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Finances / Finanzen » uk.finance » Senior economist predicts house price crash of between 20 to 50%
| Senior economist predicts house price crash of between 20 to 50% [message #373880] |
Fr, 24 März 2006 11:31 |
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"How much could prices fall? Calverley says that, if it is just a
return to average levels, the fall could be 20-35 per cent. If it is a
return to previous lows in relation to prevailing rents and wages, the
fall could be 50 per cent....."
The chief economist at American Express Bank gave his views on the UK
house price bubble at the the Royal Bank of Scotland's annual economics
lecture ....................
Friday March 24, 03:20 AM
http://uk.biz.yahoo.com/24032006/17/calverley-hints-bubble-s queak-housing-market-hits-time-high.html
Calverley hints at bubble and squeak as housing market hits all-time
high
AFTER Bill Jamieson reported on Tuesday how the Edinburgh property
market is still merrily booming, and Gordon Brown gave a boost to
property investment on Wednesday, along came a man with a big bucket of
cold water to throw on Bill, Gordon, and all you homeowners.
John Calverley, chief economist and strategist at American Express
Bank, gave the RBS (LSE: RBS.L - news) annual economics lecture. He is
an expert on "bubbles" - when the price of something inflates way above
realistic levels and then bursts, leaving people who bought in at the
wrong time a lot poorer.
His book - Bubbles and How to Survive Them (Nicholas Brealey
Publishing, Boston) - is much discussed. And as his lecture topic -
Bubbles and Busts: will the world housing boom end in tears? - zooms in
on a matter of great personal interest to every householder, there was
a big turnout.
What he had to say can be summed up in two questions and their answers.
Is there a house price bubble? His answer - yes. Is it going to burst?
His answer again - yes. At this point, people began to concentrate very
hard, especially when he posed the obvious follow-up question: when is
it going to burst? Rather disappointingly, he confessed that he did not
know. Nonetheless, he is 90 per cent certain that the bust is coming.
So what's his argument? He points out that house prices have inflated
across most of the developed world. Since 1997, British prices have
gone up by 167 per cent, topped only by California with a 191 per cent
increase. The only places where prices have fallen are Germany (down 1
per cent) Japan (-30 per cent) and Hong Kong (-45 per cent). He also
notes that prices have risen much faster than incomes and rents, so
much so that buying in Britain (including all taxes and maintenance
costs) is now 36 per cent more expensive than renting.
Calverley concedes that there are reasons for prices going up. Social
trends such as higher divorce rates means that more houses are needed
for the same number of people. Mortgages are much more available and
easier to get than in the past, and lower real and nominal interest
rates mean they are a lot cheaper.
Yet he still thinks it is a bubble. The problem here is that, much
though academics have tried, nobody has come up with a convincing way
of defining, and hence predicting, a bubble. But he does think that you
can draw up a list of bubble characteristics which you can then use to
make a subjective judgment.
These are: high expectations of continued price growth; overvaluation
compared with historical averages; being several years into an economic
upswing; a new element in the market such as stable low interest rates;
a change in attitudes such as regarding your home's value as your
pension; new investors and entrepreneurs, continuing media and popular
interest; a big rise in lending and new lenders; and a low rate of
consumer price inflation. House prices check all those boxes, so there
must be a bubble, Calverley concludes.
Moreover, he also contends that one country's housing market is
increasingly affected by other countries' house prices. Residential
property companies operate across national borders as do many
individual buyers as they seek a second home that will not just be nice
for holidays, but also be an investment. That implies that a house
price bust in America will mean a bust here.
How much could prices fall? Calverley says that, if it is just a return
to average levels, the fall could be 20-35 per cent. If it is a return
to previous lows in relation to prevailing rents and wages, the fall
could be 50 per cent.
Calverley did offer a little relief to his Scottish audience, noting
that Scottish price swings have been much less wild than in the English
market. But, he warned gloomily, Scots are liable to be hit at the same
time as the rest of Britain.
That still leaves open the question of why and when a price bust may
happen. The likeliest causes are an economic recession and a marked
rise in interest rates. Neither of these things seem likely to happen.
Barring the unexpected, such as a world flu pandemic, the world
economic outlook is pretty good. So Calverley thinks we still have a
year to go, maybe more.
Talking to people after this Corporal Fraser-esque lecture of gloom,
there was a great deal of scepticism. Houses are necessities, unlike
tulips or dot.com stocks, one listener told me, so there will always be
a demand for them. And since the planning system makes increasing the
supply of houses extremely slow, there won't be a sudden bust. That's
true, but we have had slow punctures in 1972-77 and 1989-95 when
British house prices fell relative to earnings, though the absolute
fall in prices was less and shorter. Calverley also notes that a price
recovery may take even longer, perhaps 15-20 years.
Before you rush to the estate agents, there are other equally eminent
economists who disagree with Calverley. Roger Bootle, a much cited
authority, spent most of 2005 forecasting a 20 per cent house price
fall, then recanted, saying that cheap loans and the peculiarities of
the British market meant that he had been wrong.
What really matters is people's ability to pay the cost of borrowing.
Calverley's most worrying chart showed British house prices in relation
to earnings since 1960. It shows bubbles in 1972, 1979, 1988 and now.
Alarmingly, this bubble is the biggest of the lot, reaching 5.5 times
average earnings whereas previous bubbles have only reached 4.5 times
earnings. Yet on an ability to pay measure, it is much less troubling.
Recent figures from the Alliance and Leicester (LSE: AL.L - news) bank
says that the current average cost of debt servicing is 13.8 per cent
of household income, half the level in 1990 when interest rates
averaged 14.6 per cent and debt servicing cost 25.7 per cent of income.
Interest rates have a way to go before this cost is really pushed up. A
slowdown seems much more likely than a crash.
http://www.housepricecrash.co.uk/forum/index.php?showtopic=2 6622
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373883 ] |
Fr, 24 März 2006 11:58 |
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Crowley wrote:
> "How much could prices fall? Calverley says that, if it is just a
> return to average levels, the fall could be 20-35 per cent. If it is a
> return to previous lows in relation to prevailing rents and wages, the
> fall could be 50 per cent....."
>
> The chief economist at American Express Bank gave his views on the UK
> house price bubble at the the Royal Bank of Scotland's annual economics
> lecture ....................
>
> Talking to people after this Corporal Fraser-esque lecture of gloom,
> there was a great deal of scepticism. Houses are necessities, unlike
> tulips or dot.com stocks, one listener told me, so there will always be
> a demand for them.
One wonders whether this "one listener" could have been one of our
regulars who, being local, may have attended the lecture in person.
You know who I mean. Keeps going on about tulips.
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373885 ] |
Fr, 24 März 2006 13:29 |
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"Crowley" <crowleyalastair [at] yahoo.co.uk> wrote in message
news:1143196308.969706.172340 [at] e56g2000cwe.googlegroups.com...
> "How much could prices fall? Calverley says that, if it is just a
> return to average levels, the fall could be 20-35 per cent. If it is a
> return to previous lows in relation to prevailing rents and wages, the
> fall could be 50 per cent....."
