London House Sales Slump

Re: London Sales Slump


In 2000, house prices were at an all time high in relation to all historical data, weren't they?

The same rule applies to every year thereafter.
So then there's nothing that unusual about prices being at an "all time high" is there?


What about the affordability of mortgages...as a percentage of net disposable income?
 
Re: London Sales Slump

The conclusion of the article I posted earlier is as follows. If you read the whole article then the current situation becomes clearer.

[broken link removed]


So, in essence, it becomes possible for real house prices to fall...but other things need to happen or not happen before this will take place.
 
Re: London Sales Slump

Net disposable has income hardly changed since 2000 Gabriel, most of the long series of 1990s tax cuts and interest rate cuts had been passed on to us by 2000.
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While house prices were soggy after Bacon , in 2000 and 2001, the post 9/11 interest rate cuts together with removal of Bacon in early 2002 and lax practises in Banks have caused a serious bubble in the period 2002-2004 inclusive . I would have been content had prices plateaud around 2000 or so as it would have been sustainable.

As it was possible to buy a given semi in Galway back in 2001 for £135k (€172k) where they are about €240 now I would see prices falling by as much as a third to get back to those 2001 levels.

The lifting of the Bacon restrictions charging investors 9% stamp duty caused a massive speculative froth based on cheap money and easy credit post 911. This dragged in a lot of first time speculators from what I see.

My own sister in law (mid to upper scale civil servant with slow earning growth potential ) was offered over 5 times her salary to get a mortgage recently , on her own and over 30 years . She is 38 , frankly I cannot see her working at 68 .
 
Re: London Sales Slump


Gabriel

What do you know about the author of this academic paper - Patrick Foley ?
Most of the UCC academic staff have a career outline on the website but he doesn't.
The reason I ask, is there is (or was!) an economist for TSB (as in permanent-tsb) called Patrick Foley. Obviously this company has a huge vested interest in the Irish property market.

But even if it's not the same guy you should know that academics often disagree amongst themselves so choosing one to quote from that aligns with your own hopes/beliefs may add to the debate but certainly doesn't settle it !
 
Re: London Sales Slump

CoffeeBrew said:
What do you know about the author of this academic paper - Patrick Foley ?

I know nothing of the author.

CoffeeBrew said:
Obviously this company has a huge vested interest in the Irish property market.

I would have thought that given his conclusion included...

"However there is a
danger that real house prices may fall considerably if government policy and/or
economic consideration force investors out of the housing market. Also real house
prices may fall if banks impose a credit squeeze with regard to mortgage lending.
Under such circumstances Irish house prices may experience the boom-bust scenario
so typical of many housing markets internationally."


that the piece was fairly unbiased and balanced!!!
 
Re: London Sales Slump


Actually Gabriel I must say that that paragraph looks very similiar to the standard threat that big financial institutions are using to intimidate the government to inaction.

As recent as a few weeks ago AIB said a remarkably similiar thing. (I'll see if I can find the link on RTE.ie).

They were basically saying to the Government: Don't do anything to interfere with our profits or else !!
 
Re: London Sales Slump

Arguably the credit squeeze mechanism is nowt to do with Government and a lot more to do with what the Central Bank, acting independently , considers to be prudent Banking .

The Central Bank can suck liquidity out of the Retail Banks by increasing reserve ratios , this forces the banks to pull out of certain lending books as they no longer have spare cash to throw at them .

I woulda thought that 95% Interest Only Investors , banking on Capital appreciation seeing as they cannot find tenants , are higher risk / lower margin than most CC customers and will get the chop quite early on in a sqeeze .
 
Re: London Sales Slump

If you actually read the entire article I don't think it comes across as a financial instituation threatening the government...but you can ring Patrick Foley if you like and find out exactly who he is.
 
Re: London Sales Slump

Gabriel said:
If you actually read the entire article I don't think it comes across as a financial instituation threatening the government

As you know I was referring to the paragraph you quoted. I didn't say the entire document had that tone.

