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Finances / Finanzen » uk.finance » The crumbling housing market and the impending recession.
| The crumbling housing market and the impending recession. [message #384695] |
Di, 02 Mai 2006 18:37 |
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Latest Moneyweek article predicts trouble ahead ................
"The storm clouds are gathering, taxes and utility bills are rising
while job security is falling. We're on the cusp of what could still
yet turn into a full-blown recession and things could get a lot worse
before they get better ...................... "
http://www.moneyweek.com/file/11314/where-is-the-housing-cra sh.html
Regular readers of MoneyWeek might remember that I've been warning
about an impending housing slowdown in the UK since my first article on
the subject appeared in May 2004.
But I'd like to remind readers that the last housing crash happened
over a seven-year period, much like a falling line of dominos. So far,
our domino effect has halved mortgage equity withdrawal, the rate of
personal spending and economic growth in the space of just a few
months.
Arguably, the contagion has been halted by the Bank of England cutting
interest rates to 4.5% last August. But consumer price index inflation
is at the top of the Bank's allowable range and rising, there's a
global trend towards monetary tightening and, most worrying of all, the
contagion has spread to the United States.
The Anglo-Saxon housing markets all rose together, buoyed by a wave of
cheap and accessible credit. Now there are signs of a concerted,
possibly even coordinated, monetary tightening by the world's central
banks, maybe they will all explode together too. So far, the bubbles in
Australia and the UK have deflated, if not exactly burst, but US house
prices had continued to rise. Until now.
US housing heads south
The data for sales of new family houses in the US in February was
shocking. US new home sales fell 3.4% to 1.08 million annualised and
prices were down 2.9% as higher mortgage rates started to bite. The
average 30-year fixed mortgage rate, according to Freddie Mac (the US
mortgage agency), was 6.25% in February, up from 6.15% in January. In
the economically vital Western US, new home sales in February plummeted
29% compared with the same period last year.
According to David Rosenberg at US investment bank Merrill Lynch, in
the last 30 years there have been eight such double-digit drops in new
home sales. Six times, these drops signalled recession the next year
and one drop led to GDP growth halving from 4% to 2%.
Only once in 30 years did such a sharp deceleration in new-house sales
not lead to an economy-wide slowdown - and that was in 1987, when for
most of the year there was a huge boom in equity prices. With US GDP
growth currently at 3.2% and a flat equity market, it seems the Fed's
3%-3.5% growth forecast can only be revised one way: down.
The truth is that while Americans have been building new houses so fast
you'd think house building was going out of fashion, they haven't
been able to sell them nearly so easily. US privately owned new house
building starts were up 15% in January compared with December - to
the highest level since 1973 - but the National Association of
Realtors' inventory data for existing homes for sale is at a
two-decade high of nearly three million dwellings. New-built home
inventories are now at a record 544,000 homes, equivalent to more than
six months of sales. At a median price of $230,400, the total value of
this unsold inventory overhang is an almighty $125bn.
Problems ahead for the US economy
US economic growth might seem quite strong over the next few weeks as
first-quarter personal consumption figures are reported, but this is
mainly due to a very weak fourth quarter due to weather-related
reasons. Behind the scenes, the debt-financed spending spree is being
stretched to breaking point.
With new Fed chairman Ben Bernanke keen to show his inflation-fighting
mettle, and with headline inflation figures at 13-year highs, the
financial markets are, understandably, betting that interest rates will
keep rising.
The European Central Bank is joining in and even the Bank of Japan has
announced an end to its "zero-interest rate" policy - so we are
suddenly living in a global tightening environment. And it is happening
just when everyone's guard is down, when stockmarket volatility
expectations and investors' cash positions are both at new lows and
when higher-risk assets - such as emerging markets - have been
performing well. That could all be about to change.
American borrowers' rush into debt has been accelerating. It took
more than 30 years to raise the debt-to-income ratio 30 percentage
points, from 40% to 70%. It then took only 15 years to raise it the
next 30 percentage points to 100%.But it has taken just five years
since the end of 2000 to jump the most recent 30 percentage points, to
a new all-time high of 129%. This has surely been one of the most
remarkable debt-financed spending sprees in the world, ever.
At risk is US personal consumption. Just as mortgage equity withdrawal
has been keeping consumption going in the UK, mortgage refinancing has
been supporting the US consumer.
The household debt-to-net-worth ratio is at a new all-time high of more
than 22% =AC=AC- nearly double the level of 30 years ago. More
seriously for the wider economy, Americans have increasingly moved away
from the safety of their treasured 30-year fixed-rate mortgages, into
the high-risk world of interest-only and adjustable-rate mortgages
(ARMs).
Survey evidence reveals that Americans are generally unfamiliar with
the consequences of rising interest rates on ARMs, and many seem
unaware that their monthly payments can, and will, be increased after
the re-set period. This is especially worrying since loan delinquency
(payments that are more than three months overdue) and default data
usually happen after (or lag)housing-market slowdowns.
But in this economic cycle, mortgage-delinquency rates are already at a
20-year high, according to US investment bank Merrill Lynch. As many as
3% of sub-prime borrowers (that is, those who don't qualify for loans
from cheaper, mainstream lenders) are already more than 90 days in
arrears. This will worry lenders, encouraging them to apply more
stringent lending criteria. Stockmarkets don't like it when lenders
have to raise their loan loss provisions either.
Mortgage refinancing is falling sharply in the US, just as it is in the
UK. This has caused real spending on consumer goods to drop into
negative territory. With more than 70% of the economy reliant on the
consumer and the consumer dependent on credit, the US can't be
expected to pick up the slack in global demand this year, unless
there's a huge surge in capital expenditure (capex) by corporations.
And although corporations are certainly cash-rich, they are so far
sitting on their hands, and the delayed launch of Microsoft's
replacement for XP (Vista) from this summer into next year doesn't
bode well, especially given that about 50% of US capex is usually spent
on IT.
At the start of the year, The Wall Street Journal canvassed 56
economists and found only one of them forecasting an end to the 14-year
economic expansion. Yet America is sailing directly into the same sort
of economic headwinds that in this country forced Gordon Brown
(humiliatingly) to halve his 2006 economic-growth forecast at the end
of last year.
At the moment, US consumers are dipping into their savings, but that
can't continue for long. Indeed, 2005 was the first year since 1933,
in the Great Depression era, that the US personal-savings rate was
actually negative.
The Bureau of Labor Statistics data show that the number of jobs has
grown by just 0.5% a year during this expansion, compared to about 2.5%
normally. The quality of those jobs is also worryingly poor, with real
wages growing just 1.9%, compared to nearly 4% in the previous five
expansions since 1960. Throw in 14 0.25% increases in the Fed funds
rate, which push up debt costs, and you can see that the US consumer is
getting squeezed.
And 2006 is going to be harder still. Oil price rises to date are
adding an estimated $1,000 this year to the cost of car ownership for
the average household, compared to 2005, and 25% more to heating bills.
Just scaremongering?
Perhaps you'll be thinking that there's little to worry about.
Scaremongers warned that all these housing bubbles would burst, but
both the UK and Australian examples show that prices can slow without a
meltdown. The most recent Nationwide house-price survey for the UK
showed prices were 5.3% up on last year, suggesting to many that the
housing cycle may have already bottomed. Besides, house prices can't
crash when the economy is strong, can they?
But, of course, the first thing to say is that these things take a long
time to unwind. The early Eighties housing-market 'crash' took
seven years to unfold. House prices may be up 5.3%, but that's the
lowest growth rate for a decade. Prices were growing at nearly 27%
three years ago.
What's more, the house-price surveys are lagging indicators - they
reveal the truth too late. Houses that can't sell, or won't sell
until the price is cut, don't appear in the data until later.
The second problem is that, although house price collapses only seem to
coincide with economic recessions, the cause and effect is probably the
other way around. Weaker house prices feed into economic slowdown. In
the summer of 2004 - the last time house price growth was more than
20% - UK retail sales by volume were growing at 6%-7% year-on-year.
Now, 18 months later, house price growth, adjusted for inflation, has
gone to near zero (not everyone's numbers are as optimistic as
Nationwide's) and there's also been a drop in mortgage equity
withdrawal (MEW). MEW as a percentage of disposable income had
previously peaked at an even higher level than the 1988 high. This
affected personal consumption. Retail sales volumes in February grew
just 2.1% and hence the UK real GDP growth rate halved to +1.8%, the
lowest since 1993.
The core of the problem is that households have been getting as
stretched by their debt-service costs (as a percentage of disposable
income) as they were at the top of the 1988-1999 housing cycle. So
we've got this far: house prices have stopped rising (much), so MEW
has fallen, which has led to debt-financed consumption dropping and
economic growth halving. The process hasn't ended - indeed, it has
possibly barely begun. If this is a vicious, spiralling circle, what
should we expect to see next?
What next?
This sort of contraction in the economy should start to alarm lenders
(who fear default) and borrowers (who decide they should save more).
So, the next thing we would expect to see is a big contraction in
overall lending. Sure enough, total loans, mortgages and credit on
plastic from banks have dropped sharply.
The trend is now negative for the first time in 12 years. Without the
oxygen of debt, consumers can't spend, so no wonder more than a third
of retailers reported falling sales in March. Of course, it may be that
consumers not only can't borrow so freely as before, but they don't
want to.
A recent survey by Bristol University suggested that 70% of people have
no savings to see them through a "sudden drop in income", while a
contact at a major high-street bank told me the average balance in
their accounts was just =A3750. Economic slowdowns lead to
'precautionary saving', when people stop spending and start saving
as they anticipate at least a few rainy days ahead.
It's this drop in lending and borrowing and pick-up in saving that
historically has always choked off consumer-credit-financed
economic-growth models. In the third quarter of last year, personal
bankruptcies were up 46% year-on-year, a record high. As the chances of
default increase, banks are less willing to lend, especially for
property speculation, buy-to-let and higher-risk mortgages. As the
economy worsens, people become more afraid of over-extending
themselves, especially on large mortgage payments.
