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A salutary time capsule of house price predictions - from 1996
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westernpromise
Posts: 4,833 Forumite
Chuck made a comment in the thread about the ever-receding London top:
While that is certainly quite funny, I still think my favourite Usenet poster from 1996, who argued that transaction volumes suggested prices still had further to fall, tops everything in the Couldn't Possibly Have Been More Wrong About House Prices stakes.
Here is the thread in question.
https://goo.gl/b3wewO
Posted to the newsgroup uk.finance and entitled "Buy a house ***now***", the thread is a bit of gem for terrible, terrible crashtroll predictions. The OP, one P. Burridge, began with a well-argued view suggesting that for several reasons now might be a very good time to buy a house.
Many of the responses are pure Crashyesque gold dust, and for fun, I've bolded below the crashtroll clich!s from 1996 that we are still hearing in 2016. Many crashtrolls are perhaps unaware of quite how far back their favourite clich!s go, in the same way that teenagers are often surprised to learn from ther parents that get-rich-quick chain letters are not a new idea.
"IMO prices will probably not change vey much in relation to earnings for a long time to come." - comment by Ian Dickson, 06/01/1996
"no amount of "talking up the market" by vested interests has produced results....[a house] aint going give you a return on your capital for a long long time....The housing market is beginning to emulate the car market and boy! can you get some real bargains at car auctions now." - comment by Robin Davies, 08/01/1996
"You do, however, ignore the record level of UK household indebtedness, the falling liquidity of the housing market and the fears of prospective home buyers regarding negative equity and job security." - comment by Peter Barry, 12/01/1996
"Mr/Ms Burridge is talking up the market (estate agent perhaps?)." - comment by Hemal Popat, 13/01/1996
"The fact that volumes of house sales have not yet returned to normal suggests that housing is still overpriced and has further to fall." - comment by M Holmes, 16/01/1996
(In response to P. Burridge's remarks about the prospect of lower interest rates: ) "I wish!" - comment by Stewart Brinn, 18/01/1996
(The last two comments are both interesting in that they show how many people's default assumption, in 1996 as now, is that whatever has just happened is "normal", and if now is different, now is wrong and abnormal, and must be about to change back. Thus today's house prices are too high and those of 10 to 20 years ago were about right; interest rates are too low and those of 10 to 20 years ago were about right; and so on ).
"Todays new buyers buy their first home at a higher level that [sic] in the past thus with a lower level of activity is it possible for prices to increase? " - comment by Bucky, 18/01/1996
"lack of liquidity is then a normal part of the housing market and there's no obvious reason to expect an "abnormal" surge in prices....If current levels aren't normal then it suggests that prices haven't dropped far enough to compensate people for whatever doubts they have." - comment by M Holmes, 18/01/1996
"through state-enforced scarcity of housing (planning laws) and state subsidies (MIRAS) the artificial shortage meant that people would borrow to the limit....This relationship was one basis of the then current claim that house prices (unlike any other asset in history except South Sea Shares, Wall Street Options, and Tulip Bulbs) would rise indefinately [sic]....Lower interest rates will make it cheaper to finance a house loan, but ...Would you be persuaded to pay double the price for a car if someone charged you half the percentage rate for a car?" - comment by M Holmes, 18/01/1996
It was all there in 1996. If you're not a bear, you must be an estate agent; you're talking up the market; vested interests; state intervention; artificial prices; tulips; it's not possible for prices to go higher; you're ignoring (something or other, that's not significant); and the crashtroll's favourite strawman, that anyone who thinks prices aren't about to fall imminently therefore thinks they only ever go up. HPC, avant la lettre. All that's missing is allusions to Japan.
Poor old M Holmes remains my favourite Usenet poster of all time for the way he would articulately argue himself into a 180° wrong view. Here he is in February 1996 (in a thread which did actually mention Japan), quoted at length to show I'm not taking him out of context:
https://goo.gl/agmgyA
"...house prices wouldn't rise with inflation since the low turnover indicates that houses are still perceived as overpriced....lack of demand indicates that housing is still regarded as overpriced. That indicates further falls rather than a rise.
