Nationwide flatlining.... -0.1 MOM

SquatNow

House prices will go down then they will recover to current levels and probably exceed them.

It will be in either 18 or 36 years, depending on how much damage this boom has done to the economy and the fabric of society. I wouldn't bank on 18 though, I'de work on 36, possibly even 54.

Prices go up and down... they don't platue.... they never have and never will.

Generali

mystic_trev wrote: »

brill post Generali - Thanks

There are too many people who are saying, that if we have a crash, it really dosen't matter because in 10 years time House prices will have doubled! I wouldn't be surprised to see a slump in the property market then no (or little recovery) for a decade or more. Just look to Japan in the late 80's. A Country with limited land resources and low IR's. After their massive HPI what came later, and nearly 20 years on has it recovered?

Thanks Guy_Montag.

TBH I think that a Japan-style Lost Decade (now 18 years old and counting) is the most likely outcome of the many possible scenarios from here.

A function of globalisation is that an good or service that is tradable is now competing internationally. Why employ an IT support person in the UK on £30ph in the UK when you can get someone in India on £4ph unless the UK person is 8 times more productive? Try servicing that huge mortgage if your salary has halved!

My feeling is that the Govt is going to try to inflate their way out of trouble, thinking that stagflation is better than deflation. I'm increasingly not convinced it'll work - that all inflation from here will end in deflation as foreigners undercut UK firms as a result.

The worst outcome (and very possible) is a return to protectionism. All the US Presidential candidates are making protectionist noises and you can bet that the French and Italians would vote for it in the EU. I hope the Germans would be too sensible given how much they make from exports but these things have a way of gathering momentum.

SquatNow

Generali wrote: »

inflate their way out of trouble

You can't inflate your way out of trouble if your entirely dependant upon imports. In the 80s they inflated their way to a soft landing at 20% per year because we were a net exporter, especially of energy, but now north sea oil/gas is dwindling and we are energy importers, any attempt to inflate will result in all the lights going out.

Generali

SquatNow wrote: »

You can't inflate your way out of trouble if your entirely dependant upon imports. In the 80s they inflated their way to a soft landing at 20% per year because we were a net exporter, especially of energy, but now north sea oil/gas is dwindling and we are energy importers, any attempt to inflate will result in all the lights going out.

We weren't a net exporter in the 1980s. We haven't been a net exporter since the mid-70s except maybe for a short period in the early 90s after the quid was forced out of the ERM. If you disagree perhaps you can come up with some figures.

You're right to say the the GBQuid was a petro-currency (if that's what you're saying) in the 80s but I suspect that the current account for energy isn't hugely negative for energy at the moment for the UK.

There wasn't a 'soft landing' at the end of the 80s/early-90s as anyone that remembers Lamont's "Green Shoots of Recovery" will attest to.

poppy10_2

Generali wrote: »

We weren't a net exporter in the 1980s. We haven't been a net exporter since the mid-70s except maybe for a short period in the early 90s after the quid was forced out of the ERM. If you disagree perhaps you can come up with some figures.

The UK has been a net exporter of crude oil since 1981. (Official US government figures)

The switch to becoming a net importer came in Q3 2005.

beingjdc

poppy10 wrote: »

The UK has been a net exporter of crude oil since 1981. (Official US government figures)

The switch to becoming a net importer came in Q3 2005.

But the original claim was that we were a net exporter especially of energy, not only of energy.

Generali

Good graph poppy10 but as beingjdc says, SquatNow's idea seemed to be that we had a positive current account in the house price crash during the 1980s which we did not.

The current account as a percentage of GDP:

1987 -1.8%
1988 -4.2%
1989 -5.1%
1990 -4.0%
1991 -1.8%
1992 -2.1%
1993 -1.8%
1994 -1.0%

For 2006 it was -3.9% of GDP so we're in a better trade position now than at the end of the Lawson boom (something which comes as a surpirse to me, I admit).

Still nobody has managed to come up with any evidence of a house price cycle that consists of more than 2 pieces of data, effectively (1974 and 1989).

To be clear, I reckon that houses are hugely over-valued and that prices are riding for a fall but I see nothing that has convinced me that prices must increase dramtically again. I can explain all 3 periods of rapidly rising prices as being periods where money supply rose quickly and money was easy to borrow. Neither were cyclical but in the first 2 cases were due to policy mistakes by govt and in the 3rd has been due to banks being seemingly happy to lend to anyone with a pulse. As credit conditions tighten, house prices will fall. IMO of course.

IveSeenTheLight

SquatNow wrote: »

but now north sea oil/gas is dwindling and we are energy importers, any attempt to inflate will result in all the lights going out.

People have been talking of the demise of north sea oil way back in the 70's and have been doing ever since. A bit similar to those who have been calling for a HPC since early 2000 To be clear, I'm not denying there may be a house price correction but reitterating how many people have been forcasting markets incorrectly for a long time.

I work for an oil related service company and our expected revenue will increase by approx 25% more in 2008 than it did for 2007 for the North Sea sector.
Sure there are other sectors which are going to increase dramatically even more in the next few years (mainly Asia Pacific) but definately the predictions for the next 3-5 years is a continuing growth in the North Sea.
Technology has advance allowing welld to be drilled in deeper water and for wells which would not have been worth drilling, being financially viable. This is what is contributing to the increase in North Sea exploration.

I do not deny that the UK has become an importer of Oil & Gas, but this has nothing to do with a decline in the North Sea

beingjdc

IveSeenTheLight wrote: »

I do not deny that the UK has become an importer of Oil & Gas, but this has nothing to do with a decline in the North Sea

Erm, yes it does. I don't know where you work, but North Sea Oil production is kinda collapsing. Profits are being held up by a rocketing oil price. Here's a graph.

http://ior.senergyltd.com/issue13/talking-point/Fig1.gif

Here's another one.

http://www.oilfinance.co.uk/images/northseaoil_clip_image002_0003.gif