So far, UK house price growth has almost stopped, which is hitting
high-street sales and creating a tougher debt environment. Even
unemployment has been rising since last September's 4.7%, to 5%. If
all that washes back into the housing market and pushes prices lower
again, the vicious circle will feed on itself, with recession the
inevitable consequence.
US Federal Reserve governor Ben Bernanke would be well advised to
follow Bank of England governor Mervyn King's lead and stop raising
interest rates soon. This one still isn't played out by any means.
What can we do?
My advice remains the same as it ever was. If you have any investment
property, you should sell it unless it delivers a very powerful income
stream. Anecdotal evidence reports that off-plan and buy-to-let
investors are already choosing to return their keys to the mortgage
lender rather than face a rental stream that doesn't cover the
interest, especially now that capital gains are a pipedream.
As for householders, I wouldn't presume to forecast where interest
rates go next, but it's almost always best to try to pay down your
mortgage ahead of any other strategy. But to prospective new buyers,
I'd advise this: don't assume that because house prices don't
appear to have fallen yet as evidence to suggest they can't or
won't. The three-year trend in prices is still downwards, prices and
debt service burdens are still record multiples of incomes, and
economic growth has already slowed to a 13-year low.
By housing market standards, the situation is deteriorating rapidly and
yet no one either wants to believe it or feels they can do anything
much about it. Yet the simple answer is you can do a lot just by not
getting over-extended.
If you or anyone else you know is buying a house right now, make sure
you can comfortably cover the mortgage payments - even under adverse
circumstances. If you can't, you're paying too much and that could
spell trouble ahead.
The storm clouds are gathering, taxes and utility bills are rising
while job security is falling. We're on the cusp of what could still
yet turn into a full-blown recession and things could get a lot worse
before they get better. In such an environment it pays to look forward
with a bit of imagination rather than base your forecasts on what
happened before.
Remember the famous Gary Larson cartoon, which shows a dinosaur
addressing a symposium of complacent-looking peers from the lectern:
"Brains the size of walnuts, large lumbering bodies, a rapidly
changing environment. Gentlemen, the outlook is bleak."
James Ferguson is an economist and stockbroker at Pali International.
http://www.housepricecrash.co.uk/forum/index.php?act=3DSF&am p;s=3D&f=3D22
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| Re: The crumbling housing market and the impending recession. [message #384698 ] |
Di, 02 Mai 2006 20:04 |
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Crowley wrote:
> Latest Moneyweek article predicts trouble ahead ................
>
> "The storm clouds are gathering, taxes and utility bills are rising
> while job security is falling. We're on the cusp of what could still
> yet turn into a full-blown recession and things could get a lot worse
> before they get better ...................... "
> http://www.moneyweek.com/file/11314/where-is-the-housing-cra sh.html
>
> Regular readers of MoneyWeek might remember that I've been warning
> about an impending housing slowdown in the UK since my first article on
> the subject appeared in May 2004.
>
> But I'd like to remind readers that the last housing crash happened
> over a seven-year period, much like a falling line of dominos.
There hasn't been a house price "crash" in the UK in living memory.
The dotcom bubble "crashed", but any fool could see that coming. Who'd
have thought BT, C&W and Marconi would go down in the IT crash? That
really *did* hurt!
There will be a sharp correction in the UK housing market, but nothing
like you are trying to ramp up. People always need nice places to
live...
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| Re: The crumbling housing market and the impending recession. [message #384700 ] |
Di, 02 Mai 2006 20:16 |
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>"Crowley" <crowleyalastair [at] yahoo.co.uk> wrote in message
> >news:1146587840.178361.47640 [at] j73g2000cwa.googlegroups.com...
>Latest Moneyweek article predicts trouble ahead ................
>"The storm clouds are gathering, taxes and utility bills are rising
>while job security is falling. We're on the cusp of what could still
>yet turn into a full-blown recession and things could get a lot worse
>before they get better ...................... "
> http://www.moneyweek.com/file/11314/where-is-the-housing-cra sh.html
>Regular readers of MoneyWeek might remember that I've been warning
>about an impending housing slowdown in the UK since my first article on
>the subject appeared in May 2004.
So he's been 'warning' about an 'impending' crash for TWO YEARS! During
which time, prices have risen! Some forecaster.
--
Tumbleweed
email replies not necessary but to contact use;
tumbleweednews at hotmail dot com
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| Re: The crumbling housing market and the impending recession. [message #384701 ] |
Di, 02 Mai 2006 20:25 |
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Tumbleweed wrote:
> >"Crowley" <crowleyalastair [at] yahoo.co.uk> wrote in message
> > >news:1146587840.178361.47640 [at] j73g2000cwa.googlegroups.com...
> >Latest Moneyweek article predicts trouble ahead ................
>
> >"The storm clouds are gathering, taxes and utility bills are rising
> >while job security is falling. We're on the cusp of what could still
> >yet turn into a full-blown recession and things could get a lot worse
> >before they get better ...................... "
> > http://www.moneyweek.com/file/11314/where-is-the-housing-cra sh.html
>
> >Regular readers of MoneyWeek might remember that I've been warning
> >about an impending housing slowdown in the UK since my first article on
> >the subject appeared in May 2004.
>
> So he's been 'warning' about an 'impending' crash for TWO YEARS! During
> which time, prices have risen! Some forecaster.
Aye but he's bound to get it right eventually!
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| Re: The crumbling housing market and the impending recession. [message #384702 ] |
Di, 02 Mai 2006 20:40 |
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Mel Rowing wrote:
> Tumbleweed wrote:
> > >"Crowley" <crowleyalastair [at] yahoo.co.uk> wrote in message
> > > >news:1146587840.178361.47640 [at] j73g2000cwa.googlegroups.com...
> > >Latest Moneyweek article predicts trouble ahead ................
> >
> > >"The storm clouds are gathering, taxes and utility bills are rising
> > >while job security is falling. We're on the cusp of what could still
> > >yet turn into a full-blown recession and things could get a lot worse
> > >before they get better ...................... "
> > > http://www.moneyweek.com/file/11314/where-is-the-housing-cra sh.html
> >
> > >Regular readers of MoneyWeek might remember that I've been warning
> > >about an impending housing slowdown in the UK since my first article on
> > >the subject appeared in May 2004.
> >
> > So he's been 'warning' about an 'impending' crash for TWO YEARS! During
> > which time, prices have risen! Some forecaster.
>
> Aye but he's bound to get it right eventually!
No response apart from the increasingly shrill squeals of outrage from
the usual suspects. LOL
http://www.economist.com/finance/displayStory.cfm?story_id=4 079027
http://www.economist.com/opinion/displayStory.cfm?story_id=4 079458
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| Re: The crumbling housing market and the impending recession. [message #384703 ] |
Di, 02 Mai 2006 21:06 |
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>
> There hasn't been a house price "crash" in the UK in living memory.
>
> There will be a sharp correction in the UK housing market, but nothing
> like you are trying to ramp up. People always need nice places to
> live...
It's statements like that, that convince me that we are in for the
mother of all crashes.
The first and only requirement for a house price crash is enough people
believing it can't happen, just like in the eighties.
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| Re: The crumbling housing market and the impending recession. [message #384704 ] |
Di, 02 Mai 2006 21:08 |
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"Troy Steadman" <troysteadman [at] yahoo.co.uk> wrote in message
news:1146593066.371665.125200 [at] e56g2000cwe.googlegroups.com...
> Crowley wrote:
>> Latest Moneyweek article predicts trouble ahead ................
>>
>> "The storm clouds are gathering, taxes and utility bills are rising
>> while job security is falling. We're on the cusp of what could still
>> yet turn into a full-blown recession and things could get a lot worse
>> before they get better ...................... "
>> http://www.moneyweek.com/file/11314/where-is-the-housing-cra sh.html
>>
>> Regular readers of MoneyWeek might remember that I've been warning
>> about an impending housing slowdown in the UK since my first article on
>> the subject appeared in May 2004.
>>
>> But I'd like to remind readers that the last housing crash happened
>> over a seven-year period, much like a falling line of dominos.
>
> There hasn't been a house price "crash" in the UK in living memory.
Contrary to popular belief, a lot of the UK population were indeed alive in
1989 and beyond.
"The size of homebuyers' deposits required by lenders decreased. The
interest rates charged by lenders above the base rate was reduced and the
ratio of mortgage advance to potential homebuyers' income started to rise.
People increased their debt liabilities on the assumptions of a continued
growth in earnings and house prices. In his March 1988 budget, the then
Chancellor, Nigel Lawson, announced that dual relief for joint property
holders would be abolished the following August. This prompted a further
increase in house buying activity. Given a housing stock fixed in the
short-term, this lead to an
increase in the price of houses. Between 1987 and 1989 the average price of
a house increased by £24,000 or 52% from just over £46,000 in 1987 to just
over £70,000 in 1989; an average increase of just over 21% a year.
Then the unpredictable happened. Iraq invaded Kuwait in 1990 which lead to
higher oil prices globally and a negative shock to the UK economy.
Inflation, the annual percentage change in the RPI, rose to 9.5% in 1990 and
the base interest rate, already high, hit 15%. Unemployment, which in April
1990 was half its level in January 1987, started to rise.1 The unemployment
rate, which had been falling steadily since March 1986, began to rise back
towards 10%. The growth in annual earnings slowed and the growth in real GDP
fell to -1.4% in 1991.
The knock on effect of these factors was a fall in house prices. The annual
percentage change in average house prices fell from an increase of 21% in
1989 to minus 4% in 1992. The actual average price of houses fell by 6% over
the same period. The volume of housing transactions also fell from just
under two million in 1988 to just over a million in 1992.
In these circumstances many homeowners found themselves in the uncomfortable
position of having negative equity in their property. This is where the
outstanding balance of the mortgage exceeds the value of the house. Some
homeowners who, due to either a general decline in economic conditions or a
change in personal circumstances, such as unemployment, could not afford to
pay their mortgages, were forced to try to sell their homes in an already
depressed housing market.3 Many homeowners who were unable to sell
ultimately found that their houses were repossessed. At the depth of the
property crash, lenders were repossessing homes at the rate of more than
1,500 a week."
http://www.parliament.uk/commons/lib/research/rp2002/rp02-04 2.pdf
Selective amnesia, perhaps?