Demographics also mitigate against future house price rises. There are simply less young people to buy houses. Added to this are factors like housing probably having reached a peak in terms of the percentage of the Uk population who actually want to be homeowners....The odds are that there will be further real falls in house prices. Whether that happens through gradual erosion by inflation with stable nominal house prices, or by another sudden fall caused by those who are hanging on waiting for things to get better finally giving up and selling (a normal scenario after a speculative boom) remains to be seen.
...Negative and neutral equity coupled with zero house price inflation mean that people must find transfer costs out of income rather than equity will also encourage this. When people have to pay the cost of moving out of income, they'll want to move as little as possible. That encourages the rent then buy a semi-permanent home scenario." -07/02/1996
I wonder who in 2016 is the new M Holmes?
chucknorris wrote: »Since this thread started with bubbles calling the top of the London market, the type of house in the location that he was wanting to buy has gone up by more than another £100k/25%.
While that is certainly quite funny, I still think my favourite Usenet poster from 1996, who argued that transaction volumes suggested prices still had further to fall, tops everything in the Couldn't Possibly Have Been More Wrong About House Prices stakes.
Here is the thread in question.
https://goo.gl/b3wewO
Posted to the newsgroup uk.finance and entitled "Buy a house ***now***", the thread is a bit of gem for terrible, terrible crashtroll predictions. The OP, one P. Burridge, began with a well-argued view suggesting that for several reasons now might be a very good time to buy a house.
Many of the responses are pure Crashyesque gold dust, and for fun, I've bolded below the crashtroll clich!s from 1996 that we are still hearing in 2016. Many crashtrolls are perhaps unaware of quite how far back their favourite clich!s go, in the same way that teenagers are often surprised to learn from ther parents that get-rich-quick chain letters are not a new idea.
"IMO prices will probably not change vey much in relation to earnings for a long time to come." - comment by Ian Dickson, 06/01/1996
"no amount of "talking up the market" by vested interests has produced results....[a house] aint going give you a return on your capital for a long long time....The housing market is beginning to emulate the car market and boy! can you get some real bargains at car auctions now." - comment by Robin Davies, 08/01/1996
"You do, however, ignore the record level of UK household indebtedness, the falling liquidity of the housing market and the fears of prospective home buyers regarding negative equity and job security." - comment by Peter Barry, 12/01/1996
"Mr/Ms Burridge is talking up the market (estate agent perhaps?)." - comment by Hemal Popat, 13/01/1996
"The fact that volumes of house sales have not yet returned to normal suggests that housing is still overpriced and has further to fall." - comment by M Holmes, 16/01/1996
(In response to P. Burridge's remarks about the prospect of lower interest rates: ) "I wish!" - comment by Stewart Brinn, 18/01/1996
(The last two comments are both interesting in that they show how many people's default assumption, in 1996 as now, is that whatever has just happened is "normal", and if now is different, now is wrong and abnormal, and must be about to change back. Thus today's house prices are too high and those of 10 to 20 years ago were about right; interest rates are too low and those of 10 to 20 years ago were about right; and so on ).
"Todays new buyers buy their first home at a higher level that [sic] in the past thus with a lower level of activity is it possible for prices to increase? " - comment by Bucky, 18/01/1996
"lack of liquidity is then a normal part of the housing market and there's no obvious reason to expect an "abnormal" surge in prices....If current levels aren't normal then it suggests that prices haven't dropped far enough to compensate people for whatever doubts they have." - comment by M Holmes, 18/01/1996
"through state-enforced scarcity of housing (planning laws) and state subsidies (MIRAS) the artificial shortage meant that people would borrow to the limit....This relationship was one basis of the then current claim that house prices (unlike any other asset in history except South Sea Shares, Wall Street Options, and Tulip Bulbs) would rise indefinately [sic]....Lower interest rates will make it cheaper to finance a house loan, but ...Would you be persuaded to pay double the price for a car if someone charged you half the percentage rate for a car?" - comment by M Holmes, 18/01/1996
It was all there in 1996. If you're not a bear, you must be an estate agent; you're talking up the market; vested interests; state intervention; artificial prices; tulips; it's not possible for prices to go higher; you're ignoring (something or other, that's not significant); and the crashtroll's favourite strawman, that anyone who thinks prices aren't about to fall imminently therefore thinks they only ever go up. HPC, avant la lettre. All that's missing is allusions to Japan.
