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Jewish Chronicle Article Nov 2008
Pimperne1
Posts: 2,177 Forumite
Lest we forget:
Worse than the 1990s
"Jonathan Davis is a chartered financial planner at City investment advisers Armstrong Davis. He was so convinced that there would be a property meltdown that he founded a website called housepricecrash.co.uk dedicated to charting the progress of the bursting property bubble.
In 2007 he said: "Society has allowed the housing bubble to grow. It has been a spending spree beyond all reasonable economic sense. The global system needs to shock itself out of its complacency and it won't be pretty. The '90s are nothing compared to what we are about to experience."
In 2008, Davis feels that his predictions were actually too optimistic. "At that time I was forecasting a 25 per cent fall from the peak. Now, given the bankruptcy of some of the largest financial institutions in the world I've revised my forecast to 45 per cent.
"I predict that London and the South East will be one of the most severely affected areas because the UK economy has been predicated on two things in the past few years - the housing market and financial services - in other words everything that happens within a 100-mile radius of Trafalgar Square."
While many potential first-time buyers are still complaining that they cannot secure a mortgage, Davis, who has rented since 2002, has a different view.
"How would it benefit first-time buyers to get a mortgage now? I do plan to buy a property but certainly not for the next two or three years. It is far too early to bag a bargain. At some point in the future, the cost of a mortgage will be below the cost of renting - that is when to look for a property.
"There is also a more esoteric gauge. Historically, when the average price of a London property has been equivalent to the price of 300 ounces of gold, that has been an interesting time to buy. At present, the price of 300 ounces is £150,000. Gold will almost certainly rise. When it gets to £225,000, property prices may well be equivalent.
"The bust has been waiting to happen for several years. There are those who said the price would plateau and then continue to go up. This is based on zero historical precedent. There has never been an asset bubble in history which has deflated gently. I admit the bubble went on longer than I expected but that just means the bust will be bigger.
"Prices nationally are definitely going back to 2003, probably 2002. there is a one in two chance of them going back to 1999 levels."
Although Davis is happy that he was able to warn people that a crash was on the horizon, he says that it cost him a lot of business. "In the short term it hindered us because no one wanted to listen to what I was saying. However, in the last year everyone has been listening. We have grown 35 per cent in the past year and saved our clients from enormous losses."
Worse than the 1990s
"Jonathan Davis is a chartered financial planner at City investment advisers Armstrong Davis. He was so convinced that there would be a property meltdown that he founded a website called housepricecrash.co.uk dedicated to charting the progress of the bursting property bubble.
In 2007 he said: "Society has allowed the housing bubble to grow. It has been a spending spree beyond all reasonable economic sense. The global system needs to shock itself out of its complacency and it won't be pretty. The '90s are nothing compared to what we are about to experience."
In 2008, Davis feels that his predictions were actually too optimistic. "At that time I was forecasting a 25 per cent fall from the peak. Now, given the bankruptcy of some of the largest financial institutions in the world I've revised my forecast to 45 per cent.
"I predict that London and the South East will be one of the most severely affected areas because the UK economy has been predicated on two things in the past few years - the housing market and financial services - in other words everything that happens within a 100-mile radius of Trafalgar Square."
While many potential first-time buyers are still complaining that they cannot secure a mortgage, Davis, who has rented since 2002, has a different view.
"How would it benefit first-time buyers to get a mortgage now? I do plan to buy a property but certainly not for the next two or three years. It is far too early to bag a bargain. At some point in the future, the cost of a mortgage will be below the cost of renting - that is when to look for a property.
"There is also a more esoteric gauge. Historically, when the average price of a London property has been equivalent to the price of 300 ounces of gold, that has been an interesting time to buy. At present, the price of 300 ounces is £150,000. Gold will almost certainly rise. When it gets to £225,000, property prices may well be equivalent.
"The bust has been waiting to happen for several years. There are those who said the price would plateau and then continue to go up. This is based on zero historical precedent. There has never been an asset bubble in history which has deflated gently. I admit the bubble went on longer than I expected but that just means the bust will be bigger.
