Report Comment
 

60. Andy H said...

I wonder if reducing planning laws on the green belt would actually boost the economy. More houses get built, putting more builders in work. Of course the present high density houses would crash in value, but who cares. What do people want- jobs or high house values?

Friday, October 2, 2009 01:53PM Report Comment
 

61. flashman said...

I understand your point mg. Bit of both I suspect. Isn't it always?

Friday, October 2, 2009 02:32PM Report Comment
 

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63. mark wadsworth said...

TC, it's down one per cent today. Is that a big deal?

Friday, October 2, 2009 03:19PM Report Comment
 

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65. str 2007 said...

Well TC I think it is quite a big deal. It was down 1.7% yesterday and as techieman was saying to fall back through 5000 is a very bearish signal.
Techieman implied that a move below 5000 could confirm 5190 as being the top of the Bear Market Rally.

Would a significant fall be enough to shake the current purchasers in the housing market into realising all is not so well ?

Could this indeed bring the housing bear market rally to an end.

AOr will it simply confirm to the man on the street that bricks and mortar are a far better investment than anything to do with the City.

Friday, October 2, 2009 03:57PM Report Comment
 

66. flashman said...

Why would it be a very bearish signal or any signal at all? It means absolutely nothing. World markets usually move in unison. FTSE 5000 means nothing to the Nikkei, DAX or Russell 2000. Or are we saying that the Japanese and Germans don't need to pay any attention to their own markets and fundamental data because the FTSE reached some arbitrary level and the world can now react to it?

Even if you believe in this stuff you should remember that the big boys do not. They trade huge size and it’s best not to discount their beliefs and methods

Friday, October 2, 2009 04:21PM Report Comment
 

67. flashman said...

PS: The reason the markets tend to move in unison is because we are in a globalised world and index prices, at any one time, represent a consensus of amalgamated world data and news. This is why you can't read too much into one local stock market level.
If international shipping or US consumer spending picked up, where would that leave the FTSE 5000 thing? Or does the tail wag the dog?

Before globalisation and when pit traders ruled the roost, domestic levels were far more important

Friday, October 2, 2009 04:38PM Report Comment
 

68. mountain goat said...

Maybe I should give politicians more credit. Here's one that quotes Shakespeare when describing our fiscal difficulties!


This land of such dear souls, this dear dear land,
Dear for her reputation through the world,
Is now leased out, I die pronouncing it,
Like to a tenement or pelting farm:
England, bound in with the triumphant sea
Whose rocky shore beats back the envious siege
Of watery Neptune, is now bound in with shame,
With inky blots and rotten parchment bonds:
That England, that was wont to conquer others,
Hath made a shameful conquest of itself.


Some things never change

Friday, October 2, 2009 04:47PM Report Comment
 

69. str 2007 said...

I'm no expert as well you know, perhaps that level of fall is an indication as to what the big boys are doing with individual shares around the globe that ultimately effects the overall level of the various indices.

I think techiemans comments were perhaps the reverse of how you've worded it above. Not the FTSE at 5000 particularly effecting anything else, more anything else reflecting a fall in the FTSE.

Not always but you do see individual share prices sticking at big numbers or struggling to break through them ie whole pounds or 10.00 pounds etc.

I know we tend to follow the Dow, but for UK traders seeing the level drop below a 'big' number that was seen as conquered , surely makes them think twice about being so bullish on th e individual sector or few shares they concentrate on. A collection of individual thoughts becoming a self fullfilling prophecy so to speak.

Afterall chart patterns to a large extent are a reflection of the element of human emotion to a degree. Of course there has to be some sort of level of fundamental analysis behind prices in the first place.

But surely human emotion to a large extent was behind the tech stock bubble for example.

Friday, October 2, 2009 04:55PM Report Comment
 

70. mountain goat said...

Sorry wrong link on my post above, should be http://www.youtube.com/user/DanHannanMEP#play/uploads/26/rcSBxkKN2sI

Friday, October 2, 2009 05:16PM Report Comment
 

71. flashman said...

Str: Its a big post so I'll try to answer bit by bit

“I'm no expert as well you know, perhaps that level of fall is an indication as to what the big boys are doing with individual shares around the globe that ultimately effects the overall level of the various indices”

The price level reflects what price people paid for stuff. The price is the consensus now. When there is new information people will trade at a new level. It all boils down to whether or not you believe that past chart patterns can tell us what next weeks and next months consumer spending report will say or what Iran will do next etc .