>
> The chief economist at American Express Bank gave his views on the UK
> house price bubble at the the Royal Bank of Scotland's annual economics
> lecture ....................
>
>
> Friday March 24, 03:20 AM
> http://uk.biz.yahoo.com/24032006/17/calverley-hints-bubble-s queak-housing-market-hits-time-high.html
>
> Calverley hints at bubble and squeak as housing market hits all-time
> high
>
> AFTER Bill Jamieson reported on Tuesday how the Edinburgh property
> market is still merrily booming, and Gordon Brown gave a boost to
> property investment on Wednesday, along came a man with a big bucket of
> cold water to throw on Bill, Gordon, and all you homeowners.
>
> John Calverley, chief economist and strategist at American Express
> Bank, gave the RBS (LSE: RBS.L - news) annual economics lecture. He is
> an expert on "bubbles" - when the price of something inflates way above
> realistic levels and then bursts, leaving people who bought in at the
> wrong time a lot poorer.
>
> His book - Bubbles and How to Survive Them (Nicholas Brealey
> Publishing, Boston) - is much discussed. And as his lecture topic -
> Bubbles and Busts: will the world housing boom end in tears? - zooms in
> on a matter of great personal interest to every householder, there was
> a big turnout.
>
> What he had to say can be summed up in two questions and their answers.
> Is there a house price bubble? His answer - yes. Is it going to burst?
> His answer again - yes. At this point, people began to concentrate very
> hard, especially when he posed the obvious follow-up question: when is
> it going to burst? Rather disappointingly, he confessed that he did not
> know. Nonetheless, he is 90 per cent certain that the bust is coming.
>
> So what's his argument? He points out that house prices have inflated
> across most of the developed world. Since 1997, British prices have
> gone up by 167 per cent, topped only by California with a 191 per cent
> increase. The only places where prices have fallen are Germany (down 1
> per cent) Japan (-30 per cent) and Hong Kong (-45 per cent). He also
> notes that prices have risen much faster than incomes and rents, so
> much so that buying in Britain (including all taxes and maintenance
> costs) is now 36 per cent more expensive than renting.
>
> Calverley concedes that there are reasons for prices going up. Social
> trends such as higher divorce rates means that more houses are needed
> for the same number of people. Mortgages are much more available and
> easier to get than in the past, and lower real and nominal interest
> rates mean they are a lot cheaper.
>
> Yet he still thinks it is a bubble. The problem here is that, much
> though academics have tried, nobody has come up with a convincing way
> of defining, and hence predicting, a bubble. But he does think that you
> can draw up a list of bubble characteristics which you can then use to
> make a subjective judgment.
>
> These are: high expectations of continued price growth; overvaluation
> compared with historical averages; being several years into an economic
> upswing; a new element in the market such as stable low interest rates;
> a change in attitudes such as regarding your home's value as your
> pension; new investors and entrepreneurs, continuing media and popular
> interest; a big rise in lending and new lenders; and a low rate of
> consumer price inflation. House prices check all those boxes, so there
> must be a bubble, Calverley concludes.
>
> Moreover, he also contends that one country's housing market is
> increasingly affected by other countries' house prices. Residential
> property companies operate across national borders as do many
> individual buyers as they seek a second home that will not just be nice
> for holidays, but also be an investment. That implies that a house
> price bust in America will mean a bust here.
>
> How much could prices fall? Calverley says that, if it is just a return
> to average levels, the fall could be 20-35 per cent. If it is a return
> to previous lows in relation to prevailing rents and wages, the fall
> could be 50 per cent.
>
> Calverley did offer a little relief to his Scottish audience, noting
> that Scottish price swings have been much less wild than in the English
> market. But, he warned gloomily, Scots are liable to be hit at the same
> time as the rest of Britain.
>
> That still leaves open the question of why and when a price bust may
> happen. The likeliest causes are an economic recession and a marked
> rise in interest rates. Neither of these things seem likely to happen.
> Barring the unexpected, such as a world flu pandemic, the world
> economic outlook is pretty good. So Calverley thinks we still have a
> year to go, maybe more.
>
> Talking to people after this Corporal Fraser-esque lecture of gloom,
> there was a great deal of scepticism. Houses are necessities, unlike
> tulips or dot.com stocks, one listener told me, so there will always be
> a demand for them. And since the planning system makes increasing the
> supply of houses extremely slow, there won't be a sudden bust. That's
> true, but we have had slow punctures in 1972-77 and 1989-95 when
> British house prices fell relative to earnings, though the absolute
> fall in prices was less and shorter. Calverley also notes that a price
> recovery may take even longer, perhaps 15-20 years.
>
> Before you rush to the estate agents, there are other equally eminent
> economists who disagree with Calverley. Roger Bootle, a much cited
> authority, spent most of 2005 forecasting a 20 per cent house price
> fall, then recanted, saying that cheap loans and the peculiarities of
> the British market meant that he had been wrong.
>
> What really matters is people's ability to pay the cost of borrowing.
> Calverley's most worrying chart showed British house prices in relation
> to earnings since 1960. It shows bubbles in 1972, 1979, 1988 and now.
> Alarmingly, this bubble is the biggest of the lot, reaching 5.5 times
> average earnings whereas previous bubbles have only reached 4.5 times
> earnings. Yet on an ability to pay measure, it is much less troubling.
> Recent figures from the Alliance and Leicester (LSE: AL.L - news) bank
> says that the current average cost of debt servicing is 13.8 per cent
> of household income, half the level in 1990 when interest rates
> averaged 14.6 per cent and debt servicing cost 25.7 per cent of income.
> Interest rates have a way to go before this cost is really pushed up. A
> slowdown seems much more likely than a crash.
>
> http://www.housepricecrash.co.uk/forum/index.php?showtopic=2 6622
>
Anyone who thinks that property values will fall dramatically lives in
Cloud-Cuckoo-Land. I'm getting on a bit now and when I came to this village
around 1962 I bought a cottage for under £600. Today these same cottages are
fetching well into six figures. What with the average household going down
all the time and population figures climbing there is little chance that a
commodity based upon supply and demand will show a dramatic fall in value.
--
Robert Peffers,
Kelty,
Fife,
Scotland, (UK).
(When replying take pam away from peffers.
Scotland).
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373887 ] |
Fr, 24 März 2006 14:24 |
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R=2EPeffers. wrote:
> Anyone who thinks that property values will fall dramatically lives in
> Cloud-Cuckoo-Land.
So you think you know better than the chief economist of American
Express Bank do you ?
> I'm getting on a bit now and when I came to this village
> around 1962 I bought a cottage for under =A3600. Today these same cottage=
s are
> fetching well into six figures. What with the average household going down
> all the time and population figures climbing there is little chance that a
> commodity based upon supply and demand will show a dramatic fall in value.
I think you'll find that the house price bubble is based on much more
than simple 'supply and demand'. The explosion in cheap and easy credit
in recent years has been a major, if not the main, driver of the
massive upward movement in prices. That cheap credit is now showing
signs of drying up (Bank of Japan sharply cutting back on liquidity,
raising rates later this year, end of the carry-trade, ECB and Fed
rates rising etc)
Other factors include the record level of debt (=A31.2 trillion) UK
consumers now hold, increasing unemployment, and the recession in the
retail sector as debt levels force consumers to rein in their spending.
Not a very healthy environment in which a house price bubble can be
maintained is it ?
With credit tightening/credit crunch comes a bursting of asset bubbles
of which house prices is the biggest particularly in the UK, US,
Ireland, Spain, and Australia.
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373890 ] |
Fr, 24 März 2006 16:42 |
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"R.Peffers." <peffers50 [at] btinternet.com> wrote in message
news:tJKdnV2hO_TZe77ZRVnytA [at] bt.com...
> Anyone who thinks that property values will fall dramatically lives in
> Cloud-Cuckoo-Land. I'm getting on a bit now and when I came to this
> village around 1962 I bought a cottage for under £600. Today these same
> cottages are
Whereas you are right - what tends to be debated here is short-term property
price fluctuations. I don't think that anybody doubts that property prices
will always go up over a long enough expanse of time but there are still
bubbles and crashes that can significantly effect house prices and cause all
sorts of short-term but potentially damaging situations such as negative
equity.
---
Sam
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373891 ] |
Fr, 24 März 2006 16:48 |
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Crowley wrote:
> R.Peffers. wrote:
> > Anyone who thinks that property values will fall dramatically lives in
> > Cloud-Cuckoo-Land.
>
> So you think you know better than the chief economist of American
> Express Bank do you ?
>
>
> > I'm getting on a bit now and when I came to this village
> > around 1962 I bought a cottage for under =A3600. Today these same cotta=
ges are
> > fetching well into six figures. What with the average household going d=
own
> > all the time and population figures climbing there is little chance tha=
t a
> > commodity based upon supply and demand will show a dramatic fall in val=
ue.
>
> I think you'll find that the house price bubble is based on much more
> than simple 'supply and demand'. The explosion in cheap and easy credit
> in recent years has been a major, if not the main, driver of the
> massive upward movement in prices. That cheap credit is now showing
> signs of drying up (Bank of Japan sharply cutting back on liquidity,
> raising rates later this year, end of the carry-trade, ECB and Fed
> rates rising etc)
>
> Other factors include the record level of debt (=A31.2 trillion) UK
> consumers now hold increasing unemployment, and the recession in the
> retail sector as debt levels force consumers to rein in their spending.
> Not a very healthy environment in which a house price bubble can be
> maintained is it ?
>
> With credit tightening/credit crunch comes a bursting of asset bubbles
> of which house prices is the biggest particularly in the UK, US,
> Ireland, Spain, and Australia.
Round here (SW London), you can tell by the number of cars that people
are making their houses more affordable by squeezing more people into
them.
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373895 ] |
Fr, 24 März 2006 18:34 |
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Ronald Raygun <no.spam [at] localhost.localdomain> wrote:
>> Talking to people after this Corporal Fraser-esque lecture of gloom,
>> there was a great deal of scepticism. Houses are necessities, unlike
>> tulips or dot.com stocks, one listener told me, so there will always be
>> a demand for them.
> One wonders whether this "one listener" could have been one of our
> regulars who, being local, may have attended the lecture in person.
> You know who I mean. Keeps going on about tulips.
If you mean me, then nope. Warn't me. Too busy....
FoFP
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373896 ] |
Fr, 24 März 2006 18:38 |
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In uk.finance R.Peffers. <peffers50 [at] btinternet.com> wrote:
> Anyone who thinks that property values will fall dramatically lives in
> Cloud-Cuckoo-Land. I'm getting on a bit now and when I came to this village
> around 1962 I bought a cottage for under L600. Today these same cottages are
> fetching well into six figures.
I wonder why people were so stupid back then as to be unable to realise
that houses were worth 100 times more than what they were paying?
I wonder if people could get so stupid again?
FoFP
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| Re: Senior economist predicts house price crash of between 20 to50% [message #373897 ] |
Fr, 24 März 2006 18:40 |
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Crowley wrote:
> Calverley hints at bubble and squeak as housing market hits all-time
> high
I assume he has sold his house and moved into rented accomodation, after
all if the crash is only 1 year away it would make sense wouldn't it?
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373898 ] |
Fr, 24 März 2006 18:48 |
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"davidof" <david.george [at] g-dumpthisbit-mail.com> wrote in message
news:44242edc$0$1147$7a628cd7 [at] news.club-internet.fr...
> Crowley wrote:
>> Calverley hints at bubble and squeak as housing market hits all-time
>> high
>
> I assume he has sold his house and moved into rented accomodation, after
> all if the crash is only 1 year away it would make sense wouldn't it?
WIll be the same as the professor of economics about 2 years ago.High
profile story in the Times, HPC 'imminent' but was still living in his own
house. And of course, 2 years on, no HPC.
--
Tumbleweed
email replies not necessary but to contact use;
tumbleweednews at hotmail dot com
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373899 ] |
Fr, 24 März 2006 18:49 |
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"M Holmes" <fofp [at] holyrood.ed.ac.uk> wrote in message
news:e01aqu$h21$2 [at] scotsman.ed.ac.uk...
> In uk.finance R.Peffers. <peffers50 [at] btinternet.com> wrote:
>
>> Anyone who thinks that property values will fall dramatically lives in
>> Cloud-Cuckoo-Land. I'm getting on a bit now and when I came to this
>> village
>> around 1962 I bought a cottage for under L600. Today these same cottages
>> are
>> fetching well into six figures.
>
> I wonder why people were so stupid back then as to be unable to realise
> that houses were worth 100 times more than what they were paying?
>
They werent, they were worth what they paid for them at the time, within a
few percent, just like now.
--
Tumbleweed
email replies not necessary but to contact use;
tumbleweednews at hotmail dot com
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373900 ] |
Fr, 24 März 2006 18:56 |
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In uk.finance Tumbleweed <thisaccountneverread [at] yahoo.com> wrote:
> "M Holmes" <fofp [at] holyrood.ed.ac.uk> wrote in message
> news:e01aqu$h21$2 [at] scotsman.ed.ac.uk...
>> In uk.finance R.Peffers. <peffers50 [at] btinternet.com> wrote:
>>
>>> Anyone who thinks that property values will fall dramatically lives
>>> in Cloud-Cuckoo-Land. I'm getting on a bit now and when I came to
>>> this village around 1962 I bought a cottage for under L600. Today
>>> these same cottages are fetching well into six figures.
>> I wonder why people were so stupid back then as to be unable to
>> realise that houses were worth 100 times more than what they were
>> paying?
>> They werent, they were worth what they paid for them at the time,
>> within a few percent, just like now.
Thus if people can believe a house is worth 600 Pounds at one time, they
can believe it again.
FoFP
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373901 ] |
Fr, 24 März 2006 18:55 |
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On Fri, 24 Mar 2006 18:40:12 +0100, davidof
<david.george [at] g-dumpthisbit-mail.com> wrote:
>Crowley wrote:
>> Calverley hints at bubble and squeak as housing market hits all-time
>> high
>
>I assume he has sold his house and moved into rented accomodation, after
>all if the crash is only 1 year away it would make sense wouldn't it?
