Nationwide - up 0.9% MoM

mdb99jh

I just wonder if we're about to enter the largest bulltrap in history.

At the moment, there is a feeling of "prices have dropped, interest rates are low, maybe it's time to buy?". As a result, we're seeing a little bit of a flattening out in the market.

However, there is a big player that hasn't come into effect yet: high inflation and soaring interest rates. These two things are entirely possible (and even likely IMHO) at some point in the next year or two. This would lead to big problems for a lot of over-borrowed home-owners who, at the moment, are coping quite easily. Up till now, the drop in prices has been a result of restricted credit to FTBs and sentiment, but what will happen when even bigger forces like 10% interest rates come into play? Just as the 90's crash was initiated by a recession, maybe phase II of this crash will be initiated by the big "downturn" which is yet to kick in properly.

Thoughts/comments?

the_ash_and_the_oak

Really2 wrote: »

Because prices would have to fall 3% a month every month to be larger than last years falls for the rest of this year.

don't get this. if they fall 3% every month for the rest of this year surely that would be a larger than 20% fall in year (regardless of what happened in previous year?).

(wait - we are talking here about a 20% fall 1 jan 09 to 1 jan 10 or did i misunderstand?)

Rochdale_Pioneers

As others have said one month doesn't prove anything. But, an increase tied in with a jump in the number of mortgage transactions does demonstrate signs of life in what had been a dead market.

Be interesting to see what next month brings.

Really2

mizzbiz wrote: »

, although I think, having looked at 1989-1995 figures that we may see a long period of very small declines.

I agree there will still be some big month drops this year but I think we are now showing signes we are around 9 months away from the stagnation phase (bottom)

Good luck:)

ad9898_3

mizzbiz wrote: »

Can I ask a question or two?

1. Why is it bad that house prices are falling as opposed to rising?
2. What benefit comes to the majority for house prices continuing to rise as opposed to stagnating or declining?
3. Why, (really2), is it unlikely that they will still have huge falls, despite real historical evidence that uch circumstances are possible, indeed likely?

I feel like I am missing something! I think house prices should fall as much as possible, for the benefit of everyone. I also think they will do so, as my post above demonstrates.

(And before you start calling me for renting, I actually own my own house!)

1. Because most of the population are on the 'escalator', and if you are on, or have just got on, you feel wealthier if the escalator keeps going up.

2. Because as in point one, people see the debt that they acquired to get on the ladder as an investment, if they go up, they feel that they are wealthier

3. This is VI (no offense Really2;)), most people who are on the 'escalator' want it to carry on upward forever, which seems strange as if they have children, their children are likely to suffer a lifetime of debt on a relatively small house. Those people who are yet to jump on the escalator, would prefer it to stop or go in reverse, again VI.

Hope that answers your questions.

Really2

the_ash_and_the_oak wrote: »

don't get this. if they fall 3% every month for the rest of this year surely that would be a larger than 20% fall in year (regardless of what happened in previous year?).

(wait - we are talking here about a 20% fall 1 jan 09 to 1 jan 10 or did i misunderstand?)

Nominaly. In realility a 10% fall last year is bigger than a 10% fall this year.;)

If you get what I mean. (I have not worked thout acurately but I would say it would be 9 months of around that to = the same nominal falls.)

Wookster

Really2 wrote: »

Nominaly. in rality a 10% fall last year is bigger than a 10% fall this year.;)

If you get what I mean.

What is going to support property prices at their current levels, above the long term average?

JonnyBravo

mizzbiz wrote: »

Can I ask a question or two?

1. Why ....
2. What .....
3. Why....

I hope you check your bank accounts very carefully

the_ash_and_the_oak

Really2 wrote: »

Nominaly. in rality a 10% fall last year is bigger than a 10% fall this year.;)

If you get what I mean.

yes...but I still don't really get you. you said (I think?) the reason a 20% fall in 09 was unlikely because the monthly falls would have to be bigger than the monthly 08 falls? i figured falls of <2% per month throughout the year would still result in a 20% yoy fall and that it wouldn't need greater than 3%ers

fwiw i'm not saying it will hit 20% yoy at end of 2009. i think somewhere between 10 and 15 imo. same again in 2010

Really2

ad9898 wrote: »

1. Because most of the population are on the 'escalator', and if you are on, or have just got on, you feel wealthier if the escalator keeps going up.

2. Because as in point one, people see the debt that they acquired to get on the ladder as an investment, if they go up, they feel that they are wealthier

3. This is VI (no offense Really2;)), most people who are on the 'escalator' want it to carry on upward forever, which seems strange as if they have children, their children are likely to suffer a lifetime of debt on a relatively small house. Those people who are yet to jump on the escalator, would prefer it to stop or go in reverse, again VI.

Hope that answers your questions.

I want a stable economy for my children first.
House prices can go up below inflation for ever as far as I care as long as the children's future is secure.

A 50-70% drop does not = a good future for my children as the economy would be fooked.

So Sorry I think you are thinking I am advocating rises which is incorrect.

What I am doing is hoping for stability.;)