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| Re: The crumbling housing market and the impending recession. [message #384706 ] |
Di, 02 Mai 2006 21:17 |
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"Crowley" <crowleyalastair [at] yahoo.co.uk> wrote in message
news:1146595257.973540.135790 [at] v46g2000cwv.googlegroups.com...
>
> Mel Rowing wrote:
>> Tumbleweed wrote:
>> > >"Crowley" <crowleyalastair [at] yahoo.co.uk> wrote in message
>> > > >news:1146587840.178361.47640 [at] j73g2000cwa.googlegroups.com...
>> > >Latest Moneyweek article predicts trouble ahead ................
>> >
>> > >"The storm clouds are gathering, taxes and utility bills are rising
>> > >while job security is falling. We're on the cusp of what could still
>> > >yet turn into a full-blown recession and things could get a lot worse
>> > >before they get better ...................... "
>> > > http://www.moneyweek.com/file/11314/where-is-the-housing-cra sh.html
>> >
>> > >Regular readers of MoneyWeek might remember that I've been warning
>> > >about an impending housing slowdown in the UK since my first article
>> > >on
>> > >the subject appeared in May 2004.
>> >
>> > So he's been 'warning' about an 'impending' crash for TWO YEARS! During
>> > which time, prices have risen! Some forecaster.
>>
>> Aye but he's bound to get it right eventually!
>
> No response apart from the increasingly shrill squeals of outrage from
> the usual suspects. LOL
>
outrage that you'd take notice of someone who has been consistently wrong
for two years.
--
Tumbleweed
email replies not necessary but to contact use;
tumbleweednews at hotmail dot com
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| Re: The crumbling housing market and the impending recession. [message #384707 ] |
Di, 02 Mai 2006 21:16 |
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"Tumbleweed" <thisaccountneverread [at] yahoo.com> wrote in message
news:4bplo2F12qbhrU1 [at] individual.net...
> >"Crowley" <crowleyalastair [at] yahoo.co.uk> wrote in message
>> >news:1146587840.178361.47640 [at] j73g2000cwa.googlegroups.com...
>>Latest Moneyweek article predicts trouble ahead ................
>
>>"The storm clouds are gathering, taxes and utility bills are rising
>>while job security is falling. We're on the cusp of what could still
>>yet turn into a full-blown recession and things could get a lot worse
>>before they get better ...................... "
>> http://www.moneyweek.com/file/11314/where-is-the-housing-cra sh.html
>
>>Regular readers of MoneyWeek might remember that I've been warning
>>about an impending housing slowdown in the UK since my first article on
>>the subject appeared in May 2004.
>
> So he's been 'warning' about an 'impending' crash for TWO YEARS! During
> which time, prices have risen!
He has been wrong so far, so logically we can only conclude that prices will
rise forever, houses will be x50 average income and even home owners will
live in tents for fear of damaging their 'investment'.
Hoorar! Now let us never talk of this again.
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| Re: The crumbling housing market and the impending recession. [message #384708 ] |
Di, 02 Mai 2006 21:23 |
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Tumbleweed wrote:
> "Crowley" <crowleyalastair [at] yahoo.co.uk> wrote in message
> > No response apart from the increasingly shrill squeals of outrage from
> > the usual suspects. LOL
> >
>
> outrage that you'd take notice of someone who has been consistently wrong
> for two years.
I appreciate your concern but economic cycles are considerably longer
than 2 years, more like 7 in the case of UK property.
I'm sure Ferguson didn't expect the sky to fall in the very next day
after he first forecast a major house price correction. Rest assured
this bubble's going to pop, though it's surviving longer than many
thought ti would do.
BTW congrats on the Prem, sounds a bit boring at Blackburn tonight
though, understandably so.
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| Re: The crumbling housing market and the impending recession. [message #384709 ] |
Di, 02 Mai 2006 21:47 |
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You're forgetting the demand side of the equation and planning
restrictions.
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| Re: The crumbling housing market and the impending recession. [message #384711 ] |
Di, 02 Mai 2006 21:47 |
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On 2 May 2006 09:37:20 -0700, "Crowley" <crowleyalastair [at] yahoo.co.uk>
typed:
>Latest Moneyweek article predicts trouble ahead ................
>
>"The storm clouds are gathering, taxes and utility bills are rising
>while job security is falling. We're on the cusp of what could still
>yet turn into a full-blown recession and things could get a lot worse
>before they get better ...................... "
> http://www.moneyweek.com/file/11314/where-is-the-housing-cra sh.html
>
>Regular readers of MoneyWeek might remember that I've been warning
>about an impending housing slowdown in the UK since my first article on
>the subject appeared in May 2004.
impend v. intr.
be about to happen.
rest binned unread to conserve time and my purity of essence....
--
web site at www.abelard.org - news comment service, logic, economics
energy, education, politics, etc 1,552,396 document calls in year past
------------------------------------------------------------ --------------------
all that is necessary for [] walk quietly and carry
the triumph of evil is that [] a big stick.
good people do nothing [] trust actions not words
only when it's funny -- roger rabbit
------------------------------------------------------------ --------------------
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| Re: The crumbling housing market and the impending recession. [message #384712 ] |
Di, 02 Mai 2006 21:50 |
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On 2 May 2006 12:06:00 -0700, "allan tracy" <thunderbird57303 [at] hotmail.com>
typed:
>> There hasn't been a house price "crash" in the UK in living memory.
>>
>> There will be a sharp correction in the UK housing market, but nothing
>> like you are trying to ramp up. People always need nice places to
>> live...
>
>It's statements like that, that convince me that we are in for the
>mother of all crashes.
you were 'convinced' already...
your being convinced is the first and only requirement for sane
persons to know for certain that water runs uphill....
>The first and only requirement for a house price crash is enough people
>believing it can't happen, just like in the eighties.
ah...is that 'the first and only requirement'
--
web site at www.abelard.org - news comment service, logic, economics
energy, education, politics, etc 1,552,396 document calls in year past
------------------------------------------------------------ --------------------
all that is necessary for [] walk quietly and carry
the triumph of evil is that [] a big stick.
good people do nothing [] trust actions not words
only when it's funny -- roger rabbit
------------------------------------------------------------ --------------------
|
|
|
| Re: The crumbling housing market and the impending recession. [message #384714 ] |
Di, 02 Mai 2006 21:56 |
|
That is one of the reasons why labour party toady bliar has let in hundreds
of thousands of foreigners in the UK. Some reports of 1.7 Million Polish in
the past 4 years.
They have to live somewhere whilst they are here, (I'd sooner they weren't
here at all) they are not all piss poor. Some get onto the property ladder
straight away.
The rest go into rented accomedation, I know as most of the 1.7 million live
up my street. This all puts money into the housing market. It's more than
just outright sales.
Without all these toerag foreigners coming in, there may well have been a
housing crash over the past few years or so.
Even with them, the housing market might crumble, as the base interest rates
will be going up at least 1/2% in the next 12 months. Allong with
unemployment. Energy and fuel costs as well. oh and the community charge.
All over the World, so many countries are putting their rates up. China,
USA, loads of them.
The forcast for the UK, (and I've looked into it). is ON THE UP.
I sold my house 12 months ago, and that took about 6 months to sell. And I
was lucky to sell it.
All my cash is in a building society account earning me 5.1 % before tax. I
can live off that for the next 20 years. Let the monkeys do the work,
that's what I say.
What do I care if the interest rates goes up. More cash for me.
An increase in House prices is a bit of a bad thing. All it is is INFLATION
shoe horned into one particular area. It isn't that the Houses are worth
more, just that they cost more to buy.
Is a tin of beens worth a pound, no not really, even if they cost a pound to
buy.
Houses are vastly over priced, sometime or other there will be a price
ajustment.
Then as soon as the prices start coming down, loads and loads will be put on
the market. There will be so much more houses on the market than buyers the
prices will come down even more.
I'm not paying more than £280 per month for everything except food. With no
gangs of kids who can effect my 6 figure sum by just a whim of their tiny
little minds. ie spraying grafetti all over the very direct neighbourhood.
No bricks through my windows thank you very much. No worries of that.
The housing peak has been reached for the past year or so, it's bound to
come down pretty soon.
And I'll be laughing all the way to the building society.
While 20 odd million suckers are sweating their gonads off at work, worrying
about their jobs and the value of their houses.
|
|
|
| Re: The crumbling housing market and the impending recession. [message #384716 ] |
Di, 02 Mai 2006 22:00 |
|
On 2 May 2006 12:23:32 -0700, "Crowley" <crowleyalastair [at] yahoo.co.uk>
typed:
>
>Tumbleweed wrote:
>> "Crowley" <crowleyalastair [at] yahoo.co.uk> wrote in message
>> > No response apart from the increasingly shrill squeals of outrage from
>> > the usual suspects. LOL
>> >
>>
>> outrage that you'd take notice of someone who has been consistently wrong
>> for two years.
>
>I appreciate your concern but economic cycles are considerably longer
>than 2 years, more like 7 in the case of UK property.
or perhaps even 27 years creepy....
>I'm sure Ferguson didn't expect the sky to fall in the very next day
>after he first forecast a major house price correction. Rest assured
>this bubble's going to pop,
what 'bubble' is that creepy?
> though it's surviving longer than many
>thought ti would do.
certainly a lot longer than you 'thought' 'it would do'
>BTW congrats on the Prem, sounds a bit boring at Blackburn tonight
>though, understandably so.
--
web site at www.abelard.org - news comment service, logic, economics
energy, education, politics, etc 1,552,396 document calls in year past
------------------------------------------------------------ --------------------
all that is necessary for [] walk quietly and carry
the triumph of evil is that [] a big stick.
good people do nothing [] trust actions not words
only when it's funny -- roger rabbit
------------------------------------------------------------ --------------------
|
|
|
| Re: The crumbling housing market and the impending recession. [message #384717 ] |
Di, 02 Mai 2006 22:00 |
|
On Tue, 02 May 2006 19:08:02 GMT, "Virgils Ghost" <no [at] spam.com>
typed:
>"Troy Steadman" <troysteadman [at] yahoo.co.uk> wrote in message
>news:1146593066.371665.125200 [at] e56g2000cwe.googlegroups.com...