Not really, owning a house is not simply an investment, and money is
not everything if his sole goal was to maximise profit then it may
well be a good course of action, most peoples isn't though.
Jim.
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373902 ] |
Fr, 24 März 2006 18:57 |
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In uk.finance davidof <david.george [at] g-dumpthisbit-mail.com> wrote:
> Crowley wrote:
>> Calverley hints at bubble and squeak as housing market hits all-time
>> high
> I assume he has sold his house and moved into rented accomodation, after
> all if the crash is only 1 year away it would make sense wouldn't it?
Unless he just plain likes the house more than any money he'd make by
leaving it.
His book is OK, and well-researched. I liked Shiller's better though.
FoFP
--
In domestic arguments the confusion of objectives, between winning and trying to
solve a problem, is an unnatural feminist plot. Real men know that problems are
fixed with hammers, wrenches and tools that can be heard three streets away,
and that the whole damn point of having an argument is to try to win.
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373903 ] |
Fr, 24 März 2006 19:15 |
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"M Holmes" <fofp [at] holyrood.ed.ac.uk> wrote in message
news:e01bri$h21$3 [at] scotsman.ed.ac.uk...
> In uk.finance Tumbleweed <thisaccountneverread [at] yahoo.com> wrote:
>
>> "M Holmes" <fofp [at] holyrood.ed.ac.uk> wrote in message
>> news:e01aqu$h21$2 [at] scotsman.ed.ac.uk...
>>> In uk.finance R.Peffers. <peffers50 [at] btinternet.com> wrote:
>>>
>
>>>> Anyone who thinks that property values will fall dramatically lives
>>>> in Cloud-Cuckoo-Land. I'm getting on a bit now and when I came to
>>>> this village around 1962 I bought a cottage for under L600. Today
>>>> these same cottages are fetching well into six figures.
>
>>> I wonder why people were so stupid back then as to be unable to
>>> realise that houses were worth 100 times more than what they were
>>> paying?
>
>>> They werent, they were worth what they paid for them at the time,
>>> within a few percent, just like now.
>
> Thus if people can believe a house is worth 600 Pounds at one time, they
> can believe it again.
>
> FoFP
And they'll believe it when it is. Not before. And, should you wish to
believe your house (assuming you own one) is worth 600 pounds, I'll buy it
from you.
--
Tumbleweed
email replies not necessary but to contact use;
tumbleweednews at hotmail dot com
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373904 ] |
Fr, 24 März 2006 19:17 |
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"M Holmes" <fofp [at] holyrood.ed.ac.uk> wrote in message
news:e01bu4$h21$4 [at] scotsman.ed.ac.uk...
> In uk.finance davidof <david.george [at] g-dumpthisbit-mail.com> wrote:
>> Crowley wrote:
>
>>> Calverley hints at bubble and squeak as housing market hits all-time
>>> high
>
>> I assume he has sold his house and moved into rented accomodation, after
>> all if the crash is only 1 year away it would make sense wouldn't it?
>
> Unless he just plain likes the house more than any money he'd make by
> leaving it.
>
LOL. He can always buy it back again, by paying more than its worth if
necessary. Unless the amount of money he'd gain is so small to make it not
worth doing...which would make a point about the magnitude of the 'crash' he
is expecting.
--
Tumbleweed
email replies not necessary but to contact use;
tumbleweednews at hotmail dot com
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373905 ] |
Fr, 24 März 2006 19:18 |
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"Jim Ley" <jim [at] jibbering.com> wrote in message
news:44243260.21332324 [at] news.individual.net...
> On Fri, 24 Mar 2006 18:40:12 +0100, davidof
> <david.george [at] g-dumpthisbit-mail.com> wrote:
>
>>Crowley wrote:
>>> Calverley hints at bubble and squeak as housing market hits all-time
>>> high
>>
>>I assume he has sold his house and moved into rented accomodation, after
>>all if the crash is only 1 year away it would make sense wouldn't it?
>
> Not really, owning a house is not simply an investment, and money is
> not everything if his sole goal was to maximise profit then it may
> well be a good course of action, most peoples isn't though.
>
> Jim.
Then whats the point of "warning" people there is a HPC imminent?
--
Tumbleweed
email replies not necessary but to contact use;
tumbleweednews at hotmail dot com
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373906 ] |
Fr, 24 März 2006 19:37 |
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On Fri, 24 Mar 2006 18:18:44 -0000, "Tumbleweed"
<thisaccountneverread [at] yahoo.com> wrote:
>"Jim Ley" <jim [at] jibbering.com> wrote in message
>news:44243260.21332324 [at] news.individual.net...
>> On Fri, 24 Mar 2006 18:40:12 +0100, davidof
>> <david.george [at] g-dumpthisbit-mail.com> wrote:
>>
>>>Crowley wrote:
>>>> Calverley hints at bubble and squeak as housing market hits all-time
>>>> high
>>>
>>>I assume he has sold his house and moved into rented accomodation, after
>>>all if the crash is only 1 year away it would make sense wouldn't it?
>>
>> Not really, owning a house is not simply an investment, and money is
>> not everything if his sole goal was to maximise profit then it may
>> well be a good course of action, most peoples isn't though.
>>
>> Jim.
>
>Then whats the point of "warning" people there is a HPC imminent?
Because it still effects _buying_ decisions, and the decisions of
people forced to sell (for relocation or whatever), and effects other
portions of the economy - what it does not do is mean that everyone
who warns of it should immediately sell their house and move into
rented accomodation.
Jim.
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373907 ] |
Fr, 24 März 2006 20:01 |
|
"Jim Ley" <jim [at] jibbering.com> wrote in message
news:44243c1d.23825409 [at] news.individual.net...
> On Fri, 24 Mar 2006 18:18:44 -0000, "Tumbleweed"
> <thisaccountneverread [at] yahoo.com> wrote:
>
>>"Jim Ley" <jim [at] jibbering.com> wrote in message
>>news:44243260.21332324 [at] news.individual.net...
>>> On Fri, 24 Mar 2006 18:40:12 +0100, davidof
>>> <david.george [at] g-dumpthisbit-mail.com> wrote:
>>>
>>>>Crowley wrote:
>>>>> Calverley hints at bubble and squeak as housing market hits all-time
>>>>> high
>>>>
>>>>I assume he has sold his house and moved into rented accomodation, after
>>>>all if the crash is only 1 year away it would make sense wouldn't it?
>>>
>>> Not really, owning a house is not simply an investment, and money is
>>> not everything if his sole goal was to maximise profit then it may
>>> well be a good course of action, most peoples isn't though.
>>>
>>> Jim.
>>
>>Then whats the point of "warning" people there is a HPC imminent?
>
> Because it still effects _buying_ decisions, and the decisions of
> people forced to sell (for relocation or whatever), and effects other
> portions of the economy - what it does not do is mean that everyone
> who warns of it should immediately sell their house and move into
> rented accomodation.
>
> Jim.
