House prices: disaster ahead - today's Times

peter999

Good question.

Who foresaw the Credit Crunch ??

peter999

Generali

peter999 wrote: »

Good question.

Who foresaw the Credit Crunch ??

peter999

A bloke called Christopher Wood who writes for (and owns?) Greed and Fear has been talking about it since 2005. We used to get their stuff at Big Swiss Bank.

m00m00

plenty of people saw it coming

including this person

Domain name:
creditcrunch.co.uk
Relevant dates:

Registered on: 27-Jul-2006


it's just that too many people who could have done something about where blinded either by greed or a panglossian belief in the market.

mr.broderick

m00m00 wrote: »

plenty of people saw it coming

including this person

Domain name:
creditcrunch.co.uk
Relevant dates:

Registered on: 27-Jul-2006


it's just that too many people who could have done something about where blinded either by greed or a panglossian belief in the market.

Rubbish we were all too busy watching big brother you crank.
Carol was just wondering, if you had a job (like me) that relied on consumer confidence and a strong economy would you still be praying for a market collapse that will probably take the economy with it, guess english teachers will be safe, judging by the grammar on here we will still need english teachers when the proverbial hits the fan...

mr.broderick

dolcevita wrote: »

And that is the tragedy of boom and bust economics brodders.

That people like yourself have to suffer as a result of mis-management by people who are supposed to know what they're doing.

If things were kept on an even keel with wages keeping pace with prices and in tune with real economic growth built on a sustainable foundation none of this would be happening. and we would all be a lot happier.

Instead we've had massive growth built on cheap credit which has left the country, the government, the banks and the people up to their eyes in debt with nowhere to turn.

It is a tragedy which could so easily have been avoided or at least prepared for.

Top quality post.

m00m00

mr.broderick wrote: »

Rubbish we were all too busy watching big brother you crank.
Carol was just wondering, if you had a job (like me) that relied on consumer confidence and a strong economy would you still be praying for a market collapse that will probably take the economy with it, guess english teachers will be safe, judging by the grammar on here we will still need english teachers when the proverbial hits the fan...

No, and as I have a doctorate, I could always go back to academia with my tail between my legs in shame if needed. Pity I hate students.

chappers

Generali wrote: »

That's a fallacy known as reversion to mean - it assumes that houses have a memory of some sort and so know what their price should be.

Things do change over time: since the last peak in house prices (1989) the population has grown, structural changes (freedom of movement of labour) to and expansion of the EU have increased migration (a 2 way flow), incomes have risen and the price of food, clothing, furniture, consumer goods and electronics have fallen dramatically. All those things could support higher house prices.

Similarly things have changed since then that would push down house prices - an aging population (why have a 5 bed house when the kids have left home and your pension is losing value?), banking crisis/credit crunch, rising energy and food prices, falling public sector incomes, increased taxation.

My feeling is that house prices are way too high. I see that in the struggle that people have to buy a house. That they will fall to x% of disposable income or y% of gross income ofr z% of rental value is a bit of a trap economists like to fall into.

PS I reckon The Times will have no problems with your clear citation and quoting of a small part their work ! (see previous posts).

Well said we have an entirely situation to then our economy is in amuch more stable situation we have more disposable income we are not seeing rapidly rising interest rates, to satisfy the ERM , unemployment is way below what it was then and generally we all have more flexibility in our financle dealings.

Not saying there definitely won't be troubled times ahead but just because we saw troubled times before doesn't necessarily mean we will.

There is a saying that says history has a habit of repeating its self, well that is rarely true similar events happen but usually due to different circumstances.

DaveyDave_3

Generali wrote: »

It depends where IMO: places that actually have an economy where they sell goods and services that other people want should fare ok-ish. What bothers me the most about this boom is that it has dragged up the prices of properties in absolute hell-holes - someone that's paid £200k or more to live on some of London's roughest estates is going to be cursing themselves for years.

There's always going to be popular areas and no doubt these will remain strong. However, the banks do not provide mortgages on a regional basis. The fact is that credit is being tightened everywhere and so I'd expect an equal downward pressure. At the end of the day, the money has got to come from somewhere and if you can't borrow it then people will need to change their expectations or wait for differing conditions.

Generali

DaveyDave wrote: »

There's always going to be popular areas and no doubt these will remain strong. However, the banks do not provide mortgages on a regional basis. The fact is that credit is being tightened everywhere and so I'd expect an equal downward pressure. At the end of the day, the money has got to come from somewhere and if you can't borrow it then people will need to change their expectations or wait for differing conditions.

I think that the last time, the very good and very bad areas suffered the most. I can see why crappy areas would be hit hard - why buy in Hellsville when you can buy in Poshton?

I suppose we should be careful of only taking one set of data as a cue for what may happen this time though. When I studied statistical analysis at Uni the example was given of alien archeologists coming to earth in a million years time. They dig up a bloke that's had his leg blown off by a mine and for ever more they believe that people had 1 head, 2 arms and 1 leg.

I guess the trouble is, if you're stuck in Mayfair or some beautiful Yorkshire village with negative equity it's not so bad. If you're stuck in Peckham or Bradford then it's not so great.

peter999

Generali wrote: »

A bloke called Christopher Wood who writes for (and owns?) Greed and Fear has been talking about it since 2005. We used to get their stuff at Big Swiss Bank.

That was 3 years ago.

I'm more interested in what media & analysts were saying immediately prior to it happening.

peter999