How far will house prices fall? [Volume 3]
Discussion
ATG said:
It is entirely normal for banks to behave pro-cyclically just like any other firm caught up in the start of a recession.
This is part of the problem with our economy though - the short termism - and it's where we will struggle to compete in the future. Again, banks are not to blame for this, the institutions who hold shares are as guilty as anyone.However, the banks are presently giving the old "what, who, me guv?" bks about lending to business - doing one thing and saying another, which isn't helpful and is more than a little disngenious. They make no mention of a 'pro-cyclical' strategy.
ATG said:
Why single them out for abuse?
Where's the abuse? I'm not demanding the city be ringed by a forest of pikes with bankers heads atop.Edited by Digga on Thursday 28th October 08:10
ATG said:
It is entirely normal for banks to behave pro-cyclically just like any other firm caught up in the start of a recession. Why single them out for abuse?
I think you have missed the fact that housing is not cyclical. It goes up several hundred percent, falls a few percent and then we are at the start of the next cycle. There has been a lot of research in this area by luminaries such as Krusty AllslopMeanwhile in other news, Nationwide -0.7% MOM
http://www.nationwide.co.uk/hpi/historical/Oct_201...
But don't worry, the falls are only modest, and "Further quantitative easing could boost
the housing market" (did they miss the GDP numbers?)
Beardy10 said:
XJ40 said:
So, "millionaire mansions double as house prices fall"?
This seems at odds with some of what I've read on this thread (the last volume) recently, seems quite surprising to me.
http://blogs.telegraph.co.uk/finance/ianmcowie/100...
I've read this somewhere else and see evidence of the amount of money going into high end property daily. I live in an area of London where there are a lot of very,very expensive houses (not on my street). Houses get bought for £5 to £10 mil and have several million more spent on them.....huge basements dug out and the house built back on top of them. Literally the only thing they leave is the facade and everything else is ripped down. This seems at odds with some of what I've read on this thread (the last volume) recently, seems quite surprising to me.
http://blogs.telegraph.co.uk/finance/ianmcowie/100...
It's got nothing to do with the rest of the housing market....different world. The wealth gap between the genuinely rich and the middle and working classes (for want of a better expression) had closed hugely over the last thirty years....it's now appears to be going back to where it was in Victorian times.
Decent article about the Great housing boom and bust.
http://www.telegraph.co.uk/news/newstopics/politic...
"Between 1975 and 1995, average house prices rose by just 3.5 per cent in real terms. Between 1995 and 2009, they went up by 120 per cent. That was great for Gordon Brown, since soaring house prices are like crack cocaine for politicians: illusory wealth created by unsustainable inflation that induces a huge “feelgood factor.” The hangover, however, is terrible. Under Labour, rents rose by two thirds, leaving young people unable to afford a house and forcing families to spend more on their mortgages (and, if they can afford it, on their children’s)."
http://www.telegraph.co.uk/news/newstopics/politic...
"Between 1975 and 1995, average house prices rose by just 3.5 per cent in real terms. Between 1995 and 2009, they went up by 120 per cent. That was great for Gordon Brown, since soaring house prices are like crack cocaine for politicians: illusory wealth created by unsustainable inflation that induces a huge “feelgood factor.” The hangover, however, is terrible. Under Labour, rents rose by two thirds, leaving young people unable to afford a house and forcing families to spend more on their mortgages (and, if they can afford it, on their children’s)."
fido said:
Decent article about the Great housing boom and bust.
http://www.telegraph.co.uk/news/newstopics/politic...
"Between 1975 and 1995, average house prices rose by just 3.5 per cent in real terms. Between 1995 and 2009, they went up by 120 per cent. That was great for Gordon Brown, since soaring house prices are like crack cocaine for politicians: illusory wealth created by unsustainable inflation that induces a huge “feelgood factor.” The hangover, however, is terrible. Under Labour, rents rose by two thirds, leaving young people unable to afford a house and forcing families to spend more on their mortgages (and, if they can afford it, on their children’s)."
http://www.telegraph.co.uk/news/newstopics/politic...
"Between 1975 and 1995, average house prices rose by just 3.5 per cent in real terms. Between 1995 and 2009, they went up by 120 per cent. That was great for Gordon Brown, since soaring house prices are like crack cocaine for politicians: illusory wealth created by unsustainable inflation that induces a huge “feelgood factor.” The hangover, however, is terrible. Under Labour, rents rose by two thirds, leaving young people unable to afford a house and forcing families to spend more on their mortgages (and, if they can afford it, on their children’s)."
fido said:
Decent article about the Great housing boom and bust.
We haven't see the bust yetfido said:
Between 1975 and 1995, average house prices rose by just 3.5 per cent in real terms. Between 1995 and 2009, they went up by 120 per cent.