Of course it does. I think you are forgetting the significance of the word
'crash'. You arent talking a small correction of a few percent surely? You
are talking _significant_ (else why use emotive words like 'crash'?), which
means many tens to hundreds of thousands of pounds for almost everyone in a
house, in London, maybe £250-£500k for many many people. For those sums of
money, for people that _believed_ it, most would sell, not just a few. If I
'really beluieved' for example, that my house would fall in value by 50%
over the next year, I'd be barking mad not to sell, I'd make 6 figures, tax
free, in a year.
I'd also be barking mad to buy any house under any realistic circumstance
(No one is going to offer their house for sale at 50% off the price other
houses are achieving in the area), so thats the buying decision taken care
of, just rent, under all circumstances.
Re the selling decision, that seems tricky, as apparently you believe people
shouldnt sell unless they have to, which wont be a problem since no one will
be buying anyway.
Or do you think, since apparently I must be in line to gain say £100k+ over
the next year, I should sell my house now?
--
Tumbleweed
email replies not necessary but to contact use;
tumbleweednews at hotmail dot com
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373908 ] |
Fr, 24 März 2006 20:30 |
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On Fri, 24 Mar 2006 19:01:04 -0000, "Tumbleweed"
<thisaccountneverread [at] yahoo.com> wrote:
>Of course it does. I think you are forgetting the significance of the word
>'crash'. You arent talking a small correction of a few percent surely? You
>are talking _significant_ (else why use emotive words like 'crash'?), which
>means many tens to hundreds of thousands of pounds for almost everyone in a
>house,
Except of course you need to find a suitable place to live that has
enough room for all your belongings is in the same catchment area for
your schoolchildren etc. and is available to rent. You then need to
also rely on their being suitable houses available for you to buy
later.
> If I
>'really beluieved' for example, that my house would fall in value by 50%
>over the next year, I'd be barking mad not to sell, I'd make 6 figures, tax
>free, in a year.
Most people will have significant mortgages reducing the size of any
gain, and not everyone is as money obessed as you, if I had a house I
liked to live in, I wouldn't sell it for some profit - I'd not be so
likely to find somewhere else equivalent.
>I'd also be barking mad to buy any house under any realistic circumstance
Which is why he's warning you - which is what you asked, I just
explained why just because he's warning it doesn't mean he has to
sell, not everyones prime motivation is financial.
Jim.
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373909 ] |
Fr, 24 März 2006 21:01 |
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jim [at] jibbering.com (Jim Ley) writes:
> On Fri, 24 Mar 2006 19:01:04 -0000, "Tumbleweed"
> <thisaccountneverread [at] yahoo.com> wrote:
> > If I
> >'really beluieved' for example, that my house would fall in value by 50%
> >over the next year, I'd be barking mad not to sell, I'd make 6 figures, tax
> >free, in a year.
>
> Most people will have significant mortgages reducing the size of any
> gain,
If I believed that that house prices were going to crash, I would do
the following:
1) Place a large spread bet with someone like IG Index
2) Not bother trying to convince other people that a house price crash
is imminent, as it really wouldn't make any difference.
It seems to me that the only reason to act otherwise would be if I
'hoped' or 'thought' that house prices might crash, in which case a
spread bet would be a stupid idea. But if I 'really believed' that
this is what would happen, then this would be a sensible thing to do.
> and not everyone is as money obessed as you, if I had a house I
> liked to live in, I wouldn't sell it for some profit - I'd not be so
> likely to find somewhere else equivalent.
Given that this is appearing in 'uk.finance', finding someone
'obsessed with money' is perhaps to be expected ...
Regards,
Nick
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373910 ] |
Fr, 24 März 2006 21:15 |
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"Tumbleweed" <thisaccountneverread [at] yahoo.com> wrote in message
news:48ipj7Fkg00lU1 [at] individual.net...
>
> "M Holmes" <fofp [at] holyrood.ed.ac.uk> wrote in message
> news:e01aqu$h21$2 [at] scotsman.ed.ac.uk...
> > In uk.finance R.Peffers. <peffers50 [at] btinternet.com> wrote:
> >
> >> Anyone who thinks that property values will fall dramatically lives in
> >> Cloud-Cuckoo-Land. I'm getting on a bit now and when I came to this
> >> village
> >> around 1962 I bought a cottage for under L600. Today these same
cottages
> >> are
> >> fetching well into six figures.
> >
> > I wonder why people were so stupid back then as to be unable to realise
> > that houses were worth 100 times more than what they were paying?
> >
>
>
> They werent, they were worth what they paid for them at the time, within a
> few percent, just like now.
Ultimately property prices cannot exceed what people are capable of paying.
In the long term what people are capable of paying will relate to the real
productivity in terms of goods and services that the country generates.
With the production and supply of real goods are services increasing moving
to India, China and elsewhere and an ever increasing proportion of the
population becoming engaged in essentially parasitic bureaucratic employment
the outlook is far from encouraging. One day there will be a general
realization that the whole edifice is unsustainable and the whole thing will
collapse in days or weeks.
R
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373911 ] |
Fr, 24 März 2006 21:19 |
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Crowley wrote:
> R.Peffers. wrote:
> > Anyone who thinks that property values will fall dramatically lives in
> > Cloud-Cuckoo-Land.
>
> So you think you know better than the chief economist of American
> Express Bank do you ?
What does his *position* have to do with it? His opinion is designed to
increase the NPV of American Express, not reflect reality.
You poor deluded chap - you probably think Blair still tells the truth
because he's basically y'know just a straight down-the-line kinda guy.
No wonder Liebour is still in charge :)
> I think you'll find that the house price bubble is based on much more
> than simple 'supply and demand'. The explosion in cheap and easy credit
> in recent years has been a major, if not the main, driver of the
> massive upward movement in prices. That cheap credit is now showing
> signs of drying up (Bank of Japan sharply cutting back on liquidity,
> raising rates later this year, end of the carry-trade, ECB and Fed
> rates rising etc)
You know what, if the interest rate suddently goes from 4.5% to 20%,
his prediction may actually come true. I'll give you that !
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373912 ] |
Fr, 24 März 2006 22:11 |
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Andrew Thomas wrote:
> Crowley wrote:
> > R.Peffers. wrote:
> > > Anyone who thinks that property values will fall dramatically lives in
> > > Cloud-Cuckoo-Land.
> >
> > So you think you know better than the chief economist of American
> > Express Bank do you ?
>
> What does his *position* have to do with it? His opinion is designed to
> increase the NPV of American Express, not reflect reality.
So in what way do you think a house price crash would benefit American
Express Bank ?
Please enlighten us, I'm dying to find out.
> ........snip puerile shite.............
> > I think you'll find that the house price bubble is based on much more
> > than simple 'supply and demand'. The explosion in cheap and easy credit
> > in recent years has been a major, if not the main, driver of the
> > massive upward movement in prices. That cheap credit is now showing
> > signs of drying up (Bank of Japan sharply cutting back on liquidity,
> > raising rates later this year, end of the carry-trade, ECB and Fed
> > rates rising etc)
>
> You know what, if the interest rate suddently goes from 4.5% to 20%,
> his prediction may actually come true. I'll give you that !
A comment so ludicrously naive it doesn't merit a reply.
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373913 ] |
Fr, 24 März 2006 22:21 |
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Crowley wrote:
> Andrew Thomas wrote:
> > Crowley wrote:
> > > R.Peffers. wrote:
> > > > Anyone who thinks that property values will fall dramatically lives in
> > > > Cloud-Cuckoo-Land.
