Rationalist logic = poor predictions. Why the uber bears will be wrong.

moggylover

Conrad wrote: »

I've never met met a Man in the street that factors inflation in.
I've found a few newbuilds and the odd repo with falls over 40%. The rest of the market seems to have fallen around 15%.

Ah, but most of the "rest of the market" isn't selling;)

stevetodd

abaxas wrote: »

As ever the OP misses the elephant in the room.

No-one has the right to finance. Everything bought with units of debt are priced in units of available credit.

Hey come on it isn't always easy to spot the elephant if it's behind the sofa

macaque_2

moggylover wrote: »

Ah, but most of the "rest of the market" isn't selling

And the reason is that they are still trying to sell at bubble prices.

StevieJ

macaque wrote: »

This is a somewhat naieve analysis. Credit dissapeared when people woke up to the reality that the emperor was as naked as a Jay bird. The emperor is still naked.

No it didn't, the banks reduced lending (because they lost a lot of money in US property backed securities), I will keep it simple so you can understand

abaxas

Conrad wrote: »

25% drop should mop up lost credit availability and at the same time attract more of those that can buy, for example those with cash a plenty earning zilch in interest
I recognise credit take - up is down by much more than 25% right now, but that will slowly change.

Yes, but they cant make the market. The housing market (or ladder as others call it) is defined by the bottom and those at the bottom being able to rent/buy.

You simply should never invest in a market where there is too much product out there and not enough potential purchasers. Remembering that in terms of mortgage availability there is less money in the system now as there was in 2001 and risk premiums are huge.

Property is a one way bet. Nothing in the short/medium term can fix that. You cant buy 2 apples for 20p when they are 20p each.

StevieJ

abaxas wrote: »

Yes, but they cant make the market. The housing market (or ladder as others call it) is defined by the bottom and those at the bottom being able to rent/buy.

You simply should never invest in a market where there is too much product out there and not enough potential purchasers. Remembering that in terms of mortgage availability there is less money in the system now as there was in 2001 and risk premiums are huge.

Property is a one way bet. Nothing in the short/medium term can fix that. You cant buy 2 apples for 20p when they are 20p each.

I am sure I heard that a couple of years ago

abaxas

StevieJ wrote: »

I am sure I heard that a couple of years ago

Yep, property only ever goes down. Nothing can stop it in the medium term, no-one can have a crystal ball greater than about 4-5 years.

rotate

Conrad,
It is very dangerous to state that bancruptcy clears debt and helps free up the market,it may do on a personal level for the person going bancrupt.However the cash/credit debt does not dissapear,someone has to carry that debt,be it banks,finance houses,retailers or manufacturers.
Banks,Building societies and finance houses raise their lending rates to recover their losses and become much more choosy as to to whom they lend.Retailers and manufacturers raise prices and/or cut staff and if they have too much debt go bancrupt and shut.
Individual bancruptcies are not a free get out of jail card for our problems.

StevieJ

macaque wrote: »

I won't waste my pixels listing the flaws in your arguement but just point out that house prices are influenced by:

Affordability: UK house prices are amongst in the highest in the world
Personal wealth: UK personal debt is the highest in the world
Plentiful jobs: Jobs are dissapearing at a rate of over 1/2 million a year and accelerating
High salaries: Remaining employees are taking pay cuts to keep their jobs
Irrational exuberance: This has been replaced by rational gloom
Demographics: Eastern Europeans are leaving on every plane out of here

You can pray all you like for a miracle but it won't happen. The wealth to sustain extravagant house prices just isn't there (and never was). The illusion of wealth only lasted for a long as banks were allowed to be reckless with other people's money.

Our real problem is not the credit crunch but people's attitude to real jobs and hard work. We have become too greedy and picky about the things we are prepared to do. We cannot go on being a nation of consultants, advisors, executives and administrators. We cannot rely indefinitely on importing cheap labour to do our real work.

Without being nasty, it is the very existance of jobs like 'mortgage advisor' that sums up all that is wrong in the UK. What do you do for our balance of payments? How do you make us happier and richer? I don't pay a 'car advisor' £2k when I buy a car. So why on earth should I pay a mortgage advisor?

I wont waste MY pixels picking out the flaw in your argument

abaxas

macaque wrote: »

Without being nasty, it is the very existance of jobs like 'mortgage advisor' that sums up all that is wrong in the UK. What do you do for our balance of payments? How do you make us happier and richer? I don't pay a 'car advisor' £2k when I buy a car. So why on earth should I pay a mortgage advisor?

Excellent point. We live in a society of the 'intermediary' with lots of people involved between the product and the buyer.

In terms of your 'mortgage adviser', most are just the pension advisers of yesteryear, reborn into a new market. As they will convert to the next 'financial boom' area.

Endowment mortgage anyone?