>> Crowley wrote:
>>> Latest Moneyweek article predicts trouble ahead ................
>>>
>>> "The storm clouds are gathering, taxes and utility bills are rising
>>> while job security is falling. We're on the cusp of what could still
>>> yet turn into a full-blown recession and things could get a lot worse
>>> before they get better ...................... "
>>> http://www.moneyweek.com/file/11314/where-is-the-housing-cra sh.html
>>>
>>> Regular readers of MoneyWeek might remember that I've been warning
>>> about an impending housing slowdown in the UK since my first article on
>>> the subject appeared in May 2004.
>>>
>>> But I'd like to remind readers that the last housing crash happened
>>> over a seven-year period, much like a falling line of dominos.
>>
>> There hasn't been a house price "crash" in the UK in living memory.
>
>Contrary to popular belief, a lot of the UK population were indeed alive in
>1989 and beyond.
>
>"The size of homebuyers' deposits required by lenders decreased. The
>interest rates charged by lenders above the base rate was reduced and the
>ratio of mortgage advance to potential homebuyers' income started to rise.
>People increased their debt liabilities on the assumptions of a continued
>growth in earnings and house prices. In his March 1988 budget, the then
>Chancellor, Nigel Lawson, announced that dual relief for joint property
>holders would be abolished the following August. This prompted a further
>increase in house buying activity. Given a housing stock fixed in the
>short-term, this lead to an
>increase in the price of houses. Between 1987 and 1989 the average price of
>a house increased by £24,000 or 52% from just over £46,000 in 1987 to just
>over £70,000 in 1989; an average increase of just over 21% a year.
>
>Then the unpredictable happened. Iraq invaded Kuwait in 1990 which lead to
>higher oil prices globally and a negative shock to the UK economy.
>Inflation, the annual percentage change in the RPI, rose to 9.5% in 1990 and
>the base interest rate, already high, hit 15%. Unemployment, which in April
>1990 was half its level in January 1987, started to rise.1 The unemployment
>rate, which had been falling steadily since March 1986, began to rise back
>towards 10%. The growth in annual earnings slowed and the growth in real GDP
>fell to -1.4% in 1991.
>
>The knock on effect of these factors was a fall in house prices. The annual
>percentage change in average house prices fell from an increase of 21% in
>1989 to minus 4% in 1992. The actual average price of houses fell by 6% over
>the same period. The volume of housing transactions also fell from just
>under two million in 1988 to just over a million in 1992.
>
>In these circumstances many homeowners found themselves in the uncomfortable
>position of having negative equity in their property. This is where the
>outstanding balance of the mortgage exceeds the value of the house. Some
>homeowners who, due to either a general decline in economic conditions or a
>change in personal circumstances, such as unemployment, could not afford to
>pay their mortgages, were forced to try to sell their homes in an already
>depressed housing market.3 Many homeowners who were unable to sell
>ultimately found that their houses were repossessed. At the depth of the
>property crash, lenders were repossessing homes at the rate of more than
>1,500 a week."
>
> http://www.parliament.uk/commons/lib/research/rp2002/rp02-04 2.pdf
>
>Selective amnesia, perhaps?
and the real drop until stabilisation was ~50%
i am unaware of any other period of general housing 'price' falls
in modern britain....
you have listed some possible factors in the crash.....
now what real factors would anyone expect to cause a crash at present.
not the empty headed bleating of the likes of creepy....
but clear analysis that would suggest a drop....or even a 'correction'
along with a suggestion of the %ages to be associated with this alleged
'crash'
any fools can keep making vague 'predictions'
and as all markets vary over time....if you bleat long enuf eventually
you will either be correct to one degree or another...or ded...
regards....
--
web site at www.abelard.org - news comment service, logic, economics
energy, education, politics, etc 1,552,396 document calls in year past
------------------------------------------------------------ --------------------
all that is necessary for [] walk quietly and carry
the triumph of evil is that [] a big stick.
good people do nothing [] trust actions not words
only when it's funny -- roger rabbit
------------------------------------------------------------ --------------------
|
|
|
| Re: The crumbling housing market and the impending recession. [message #384718 ] |
Di, 02 Mai 2006 22:04 |
|
On Tue, 02 May 2006 19:56:15 GMT, "BIG BEN" <Fred9999 [at] aol.com>
typed:
>That is one of the reasons why labour party toady bliar has let in hundreds
>of thousands of foreigners in the UK. Some reports of 1.7 Million Polish in
>the past 4 years.
>They have to live somewhere whilst they are here, (I'd sooner they weren't
>here at all) they are not all piss poor. Some get onto the property ladder
>straight away.
>The rest go into rented accomedation, I know as most of the 1.7 million live
>up my street. This all puts money into the housing market. It's more than
>just outright sales.
>
>Without all these toerag foreigners coming in, there may well have been a
>housing crash over the past few years or so.
>Even with them, the housing market might crumble, as the base interest rates
>will be going up at least 1/2% in the next 12 months. Allong with
>unemployment. Energy and fuel costs as well. oh and the community charge.
>
>All over the World, so many countries are putting their rates up. China,
>USA, loads of them.
>The forcast for the UK, (and I've looked into it). is ON THE UP.
>
>I sold my house 12 months ago, and that took about 6 months to sell. And I
>was lucky to sell it.
>All my cash is in a building society account earning me 5.1 % before tax. I
>can live off that for the next 20 years. Let the monkeys do the work,
>that's what I say.
>What do I care if the interest rates goes up. More cash for me.
>
>An increase in House prices is a bit of a bad thing. All it is is INFLATION
>shoe horned into one particular area. It isn't that the Houses are worth
>more, just that they cost more to buy.
>Is a tin of beens worth a pound, no not really, even if they cost a pound to
>buy.
>
>Houses are vastly over priced, sometime or other there will be a price
>ajustment.
>Then as soon as the prices start coming down, loads and loads will be put on
>the market. There will be so much more houses on the market than buyers the
>prices will come down even more.
>
>I'm not paying more than £280 per month for everything except food. With no
>gangs of kids who can effect my 6 figure sum by just a whim of their tiny
>little minds. ie spraying grafetti all over the very direct neighbourhood.
>No bricks through my windows thank you very much. No worries of that.
>
>The housing peak has been reached for the past year or so, it's bound to
>come down pretty soon.
>And I'll be laughing all the way to the building society.
>While 20 odd million suckers are sweating their gonads off at work, worrying
>about their jobs and the value of their houses.
it may not be solid economics but you have a healthy attitude!
regards..
--
web site at www.abelard.org - news comment service, logic, economics
energy, education, politics, etc 1,552,396 document calls in year past
------------------------------------------------------------ --------------------
all that is necessary for [] walk quietly and carry
the triumph of evil is that [] a big stick.
good people do nothing [] trust actions not words
only when it's funny -- roger rabbit
------------------------------------------------------------ --------------------
|
|
|
| Re: The crumbling housing market and the impending recession. [message #384719 ] |
Di, 02 Mai 2006 22:07 |
|
"abelard" <abelard3 [at] abelard.org> wrote in message
news:g7ef52dusmur3a294jdr39q6ao1h4h8hm6 [at] 4ax.com...
<
>> http://www.parliament.uk/commons/lib/research/rp2002/rp02-04 2.pdf
>>
>>Selective amnesia, perhaps?
>
> and the real drop until stabilisation was ~50%
Hardly a worry then.
<
> i am unaware of any other period of general housing 'price' falls
> in modern britain....
>
> you have listed some possible factors in the crash.....
I haven't listed anything, that was from a government report, take a look,
if you can 'bear' it.
|
|
|
| Re: The crumbling housing market and the impending recession. [message #384720 ] |
Di, 02 Mai 2006 22:24 |
|
abelard wrote:
....... SNIP fraudelards usual puerile gibberish ........
> >I'm sure Ferguson didn't expect the sky to fall in the very next day
> >after he first forecast a major house price correction. Rest assured
> >this bubble's going to pop,
>
> what 'bubble' is that creepy?
Try listening to your betters fraudelard instead of mindless
pseudo-intellectual posturing :
"The worldwide rise in house prices is the biggest bubble in history."
http://www.economist.com/finance/displayStory.cfm?story_id=4 079027
and http://www.economist.com/opinion/displayStory.cfm?story_id=4 079458
> > though it's surviving longer than many
> >thought it would do.
>
> certainly a lot longer than you 'thought' 'it would do'
Stop trying to be a smart-arse fraudy, you're just showing yourself up.
http://www.housepricecrash.co.uk/forum/index.php?showforum=2 2
|
|
|
| Re: The crumbling housing market and the impending recession. [message #384724 ] |
Di, 02 Mai 2006 23:36 |
|
On Tue, 02 May 2006 20:07:43 GMT, "Virgils Ghost" <no [at] spam.com>
typed:
>"abelard" <abelard3 [at] abelard.org> wrote in message
>news:g7ef52dusmur3a294jdr39q6ao1h4h8hm6 [at] 4ax.com...
><
>>> http://www.parliament.uk/commons/lib/research/rp2002/rp02-04 2.pdf
>>>
>>>Selective amnesia, perhaps?
>>
>> and the real drop until stabilisation was ~50%
>
>Hardly a worry then.
:-)
>> i am unaware of any other period of general housing 'price' falls
>> in modern britain....
>>
>> you have listed some possible factors in the crash.....
>
>I haven't listed anything, that was from a government report, take a look,
>if you can 'bear' it.
i have looked....
you did list it whatever your source....
ah, you mean look at the report
it is interesting your source was government of course...
shaking out the make work of previous socialist gov't failure
and the deliberate generation of inflation followed by the
attempts then to squeeze out inflation (maybe too rapidly)
are mostly government actions effecting the 'crash'
so emphasising that ain't likely!
so to the report...
doesn't look too awful....