...but you can ring Patrick Foley if you like and find out exactly who he is.

To be honest I don't really care. I was just curious if you knew something of this author because you have posted this same link so many times now.
 
Re: London Sales Slump

CoffeeBrew said:
...because you have posted this same link so many times now.

Probably because no one's bothered to read it or at least deal with the jist of it. It's a very well written and well argumented piece, even if you find holes in its main points.
 
Bubbles et al

I read this book (linked below) some 20 years ago when it came out, it has been recently reprinted . It is an absolute howl and simply proves that a bubble is a bubble is a bubble no matter who believes the hype.

In this case the bubble in question was fed on oil and gas prices which kept going up and up in the 1970s . Nobody believed they would start coming down.....and then they did. There was also a theory that if you drilled very far dow there was a huge amount of high pressure gas down there .

http://www.amazon.com/gp/reader/061...384-4880824?_encoding=UTF8&p=S001#reader-page

When the prime suspect bank eventually crashed it brought down the 13th largest bank in the US , the 9th largest was taken over by the Fed in effect, and severely damaged some of the rest of the top 10 .

It also shows clearly what a bunch of headless chickens (nay lemmings) our bankers really are . 10 years after reading it along came the New Economy (.coms ) and I thought to myself here we go again . I was right about that too .

In essence , once the 'man on the street' believes he cannot lose money in XXX then it is by definition a bubble .

Thats the Tonks definition for yiz .
 
Re: London Sales Slump

Gabriel said:
Probably because no one's bothered to read it or at least deal with the jist of it. It's a very well written and well argumented piece, even if you find holes in its main points.

You have to remember that economists differ in their opinions too so if you find an economist at UCC that agrees with you and says we don't have a bubble then chances are there will be another economist at TCD saying that we do have a bubble and house prices have lost touch with fundamentals.

Finding a link that agrees with your viewpoint is not an excuse for repeatedly posting the same link. I can't help feeling that if someone with a more "bearish" point of view repeatedly posted the same link on this forum that there would be a bit of scolding going on and perhaps even a new posting guideline published
 
Re: London Sales Slump


Patrick Foley presents a balanced point of view on the subject of a bubble. It is not a one sided argument. If you READ the article you'll see that!
I'm only interested in facts or balanced opinions...not in backing up my own assertions.

To reitterate what I've already said, I do not personally believe that we are on the cusp of a price slide, but I acknowledge that given the right circumstances it could well happen.

If you want a debate on this subject then you should relish the chance to deal with the points he raises in his report.
If all you're interested in is patting each other on the back every time someone posts an artcicle about oil price bubbles or house prices in Australia then so be it.
 
Re: London Sales Slump

No Gabriel. Its just that I have been around long enough to recognise a bubble when I see one and thats all there is to it.

One Cork economist and Dan McLoughlin will not budge de Tonk unless they feed him an awful schkelp of drink first , at their expense naturally . I am always amenable to bribery !!!!
 
Re: London Sales Slump

Gabriel said:
Patrick Foley presents a balanced point of view on the subject of a bubble. It is not a one sided argument. If you READ the article you'll see that!
I'm only interested in facts or balanced opinions...not in backing up my own assertions.

Gabriel, his conclusion is there is no property bubble in Ireland and house prices are based on fundementals. This is a controversial stance - not balanced. This stance coincides with your viewpoint. You may agree with this conclusion but others don't.
 
Re: London Sales Slump

There's an interesting debate on the subject on politics.ie here...

[broken link removed]
 
Right now we are just at the beginning of the stagnation period in the boom/bust cycle in Ireland. Things might change quickly though... the world economy is looking shakier by the day... and HSBC, the worlds second largest bank, is not afraid to call it as it sees it. See link...

http://www.sbe.co.uk/events/meetings/30_Nov_2004_John_Butler.pdf


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"my advice remains maintain zero speculative exposure to Irish property market (commercial or residential)" WTTW May '05