Sunday, April 29, 2012
Big greasy bear breakfast…
Double-dip recession to trigger house price fall
The potential drop in prices is expected to be more significant than that seen recently.
Posted by happy mondays @ 09:00 AM (3454 views)
13 thoughts on “Big greasy bear breakfast…”
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drewster says:
He’s actually blaming our small, statistically insignificant, double-dip recession? So if the economy had grown by +0.1% rather than -0.1%, the housing market would be hunky-dory?
Also there’s no mention of fundamentals: price-to-rent ratio (yield), mortgage rates, expectations of house prices and mortgage rates. I don’t see any scope for further price rises, but the only scope for falls comes from a recent slight uptick in mortgage rates.
mark wadsworth says:
D, don’t look a bear in the mouth, the article is almost entirely fact free, but ends with this:
“There is then a danger of a self-fulfilling loop in which wary consumers delay buying and the market drops further.”
That’s all we need to get the HPC back on track, a bit of negative sentiment.
quiet guy says:
There’s no mention of the foreign money flowing into the London market either. If one of the large southern eurozone countries abandons the euro, we may see even more cash go to London in the short term. What would the major indices and public sentiment be like without the London effect?
(http://www.acadametricstest.com/LSL%20Acad%20E&W%20HPI%20News%20Release%20March%2012.pdf)
stillthinking says:
http://www.bloomberg.com/news/2012-04-27/u-k-pension-liabilities-reach-five-times-gdp-ons-says.html
Pension obligations hit 5xGDP, and zerohedge is estimating total UK debt now running at 9.5xGDP. I would be very scared of buying into the UK property market if I was foreign. You may as well draw a target on your head as easy meat government revenue with the masses cheering them on. Also the revenue fell with the devaluation, it wasn’t just the total price.
Mainly the UK is horribly busted and the word is getting out.
However, having said that, I don’t dispute the chart. I don’t have a reason why anybody would spend around $300,000 on a small flat in a not very nice part of London. Maybe because the main location for new builds is in the London area, new starts collapsed elsewhere and the government is pumping funds specifically into new builds. That seems plausible. I have no idea whether thats true, seems a reasonable possibility at least. Or possibly a shift in the distribution of London sales towards the higher priced properties. Lower valuation Londoners are mortgage trapped in negative equity and can’t shift out, whereas the higher family homes are still shifting as the earlier generation shuffles off this mortal coil. Or inaccurate because of transaction volumes.
I would say certainly though that the above graphic visually implies that the loss in values is a function of the distance from London, ie London represents some kind of epicentre. But actually this graphics has been sorted on the basis of the loss. If London was holding up so well why would the South East be such a disaster zone? Why would Wales hold up better than the SE? Anyway.
icarus says:
stillthinking – since you mention pension obligations (= gdp x 5) in the same breath as total UK government debt it’s only fair to point out that the ONS says that unfunded public pension obligations (those to be paid by government/taxpayer) are 58%, not 500%, of GDP. The other 462% are private and/or backed by assets.
icarus says:
make that “the other 442%”
mark wadsworth says:
ST, Icarus, the generally accepted, and probably accurate figure for unfunded public sector pensions is about £1 trillion (i.e. somewhere between £700 billion and £1.5 trillion depending on assumptions). Annual OAP paid out are about £70 billion, so at a discount rate of 2%, that makes about £3.5 trillion net present value, or two-and-a-bit times GDP.
As I’ve said before, if you are 20 and starting work, you have a huge great liability facing you because you’ll have to pay in for fifty years, and if you are lucky, you might get a bit back in fifty one years’ time. If you are on the verge of retirement age, you have a small liabillity (one year’s contributions) and a massive great potential asset (you will be collecting pension for twenty or twenty or twenty five years) and
There must be a break even point between the two, i.e. if you are aged (say) 45, the two sides probably net off to plus minus nothing, i.e. if you are 45 and they shut down OAPs and reduce tax by £70 billion a year, then your future tax saving will be enough to fund your own pension.
libertas says:
To pay pensions, we need to have an economy. The economy is being gutted in the name of globalism. Will we be lent back the billions we gave to the IMF and go under their dictatorship for to pay these unfunded mandates? Is that their purpose? Because the politicians sure as heck knew this crisis would come.
Sacrificed at the alter of world government. Sacrificed at the alter of the New World Order:
stuartking says:
Libertas: The UK hasn’t “given” any money to the IMF. Any more that the IMF has from this country is in the form of interest-bearing loans and no money lent to the IMF has ever been lost.
The kind of socialist protectionism you would wish on the economy would kill it stone dead, especially if other country’s retaliated, which would be a distinct possibility.
stuartking says:
The second sentence should read: “Any money…”
letthemfall says:
Treasury estimate of pension obligations (4 years old now) are about 53% GDP (so icarus is right). Interesting that the “free-market” “independent” estimates are higher, presumably because these people tend to prefer low taxes, which benefits them disproportionately, to good pensions for most other people. Even so, their estimates are no greater than 80% odd. Whether these figures are of any real consequence is moot: there is the “scary number” thing going on here, and given that liabilities are forecast to fall in future, this all may just be more huffing and puffing by the austerity kings.
bubba sparks says:
NWO, illuminati…malct, is that you??
general congreve says:
@7 – A valid point MW, but it does rely on all things being equal, i.e. the economy not suffering a collapse and a debt default in the meantime.