"Also, average house prices, after taking inflation into account, have
only just recovered to their 1990 level."...seems about right...'your'
report is of course 2002!
now what does 'taking inflation into account mean'....doubtless the
swindling rpi....so the reality will be still way below real 1990
numbers...
so...i've skipped through the 'analysis' section which imv could be
a lot worse....
as usual i see no obvious reason to predict a 'crash' from that confection
as a more relevant (afaiac) measure....the current uk real inflation is
now around 11% so the rises are nothing like the appearances...
further....particularly london is even more a magnet for forrin 'refugees'
who want a 'safe' base....
regards...
--
web site at www.abelard.org - news comment service, logic, economics
energy, education, politics, etc 1,552,396 document calls in year past
------------------------------------------------------------ --------------------
all that is necessary for [] walk quietly and carry
the triumph of evil is that [] a big stick.
good people do nothing [] trust actions not words
only when it's funny -- roger rabbit
------------------------------------------------------------ --------------------
|
|
|
| Re: The crumbling housing market and the impending recession. [message #384726 ] |
Di, 02 Mai 2006 23:41 |
|
On 2 May 2006 13:24:04 -0700, "Crowley" <crowalas1234 [at] yahoo.co.uk>
typed:
>
>abelard wrote:
>
>...... SNIP fraudelards usual puerile gibberish ........
>
>> >I'm sure Ferguson didn't expect the sky to fall in the very next day
>> >after he first forecast a major house price correction. Rest assured
>> >this bubble's going to pop,
>>
>> what 'bubble' is that creepy?
>
>Try listening to your betters fraudelard instead of mindless
>pseudo-intellectual posturing :
>
>"The worldwide rise in house prices is the biggest bubble in history."
> http://www.economist.com/finance/displayStory.cfm?story_id=4 079027
>
>and http://www.economist.com/opinion/displayStory.cfm?story_id=4 079458
>
>> > though it's surviving longer than many
>> >thought it would do.
>>
>> certainly a lot longer than you 'thought' 'it would do'
>
>Stop trying to be a smart-arse fraudy, you're just showing yourself up.
> http://www.housepricecrash.co.uk/forum/index.php?showforum=2 2
you'll get more useful advice from mystic meg creepy....
so would i relative to you!
can't be bothered with your links....you only ever post those that say
what you want to believe..and even those you can't read adequately
you have been asked dozens of times why you make the claims you do...
you always run for the hills...why would anyone take you seriously.....
here's your chance yet again creepy....
make out a case in your own words and then be expected to defend your
claims...
now that creepy is your inevitable signal to start blustering
g'wan....surprise me mister dork...
--
web site at www.abelard.org - news comment service, logic, economics
energy, education, politics, etc 1,552,396 document calls in year past
------------------------------------------------------------ --------------------
all that is necessary for [] walk quietly and carry
the triumph of evil is that [] a big stick.
good people do nothing [] trust actions not words
only when it's funny -- roger rabbit
------------------------------------------------------------ --------------------
|
|
|
| Re: The crumbling housing market and the impending recession. [message #384727 ] |
Di, 02 Mai 2006 23:49 |
|
whitely525 [at] yahoo.co.uk wrote:
> You're forgetting the demand side of the equation and planning
> restrictions.
He's forgetting a lot of things including (for England).
Owner occupied stock 68%
(1) Mortgaged 39%
(2) Owned outright 29%
Rented stock 32%
(3) Social landlord 19%
(4) Private landlord 13%
http://tinyurl.com/huohz
Of course no asset can appreciate in real terms indefinitely. That is
not disputed.
Starting therefore, at the point where property prices hit a ceiling.
Sub Groups (2) & (3) above amounting to some 48% of households are
unaffected.
The majority of the mortgages (1) have been going for some time even if
the provider has been changed so as to bring down the average life to
4-5 years. Therefore negative equity is only going to be problem in a
tiny minority of the cases.
Even when in a position of negative equity a mortgagee has to take
certain considerations on board before taking the decision to
liquidate. The primary concern is that he will still need somewhere to
live and hence pay rent (a considerable proportion of his mortgage
liability). Liquidation has its own attendant cost (legal fees, estatge
agents etc) and, in the case of a negative equity situation
liquidation, does not clear the debt.
Equity drawdowns are of course possible. There is a least an argument
that the importance of these are over egged. People draw down on equity
in order to take advantage of cheap credit. It's money they would be
inclined to borrow anyway but at higher rates. No cognizance seems to
be paid to the fact that a goodly proportion of drawn down money is
used for home improvements thus adding value to the underlying asset.
The worst scenario for the equity drawer is that he will move into
negative equity.
Nonetheless, it is reasonable to expect some liquidations.
There is but one sub group above (4) where the landlords may perhaps be
more tempted to cut and run. However, even here it's not a painless
decision. All the above costs still apply plus loss of rental income
during the sale period. Moreover liquidations will reduce the size of
this particular sector of the market causing upward pressure on rents
and at the same time easing the incentive to sell.
Of course the rate of liquidations will be reflected in market prices.
The sharper these fall the more individuals in the rental sector will
be enabled to enter the market.
There are no indications whatsoever of a house price crash with
thousands sleeping rough whilst properties stand empty. Markets don't
work like that and that is the final weakness of the idea. Markets
exhibit the properties of organisms. They don't stand still as
situations change. They react in many different ways simultaneously
just like a disturbed plate of jelly.
I believe one of the links referred to the metaphor of a brick attached
to a parachute. That's pretty much the end game as I see it. However,
unlike some I will not say when. The reason why I will not say when is
that I have had past bitter experience in trying to second guess
markets. Now I treat them with respect.
|
|
|
| Re: The crumbling housing market and the impending recession. [message #384728 ] |
Di, 02 Mai 2006 23:57 |
|
Tumbleweed wrote:
>> "Crowley" <crowleyalastair [at] yahoo.co.uk> wrote in message
>>> news:1146587840.178361.47640 [at] j73g2000cwa.googlegroups.com...
>> Latest Moneyweek article predicts trouble ahead ................
>
>> "The storm clouds are gathering, taxes and utility bills are rising
>> while job security is falling. We're on the cusp of what could still
>> yet turn into a full-blown recession and things could get a lot worse
>> before they get better ...................... "
>> http://www.moneyweek.com/file/11314/where-is-the-housing-cra sh.html
>
>> Regular readers of MoneyWeek might remember that I've been warning
>> about an impending housing slowdown in the UK since my first article on
>> the subject appeared in May 2004.
>
> So he's been 'warning' about an 'impending' crash for TWO YEARS! During
> which time, prices have risen! Some forecaster.
Aha, I knew you'd be trolling in here!
Irma
Inviato da X-Privat.Org - Registrazione gratuita http://www.x-privat.org/join.php
|
|
|
| Re: The crumbling housing market and the impending recession. [message #384730 ] |
Mi, 03 Mai 2006 00:06 |
|
abelard wrote:
typed
> On 2 May 2006 13:24:04 -0700, "Crowley" <crowalas1234 [at] yahoo.co.uk>
>
> typed:
> >
> >abelard wrote:
> >
> >...... SNIP fraudelards usual puerile gibberish ........
> >
> >> >I'm sure Ferguson didn't expect the sky to fall in the very next day
> >> >after he first forecast a major house price correction. Rest assured
> >> >this bubble's going to pop,
> >>
> >> what 'bubble' is that creepy?
> >
> >Try listening to your betters fraudelard instead of mindless
> >pseudo-intellectual posturing :
> >
> >"The worldwide rise in house prices is the biggest bubble in history."
> > http://www.economist.com/finance/displayStory.cfm?story_id=4 079027
> >
> >and http://www.economist.com/opinion/displayStory.cfm?story_id=4 079458
> >
> >> > though it's surviving longer than many
> >> >thought it would do.
> >>
> >> certainly a lot longer than you 'thought' 'it would do'
> >
> >Stop trying to be a smart-arse fraudy, you're just showing yourself up.
>
> > http://www.housepricecrash.co.uk/forum/index.php?showforum=2 2
>
> you'll get more useful advice from mystic meg creepy....
> so would i relative to you!
>
> can't be bothered with your links....you only ever post those that say
> what you want to believe..and even those you can't read adequately
>
> you have been asked dozens of times why you make the claims you do...
> you always run for the hills...why would anyone take you seriously.....
>
> here's your chance yet again creepy....
> make out a case in your own words and then be expected to defend your
> claims...
>
> now that creepy is your inevitable signal to start blustering
> g'wan....surprise me mister dork...
>
> --
> web site at www.abelard.org - news comment service, logic, economics
> energy, education, politics, etc 1,552,396 document calls in year past
> ------------------------------------------------------------ --------------------
> all that is necessary for [] walk quietly and carry
> the triumph of evil is that [] a big stick.
> good people do nothing [] trust actions not words
> only when it's funny -- roger rabbit
> ------------------------------------------------------------ --------------------
LOL. I've 'made out a case' many times on here fraudelard both in my
'own words' and with reference to various articles as you well know.
You however in your selective replies seek only to lower discussion
down to your puerile level ie that of an infant school slanging match.
If you really want to break your usual childish habits and join a
debate then start off by telling us why you think this *isn't* a house
price bubble ............... or alternately just do what you do best
and resort to your characteristic bluff, bluster, and tripe so we can
all have another good laugh at you.
|
|
|
| Re: The crumbling housing market and the impending recession. [message #384732 ] |
Mi, 03 Mai 2006 00:20 |
|
On 2 May 2006 15:06:58 -0700, "Crowley" <crowleyalastair [at] yahoo.co.uk>
typed:
>
>abelard wrote:
>typed
>
>> On 2 May 2006 13:24:04 -0700, "Crowley" <crowalas1234 [at] yahoo.co.uk>
>>
>> typed:
>> >
>> >abelard wrote:
>> >
>> >...... SNIP fraudelards usual puerile gibberish ........
>> >
>> >> >I'm sure Ferguson didn't expect the sky to fall in the very next day
>> >> >after he first forecast a major house price correction. Rest assured
>> >> >this bubble's going to pop,
>> >>
>> >> what 'bubble' is that creepy?
>> >
>> >Try listening to your betters fraudelard instead of mindless
>> >pseudo-intellectual posturing :
>> >
>> >"The worldwide rise in house prices is the biggest bubble in history."