This was caused by the following1. In 1995, all women went to work - this was unheard of before
2. Great swathes of the white cliffs of Dover fell into the sea, causing a shortage of land
3. 99% of people became self employed in 1995, earning 10 times what they did as an employee. This doesn't show up on the earnings numbers, hence the price increase.
NoelWatson said:
fido said:
Decent article about the Great housing boom and bust.
We haven't see the bust yetWith evidence of an economic recovery confidence will start to increase. I know we've got the whole government “cuts” thing which will have some effect on growth, but as government spending overall will still be increasing I think the impact is being over played by some, I'm trusting the government approach although it's early doors yet. A growing private sector can mop up public sector job losses over the next five years.
Personally, I think that for all the orange folks with the maxed off plastic buying 60 plate Audi's on the never never, there's a good, perhaps greater number of proper people out there who've been quietly and without fuss saving / paying down debt over the last few years. That's what I've been doing in any case and am in the process of becoming a FTB (still), buying a new build that not yet finished.
I did share some of the gloom on house prices though I'm seeing reasons for cautious optimism and have changed my view now I've a vested interest.
Edited by XJ40 on Thursday 28th October 11:12
XJ40 said:
Although we've not had a spectacular bust, the fact that we've got 5%+ inflation PA eroding prices in real terms is a gentle bust is it not. It seems to me that low rates, QE, etc. are letting the air out slowly. Wages are lagging but will follow sooner or later.
And when wages go up, and inflation is at 5%, will interest rates still be at 0.5%?NoelWatson said:
XJ40 said:
Although we've not had a spectacular bust, the fact that we've got 5%+ inflation PA eroding prices in real terms is a gentle bust is it not. It seems to me that low rates, QE, etc. are letting the air out slowly. Wages are lagging but will follow sooner or later.
And when wages go up, and inflation is at 5%, will interest rates still be at 0.5%?XJ40 said:
NoelWatson said:
XJ40 said:
Although we've not had a spectacular bust, the fact that we've got 5%+ inflation PA eroding prices in real terms is a gentle bust is it not. It seems to me that low rates, QE, etc. are letting the air out slowly. Wages are lagging but will follow sooner or later.
And when wages go up, and inflation is at 5%, will interest rates still be at 0.5%?They're clearly using low rates to support the economy rather than to put the brakes on inflation. If the recovery is sustained then I think we'll see 'em rise to something approaching sensible though I think it'll be a long time before we see anything like what your suggesting. If not then they'll look to keep them on the deck as they have done. Either way, I don't think it has to be bad news for house prices.
XJ40 said:
NoelWatson said:
XJ40 said:
Although we've not had a spectacular bust, the fact that we've got 5%+ inflation PA eroding prices in real terms is a gentle bust is it not. It seems to me that low rates, QE, etc. are letting the air out slowly. Wages are lagging but will follow sooner or later.
And when wages go up, and inflation is at 5%, will interest rates still be at 0.5%?It'll start slowly with a quarter or half point announced at the meetings but then it is extremely likely that all hell with break lose with inflation and we'll see emergency 50 to 100 bp being piled on out of the blue and what started as a small, slow, gentle climb back up will become a rout.
That is when hoards will be taken out fo the market overnight.
We are in a period at present where banks are shoring up their balance sheets so as to take the hits on board and attempting to reduce their exposure and the people have the opportunity to pay down debt or unwind their over leveraged positions. A lot of people are doing just that but others are leasing cars and buying hair products.
There is an extremely strong probablity of a large section of the home owning public being fked within a quarter once this starts. But it will release property to those who have been smart enough to save their money rather than invest it in cars, TVs and hair products.
I would say the chance of a strong but selective and short lived price correction within the next few years is very good.
DonkeyApple said:
Digga said:
DonkeyApple said:
I would say the chance of a strong but selective and short lived price correction within the next few years is very good.
Outside of Pistonheadcestershire.Naturally.
House rpices resume slide
Digga said:
Wake up at the back!! Posted yesterday - think people are so used to seeing falling prices now (obviously their area excepted) that there wasn't much commentNoelWatson said:
Digga said:
Wake up at the back!! Posted yesterday - think people are so used to seeing falling prices now (obviously their area excepted) that there wasn't much commentMy excuse: It's exceptionally dark here this morning and it's difficult to wake up. I have a cup of super-strenght coffe on the go, but still I'm feeling a bit like I'd prefer to go back to my pit than stay awake.
The article harps on about consumers preparing for "for the toughest government spending squeeze in generations", but as well all know, the cuts aren't much depper than Darling had already announced - prior to the revival in house prices - and are unlikely to have significant or immediate effects in any case. If it is true though, then coupled with the natural quiet spell for house purchases over Christmas and New Year, it'll be dead in most EAs until at least March.
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