Tuesday, April 27, 2010

That graph again

The 2010 deadly property lie

This is actually an advert but starts with some interesting observations about the infamous bubble graph. Moneyweek are still very bearish about property.

Posted by quiet guy @ 01:14 PM (3119 views)
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19 thoughts on “That graph again

  • “have a look at the green dotted line on the chart. This tracks the housing market during the last boom and bust, from 1982 to 1995. As you can see, the property market followed the script closely, start to finish. First, house prices rose slowly, then they rocketed, slumped sharply, plateaued and finally started falling again. And this is the crucial bit. The current house price crash is following the exact same path. In fact, as you can see from the blue line on the chart, it’s almost a MIRROR IMAGE.”

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  • So there was no bull trap last time around?

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  • montesquieu says:

    Agree with the sentiment but shame about all the caps, italics and generally American hysterical infomercial signposting. Doesn’t do anything for credibility – online equivalent of green ink.

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  • The property lie that actually festers in the minds of many, particularly the young,

    is perhaps listening to the HPC “experts” two years ago that “much more pain was to come”.

    When actually, that phase in time presented them with the best buying opportunity

    they will have ever had in their lifetime.

    Self appointed experts with their parchments of predictions, a dangerous combination.

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  • Nice to see the bubble graph again – always brings out smugdog to play.

    No bull trap last time because the interest rates were not pulverised and there was no money printing. This, our very own, bull trap is government driven.

    But the markets are waiting and watching!

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  • That secret chart – the one ‘they’ don’t want you you see – isn’t it just the House Price to Average Earnings Ratio ? The one that Nationwide publishes in their monthly report ?

    As for the bubble chart, I wish the blue line was ‘almost a MIRROR IMAGE’ since a mirror image is the opposite of the original image.

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  • I’m willing to wait one more year before diving into property. Hopefully this is sufficient to show the blow-off phase if there is going to be one. Surely government cutbacks will have an effect, but right now it’s not clear how big that effect will be. One thing I am seeing now is an increase in the number of properties for sale. I’m seeing a 10% increase over 2 weeks and would suggest people are beginning to sell off their investments.

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  • This thing has been trotted out every quarter or so with my weekly money week . It’s wearing a bit thin. I just chuck it
    in the bin these days. All hope lost.

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  • Notyethomeless says:

    Gold price’s done the same shape graph in the last decade. But that’s based on the fundamentals – things are different this time.
    😀

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  • Hi Smugdog

    I thought this posting might get a bite from you!

    Who is more dangerous: the “self appointed experts with their parchments of predictions” or the army of VIs telling our youngsters they must get on the ladder, whatever the cost?

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  • Smuggy smuggy smuggy :

    “10. techieman said…
    drewster – cant agree with this, if it costs nothing to borrow money then why would anyone want to pay to rent somewhere? I think this is when we will have a dead cat bounce. (see my posts against yours earlier today). I.e. we have a big fall, then a dead cat bounce – i.e. a shallow rise AFTER a large fall and then a further plunge. The DCB could be when rates collapse (again i cant see this being all over quickly though). The mentality i have highlighted will be probably what causes the DCB – thats NOT to say i agree with that being a reason to buy. It then ALL depends on the state of the economy AT THAT TIME. But if rates were to Fall tomorrow to 0% then surely (“A” rated credit risks) would secure any loan! [I realise thats an extreme example and obviously it aint gonna happen but im sure you get the gist].

    Thursday, December 13, 2007 04:36PM”

    Right that deals with ” HPC “experts” two years ago that “much more pain was to come”.

    Now the next thing : oh yes : “When actually, that phase in time presented them with the best buying opportunity they will have ever had in their lifetime”.

    Well the best SHORT TERM opportunity obviously. But will the graph re-instate? Interesting innit?

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  • Actually, regular posters on this site are candid about the difference between what they expected and what the market has done:
    a gulf between what sensible people would do regarding property purchases and what the crowd has done (to the sound of encouraging politicians); and
    a prediction of a house price crash based on earnings to loan borrowed ration compared with a related but distinctly different economic problem as the trigger (US subprime)

    Where HPC experts have tumbled is in their predictions of WHEN the HPC would happen but the jury is still out on whether the sentiment of the HPC crew has been wise or not because they are typically talking about properties as homes which are paid for over decades rather than short term buy/sell investments; in the latter case, a short term investor might be delighted with performance – but that is a discussion for another forum, perhaps.

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  • Techie,

    When I read your posts, do you know, in my mind’s eye, who I actually see preaching to me?

    I see is David Cameron, perhaps not in your unique content, but certainly in your style.

    It’s not you is it Dave ?.

    If not, although I’m not convinced, perhaps you would fare better behind the glossy black door.

    I altogether hope it’s not Vince and his amazing crystal ball.

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  • tenyearstogetmymoneyback says:

    techieman said “But if rates were to Fall tomorrow to 0% then surely (“A” rated credit risks) would secure any loan!”

    I’m sure you realise that it is not that simple. In normal times loans were based on the money paid in by savers.
    A fifty year old having paid off their mortgage would put a bit of money in a building society who would lend it to a
    twenty five year old.

    If rates really were zero then there would be no incentive to save and no incentive for foreigners to invest their money.
    Therefore, the only way in which money could be lent out would be to print it. We all know from Zimbawe how that ends up.

    The alternative would be to limit loans. I can just imagine a limit of 2x salary and a minimum 50% deposit.

    Closer to home it is interesting to note that YBS are still paying 3.75% on their Issue 1 Regular Saver. It isn’t a fixed
    rate or anything so they don’t have to. However, due to the structure of the account it is likely that most holders
    have a fairly significant sum so they probably realise ther would be lots of withdrawls (including my five figure sum)
    if they cut the rate.

    I know things might be different this time but as I often say look at my user name.

    :- Duncan Bought 1989 £65500, Best Offer 1995 £48000, Sold 1999 £70500

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  • 10 years – that was my post dated Thursday, December 13, 2007. Yes 2007!!!!

    You missed the point. We all know now what happened next.

    Smuggy, really surely you can do better than that…. er can’t you? I’m not preaching to anyone – you made a statement that all “HPC Experts” were suggesting gloom and doom and further falls. Re-read what i wrote in 2007 and you will see that aint true.

    I would be the first to admit i didn’t expect this bounce to go as far, but i always expected a bounce further than most. Hats off to Gordon on this one.He has done a very good job of reflating but i think he is surprised that he still remains unloved.

    The basic premise is that MEWing and consumer spending, confidence and expansion are based on the Holy Grail of ever increasing prosperity via HPI.

    We’ll see ;-).

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  • Techie,

    ‘Preaching’ was an inappropriate choice of words.

    You were pretty spot on I have to admit.

    But do you keep a diary of all your inputs?

    Very interesting indeed!

    May your accurate contributions continue.

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  • So smuggy you can do better !

    No no-one KNOWs anything its about probabilities. No i dont keep a diary. In November of 2008 i said that the seeds had been sown for the DCB.

    The point is I still THINK its a DCB. You may think its a new bull era. I may be right and i may be wrong. But basically my money IS where my mouth is. As i think is yours so that’s fine, or if was Dave “cool”.

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  • oh and smuggy here is the link http://www.housepricecrash.co.uk/newsblog/2007/12/blog-sorry-no-more-rate-cuts-8854.php

    its number 10.

    I basically remember what ive said and roughly when – its then a case of using the [crappy] search function here.

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  • Thanks Techie,

    A new bull era, I’m far from convinced. It’s much too fragile out there.

    A level head and informed choices will be order of the day from now on.

    You may well be spot on once more ‘Dave’, cool indeed.

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