>> > http://www.economist.com/finance/displayStory.cfm?story_id=4 079027
>> >
>> >and http://www.economist.com/opinion/displayStory.cfm?story_id=4 079458
>> >
>> >> > though it's surviving longer than many
>> >> >thought it would do.
>> >>
>> >> certainly a lot longer than you 'thought' 'it would do'
>> >
>> >Stop trying to be a smart-arse fraudy, you're just showing yourself up.
>>
>> > http://www.housepricecrash.co.uk/forum/index.php?showforum=2 2
>>
>> you'll get more useful advice from mystic meg creepy....
>> so would i relative to you!
>>
>> can't be bothered with your links....you only ever post those that say
>> what you want to believe..and even those you can't read adequately
>>
>> you have been asked dozens of times why you make the claims you do...
>> you always run for the hills...why would anyone take you seriously.....
>>
>> here's your chance yet again creepy....
>> make out a case in your own words and then be expected to defend your
>> claims...
>>
>> now that creepy is your inevitable signal to start blustering
>> g'wan....surprise me mister dork...
>LOL. I've 'made out a case' many times on here fraudelard
no you haven't...rest binned unread
--
web site at www.abelard.org - news comment service, logic, economics
energy, education, politics, etc 1,552,396 document calls in year past
------------------------------------------------------------ --------------------
all that is necessary for [] walk quietly and carry
the triumph of evil is that [] a big stick.
good people do nothing [] trust actions not words
only when it's funny -- roger rabbit
------------------------------------------------------------ --------------------
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| Re: The crumbling housing market and the impending recession. [message #384734 ] |
Mi, 03 Mai 2006 01:11 |
|
"Tumbleweed" <thisaccountneverread [at] yahoo.com> wrote in message
news:4bplo2F12qbhrU1 [at] individual.net...
> >"Crowley" <crowleyalastair [at] yahoo.co.uk> wrote in message
> > >news:1146587840.178361.47640 [at] j73g2000cwa.googlegroups.com...
> >Latest Moneyweek article predicts trouble ahead ................
>
> >"The storm clouds are gathering, taxes and utility bills are rising
> >while job security is falling. We're on the cusp of what could still
> >yet turn into a full-blown recession and things could get a lot worse
> >before they get better ...................... "
> > http://www.moneyweek.com/file/11314/where-is-the-housing-cra sh.html
>
> >Regular readers of MoneyWeek might remember that I've been warning
> >about an impending housing slowdown in the UK since my first article on
> >the subject appeared in May 2004.
>
> So he's been 'warning' about an 'impending' crash for TWO YEARS! During
> which time, prices have risen! Some forecaster.
He walks round the street with a board strapped to his front and back
claiming a crash anytime now
rotfl
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| Re: The crumbling housing market and the impending recession. [message #384735 ] |
Mi, 03 Mai 2006 01:40 |
|
On 2 May 2006 11:25:21 -0700 'Mel Rowing'
posted this onto uk.politics.misc:
>
>Tumbleweed wrote:
>> >"Crowley" <crowleyalastair [at] yahoo.co.uk> wrote in message
>> > >news:1146587840.178361.47640 [at] j73g2000cwa.googlegroups.com...
>> >Latest Moneyweek article predicts trouble ahead ................
>>
>> >"The storm clouds are gathering, taxes and utility bills are rising
>> >while job security is falling. We're on the cusp of what could still
>> >yet turn into a full-blown recession and things could get a lot worse
>> >before they get better ...................... "
>> > http://www.moneyweek.com/file/11314/where-is-the-housing-cra sh.html
>>
>> >Regular readers of MoneyWeek might remember that I've been warning
>> >about an impending housing slowdown in the UK since my first article on
>> >the subject appeared in May 2004.
>>
>> So he's been 'warning' about an 'impending' crash for TWO YEARS! During
>> which time, prices have risen! Some forecaster.
>
>Aye but he's bound to get it right eventually!
Unlike you Mel ...eh Lol.
--
"ID cards will potentially make a difference to any area of
everyday life where you already have to prove your identity,
such as opening a bank account, going abroad on holiday,
claiming a benefit, buying goods on credit and renting a video."
........Charles Clarke December 2004:
http://www.timesonline.co.uk/article/0,,1072-1409799,00.html
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| Re: The crumbling housing market and the impending recession. [message #384736 ] |
Mi, 03 Mai 2006 01:58 |
|
"abelard" <abelard3 [at] abelard.org> wrote in message
<
> as a more relevant (afaiac) measure....the current uk real inflation is
> now around 11% so the rises are nothing like the appearances...
> further....particularly london is even more a magnet for forrin 'refugees'
> who want a 'safe' base....
I wouldn't be surprised at that inflation figure, look at the growth of
broad money (M4), it's running at the tune of 13.2% year-on-year, take off
~2% GDP and you have your 11% of inflationary excess above the real
supported growth of the economy.
http://www.bankofengland.co.uk/statistics/m4/current/index.h tm
Obviously this isn't reflected in the price of everything (e.g. Chinese DVD
players) however it does go somewhere, undoubtedly the property market and
increasingly equities, bonds (just look at the poor yields) and of course
commodities.
You cannot create so much liquidity on a global basis without blowing
bubbles, the central banks should be thankful so little has leaked into the
real economy so far, increased lending and subsequent interest charges
actually suck money out of the real economy of course, which can explain the
predicament with retail in the UK.
Mortgage Equity Withdraw running to the tune of 6% of post tax income can
also explain the sort of consumer spending levels we've witnessed over
recent years in the absence of high general wage inflation. However MEW is
the pay rise that needs to be paid back, with interest, many will hope it
can be inflated away, yet the Bank of England only seem to care about wage
inflation and not price inflation these days.
So this all goes a lot deeper than the housing market, the modern day tulip
bulb, it will be interest to see how it all plays out. I would suggest a
repeat of the 'hidden' crash in the late 70's, nominal prices were static
yet real prices crashed upwards of 25% as the currency was debased and
inflated away. This scenario resolves the crippling problem of debt in a
deflationary environment.
As for refugees, unless they come with £200k stuffed in their back pockets
or are able to walk into £50k jobs I cannot see how they can directly
support the market. Some Buy-To-Letter's may be able to pack a dozen into a
single dwelling, that may help them drive their yield up and increase wider
demand, I'm not sure if this is sustainable and whether they can offset
increased borrowing costs.
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| Re: The crumbling housing market and the impending recession. [message #384738 ] |
Mi, 03 Mai 2006 03:28 |
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Post removed (X-No-Archive: yes)
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| Re: The crumbling housing market and the impending recession. [message #384739 ] |
Mi, 03 Mai 2006 03:29 |
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Post removed (X-No-Archive: yes)
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| Re: The crumbling housing market and the impending recession. [message #384745 ] |
Mi, 03 Mai 2006 08:24 |
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Mel Rowing wrote:
> whitely525 [at] yahoo.co.uk wrote:
>
> > You're forgetting the demand side of the equation and planning
> > restrictions.
>
> He's forgetting a lot of things including (for England).
>
> Owner occupied stock 68%
>
> (1) Mortgaged 39%
> (2) Owned outright 29%
>
> Rented stock 32%
>
> (3) Social landlord 19%
> (4) Private landlord 13%
>
> http://tinyurl.com/huohz
>
> Of course no asset can appreciate in real terms indefinitely. That is
> not disputed.
>
> Starting therefore, at the point where property prices hit a ceiling.
>
> Sub Groups (2) & (3) above amounting to some 48% of households are
> unaffected.
>
> The majority of the mortgages (1) have been going for some time even if
> the provider has been changed so as to bring down the average life to
> 4-5 years. Therefore negative equity is only going to be problem in a
> tiny minority of the cases.
>
> Even when in a position of negative equity a mortgagee has to take
> certain considerations on board before taking the decision to
> liquidate. The primary concern is that he will still need somewhere to
> live and hence pay rent (a considerable proportion of his mortgage
> liability). Liquidation has its own attendant cost (legal fees, estatge
> agents etc) and, in the case of a negative equity situation
> liquidation, does not clear the debt.
>
> Equity drawdowns are of course possible. There is a least an argument
> that the importance of these are over egged. People draw down on equity
> in order to take advantage of cheap credit. It's money they would be
> inclined to borrow anyway but at higher rates. No cognizance seems to
> be paid to the fact that a goodly proportion of drawn down money is
> used for home improvements thus adding value to the underlying asset.
> The worst scenario for the equity drawer is that he will move into
> negative equity.
>
> Nonetheless, it is reasonable to expect some liquidations.
>
> There is but one sub group above (4) where the landlords may perhaps be
> more tempted to cut and run. However, even here it's not a painless
> decision. All the above costs still apply plus loss of rental income
> during the sale period. Moreover liquidations will reduce the size of
> this particular sector of the market causing upward pressure on rents
> and at the same time easing the incentive to sell.
>
> Of course the rate of liquidations will be reflected in market prices.
> The sharper these fall the more individuals in the rental sector will
> be enabled to enter the market.
>
> There are no indications whatsoever of a house price crash with
> thousands sleeping rough whilst properties stand empty. Markets don't
> work like that and that is the final weakness of the idea. Markets
> exhibit the properties of organisms. They don't stand still as
> situations change. They react in many different ways simultaneously
> just like a disturbed plate of jelly.
>
> I believe one of the links referred to the metaphor of a brick attached
> to a parachute. That's pretty much the end game as I see it. However,
> unlike some I will not say when. The reason why I will not say when is
> that I have had past bitter experience in trying to second guess
> markets. Now I treat them with respect.
I think that's right. In a "crash" something hugely desirable, BT or
C&W or Marconi, becomes virtually worthless, as those companies did in
the "Tech" crash of 2000.
We are obviously heading for a *big* housing correction, and to those
jumping in at the moment with near 100% mortgages it will seem like a
"crash". But a rare painting, or a beautiful woman, or a nice house,
will always be desirable...at the correct price.
|
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| Re: The crumbling housing market and the impending recession. [message #384746 ] |
Mi, 03 Mai 2006 09:02 |
|
"Virgils Ghost" <no [at] spam.com> wrote in message
news:qeO5g.89348$%_1.69434 [at] fe01.news.easynews.com...