“I know we tend to follow the Dow, but for UK traders seeing the level drop below a 'big' number that was seen as conquered , surely makes them think twice about being so bullish on the individual sector or few shares they concentrate on. A collection of individual thoughts becoming a self fulfilling prophecy so to speak”.

But what if Americans are simultaneously thinking of DOW 10,000 as their next big number? They don't feel that anything significant happened on their charts today so what if their market continues upwards. Will we sink anyway because something supposedly happened around the FTSE 5000 mark? Even if UK traders all decided to be bearish when the DOW was bullish (unlikely), they would get stopped out of their trades by a computerised arb trade

“Afterall chart patterns to a large extent are a reflection of the element of human emotion to a degree. Of course there has to be some sort of level of fundamental analysis behind prices in the first place”.
Yes, chart patterns do to some extent reflect human emotion. The problem is that chart patterns only reflect past human emotion . We can not possibly know what will happen next in the world and how humans will react to it. Did charts predict 9/11 or the New Orleans flood?

Claiming that chart patterns can predict the future is no different to claiming that I will twist my ankle tomorrow because I twist it every two months on average and particularly when I wear my red shirt. The truth is that I might twist it tomorrow or I might never twist it again (even if I wear my red shirt).

Nice chatting. Gotta go out now. Cheers

Friday, October 2, 2009 06:26PM Report Comment
 

72. tenyearstogetmymoneyback said...

There is a very good comment on Stephanie Flanders Blog.

Basically it says that the only people who have been managing to get mortgages are people upgrading.
Making up an example if you had a £140K house with £100K equity then I doubt if you would have much of a problem
getting a mortgage to upgrade to a £190K house. The only way the £140K is likely to be sold is the Bank of
Mum and Dad or a BTLer buying it for cash.

Without knowledge of the type of houses being sold this data is meaningless. It is like a car dealer who sells
nothing but two Limosines is a month saying that the price of cars has gone up.

Getting a bit fed up of all this personally. Yesterday the wireman at work said he was thinking of buying a BTL
"Because prices can't possibly go any lower". Today another colleague was spreading the good news about the
Nationwide figures.

Finally in response to Titanice Captains comment some of us saved £20K in two years and then continued at the
same rate for the next eight. The reason I post here is that it was really annoying to find that after ten years
I was no closer to being able to afford a decent house.

:- Duncan

Bought 1989 £65500 Sold 1999 £70500 - Current Value : The national average (interestingly it always was +- a couple of %)

Friday, October 2, 2009 06:36PM Report Comment
 

73. str 2007 said...

MG

I do like Daniel Hannan, so history does reoeat itself.

Wish I could now buy at Shakespeare prices though, even if it was wattle and dorb instead of bricks & mortar.

Friday, October 2, 2009 06:38PM Report Comment
 

74. str 2007 said...

Flashman

For when you get back.

No I certainly don't think chart patterns will predict events as such. However in the absense of 'special' events as you describe then you can certainly see trends that have happened.
These trends do end of course, perhaps with the arrival of a companies annual report for example.
However if the begining of a trend can be spotted it can surely still be traded with managed exposure.
You won't always be right but if the likelihood of outcome is in your favour you would gain overall.

I must admit I've wondered how, with all the different factors added in, an index can have predicatable patterns.

You can see individual shares following the same ups & downs of the index, but for me it's a bit of a chcken & egg question as to which is driving which.

I take it all your analysis is done on a fundamental basis ?

Friday, October 2, 2009 07:03PM Report Comment
 

75. iguana said...

Mrs Iguana and myself heard this story this morning, we had just been looking at the results of the latest Harman Healy auction.
Nationwide may have made a good stab at what they think might be happening but the auction results disagree significantly.
Suggest a quick look.......see what you think.

Friday, October 2, 2009 07:41PM Report Comment
 

76. str 2007 said...

http://www.harman-healy.co.uk/Current-Auction.aspx

That's the address if anyone wants it.

Flats in Preston Lancashire selling for £40kish.

Handy for the Pleaseure Beach, Illuminations and a great party atmosphere down the road in Blackpool.

Friday, October 2, 2009 08:02PM Report Comment
 

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