From: M Holmes 
Newsgroups: uk.finance
Subject: Re: Soothsayer predicts property bust
Date: Tue, 20 Apr 2004 13:24:02 +0000 (UTC)

news  wrote:

> That seems a bit extreme. But I hope you are right, as I'll be first in 
> the queue to buy. Rents are unlikely to fall that much, so they would 
> cover any mortgage. Values will then take 5 to 7 years to recover their 
> old levels, if past patterns hold,

Have you looked at past credit bubbles? Tulip bulbs never recovered
their peak value or anything like it. On the previous bubble, the Dow
Jones Index recovered its 1929 peak value in real terms in 1992.

If patterns hold, what we'll see is what Prof Kindleberger called
revulsion. People will be unlikely to borrow, and lenders, having been
burned, will be much less keen to make loans. The pattern is likely to
hold, though degenerate gradally, across two generations. The third will
provide fodder for the next bubble.

Odds are that houses won't be the Magic Token next time though.

FoFP

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