bloomberg housing-bubble-may-pop-entire-u-k-economy

cells

Generali wrote: »

If I was looking at the sector as a perpetual bond I'd want to know what has changed to reprice the asset class and whether that change was permanent.

why do you think bonds have been repriced to yield such low figures? Permanent or temporary

We have kind of had this discussion before. My view is as the world advances and gets more secure and life expectancy goes up and a lot of the heavy capital intensive sectors get built out or are replaced by lower capital industries then there is only one way for rates to go and thats down down down until it gets to zero. We are kind of there now. Personally I think it will be a mistake if the base rate is increased past 2.5% in this cycle (and the next will likely be lower yet)

Generali

cells wrote: »

why do you think bonds have been repriced to yield such low figures? Permanent or temporary

We have kind of had this discussion before. My view is as the world advances and gets more secure and life expectancy goes up and a lot of the heavy capital intensive sectors get built out or are replaced by lower capital industries then there is only one way for rates to go and thats down down down until it gets to zero. We are kind of there now. Personally I think it will be a mistake if the base rate is increased past 2.5% in this cycle (and the next will likely be lower yet)

Temporary. They reflect low base rates & QE.

If interest rates do remain at ~0% then the prices of assets can remain as they are. The problem is, nominal interest rates won't remain at 0%.

Aberdeenangarse

Crashy_Time wrote: »

Asking prices are heading down though.

What year Crashy? Give us another prediction :rotfl:

Crashy_Time

Aberdeenangarse wrote: »

What year Crashy? Give us another prediction :rotfl:

I predict a LOT of voids for Aberdeen landlords next year, how`s that? :rotfl:

cells

Generali wrote: »

Temporary. They reflect low base rates & QE.

If interest rates do remain at ~0% then the prices of assets can remain as they are. The problem is, nominal interest rates won't remain at 0%.

But surely the efficient capital markets and the wiz kids would price in this temporary change if it was indeed short term. Ten year gilts are still at ~1.8% and 30 year gilts at 2.51%

At least they seem to be kind of on my side of the argument. They seem to think long term rates are going to stay very low. 10-30 year gilts/bonds would not trade at 1.8-2.5% if they thought nominal rates would return to 5%

of course this is not to say they are correctly pricing gilts/bonds. clearly they did quite a poor job of predicting the crash in yields from ~5% towards 0-1% so maybe they are making a mistake this time by not pricing 0-1% long term bonds towards ~5%

who knows, all of the markets are about predicting the future and there are probably compelling arguments one way or the other.

mystic_trev

mystic_trev wrote: »

I expect Crashy will be telling us how House prices are crashing in Aberdeen, which for some reason he thinks is a 'barometer' for the rest of the UK!

Your nothing if not predictable!

Crashy_Time wrote: »

I predict a LOT of voids for Aberdeen landlords next year, how`s that? :rotfl:

mayonnaise

What's with this obsession over Aberdeen prices?
Is it simply because Hamish (who is always right) lives there?

Crashy_Time

mystic_trev wrote: »

Your nothing if not predictable!

Aberdeen is a barometer for what happens when the money that drives a bubble dries up, it will be a graphic lesson on how a property price/rent crash unfolds. Aberdeen`s fortunes will affect sentiment right across the UK because it will just be one more example of how we are not "leading" any more. All we need then is another banking crisis to turn the wider UK into HPC central. Seriously, how many of the mug BTL punters posting on here would have even dreamed a year or so ago that they would become the new favourite tax target, and that the richest city in the UK outside London would go belly up?

Aberdeenangarse

Crashy_Time wrote: »

I predict a LOT of voids for Aberdeen landlords next year, how`s that? :rotfl:

There appear to be a lot of voids inbetween your ears!

Crashy_Time

mayonnaise wrote: »

What's with this obsession over Aberdeen prices?
Is it simply because Hamish (who is always right) lives there?

It is because Hamish who has posted about "fundamentals" that will always drive HPI is going to have to re-educate himself about what fundamentals are.


Also because the Aberdeen situation will affect Scotland and the wider UK (don`t forget that a large % of workers in Aberdeen probably support mortgages on homes and BTL`s elsewhere in the UK)


And because it will be a clear example of what a bust looks like and how the over-leveraged can expect to fare in a wider UK crash.


And finally it is because Hamish suddenly doesn`t want to engage in conversation about Aberdeen house prices and rents :rotfl: I have been telling him for years how cheap rent can be in Edinburgh, seems his spread-sheets for rental income were not set to go that low :rotfl: