tag:blogger.com,1999:blog-2948538160252327076.post2833652402813576925..comments2023-11-02T15:48:50.381+00:00Comments on UK Bubble UK Economy: Comparing bubbles, predicting the crashAlice Cookhttp://www.blogger.com/profile/05753570123987780947noreply@blogger.comBlogger20125tag:blogger.com,1999:blog-2948538160252327076.post-10722957005895270992008-05-23T08:02:00.000+01:002008-05-23T08:02:00.000+01:00I agree Steve. It will take a bit of time, but I'd...I agree Steve. It will take a bit of time, but I'd say after the summer period, say August, real falls will shown on the nation figures which the the banks have been trying to hide falls on, and by DEC it will show average falls up to 10% with more to come in 2009, though we know locally falls will have been between 10-15%...DTRhttps://www.blogger.com/profile/00873077397111504845noreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-30284708153173360682008-05-22T22:04:00.000+01:002008-05-22T22:04:00.000+01:00Yes. Those figures look plausible to me.£350K => ...Yes. Those figures look plausible to me.<BR/><BR/>£350K => £230K is my target... from peek.<BR/><BR/>It seems reasonable to expect, too...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-1994803335229026002008-05-22T13:39:00.000+01:002008-05-22T13:39:00.000+01:00Mark, when prices are rising fundamentals going ou...Mark, when prices are rising fundamentals going out of the window, because people cannot see what will stop it rising, so along the way they make all kinds of things up. Supply and demand, and we are joining the euro so rates will be 2% were two of them. Demand was part speculative we all know that, but debt is the bigger problem here. Look at Japan.. UK and other countries are not much different.<BR/><BR/>When prices fall, then fundamentals kick in as that's the only method you can use to determine the floor.<BR/><BR/>I predict prices will fall back to late 2001 price levels which creates a 35% fall.<BR/><BR/>Here are some samples.<BR/><BR/>Prices will fall 35% I believe and they will fall back to at least 2002 levels.<BR/><BR/>This means even if you say the average house was 70k in 1998 which is now 160k for example, -35%, they will be worth 100k, which is well above 70k 1998 level, because over the last 10 years if we say inflation has been 5% a year then a 50% increase is ok making the price 105k...<BR/><BR/>They are my predictions<BR/><BR/>325 detached fall to 212k..<BR/>294 detached fall to 192k<BR/>220k detached needs to fall to approx 150k<BR/>160k semi needs to fall to 105K<BR/>120k terraced house to fall to 80kDTRhttps://www.blogger.com/profile/00873077397111504845noreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-56588696602973837772008-05-20T20:19:00.000+01:002008-05-20T20:19:00.000+01:00The nonlinearity of percentages, up is not equal t...The nonlinearity of percentages, up is not equal to down.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-51973076275208608302008-05-20T17:00:00.000+01:002008-05-20T17:00:00.000+01:00@ mark, if price trebles from £100 to £300 and the...@ mark, if price trebles from £100 to £300 and then drops by 30% from £300 to £210, the 30% drop has eaten away nearly half the original gain!!Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-82739778691403316502008-05-20T01:20:00.000+01:002008-05-20T01:20:00.000+01:00Agreed. "effective demand" is not the same as "dem...Agreed. "effective demand" is not the same as "demand". Everybody wants to live in a big mansion by the sea, but unless you've got the cash or loan to pay for it, you won't affect the price.<BR/><BR/>The UK population is declining except for four sectors:<BR/>1) Old people, who don't work<BR/>2) Welfare scroungers, who don't work<BR/>3) Low income immigrants, who don't make much money and tend not to buy and will flatshare<BR/>4) Professional immigrants, who do have money.<BR/><BR/>The latter two categories are drying up as the economy tanks.<BR/><BR/>NickAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-74421640489751279992008-05-19T20:27:00.000+01:002008-05-19T20:27:00.000+01:00Mark, you need to check out the archive in this bl...Mark, you need to check out the archive in this blog. There are posts that deal with housing supply and demographics.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-71642851926581686662008-05-19T20:16:00.000+01:002008-05-19T20:16:00.000+01:00Mark... Firstly a point of definition. A crash is...Mark... Firstly a point of definition. A crash is widely understood to be a fall of 15% or more, so a fall of 20-30% would definitely be a crash.<BR/><BR/>While the population is growing (slowly) emigration counteracts this effect, as does the fact that we've been building significantly more quickly than the population has been growing.<BR/><BR/>When you talk about "supply and demand" you make an elemental error. You equate desire (or perceived need) with demand. They are not the same... not at all. Demand, in the economic sense - that would not be a nonsense in the context of your "supply and demand" argument for housing - has already evaporated. The crash in value has already happened... we're now waiting for owners to come to accept the new prices.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-53445744172293132892008-05-19T19:40:00.000+01:002008-05-19T19:40:00.000+01:00House price crash? 40 percent in two years.House price crash? 40 percent in two years.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-16942768461577624432008-05-19T17:49:00.000+01:002008-05-19T17:49:00.000+01:00Simon,A wonderful question. Just posted something ...Simon,<BR/><BR/>A wonderful question. Just posted something on it.<BR/><BR/>AliceAlice Cookhttps://www.blogger.com/profile/05753570123987780947noreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-17835077888653324242008-05-19T17:26:00.000+01:002008-05-19T17:26:00.000+01:00Prices have scope to go down about 40% to restore ...Prices have scope to go down about 40% to restore the historic average ratio between house prices and earnings. This would certainly feel like a crash to a highly-leveraged buy to let investor or somebody with less than 40% equity in their home who needed to sell up and move with their career.<BR/><BR/>Population and housing supply are two factors in house prices. The third is the supply of credit people use to bid on the houses. <BR/><BR/>The price increases we saw over the last decade were mainly in response to a massive expansion of this supply of credit. It is now being withdrawn.powermanhttps://www.blogger.com/profile/13670631915567128744noreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-69143831810444907112008-05-19T16:31:00.000+01:002008-05-19T16:31:00.000+01:00You have missed out an important factor in the UK ...You have missed out an important factor in the UK of supply and demand, with the population growing and supply reducing house prices will not crash.<BR/>House prices have trebled in the last 10 years so even if they went down 20-30% is this a crash ? NoMark Raineyhttps://www.blogger.com/profile/16963729052811848713noreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-57510528749890339312008-05-19T14:44:00.000+01:002008-05-19T14:44:00.000+01:00Interesting conclusion re: inflation and interest ...Interesting conclusion re: inflation and interest rates.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-89088124042140187612008-05-19T12:16:00.000+01:002008-05-19T12:16:00.000+01:00I think inflation might go well above 5%.We are in...I think inflation might go well above 5%.<BR/><BR/>We are in the midst of a Sterling crisis right now.<BR/><BR/>How much have house prices already fallen in Euro terms?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-33441027922636729652008-05-19T02:57:00.000+01:002008-05-19T02:57:00.000+01:00Yeah, a great article. I imagine it was alot more ...Yeah, a great article. I imagine it was alot more difficult to draw the threads together than it looks in the final piece.<BR/><BR/>Things I'd add:<BR/><BR/>- The Tory bubble happened with high interest rates and the bursting was cushioned with lower rates. It's the opposite this time round, which is ominous;<BR/>- Incomes grew into house prices following the Tory bust. This time house prices will fall to income;<BR/>- The impact is that under the Tory bubble the homedebtors were bailed out by inflation and reduced interest rates. Basically their debt was devalued. This time around homedebtors are more screwed because rising interest rates will make the debt more, not less, crushing.<BR/><BR/>NickAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-34037616031967071132008-05-18T20:16:00.000+01:002008-05-18T20:16:00.000+01:00Alice, excellent stuff, but why not include the 19...Alice, excellent stuff, but why not include the 1948 or the 1973 bubbles as well? <BR/><BR/>Graph <A HREF="http://markwadsworth.blogspot.com/2008/02/house-price-crash-porn.html" REL="nofollow">here</A>, these bubbles have far more similarities than differences. You get a self-perpetuating asset-price bubble and credit bubble (you can't have one without the other) then it goes *pop*Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-87231965453480096242008-05-18T19:49:00.000+01:002008-05-18T19:49:00.000+01:00A lot of useful and diligent research here... I es...A lot of useful and diligent research here... I especially like the supposition that house price inflation is not party-political.<BR/><BR/>With this in mind, maybe we're looking at too short a time-frame? There is no doubt that house prices took a tumble in the early 1990s, but, without the complication of the ERM debacle, maybe that wasn't a crash? Might it not be more appropriate to look at the current credit-crisis as the culmination of 24 years of credit expansion from 1984 to 2008 with a brief lull 1990-1996?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-36559505481694651102008-05-18T19:34:00.000+01:002008-05-18T19:34:00.000+01:00firstly i liked the article, interesting read. but...firstly i liked the article, interesting read. but i want to bring forth a few points.<BR/><BR/>There are stark contrasts between the two periods being compared here.<BR/>1.Globalisation<BR/>2.Real Estate surge this time around is driven by global cues than local factors.<BR/>3.It is an unwarranted to say banks won't return to housing market, its their bread. They might exercise control in the way they would enter the housing market. Might avoid structured and complex financial products.SDhttps://www.blogger.com/profile/07499249897718903580noreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-2457888474288046482008-05-18T19:17:00.000+01:002008-05-18T19:17:00.000+01:00I am amazed at how high inflation was during the 1...I am amazed at how high inflation was during the 1980s-1990s. Was it really so high?????Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-46603527932216150742008-05-18T19:06:00.000+01:002008-05-18T19:06:00.000+01:00A well researched article.A well researched article.Anonymousnoreply@blogger.com