> > >
> > > So you think you know better than the chief economist of American
> > > Express Bank do you ?
> >
> > What does his *position* have to do with it? His opinion is designed to
> > increase the NPV of American Express, not reflect reality.
>
> So in what way do you think a house price crash would benefit American
> Express Bank ?
> Please enlighten us, I'm dying to find out.
I don't know - I don't have access to Amex's inner-sanctum cash flows,
so I have to go by motive.
> > You know what, if the interest rate suddently goes from 4.5% to 20%,
> > his prediction may actually come true. I'll give you that !
>
> A comment so ludicrously naive it doesn't merit a reply.
Well, *I'm* reading a reply. Given your sanctimonous, yet oddly
slavish, comment regarding the apparent (but no better informed)
OPINION of Amex's chief economist, I'd expect you to be good at
pointing naivete out but as with the economist, expectations aren't
always met.
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373914 ] |
Fr, 24 März 2006 22:23 |
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Crowley wrote:
> "How much could prices fall? Calverley says that, if it is just a
> return to average levels, the fall could be 20-35 per cent. If it is a
> return to previous lows in relation to prevailing rents and wages, the
> fall could be 50 per cent....."
>
> The chief economist at American Express Bank gave his views on the UK
> house price bubble at the the Royal Bank of Scotland's annual economics
> lecture ....................
Ooh! Ooh! Another "expert" for us all to hang our own beliefs on
whilst we inwardly align what we perceive to be "facts" with the
opinion proffered. No wonder this country is so stupid - it can't even
think for itself any more.
Line the man up with all the other fuckwitted "experts" regularly
trolling the newspages...
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373918 ] |
Fr, 24 März 2006 23:02 |
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"M Holmes" <fofp [at] holyrood.ed.ac.uk> wrote in message
news:e01aqu$h21$2 [at] scotsman.ed.ac.uk...
> In uk.finance R.Peffers. <peffers50 [at] btinternet.com> wrote:
>
>> Anyone who thinks that property values will fall dramatically lives in
>> Cloud-Cuckoo-Land. I'm getting on a bit now and when I came to this
>> village
>> around 1962 I bought a cottage for under L600. Today these same cottages
>> are
>> fetching well into six figures.
>
> I wonder why people were so stupid back then as to be unable to realise
> that houses were worth 100 times more than what they were paying?
>
> I wonder if people could get so stupid again?
>
> FoFP
No and yes.
--
Robert Peffers,
Kelty,
Fife,
Scotland, (UK).
(When replying take pam away from peffers.
Scotland).
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373919 ] |
Fr, 24 März 2006 23:12 |
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"M Holmes" <fofp [at] holyrood.ed.ac.uk> wrote in message
news:e01bri$h21$3 [at] scotsman.ed.ac.uk...
> In uk.finance Tumbleweed <thisaccountneverread [at] yahoo.com> wrote:
>
>> "M Holmes" <fofp [at] holyrood.ed.ac.uk> wrote in message
>> news:e01aqu$h21$2 [at] scotsman.ed.ac.uk...
>>> In uk.finance R.Peffers. <peffers50 [at] btinternet.com> wrote:
>>>
>
>>>> Anyone who thinks that property values will fall dramatically lives
>>>> in Cloud-Cuckoo-Land. I'm getting on a bit now and when I came to
>>>> this village around 1962 I bought a cottage for under L600. Today
>>>> these same cottages are fetching well into six figures.
>
>>> I wonder why people were so stupid back then as to be unable to
>>> realise that houses were worth 100 times more than what they were
>>> paying?
>
>>> They werent, they were worth what they paid for them at the time,
>>> within a few percent, just like now.
>
> Thus if people can believe a house is worth 600 Pounds at one time, they
> can believe it again.
>
> FoFP
>
Get real. In 1962 the average wage for a tradesman was £11 - £12 per week.
The cost of living was in line with that income so the average worker was no
better, and no worse, off then as they are now . The cost of living goes up
and the worker sells his/her skills and/or labour for as much as they can
demand. The boss puts up prices of his/her commodity to keep ahead and the
worker then asks more for the only commodity they have to sell - their
skills and labour. Then the boss outsourcers to India and --- --- ---
Get the picture?
--
Robert Peffers,
Kelty,
Fife,
Scotland, (UK).
(When replying take pam away from peffers.
Scotland).
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373920 ] |
Fr, 24 März 2006 23:14 |
|
"Tumbleweed" <thisaccountneverread [at] yahoo.com> wrote in message
news:48ira0FkctiuU1 [at] individual.net...
> "Jim Ley" <jim [at] jibbering.com> wrote in message
> news:44243260.21332324 [at] news.individual.net...
>> On Fri, 24 Mar 2006 18:40:12 +0100, davidof
>> <david.george [at] g-dumpthisbit-mail.com> wrote:
>>
>>>Crowley wrote:
>>>> Calverley hints at bubble and squeak as housing market hits all-time
>>>> high
>>>
>>>I assume he has sold his house and moved into rented accomodation, after
>>>all if the crash is only 1 year away it would make sense wouldn't it?
>>
>> Not really, owning a house is not simply an investment, and money is
>> not everything if his sole goal was to maximise profit then it may
>> well be a good course of action, most peoples isn't though.
>>
>> Jim.
>
> Then whats the point of "warning" people there is a HPC imminent?
>
> --
> Tumbleweed
>
> email replies not necessary but to contact use;
> tumbleweednews at hotmail dot com
>
One assumes he/she got paid for that warning.
--
Robert Peffers,
Kelty,
Fife,
Scotland, (UK).
(When replying take pam away from peffers.
Scotland).
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373921 ] |
Fr, 24 März 2006 23:17 |
|
"Jim Ley" <jim [at] jibbering.com> wrote in message
news:44243c1d.23825409 [at] news.individual.net...
> On Fri, 24 Mar 2006 18:18:44 -0000, "Tumbleweed"
> <thisaccountneverread [at] yahoo.com> wrote:
>
>>"Jim Ley" <jim [at] jibbering.com> wrote in message
>>news:44243260.21332324 [at] news.individual.net...
>>> On Fri, 24 Mar 2006 18:40:12 +0100, davidof
>>> <david.george [at] g-dumpthisbit-mail.com> wrote:
>>>
>>>>Crowley wrote:
>>>>> Calverley hints at bubble and squeak as housing market hits all-time
>>>>> high
>>>>
>>>>I assume he has sold his house and moved into rented accomodation, after
>>>>all if the crash is only 1 year away it would make sense wouldn't it?
>>>
>>> Not really, owning a house is not simply an investment, and money is
>>> not everything if his sole goal was to maximise profit then it may
>>> well be a good course of action, most peoples isn't though.
>>>
>>> Jim.
>>
>>Then whats the point of "warning" people there is a HPC imminent?
>
> Because it still effects _buying_ decisions, and the decisions of
> people forced to sell (for relocation or whatever), and effects other
> portions of the economy - what it does not do is mean that everyone
> who warns of it should immediately sell their house and move into
> rented accomodation.
