From: abelard
Newsgroups: uk.politics.misc alt.politics.british alt.politics.bush uk.finance
Subject: Re: The crumbling housing market and the impending recession.
Date: Tue, 02 May 2006 22:00:51 +0200
On Tue, 02 May 2006 19:08:02 GMT, "Virgils Ghost"
typed:
>"Troy Steadman" wrote in message
>news:1146593066.371665.125200@e56g2000cwe.googlegroups.com...
>> Crowley wrote:
>>> Latest Moneyweek article predicts trouble ahead ................
>>>
>>> "The storm clouds are gathering, taxes and utility bills are rising
>>> while job security is falling. We're on the cusp of what could still
>>> yet turn into a full-blown recession and things could get a lot worse
>>> before they get better ...................... "
>>> http://www.moneyweek.com/file/11314/where-is-the-housing-crash.html
>>>
>>> Regular readers of MoneyWeek might remember that I've been warning
>>> about an impending housing slowdown in the UK since my first article on
>>> the subject appeared in May 2004.
>>>
>>> But I'd like to remind readers that the last housing crash happened
>>> over a seven-year period, much like a falling line of dominos.
>>
>> There hasn't been a house price "crash" in the UK in living memory.
>
>Contrary to popular belief, a lot of the UK population were indeed alive in
>1989 and beyond.
>
>"The size of homebuyers' deposits required by lenders decreased. The
>interest rates charged by lenders above the base rate was reduced and the
>ratio of mortgage advance to potential homebuyers' income started to rise.
>People increased their debt liabilities on the assumptions of a continued
>growth in earnings and house prices. In his March 1988 budget, the then
>Chancellor, Nigel Lawson, announced that dual relief for joint property
>holders would be abolished the following August. This prompted a further
>increase in house buying activity. Given a housing stock fixed in the
>short-term, this lead to an
>increase in the price of houses. Between 1987 and 1989 the average price of
>a house increased by £24,000 or 52% from just over £46,000 in 1987 to just
>over £70,000 in 1989; an average increase of just over 21% a year.
>
>Then the unpredictable happened. Iraq invaded Kuwait in 1990 which lead to
>higher oil prices globally and a negative shock to the UK economy.
>Inflation, the annual percentage change in the RPI, rose to 9.5% in 1990 and
>the base interest rate, already high, hit 15%. Unemployment, which in April
>1990 was half its level in January 1987, started to rise.1 The unemployment
>rate, which had been falling steadily since March 1986, began to rise back
>towards 10%. The growth in annual earnings slowed and the growth in real GDP
>fell to -1.4% in 1991.
>
>The knock on effect of these factors was a fall in house prices. The annual
>percentage change in average house prices fell from an increase of 21% in
>1989 to minus 4% in 1992. The actual average price of houses fell by 6% over
>the same period. The volume of housing transactions also fell from just
>under two million in 1988 to just over a million in 1992.
>
>In these circumstances many homeowners found themselves in the uncomfortable
>position of having negative equity in their property. This is where the
>outstanding balance of the mortgage exceeds the value of the house. Some
>homeowners who, due to either a general decline in economic conditions or a
>change in personal circumstances, such as unemployment, could not afford to
>pay their mortgages, were forced to try to sell their homes in an already
>depressed housing market.3 Many homeowners who were unable to sell
>ultimately found that their houses were repossessed. At the depth of the
>property crash, lenders were repossessing homes at the rate of more than
>1,500 a week."
>
>http://www.parliament.uk/commons/lib/research/rp2002/rp02-042.pdf
>
>Selective amnesia, perhaps?
and the real drop until stabilisation was ~50%
i am unaware of any other period of general housing 'price' falls
in modern britain....
you have listed some possible factors in the crash.....
now what real factors would anyone expect to cause a crash at present.
not the empty headed bleating of the likes of creepy....
but clear analysis that would suggest a drop....or even a 'correction'
along with a suggestion of the %ages to be associated with this alleged
'crash'
any fools can keep making vague 'predictions'
and as all markets vary over time....if you bleat long enuf eventually
you will either be correct to one degree or another...or ded...
regards....
--
web site at www.abelard.org - news comment service, logic, economics
energy, education, politics, etc 1,552,396 document calls in year past
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