"Prices nationally are definitely going back to 2003, probably 2002. there is a one in two chance of them going back to 1999 levels."
Although Davis is happy that he was able to warn people that a crash was on the horizon, he says that it cost him a lot of business. "In the short term it hindered us because no one wanted to listen to what I was saying. However, in the last year everyone has been listening. We have grown 35 per cent in the past year and saved our clients from enormous losses."
0
Comments
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:rotfl::rotfl::rotfl::rotfl::rotfl::rotfl::rotfl:“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
...Prices nationally are definitely going back to 2003, probably 2002. there is a one in two chance of them going back to 1999 levels."...
well, we got back to 2004 prices exceptionally quickly. i find it very difficult indeed to believe that 2003 prices would have been avoided without ZIRP & QE.FACT.0 -
“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
Lest we forget:
Worse than the 1990s
"Jonathan Davis is a chartered financial planner at City investment advisers Armstrong Davis. He was so convinced that there would be a property meltdown that he founded a website called housepricecrash.co.uk dedicated to charting the progress of the bursting property bubble.
Pimp you idiot, JD might be a nutter
, but he didn't found HPC. Everyone knows it was started by Sibley :rotfl: 0 -
HAMISH_MCTAVISH wrote: »definitely:
Indisputable; certain; without doubt
JD's clearly a bit bonkers but that IMO was more plausible, honest, prediction than some of the filth being chucked around by the usual VI suspects in 2008, e.g. http://press.assetz.co.uk/articles/4038.html predicting fairly big HPI for 2008 even before anyone could have known that ZIRP would come quite quickly.FACT.0 -
Jonathan Davis said; At some point in the future, the cost of a mortgage will be below the cost of renting - that is when to look for a property.
"There is also a more esoteric gauge. Historically, when the average price of a London property has been equivalent to the price of 300 ounces of gold, that has been an interesting time to buy.
So according to JD, the right time to buy a house is now.
DCLG average London house price £347,271...
Gold price today is £1147.
Ounces required to buy a London house =302.
http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/8728133/Buying-a-house-is-cheaper-than-renting-for-first-time-buyers.htmlNew research shows that the average monthly cost associated with buying a two-bedroom flat for a first-time buyer is around £567. This is £110 lower than the typical rent paid on an equivalent property.
Interesting.
I'll bet old JD hadn't planned on the right time to buy being when prices on average were just 10% or so below peak (Nationwide), but he can't very well backtrack now.:rotfl:
Anyway, have fun with it Pimp, that may be worth a thread of it's own.:beer:“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
It shows the true state of the bulls when you need a thread like this to keep you going. Enjoy!0
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It shows the true state of the bulls when you need a thread like this to keep you going. Enjoy!
Lets be honest, the crash never came. We are destined to be posting on here forever if we are waiting for a crash.
Although if you include "real" prices then of course the crash has happened - its just that this didn't help affordability for those who were awaiting a crash.0 -
HAMISH_MCTAVISH wrote: »So according to JD, the right time to buy a house is now.
DCLG average London house price £347,271...
Gold price today is £1147.
Ounces required to buy a London house =302...
you [unusually] make a fair point about valuing houses in gold. doing so is a nonsense. houses being cheap relative to gold could mean almost anything, e.g.:
1 - houses at fair value, gold overvalued;
2 - houses undervalued, gold at fair value;
3 - houses very undervalued, gold undervalued; or
4 - houses overvalued, gold very overvalued.
stick with rental yields & affordability for looking at pwoperdee IMO.FACT.0 -
Lets be honest, the crash never came. We are destined to be posting on here forever if we are waiting for a crash.
Although if you include "real" prices then of course the crash has happened - its just that this didn't help affordability for those who were awaiting a crash.
I agree. The crash was predicted based on expectations of certain behaviour from politicians and banks. Things didn't happen in that particular way.
We live in peculiar times and no one should be so sure of anything anymore.0
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