The Housing Market Is Hanging On By A Thread Signals High End Real Estate

This is a discussion on The Housing Market Is Hanging On By A Thread Signals High End Real Estate within the Economic & Fundamental Analysis forums, part of the Methods category; Originally Posted by new_trader Look at what happened to property prices in Northern Ireland...a loss of over 54% ! But ...

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Old Aug 17, 2016, 9:23pm   #61
 
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Quote:
Originally Posted by new_trader View Post
Look at what happened to property prices in Northern Ireland...a loss of over 54% !

Click the image to open in full size.



But the forkwits will tell you the U.K doesn't do property crashes...last time I checked Northern Ireland is a part of the UK...but to tell you the truth under all this Brexit I've lost track myself

NT you missing the point. It is simply about supply & demand. Whilst the US & EU were having issues 2007/8 - property asset prices were storming ahead in Asia including Australia (and BRICS were doing well). London hardly registered and recovery was really a V-type correction in UK property market. Much of it supported by migrants, foreign investors/buyers and lower interest rates, easy money yes.

The economic cycle is with us but as with capitalism (without changing the subject) can not handle any slowdown in profits. Capitalism is inherently unstable seeking continuous growth in profits etc.

Same thing happened in Spain as in Irelan ie with the PIGS. The boom and bust was avoided or perhaps postponed but easy money policy did work.


imho What we need now is some fiscal policy to bring in tax revenue and redistribute that to infrastructure projects and manufacturing around the country to provide the platform for UK to be able to compete in international markets.

Bit of inflation here should help to eradicate the debt burden too.


To answer the question of the thread however, to get back on track - the UK housing is not hanging by a thread but ticking along nicely with an increase in supply a requirement for continued stability and dampen excessive price rises.
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Old Aug 18, 2016, 12:11am   #62
Joined Jul 2008
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Originally Posted by new_trader View Post
Central Banks cause the property bubbles by suppressing interest rates
gardian article

"The report, called Finding Shelter, cites statistics showing that 85% of prime London property purchases in 2012 were made with overseas money. "

"Civitas says the problem is not confined to the top end of the market and that overseas buyers are also acquiring less expensive newbuild homes. It says that over the past two years only 27% of new homes in central London went to UK buyers, while more than half were sold to residents of Singapore, Hong Kong, China, Malaysia and Russia."

In the run up to 2007, Russia and Singapore had interest rates of 6%, Malaysia was just under 3%, Hong Kong was over 4%, and the UK was over 4%. None of the countries listed had suppressed interest rates so how does one explain the cause? this leads onto your next point:

Quote:
Originally Posted by new_trader View Post
it was Gordon Brown who helped fuel the UK property bubble and subsequent bust in 2007
Admittedly, Gordon is a basket case with him selling our gold reserves the way he did. That being said, he was responsible for freeing brownfield land for new homes and gave people a change to shared ownership but this wasn't a driver to inflation, it was a reaction to it. Availability of land is one of the key drivers in the shortage of property. It could be argued that Gordy could have slowed foreign investment through taxes. It also could be argued that he could have removed tax credits to landlords (controversial as they provide rental liquidity).

Gordy is a good point you raise however you fail miserably in your delivery where you associate his help with this "bust" as you call it in 2007. Gordon was not the architect of subprime securities categorised as investment grade. Nor was he responsible for the lack of liquidity on international capital markets. He also wasn't responsible for banks, such as those in Ireland,for holding too much risk in a single asset class. Ultimately we can only conclude that you talk a good turd which is evident with your elegant follow through:

Quote:
Originally Posted by new_trader View Post
it was Gordon Brown who pushed interest rates down to almost 0%
in 1997, Gordon announced that the bank of England have operational independence over monetary policy (including setting interest rates). Stating he pushed them down to almost 0%, well, the only comment i have on this is the irony in your following statement:

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Originally Posted by new_trader View Post
My experience tells me that you and others in this thread haven't got the foggiest idea of what you are talking about.
one more thing, i need to correct you on something:

Quote:
Originally Posted by new_trader View Post
misguided belief that the days of boom and bust are over.
Perhaps i should put it in layman's terms so you don't regurgitate the turds that flow so easily for you

"Does not apply globally anymore"
does not translate to
"believing the days of boom an bust are over".

Your interpretation of what i have said is no different than me telling you measles doesn't kill globally anymore. Your interpretation then follows as the days of people dying of measles are over.
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