>
> Jim.
Where are they going to find rented accommodation? Actually the smart move
is to panic everyone else into selling up and first rent your property out
as flats and buy up the homes being sold to turn into more flats.
--
Robert Peffers,
Kelty,
Fife,
Scotland, (UK).
(When replying take pam away from peffers.
Scotland).
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373922 ] |
Fr, 24 März 2006 23:18 |
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Andrew Thomas wrote:
> Crowley wrote:
> > Andrew Thomas wrote:
> > > Crowley wrote:
> > > > R.Peffers. wrote:
> > > > > Anyone who thinks that property values will fall dramatically lives in
> > > > > Cloud-Cuckoo-Land.
> > > >
> > > > So you think you know better than the chief economist of American
> > > > Express Bank do you ?
> > >
> > > What does his *position* have to do with it? His opinion is designed to
> > > increase the NPV of American Express, not reflect reality.
> >
> > So in what way do you think a house price crash would benefit American
> > Express Bank ?
> > Please enlighten us, I'm dying to find out.
>
> I don't know - I don't have access to Amex's inner-sanctum cash flows,
> so I have to go by motive.
So you don't know then.
> > > You know what, if the interest rate suddently goes from 4.5% to 20%,
> > > his prediction may actually come true. I'll give you that !
> >
> > A comment so ludicrously naive it doesn't merit a reply.
>
> Well, *I'm* reading a reply. Given your sanctimonous, yet oddly
> slavish, comment regarding the apparent (but no better informed)
> OPINION of Amex's chief economist, I'd expect you to be good at
> pointing naivete out but as with the economist, expectations aren't
> always met.
More puerile drivel
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373923 ] |
Fr, 24 März 2006 23:24 |
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Andrew Thomas wrote:
> Crowley wrote:
> > "How much could prices fall? Calverley says that, if it is just a
> > return to average levels, the fall could be 20-35 per cent. If it is a
> > return to previous lows in relation to prevailing rents and wages, the
> > fall could be 50 per cent....."
> >
> > The chief economist at American Express Bank gave his views on the UK
> > house price bubble at the the Royal Bank of Scotland's annual economics
> > lecture ....................
>
> Ooh! Ooh! Another "expert" for us all to hang our own beliefs on
> whilst we inwardly align what we perceive to be "facts" with the
> opinion proffered. No wonder this country is so stupid - it can't even
> think for itself any more.
You really are an angry little fellow aren't you ? Or is it that you
already 'know it all' and don't need to listen to anyone else.
> Line the man up with all the other fuckwitted "experts" regularly
> trolling the newspages...
When people, whether so-called experts or not, express an opinion they
are usually prepared to try to back them up. Something you have failed
dismally to do so far.
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373924 ] |
Fr, 24 März 2006 23:58 |
|
"Jim Ley" <jim [at] jibbering.com> wrote in message
news:4424472f.26659133 [at] news.individual.net...
> On Fri, 24 Mar 2006 19:01:04 -0000, "Tumbleweed"
> <thisaccountneverread [at] yahoo.com> wrote:
>>Of course it does. I think you are forgetting the significance of the word
>>'crash'. You arent talking a small correction of a few percent surely? You
>>are talking _significant_ (else why use emotive words like 'crash'?),
>>which
>>means many tens to hundreds of thousands of pounds for almost everyone in
>>a
>>house,
>
> Except of course you need to find a suitable place to live that has
> enough room for all your belongings is in the same catchment area for
> your schoolchildren etc. and is available to rent.
Hmmm, so if you cant find one, then maybe houses arent overpriced after all
and neither are rents too high?
Though I'm not surprised there isnt one to rent in your scenario, since the
HPC-proponents also think that BTL is a stupid idea so there shouldn't be
anyone renting. For only 1 year, put up with something sub-optimal, put
stuff in storage. Mopst people would do that for say 50% of the value of
their house. If they believed the scare stories. Which they dont.
> You then need to
> also rely on their being suitable houses available for you to buy
> later.
Well there will be after a massive crash obviously, you could buy it back at
above the market rate and have people clamouring to sell to you. Think of
all the new builds with builders just desperate to sell.
>
>> If I
>>'really believed' for example, that my house would fall in value by 50%
>>over the next year, I'd be barking mad not to sell, I'd make 6 figures,
>>tax
>>free, in a year.
>
> Most people will have significant mortgages reducing the size of any
> gain, and not everyone is as money obessed as you,
Why do you think I'm money obsesed? I'm not one of the people posting doom
and gloom stories about HPC and economic crashes 10-15 times a day!
However, I make my point that just about every person you hear talking about
a HPC doesnt actually take any action on it inspite of the fact that they
could, for example, clear their mortgages, move to a better house, and so
on. If they all think one is coming, why dont they do something to take
advantage of it. If in say 1 years time, you are living in a house with
massive negative equity you are going to look pretty stupid after telling
everyone what was going to happen and then not getting out of the way of the
oncoming wreck! "Hey look everyone there is a massive train heading straight
towards me, and I'm just going to stand right here , and continue telling
everyone about it until it runs right over me. And even as it does that, I'm
still not going to move!
>if I had a house I
> liked to live in, I wouldn't sell it for some profit - I'd not be so
> likely to find somewhere else equivalent.
You should be able to find somewhere better you'll be cash rich. And the
mortgage wont reduce the size of the gain at all. If your house was say 200k
with a 200k mortgage, sell house for 200k, settle mortgage. 1 year later buy
house for 100k, new mortgage =100k. Gain =100k. WIth no mortgage, gain is
still 100k.
>
>>I'd also be barking mad to buy any house under any realistic circumstance
>
> Which is why he's warning you - which is what you asked, I just
> explained why just because he's warning it doesn't mean he has to
> sell, not everyones prime motivation is financial.
>
> Jim.
There is no point warning someone who wont do something when they receive
the warning. And the whole issue about HPC *is* financial!! House **price**
crash.
--
Tumbleweed
email replies not necessary but to contact use;
tumbleweednews at hotmail dot com
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373928 ] |
Sa, 25 März 2006 10:07 |
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Nick Lacey wrote:
> It seems to me that the only reason to act otherwise would be
If I had a book to sell?
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373929 ] |
Sa, 25 März 2006 10:17 |
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Tumbleweed wrote:
> Well there will be after a massive crash obviously, you could buy it back at
> above the market rate and have people clamouring to sell to you.
Quite.
Given the readyness of most Brits to move or "trade up" I would say a
large number of the population only view their current house as
something temporary and so would be quite happy to go into a rented
house for 12 months if they could pay off their current mortgage.
I own my house outright but if I believed prices would crash by 30-50%
in the next 12 months I would sell up like a shot. I'm not money
obsessed but I would be completely stupid not to; there are plenty of
houses in my area which I would also like to live in. I do believe the
current market is overvalued and have believed that since around 2002.
The problem is we've been hearing HPC in the next 6 months stories for
so long that it is clear that the experts have about as much clue as the
punters. The fundementals seem wrong but thats it.
The Amex guy has a lecture circuit and a book to make money from so has
good reason to over egg his cake. I don't trust experts who wont eat
their own dogfood.