> "Tumbleweed" <thisaccountneverread [at] yahoo.com> wrote in message
> news:4bplo2F12qbhrU1 [at] individual.net...
>> >"Crowley" <crowleyalastair [at] yahoo.co.uk> wrote in message
>>> >news:1146587840.178361.47640 [at] j73g2000cwa.googlegroups.com...
>>>Latest Moneyweek article predicts trouble ahead ................
>>
>>>"The storm clouds are gathering, taxes and utility bills are rising
>>>while job security is falling. We're on the cusp of what could still
>>>yet turn into a full-blown recession and things could get a lot worse
>>>before they get better ...................... "
>>> http://www.moneyweek.com/file/11314/where-is-the-housing-cra sh.html
>>
>>>Regular readers of MoneyWeek might remember that I've been warning
>>>about an impending housing slowdown in the UK since my first article on
>>>the subject appeared in May 2004.
>>
>> So he's been 'warning' about an 'impending' crash for TWO YEARS! During
>> which time, prices have risen!
>
> He has been wrong so far, so logically we can only conclude that prices
> will rise forever, houses will be x50 average income and even home owners
> will live in tents for fear of damaging their 'investment'.
>
> Hoorar! Now let us never talk of this again.
Dont put words in my mouth. He's been wrong so far, so logically we can
predict he isnt a very good predictor. Thats all. Put it another way,
Crowleys message could have been rewritten as 'someone who has been
predicting X for the past two years (and has been wrong for the past two
years) just predicted X again.
--
Tumbleweed
email replies not necessary but to contact use;
tumbleweednews at hotmail dot com
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| Re: The crumbling housing market and the impending recession. [message #384747 ] |
Mi, 03 Mai 2006 09:04 |
|
"Virgils Ghost" <no [at] spam.com> wrote in message
news:l6O5g.219248$zy2.54683 [at] fe08.news.easynews.com...
> "Troy Steadman" <troysteadman [at] yahoo.co.uk> wrote in message
> news:1146593066.371665.125200 [at] e56g2000cwe.googlegroups.com...
>> Crowley wrote:
>>> Latest Moneyweek article predicts trouble ahead ................
>>>
>>> "The storm clouds are gathering, taxes and utility bills are rising
>>> while job security is falling. We're on the cusp of what could still
>>> yet turn into a full-blown recession and things could get a lot worse
>>> before they get better ...................... "
>>> http://www.moneyweek.com/file/11314/where-is-the-housing-cra sh.html
>>>
>>> Regular readers of MoneyWeek might remember that I've been warning
>>> about an impending housing slowdown in the UK since my first article on
>>> the subject appeared in May 2004.
>>>
>>> But I'd like to remind readers that the last housing crash happened
>>> over a seven-year period, much like a falling line of dominos.
>>
>> There hasn't been a house price "crash" in the UK in living memory.
>
> Contrary to popular belief, a lot of the UK population were indeed alive
> in 1989 and beyond.
>
> "The size of homebuyers' deposits required by lenders decreased. The
> interest rates charged by lenders above the base rate was reduced and the
> ratio of mortgage advance to potential homebuyers' income started to rise.
> People increased their debt liabilities on the assumptions of a continued
> growth in earnings and house prices. In his March 1988 budget, the then
> Chancellor, Nigel Lawson, announced that dual relief for joint property
> holders would be abolished the following August. This prompted a further
> increase in house buying activity. Given a housing stock fixed in the
> short-term, this lead to an
> increase in the price of houses. Between 1987 and 1989 the average price
> of a house increased by £24,000 or 52% from just over £46,000 in 1987 to
> just over £70,000 in 1989; an average increase of just over 21% a year.
>
> Then the unpredictable happened. Iraq invaded Kuwait in 1990 which lead to
> higher oil prices globally and a negative shock to the UK economy.
> Inflation, the annual percentage change in the RPI, rose to 9.5% in 1990
> and the base interest rate, already high, hit 15%. Unemployment, which in
> April 1990 was half its level in January 1987, started to rise.1 The
> unemployment rate, which had been falling steadily since March 1986, began
> to rise back towards 10%. The growth in annual earnings slowed and the
> growth in real GDP fell to -1.4% in 1991.
>
> The knock on effect of these factors was a fall in house prices. The
> annual percentage change in average house prices fell from an increase of
> 21% in 1989 to minus 4% in 1992. The actual average price of houses fell
> by 6% over the same period. The volume of housing transactions also fell
> from just under two million in 1988 to just over a million in 1992.
>
> In these circumstances many homeowners found themselves in the
> uncomfortable position of having negative equity in their property. This
> is where the outstanding balance of the mortgage exceeds the value of the
> house. Some homeowners who, due to either a general decline in economic
> conditions or a change in personal circumstances, such as unemployment,
> could not afford to pay their mortgages, were forced to try to sell their
> homes in an already depressed housing market.3 Many homeowners who were
> unable to sell ultimately found that their houses were repossessed. At the
> depth of the property crash, lenders were repossessing homes at the rate
> of more than 1,500 a week."
>
> http://www.parliament.uk/commons/lib/research/rp2002/rp02-04 2.pdf
>
> Selective amnesia, perhaps?
>
Hmmm, the end effect of all those rises and falls is an increase in prices
over the period mentioned. Must be you with the selective amnesia.
--
Tumbleweed
email replies not necessary but to contact use;
tumbleweednews at hotmail dot com
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| Re: The crumbling housing market and the impending recession. [message #384748 ] |
Mi, 03 Mai 2006 09:09 |
|
"Crowley" <crowleyalastair [at] yahoo.co.uk> wrote in message
news:1146597812.623871.70720 [at] i40g2000cwc.googlegroups.com...
>
> Tumbleweed wrote:
>> "Crowley" <crowleyalastair [at] yahoo.co.uk> wrote in message
>> > No response apart from the increasingly shrill squeals of outrage from
>> > the usual suspects. LOL
>> >
>>
>> outrage that you'd take notice of someone who has been consistently wrong
>> for two years.
>
> I appreciate your concern but economic cycles are considerably longer
> than 2 years, more like 7 in the case of UK property.
>
> I'm sure Ferguson didn't expect the sky to fall in the very next day
> after he first forecast a major house price correction. Rest assured
> this bubble's going to pop, though it's surviving longer than many
> thought ti would do.
he needs a dictionary and to look up the word 'impending'.
>
> BTW congrats on the Prem, sounds a bit boring at Blackburn tonight
> though, understandably so.
>
Cheers. BTW, for all those who say that Chelsea 'bought' the premiership,
the team that played at Blackburn was the one bought mostly with
Abromovich's money, the one that beat Man Utd 3 0 was the mostly pre-A
players. IMHO there were only two significant post A signings, Jose and
Chech.
--
Tumbleweed
email replies not necessary but to contact use;
tumbleweednews at hotmail dot com
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| Re: The crumbling housing market and the impending recession. [message #384749 ] |
Mi, 03 Mai 2006 09:10 |
|
"Irma Troll" <troll [at] troll.com> wrote in message
news:4457d5d5$1_1 [at] x-privat.org...
> Tumbleweed wrote:
>>> "Crowley" <crowleyalastair [at] yahoo.co.uk> wrote in message
>>>> news:1146587840.178361.47640 [at] j73g2000cwa.googlegroups.com...
>>> Latest Moneyweek article predicts trouble ahead ................
>>
>>> "The storm clouds are gathering, taxes and utility bills are rising
>>> while job security is falling. We're on the cusp of what could still
>>> yet turn into a full-blown recession and things could get a lot worse
>>> before they get better ...................... "
>>> http://www.moneyweek.com/file/11314/where-is-the-housing-cra sh.html
>>
>>> Regular readers of MoneyWeek might remember that I've been warning
>>> about an impending housing slowdown in the UK since my first article on
>>> the subject appeared in May 2004.
>>
>> So he's been 'warning' about an 'impending' crash for TWO YEARS! During
>> which time, prices have risen! Some forecaster.
>
>
> Aha, I knew you'd be trolling in here!
> Irma
>
significantly longer than you dude :-)
--
Tumbleweed
email replies not necessary but to contact use;
tumbleweednews at hotmail dot com
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| Re: The crumbling housing market and the impending recession. [message #384756 ] |
Mi, 03 Mai 2006 10:57 |
|
In message <1146637465.404721.10260 [at] j73g2000cwa.googlegroups.com>, Troy
Steadman <troysteadman [at] yahoo.co.uk> writes
>
>We are obviously heading for a *big* housing correction, and to those
>jumping in at the moment with near 100% mortgages it will seem like a
>"crash". But a rare painting, or a beautiful woman, or a nice house,
>will always be desirable...at the correct price.
What's the right price for a beautiful woman?
--
Timothy
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| Re: The crumbling housing market and the impending recession. [message #384765 ] |
Mi, 03 Mai 2006 14:23 |
|
On Tue, 02 May 2006 23:58:48 GMT, "Virgils Ghost" <no [at] spam.com>
typed:
>"abelard" <abelard3 [at] abelard.org> wrote in message
><
>> as a more relevant (afaiac) measure....the current uk real inflation is
>> now around 11% so the rises are nothing like the appearances...
>> further....particularly london is even more a magnet for forrin 'refugees'
>> who want a 'safe' base....
>
>I wouldn't be surprised at that inflation figure, look at the growth of
>broad money (M4), it's running at the tune of 13.2% year-on-year, take off
>~2% GDP and you have your 11% of inflationary excess above the real
>supported growth of the economy.
>
> http://www.bankofengland.co.uk/statistics/m4/current/index.h tm
>
>Obviously this isn't reflected in the price of everything (e.g. Chinese DVD
>players) however it does go somewhere, undoubtedly the property market and
>increasingly equities, bonds (just look at the poor yields) and of course
>commodities.
you obviously have a better grasp of money than is common....
however, i have some problems with the way you are apparently thinking
and would like you to explain yourself further....
(dvd players go down as the technology matures and as volume increases...
it is also to the advantage of dvd sellers to get as many 'out there'
as possible and make the profits out of vastly 'overpriced' dvds...
