'We've reached a tipping point' Signs of house price weakness

bdb303

Following this discussion with interest. While I don't wish to speculate on whether a crash will be taking place or not, I don't believe the short-term prospects for the housing market are as positive as some of the sunshine pumpers on here seem to believe. I find it particularly interesting that the share prices of property-related companies such as Foxtons and Barratt have declined significantly over the last few months, which if anything you would expect to have increased (rising house prices, economic recovery gaining traction).

hpc_troll

HAMISH_MCTAVISH wrote: »

I'm pre-empting the usual fallacious arguments about house price to income ratios that all our visitors from HPC try to make. Even though they've been discredited on multiple threads in the past.

Again, it does seem a little unfriendly, to say the least, that you elect to anticipate the 'fallacious argument' that I am going to make. It is all very fine for you to suppose that your "visitors from HPC" are some fungible lump, all sharing the same beliefs and all wanting the same thing, but doesn't common decency require that initially at least, you first consider the possibility that this is not in fact the case? Isn't it a little dehumanising to determine that the extent of my identity is whatever you choose to attribute to some group with which I have chosen to identify. hpc posters are an extremely catholic church. The view that lower house prices would be welcome is probably about the only thing we have in common.

HAMISH_MCTAVISH

hpc_troll wrote: »

Well, it seems self-evident to me that the people actually buying houses will be those who can afford to so - hence when you look at the new lending, you'll find the figures you give.

Beautiful....

That's the answer I was hoping you'd come up with.

So in essence you accept that people who buy houses have a higher income and/or wealth than the average of the entire population, and that houses are therefore not unaffordable for current house buyers.

In other words, people are clearly not overstretching themselves to buy at current price levels, on average.

Lets hold that thought for a moment and move onto this.....

Without being intentionally obtuse, I can't really see your point.

Ferraris.

Lets take the Ferrari analogy and explore it a bit more.....

Everyone wants a Ferrari. However Ferrari only make just shy of 7,000 vehicles a year.

Ferrari have therefore been able to raise prices until supply and demand equalise.

Just as.....

Everyone wants a house. However the UK only built just over 100,000 houses last year.

The housing market therefore has been able to raise prices until supply and demand equalise.

Which leaves us with....

People that buy houses can afford to do so, just as people that buy Ferraris can afford to do so.

Prices are high because they are both goods in scarce supply, and the market uses price to ration them.

And as neither current house or Ferrari buyers are overstretching themselves to buy, where is the momentum for prices of either to fall?

Crashy_Time

CLAPTON wrote: »

I don't recognise that as the cause of the financial meltdown

People were encouraged to borrow money to cover declining living standards in the west, bankers realised that if you take something really emotive and necessary (like shelter) and make it seem much more valuable than it actually is, then you could get people to borrow very large sums (at interest) to "buy" it. It had been done before with tulip bulbs, but they didn`t think they could run that scam again, and besides you can`t sit in a tulip bulb and watch Kirsty and Phil?


The little magic money (for the bankers) trick worked a treat, but the politicians wanted in on the game. They said that the little people should be allowed to feel "wealthy" so that they would vote for them, and turn a blind eye to all their scams (often involving their chums the bankers) The bankers said "Ok, lets get them borrowing against the VALUE of their house as well as borrowing to live IN their house. If they don`t pay back we take the house back and sell it on at profit, and we can do this because we have got them all believing that if they don`t borrow for property they will miss their place on The Golden Ladder. Houses always go up in value now because of this so we will get our money back and some.


The bankers also packaged up all this debt into exotic "instruments" that the little people wouldn`t understand and sold it back and forth to each other, making up exotic names for the packages when DogTurd would have been more accurate. They would buy some DogTurd and tell their investors that it was Prime Mortgage Borrowing by people who polished Grouse willies on the Queen`s estates (American "investors" lapped it up) when really it was sub-prime borrowing from people who made toothpaste in the North of England, or worked in a warehouse in Chicago.


One day the little people who had borrowed all the money couldn`t keep up with their payments, and because no one knew where their loans lay in the layers of DogTurd all the bankers panicked in case they got some on their hands, and stopped playing with each other. At this point the Big Government had to step in and wipe the bankers noses with freshly made money because they were crying so hard. The bankers held on to the money this time because they were scared and the little circle jerk of lending/borrowing/passing round the Mulberry Bush came to a halt, and so did Mr and Mrs Daily Mail`s Free Cash Machine (their house) They stopped spending their debt into the economy, and the Big Government thought just making tons of money and giving it to their chums the bankers to make them better would get everything back on track. It didn`t.


So now the only way the banks can make money from property is to get all better again (re-capitalise with their free money from the central bank) and cause a property crash so they can say to more people "Look how cheap property is....you better borrow to buy some". The volume of new lending will make banker man very happy, because after all, if you paid off your mortgage years ago you are not making money for banker man, and he doesn`t really care how much your house is worth any more, his losses are covered. The politicians still need their votes, so they will pretend to be HelpToBuying, but after a while the bad banker man will pull the extra funds away so they can get some lending volumes as outright owners are forced to drop their asking prices.


I am actually surprised they didn`t try tulip bulbs again, the public would probably have gone for it.

Rota

hpc_troll wrote: »

Can you delete your entire posts over here? If so, tremendous,

Brilliant! Even your HPC mates think you are an economic illiterate Crashy.

Don't forget to have a beer when the "ponzi" breaks down. :beer:

hpc_troll

HAMISH_MCTAVISH wrote: »

Beautiful....

That's the answer I was hoping you'd come up with.

So in essence you accept that people who buy houses have a higher income and/or wealth than the average of the entire population.

I am afraid that I will have to stop you there - I accept no such thing and don't have the faintest idea where you got it from. The Ferrari garage was to illustrate the effect of self-selection in general and not the idea that first time buyers are wealthy. Let's be fair about this, I've danced to your tune a little, but if we are to proceed in good faith you'll have to explain to me how you've jumped from the answer I gave to view that you've attributed to me.

Again, you seem to be projecting onto me some fiction of your own creation - that is not going to give us a debate, so I'll ask you to restrain yourself to attributing to me opinions that are evident in what I write, rather than setting me up as a generic hpc straw man, as imagined by you.

Jack_Johnson_the_acorn

Crashy_Time wrote: »

I am actually surprised they didn`t try tulip bulbs again, the public would probably have gone for it.

WOW. You've just gone full retard. Never go full retard.

HAMISH_MCTAVISH

hpc_troll wrote: »

you seem to be projecting onto me some fiction of your own creation -

I didn't select your username....:)

OK, back to basics.

Do you think house prices are too high? If so, why?

hpc_troll

Rota wrote: »

Brilliant! Even your HPC mates think you are an economic illiterate Crashy.

Don't forget to have a beer when the "ponzi" breaks down. :beer:

Rota - Sorry, I didn't get a straight answer - is it actually possible to delete your posts over here?

BTW - I think you misread my post. I was saying that I have posted some complete tosh over the years. After all who would be fool enough to suppose that they were right all the time, especially on a complex topic?

HAMISH_MCTAVISH

hpc_troll wrote: »

is it actually possible to delete your posts over here?

Yes.

However if someone has quoted them the quote in the other persons post will remain.