Poor old M Holmes remains my favourite Usenet poster of all time for the way he would articulately argue himself into a 180° wrong view. Here he is in February 1996 (in a thread which did actually mention Japan), quoted at length to show I'm not taking him out of context:
https://goo.gl/agmgyA
"...house prices wouldn't rise with inflation since the low turnover indicates that houses are still perceived as overpriced....lack of demand indicates that housing is still regarded as overpriced. That indicates further falls rather than a rise.
Demographics also mitigate against future house price rises. There are simply less young people to buy houses. Added to this are factors like housing probably having reached a peak in terms of the percentage of the Uk population who actually want to be homeowners....The odds are that there will be further real falls in house prices. Whether that happens through gradual erosion by inflation with stable nominal house prices, or by another sudden fall caused by those who are hanging on waiting for things to get better finally giving up and selling (a normal scenario after a speculative boom) remains to be seen.
...Negative and neutral equity coupled with zero house price inflation mean that people must find transfer costs out of income rather than equity will also encourage this. When people have to pay the cost of moving out of income, they'll want to move as little as possible. That encourages the rent then buy a semi-permanent home scenario." -07/02/1996
I wonder who in 2016 is the new M Holmes?
0
Comments
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westernpromise wrote: »I wonder who in 2016 is the new M Holmes?
I'd bet money he's posted on HPC....;)“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 -
HAMISH_MCTAVISH wrote: »I'd bet money he's posted on HPC....;)
Not with me you wouldn't, lol.Chuck Norris can kill two stones with one birdThe only time Chuck Norris was wrong was when he thought he had made a mistakeChuck Norris puts the "laughter" in "manslaughter".I've started running again, after several injuries had forced me to stop0 -
Amusingly, in this thread
https://goo.gl/EIr8iS
the total, total legend M Holmes confesses to a BCR of 90%...in 2006. ButIt's the wrong question though since when I was 18 I wanted to blow my money on sex, drugs and rock'n'roll, not a sodding mortgage debt.
So that's all right then.0 -
That's brilliant
M Holmes should post about PCP in the loans and motoring forum:M_Holmes wrote:Lower interest rates will make it cheaper to finance a house loan, but
financing the loan is only one cost of owning a house. Also, the cost of
the finance tells you little about the value of the asset. Would you be
persuaded to pay double the price for a car if someone charged you half
the percentage rate for a car? Would you pay anything more for a car
simply to get cheaper finance?0 -
racing_blue wrote: »That's brilliant
M Holmes should post about PCP in the loans and motoring forum:
What does PCP mean in this context please? Are you saying it has increased car prices?0 -
I bet Wonga are gutted they didn't think of PCP.0
-
The HPC-ers are starting to realise how much money they've lost by renting.
http://www.housepricecrash.co.uk/forum/index.php?/topic/209130-not-buying-has-cost-me-l95000/“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 -
HAMISH_MCTAVISH wrote: »The HPC-ers are starting to realise how much money they've lost by renting.
http://www.housepricecrash.co.uk/forum/index.php?/topic/209130-not-buying-has-cost-me-l95000/
25% BCR I make it. At the outer edges of what we've seen before, but still possible.
The denial in that thread is a thing to behold, though They all admit in that thread to having freely speculated against property and having lost. Notice how they all see it as a short term time-your-entry-and-exit decision, rather than the 25-year financial commitment it is. But the same people elsewhere are full of seething rage against people they needed to take the other side of their speculative punt - the landlords who enabled them to rent, for example, or the people who sat tight and didn't sell - as though those people have done them some sort of injury.
When did this sense of entitlement take hold? Is it a Blair thing?0 -
That thread started on the main forum and was shunted off to anecdotals in pretty short order.0
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That thread started on the main forum and was shunted off to anecdotals in pretty short order.
Mustn't upset the hive mind.:)“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
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