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373930 ] |
Sa, 25 März 2006 00:17 |
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Nick Lacey wrote:
> If I believed that that house prices were going to crash, I would do
> the following:
>
> 1) Place a large spread bet with someone like IG Index
Just one problem with that.
While you may agree that there is going to be a house price crash, you may
concede that prices might go up a bit more before they crash.
You might also not know when exactly it is going to happen.
In this situation, you could still lose a lot of money on your spread bet
even though you are subsequently proved right.
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373931 ] |
Sa, 25 März 2006 10:38 |
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"Andrew Thomas" <andrewj_nospamthomas [at] yahoo.com.au> wrote in message
news:1143235307.535761.62860 [at] v46g2000cwv.googlegroups.com...
>
> Crowley wrote:
>> Andrew Thomas wrote:
>> > Crowley wrote:
>> > > R.Peffers. wrote:
>> > > > Anyone who thinks that property values will fall dramatically lives
>> > > > in
>> > > > Cloud-Cuckoo-Land.
>> > >
>> > > So you think you know better than the chief economist of American
>> > > Express Bank do you ?
>> >
>> > What does his *position* have to do with it? His opinion is designed to
>> > increase the NPV of American Express, not reflect reality.
>>
>> So in what way do you think a house price crash would benefit American
>> Express Bank ?
>> Please enlighten us, I'm dying to find out.
>
> I don't know - I don't have access to Amex's inner-sanctum cash flows,
> so I have to go by motive.
So you've simply made one up to support your view then.
You may be correct in your assessment that this chap is
wrong. But if you wish to claim that he is saying it just
because it helps his business you have to have the proof.
The chap is a financial professional he is perfectly entitled
to come to view he has on the evidence alone, he is not
the only person to have done so.
tim
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373933 ] |
Sa, 25 März 2006 11:01 |
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"R.Peffers." <peffers50 [at] btinternet.com> wrote in message
news:OfCdnbFOE54r87nZRVnyvQ [at] bt.com...
>
> "M Holmes" <fofp [at] holyrood.ed.ac.uk> wrote in message
> news:e01bri$h21$3 [at] scotsman.ed.ac.uk...
>> In uk.finance Tumbleweed <thisaccountneverread [at] yahoo.com> wrote:
>>
>>> "M Holmes" <fofp [at] holyrood.ed.ac.uk> wrote in message
>>> news:e01aqu$h21$2 [at] scotsman.ed.ac.uk...
>>>> In uk.finance R.Peffers. <peffers50 [at] btinternet.com> wrote:
>>>>
>>
>>>>> Anyone who thinks that property values will fall dramatically lives
>>>>> in Cloud-Cuckoo-Land. I'm getting on a bit now and when I came to
>>>>> this village around 1962 I bought a cottage for under L600. Today
>>>>> these same cottages are fetching well into six figures.
>>
>>>> I wonder why people were so stupid back then as to be unable to
>>>> realise that houses were worth 100 times more than what they were
>>>> paying?
>>
>>>> They werent, they were worth what they paid for them at the time,
>>>> within a few percent, just like now.
>>
>> Thus if people can believe a house is worth 600 Pounds at one time, they
>> can believe it again.
>>
>> FoFP
>>
> Get real. In 1962 the average wage for a tradesman was £11 - £12 per week.
> The cost of living was in line with that income so the average worker was
> no better, and no worse, off then as they are now .
By your own figures they are.
A house than in 1962 used to cost one times this person annual salary
now costs three or more (you didn't put an upper limit on the value).
In some areas the price of starter homes is now 6 times average
salaries. The people who think that houses are overpriced aren't
(generally) suggesting that the price will go down to a level based
upon some previous periods absolute prices, they are suggesting
that the multiplier will decrease. A thirty percent reduction (from
6 times to 4 times) will still leave houses at historically very high
level, but a 30% reduction in a 300K house is a large lump of
(virtual) money to lose.
> The cost of living goes up and the worker sells his/her skills and/or
> labour for as much as they can demand. The boss puts up prices of his/her
> commodity to keep ahead and the worker then asks more for the only
> commodity they have to sell - their skills and labour. Then the boss
> outsourcers to India and --- --- ---
And this keeps house prices high, how?
tim
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373934 ] |
Sa, 25 März 2006 11:19 |
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"Jim Ley" <jim [at] jibbering.com> wrote in message
news:4424472f.26659133 [at] news.individual.net...
> On Fri, 24 Mar 2006 19:01:04 -0000, "Tumbleweed"
> <thisaccountneverread [at] yahoo.com> wrote:
>>Of course it does. I think you are forgetting the significance of the word
>>'crash'. You arent talking a small correction of a few percent surely? You
>>are talking _significant_ (else why use emotive words like 'crash'?),
>>which
>>means many tens to hundreds of thousands of pounds for almost everyone in
>>a
>>house,
>
> Except of course you need to find a suitable place to live that has
> enough room for all your belongings is in the same catchment area for
> your schoolchildren etc. and is available to rent. You then need to
> also rely on their being suitable houses available for you to buy
> later.
>
It is depressingly hard to find rental properties in the UK on terms
that match the needs of the average 'established' individual.
Agents insist on no flexibility in leases, requiring back-to-back six
month periods (or a year) with a new set of rip-off charges each
time. But if you do want to move in for a long period, rarely do
you get any real feel for how long you might be able to stay unless
you sign up for a long time at the start, but then you have the
possibility of needing to buy yourself out if plans (jobs) change.
So you either have to take a chance on needing to move (and pay
the associated costs) each six months when the landlord decides
that he doesn't want to rent anymore (or puts up the rent too
much), or risk signing up for a number of years for a place that
turns out to be a millstone.
Yes, I know that landlords, in for the long term, prepared to let
to a good tenant (which simply means one that pays the rent on
time) for as long as the tenant wants on a months notice, exisit.
But finding them (in some areas) is next to impossible.
In Europe this type of rental is the absolute norm, IMHO it
should be so in the UK too.
tim
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| Re: Senior economist predicts house price crash of between 20 to 50% [message #373947 ] |
Sa, 25 März 2006 13:20 |
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davidof wrote:
> Tumbleweed wrote:
> > Well there will be after a massive crash obviously, you could buy it back at
> > above the market rate and have people clamouring to sell to you.
>
> Quite.
>
> Given the readyness of most Brits to move or "trade up" I would say a
> large number of the population only view their current house as
> something temporary and so would be quite happy to go into a rented
> house for 12 months if they could pay off their current mortgage.
>
> I own my house outright but if I believed prices would crash by 30-50%
> in the next 12 months I would sell up like a shot. I'm not money
> obsessed but I would be completely stupid not to; there are plenty of
> houses in my area which I would also like to live in. I do believe the
> current market is overvalued and have believed that since around 2002.
> The problem is we've been hearing HPC in the next 6 months stories for
> so long that it is clear that the experts have about as much clue as the
> punters. The fundementals seem wrong but thats it.
>
> The Amex guy has a lecture circuit and a book to make money from so has
> good reason to over egg his cake. I don't trust experts who wont eat
> their own dogfood.
Dogs don't eat cake.
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