>You cannot create so much liquidity on a global basis without blowing
>bubbles,
what is your reasoning for this?
why bubbles rather than general inflation?
> the central banks should be thankful so little has leaked into the
>real economy so far,
again i don't understand your reasoning here...read on
>increased lending and subsequent interest charges
surely interest charges relate to supply and demand for borrowing....
(yes, and probably more...but i'm not following your train of thought
properly)
>actually suck money out of the real economy of course,
now...why do you say this...
by what mechanism do you believe this 'suck/s money out of the economy'?
considering that the loans have given (those taking them) money...and
thence spending power....
> which can explain the
>predicament with retail in the UK.
certainly a 'bubble' is likely to redirect money away from (say)
retailing...is that your meaning?
>Mortgage Equity Withdraw running to the tune of 6% of post tax income can
>also explain the sort of consumer spending levels we've witnessed over
>recent years in the absence of high general wage inflation. However MEW is
>the pay rise that needs to be paid back, with interest, many will hope it
>can be inflated away,
indeed....imv most of it is being inflated away....
yet you seem then to ditch this *assumption*...why do you do that?
>yet the Bank of England only seem to care about wage
>inflation and not price inflation these days.
ok....
the boe of course does what the government/appointees tell them....
bye bye eddie george....
the government only care about fooling the sheep...that means frigging
the rpi....and lying and pretending that is 'inflation'
the government wants inflation...every gov't does....esp socialist gov't
like the present load of shysters...
http://www.abelard.org/inflation.htm
>So this all goes a lot deeper than the housing market, the modern day tulip
>bulb,
*assuming* it is 'a bubble'
>it will be interest to see how it all plays out. I would suggest a
>repeat of the 'hidden' crash in the late 70's, nominal prices were static
>yet real prices crashed upwards of 25% as the currency was debased and
>inflated away.
the figure i work on for the late 70s is more like 50%...
> This scenario resolves the crippling problem of debt in a
>deflationary environment.
fine....
>As for refugees, unless they come with £200k stuffed in their back pockets
>or are able to walk into £50k jobs I cannot see how they can directly
>support the market. Some Buy-To-Letter's may be able to pack a dozen into a
>single dwelling, that may help them drive their yield up and increase wider
>demand, I'm not sure if this is sustainable and whether they can offset
>increased borrowing costs.
i've miscommunicated on this bit...i was more focussed on those with pots
of cash buying at the upper end...
of course there are also many buy to let operations also feeding at that
trough....
regards....
--
web site at www.abelard.org - news comment service, logic, economics
energy, education, politics, etc 1,552,396 document calls in year past
------------------------------------------------------------ --------------------
all that is necessary for [] walk quietly and carry
the triumph of evil is that [] a big stick.
good people do nothing [] trust actions not words
only when it's funny -- roger rabbit
------------------------------------------------------------ --------------------
|
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| Re: The crumbling housing market and the impending recession. [message #384766 ] |
Mi, 03 Mai 2006 14:28 |
|
On Wed, 3 May 2006 09:57:15 +0100, "me [at] privacy.net" <me [at] Privacy.Net>
typed:
>In message <1146637465.404721.10260 [at] j73g2000cwa.googlegroups.com>, Troy
>Steadman <troysteadman [at] yahoo.co.uk> writes
>>
>>We are obviously heading for a *big* housing correction, and to those
>>jumping in at the moment with near 100% mortgages it will seem like a
>>"crash". But a rare painting, or a beautiful woman, or a nice house,
>>will always be desirable...at the correct price.
>
>What's the right price for a beautiful woman?
a good woman worth her weight in gold cost her weight in
diamonds confuseus
--
web site at www.abelard.org - news comment service, logic, economics
energy, education, politics, etc 1,552,396 document calls in year past
------------------------------------------------------------ --------------------
all that is necessary for [] walk quietly and carry
the triumph of evil is that [] a big stick.
good people do nothing [] trust actions not words
only when it's funny -- roger rabbit
------------------------------------------------------------ --------------------
|
|
|
| Re: The crumbling housing market and the impending recession. [message #384767 ] |
Mi, 03 Mai 2006 14:29 |
|
On 2 May 2006 23:24:25 -0700, "Troy Steadman" <troysteadman [at] yahoo.co.uk>
typed:
>Mel Rowing wrote:
>> whitely525 [at] yahoo.co.uk wrote:
>>
>> > You're forgetting the demand side of the equation and planning
>> > restrictions.
>>
>> He's forgetting a lot of things including (for England).
>>
>> Owner occupied stock 68%
>>
>> (1) Mortgaged 39%
>> (2) Owned outright 29%
>>
>> Rented stock 32%
>>
>> (3) Social landlord 19%
>> (4) Private landlord 13%
>>
>> http://tinyurl.com/huohz
>>
>> Of course no asset can appreciate in real terms indefinitely. That is
>> not disputed.
>>
>> Starting therefore, at the point where property prices hit a ceiling.
>>
>> Sub Groups (2) & (3) above amounting to some 48% of households are
>> unaffected.
>>
>> The majority of the mortgages (1) have been going for some time even if
>> the provider has been changed so as to bring down the average life to
>> 4-5 years. Therefore negative equity is only going to be problem in a
>> tiny minority of the cases.
>>
>> Even when in a position of negative equity a mortgagee has to take
>> certain considerations on board before taking the decision to
>> liquidate. The primary concern is that he will still need somewhere to
>> live and hence pay rent (a considerable proportion of his mortgage
>> liability). Liquidation has its own attendant cost (legal fees, estatge
>> agents etc) and, in the case of a negative equity situation
>> liquidation, does not clear the debt.
>>
>> Equity drawdowns are of course possible. There is a least an argument
>> that the importance of these are over egged. People draw down on equity
>> in order to take advantage of cheap credit. It's money they would be
>> inclined to borrow anyway but at higher rates. No cognizance seems to
>> be paid to the fact that a goodly proportion of drawn down money is
>> used for home improvements thus adding value to the underlying asset.
>> The worst scenario for the equity drawer is that he will move into
>> negative equity.
>>
>> Nonetheless, it is reasonable to expect some liquidations.
>>
>> There is but one sub group above (4) where the landlords may perhaps be
>> more tempted to cut and run. However, even here it's not a painless
>> decision. All the above costs still apply plus loss of rental income
>> during the sale period. Moreover liquidations will reduce the size of
>> this particular sector of the market causing upward pressure on rents
>> and at the same time easing the incentive to sell.
>>
>> Of course the rate of liquidations will be reflected in market prices.
>> The sharper these fall the more individuals in the rental sector will
>> be enabled to enter the market.
>>
>> There are no indications whatsoever of a house price crash with
>> thousands sleeping rough whilst properties stand empty. Markets don't
>> work like that and that is the final weakness of the idea. Markets
>> exhibit the properties of organisms. They don't stand still as
>> situations change. They react in many different ways simultaneously
>> just like a disturbed plate of jelly.
>>
>> I believe one of the links referred to the metaphor of a brick attached
>> to a parachute. That's pretty much the end game as I see it. However,
>> unlike some I will not say when. The reason why I will not say when is
>> that I have had past bitter experience in trying to second guess
>> markets. Now I treat them with respect.
>
>I think that's right. In a "crash" something hugely desirable, BT or
>C&W or Marconi, becomes virtually worthless, as those companies did in
>the "Tech" crash of 2000.
>
>We are obviously heading for a *big* housing correction,
please state your reasoning in the space provided....
regards....
>and to those
>jumping in at the moment with near 100% mortgages it will seem like a
>"crash". But a rare painting, or a beautiful woman, or a nice house,
>will always be desirable...at the correct price.
--
web site at www.abelard.org - news comment service, logic, economics
energy, education, politics, etc 1,552,396 document calls in year past
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all that is necessary for [] walk quietly and carry
the triumph of evil is that [] a big stick.
good people do nothing [] trust actions not words
only when it's funny -- roger rabbit
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| Re: The crumbling housing market and the impending recession. [message #384793 ] |
Mi, 03 Mai 2006 21:20 |
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"abelard" <abelard3 [at] abelard.org> wrote in message
news:f18h52to29k5sched0bdjit8t1ffgcs1q9 [at] 4ax.com...
<
>>actually suck money out of the real economy of course,
>
> now...why do you say this...
> by what mechanism do you believe this 'suck/s money out of the economy'?
People have generally enjoyed 4-5% in wage inflation, below the basic cost
of living, other essentials include paying their sizable mortgage each
month, what's left is discretionary, obviously a rise in one offsets the
other. Paying down loans and interest sucks up disposable income, which
depresses the retail sector.
If you are a bank or work in the financial sector is good news however,
provided such a squeeze doesn't drive people in default. Be under no doubt,
the money used to pay down interest is in detriment to every other sector of
the economy.
> considering that the loans have given (those taking them) money...and
> thence spending power....
Mortgage debt is a simple transference of wealth, it's a zero-sum game, even
those who have enjoyed run away house price inflation will face problems as
the next rung up is further away than ever. It's only useful if you're
selling up to move abroad or live in a tent, undoubtedly the tax man is also
grateful for his 40% IHT on an increasing number of estates.
As I mentioned, increased borrowing in the form of MEW and unsecured loans
has buoyed the economy and made up for lacklustre wage inflation over recent
years, capital expenditure from business certainly hasn't been driving
growth. However, we are not talking about longterm investment for the future
here, such loans are often used to fund short term consumption, like
holidays or new cars, their 'value' has already been passed through the
chain, only the hangover remains... the debt and interest.
This bubble is far in excess of the dot-com era.
<
> ok....
> the boe of course does what the government/appointees tell them....
> bye bye eddie george....
>
> the government only care about fooling the sheep...that means frigging
> the rpi....and lying and pretending that is 'inflation'
> the government wants inflation...every gov't does....esp socialist gov't
> like the present load of shysters...
You have a certain way with words. But you know all this, just look at gold,
a traditional inflationary hedge, the BoE and co and try and cook the books
when it comes to inflation and they can try and suppress secondary effects,
however they cannot fool all of the people all of the time. When our central
bank is 'printing money'/creating credit at the annual rate of 14% people
aren't going to be holding on to paper.
VG.
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