Property prices will have stabilised by this time next year. Yes or NO?

Generali

StevieJ wrote: »

Remind me when were house price increases last stopped in their tracks by such a dramatic withdrawal of credit? We can then discuss the historical perspective.

1974. The real (inflation adjusted) GDP of the UK was pretty much flat overall between 1974 and 1981. This means a drop in the average standard of living in the UK.

The following things are different now:

- The public sector is much smaller due to most nationalised industries being sold although this is being gradually reversed by Labour (Network Rail & banking industry).

- The free movement of capital across the world makes it easier to fund a trade or budget deficit. It also means that things can move against you very fast as Iceland is finding out to its cost.

- There are a lot of people looking to retire in the next few years. Many of their pensions are entirely unfunded (public sector). Most of the rest are underfunded (private sector). For the majority of these people the house they live in is by far their biggest asset.

- Globalisation means that you can't demand a payrise. If you go on strike you will find your job moves abroad. The shift of employment from the public to the private sector has weakened trade unions as have changes in the law.

- The Bay City Rollers are unlikely to be at number 1 in the near future.

Most of these things suggest to me declining disposable real incomes in the UK for a while and also falling house prices as more people look to fund their retirement using their home for example.

Cannon_Fodder

It is not just reducing interest rates that will lead to house prices rising.

After all, I'll bet that 60%+ of us have lived through double-figure rates. Its not affordability, at all.

Its liquidity. Trust between the banks. That cannot return overnight.

I did say above that stable is possible at the 12 month mark, as in say 6 months, it is feasible for the banks to have opened up their books to a point where they can trust each other, then another 6 months for that to have an effect...

But I suspect any stability will be temporary. Before 12 months the recession should be hitting, and that's a slower process.

I looked at the 90s crash graph, earlier. Might have been the Halifax one. Already had the same % drop in 1/5 of the time...

Found it...
http://www.housepricecrash.co.uk/graphs-last-house-price-crash.php

That looks really tame, compared to what we have just been through, but could be repeated as the tail of this crash, when the crunch factors dissipate and the recession takes over...

monkeymaster

globalds wrote: »

There are many sound reasons why the economy performed consistently well over the last ten years or so.Like property itself ...UK was seen as a good place to invest.

You've been listening to Gordon Brown too much.

Feel free to explain these sound reasons why the UK economy is in such good shape... :rotfl:

Financial services doesn't count as that has now been found out to be a lie and is going down the toilet.

Also remember that debt is not wealth and is in fact just stealing from the future so anything based on consumer borrowing such as rising house prices isn't based on sound economic funimentals so does not count.

You can list things that we can actually manufacture, export and that add value to our economy here... You may refer to the link below in your answer :rotfl:

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3372769/Britain-to-be-worst-hit-by-the-impending-European-recession.html

North_Sea_Bubble

Cannon_Fodder wrote: »

Its not affordability, at all.

Its liquidity.

No, it's solvency !

ModernSlave

a) property prices in decline

Reason: Global recession --> banks afraid to lend --> no more cheap money sloshing around for people to buy property (or wine or art or any of the other bubbles for that matter).

Plasticman

I believe that they will be declining but at a slowing rate (moving towards stability).

Generali wrote: »

- The Bay City Rollers are unlikely to be at number 1 in the near future.

Now that would be REALLY scary :eek:

globalds

monkeymaster wrote: »

You've been listening to Gordon Brown too much.

Feel free to explain these sound reasons why the UK economy is in such good shape... :rotfl:

There are many sound reasons why the economy performed consistently well over the last ten years or so.Like property itself

I can only defend my own words .
There is no denying the economy performed well during the last decade.
We have pursued an open market and fair trade. We have not supported failed industries and within the confines of a nation that seems to favour social welfare We have allowed individual wealth acquisition to flourish .
To coin a phrase it seems the UK has tried to find a "middle way".This has been a successful policy in general .
Would a huge manufacturing base be a defence from these recessive forces ...I don't think it would....The speed of society to churn it's workforce from a redundant sector is a much more valuable asset.

I would say the UK has put itself in quite a strong position in comparison to many other economies to weather a global change of season.

I suppose only time will tell.

StevieJ

Generali wrote: »

1974. The real (inflation adjusted) GDP of the UK was pretty much flat overall between 1974 and 1981. This means a drop in the average standard of living in the UK.

The following things are different now:

- The public sector is much smaller due to most nationalised industries being sold although this is being gradually reversed by Labour (Network Rail & banking industry).

- The free movement of capital across the world makes it easier to fund a trade or budget deficit. It also means that things can move against you very fast as Iceland is finding out to its cost.

- There are a lot of people looking to retire in the next few years. Many of their pensions are entirely unfunded (public sector). Most of the rest are underfunded (private sector). For the majority of these people the house they live in is by far their biggest asset.

- Globalisation means that you can't demand a payrise. If you go on strike you will find your job moves abroad. The shift of employment from the public to the private sector has weakened trade unions as have changes in the law.

- The Bay City Rollers are unlikely to be at number 1 in the near future.

Most of these things suggest to me declining disposable real incomes in the UK for a while and also falling house prices as more people look to fund their retirement using their home for example.

Are you saying that their was a sudden removal of credit in 1974?

Surely if people are trying to fund retirement using their homes then this would put pressure on the lower end of the market as people trade down (supporting prices lower down the hierarchy).

In addition all those things you mention were in existence when house prices were bubbling, so the real issue comes back to credit. When the the credit markets unfreeze house prices will stalilise.

As for the BCR expect their greatest hits to be released next week.

monkeymaster

globalds wrote: »

I can only defend my own words .
There is no denying the economy performed well during the last decade.
We have pursued an open market and fair trade. We have not supported failed industries and within the confines of a nation that seems to favour social welfare We have allowed individual wealth acquisition to flourish .
To coin a phrase it seems the UK has tried to find a "middle way".This has been a successful policy in general .
Would a huge manufacturing base be a defence from these recessive forces ...I don't think it would....The speed of society to churn it's workforce from a redundant sector is a much more valuable asset.

I would say the UK has put itself in quite a strong position in comparison to many other economies to weather a global change of season.

I suppose only time will tell.

It';s performed well because of debt which at some stage has to be paid back and is therefore unsustainable.

I dispute we're in a strong position and would argue that we're in a worse position than most. Let's see how we compare to countries with a strong manufacturing base like Germany who haven't had the debt expansion we've had over the next few years.

monkeymaster

StevieJ wrote: »

When the the credit markets unfreeze house prices will stalilise.

What makes you think credit markets will unfreeze? What do you mean by unfreeze and when do you think it will happen?

Banks aren't going to start lending freely while house prices are falling and prices aren't going to stop falling until there is a MASSIVE increase in lending. Catch 22 and the housing market is destined to find it's natural level.

We've yet to see what regulation will come out of recent events as the focus has been on stablising the system, but regulation will have to come and that could impact the recovery.