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| The UK housing market: a bubble about to burst? |
Mr X
by jack Straw
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#1000758
of 3278
 14 Nov 2002
05:41 PM |
Mr X I applaud you. I have repeated that very point so many times. You are right these are market fundamentals.
If we took another persons view we would all be closing out with 70% losses.
One would consider of this persons approach,
"The right honourable gentleman is reminiscent of a poker. The only difference is that a poker gives off the occasional signs of warmth."
Disraeli On Robert Peel |
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Im moral
by Slapper
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#1000757
of 3278
14 Nov 2002
05:25 PM |
Mr X, dearest, thank you so much for providing much-needed moral guidance to the forum.
"you do not have to sell ... unless you need to"
Mr X
You do not have to buy, ever.
Thus, darling, out of simple necessity, may come a time with more sellers than buyers. |
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Housing
by Mr X
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#1000756
of 3278
14 Nov 2002
05:07 PM |
To Rob G - Nonsense after having read your last post and 701. If no one buys, then the seller can easily not sell unless you are forced to. Many sell to move up market etc. So imagine this scenario - seller has bought his place 5 years ago and sees a tidy equity gain. Says to himself, nows the time to move and move up market. Sees a place that he knows he can afford and places his property on the market. Then either he sells at the price he needs to move upwards, or simply says "no" I will not take a price reduction. Result ? He stays put where he is.
Regretably, it is the generally [but certainly not always] first time buyers currently seeking or having just bought that are at most risk. Those that have bought years ago paying much less mortgages or those who have inherited chunks of cash to lay deposits down simply do not realise their aspirations that quicky.
During my time, there have been several occassions when I thought of moving upmarket, but refused to go with the market just because at that point in time the price of my place [in relation to my intended purchase] was deemed to be low. Subsequently, when the prices started to rise again, you re-aspire to your dreams knowing that you will get the price you need and catch the market before your intended purchase goes up too much. The moral of the story is that you do not have to sell [and there are many of us who do not]unless you need to. |
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I have never heard such rubbish!
by Extradry Martini
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#1000755
of 3278
14 Nov 2002
05:03 PM |
Jack Straw:
For the second time, please explain what “Asset Liquidity Theory” is. It is an unknown phrase in the financial markets and it is not a phrase on any of the billions of sites that Google searches.
Please provide an example of a single day in which the Nasdaq index has moved 10% in a day in the last 2 years.
Please provide an example of a single day in which the Nasdaq has moved less than the S&P 500 (a index of much more liquid stocks) or even of the EUR/USD (the most liquid exchange in the world.)
I’m not sure you understand the term volatility when applied to price movement. It refers to how far a price can move between highs and lows, not how many small incremental moves it goes through. I’m sure you don’t know this, but volatility is actually a tradeable asset class in most financial markets. Implied volatility in the Nasdaq is currently 16% higher than that of the S&P, more than twice that of volatility in the EUR/USD and the historical volatility differential has been even higher.
You are right to say that volatility is not the difference between the bid and offer. That is more a function of liquidity, the lack of which creates more volatility. Why? With less liquidity, there are less players in the market. If there are less players in the market , there are less reasons to oppose a movement in a given direction, with less movement opposition (or resistance in the Brownian motion model), it moves further. If it moves further it is more volatile.
I have a feeling that “Asset Liquidity Theory” is you simply saying “…clearly volatility in a liquid market is far higher. “ Well, I’m afraid “Asset Liquidity Theory” will have to be binned as it is wrong. |
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Forgive me if I'm being naive: does illequidity/lack of volatility only matter over the short term?
by Si
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#1000754
of 3278
14 Nov 2002
04:54 PM |
Jack,
Fair enough! I clearly don't have your technical grounding in macroeconomic argument, and I believe in tested theory as essential to understanding the universe, etc. so what is the functional microeconomic connection between the illequidity of houses (meaning lower volatility) and my previous posting asserting that some quite small changes in the background to the housing market could result in quite large price changes? To be fair, i don't know enough to guess at a good timescale, so are we saying that providing any tax, unemployment changes, etc. don't last for too long then they won't affect house prices much because of a lack of volatility in property prices? Would this, then, be like a heavily damped mechanical system? |
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70% Losses Unrealistic? Maybe.
by Rob G
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#1000753
of 3278
14 Nov 2002
04:46 PM |
Let's hope that pie-in-the-sky doesn't turn out to be egg-on-your-face Jacky Baby.
50% is entirely possible. 70% is less likely but not unthinkable.
You underestimate the fear factor. Greed is on the way out. Pure fear will dominate in the months to come.
I refer you to the answer I gave some hours ago.
#1000701
You have to get yourself into the head of a potential first time buyer. I think I have a distinct advantage in that respect... |
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Jack, luv, you stir me
by Slapper
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#1000752
of 3278
14 Nov 2002
04:33 PM |
Mr Straw Man, darling, your poetry tickles my fancy.
"A bird in the hand is worth two in the bush"
Anon
Sell your houses now before it is too late, dear. |
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shaken but not stirred
by Jack Straw
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#1000751
of 3278
14 Nov 2002
04:01 PM |
Si,
I feel I caught “the tiger by the tail” with my previous comments. I thought it appeared to be pretty rational, however I thought I better clarify a number of issues: -
With regard to, “Asset Liquidity Theory”, clearly volatility in a liquid market is far higher.
That is a fact that cannot be disputed. I fear that some people that take volatility to be the difference between the bid and the offer, the spread – not true. Previously a certain individual, I will refer to them as “M”, was using the example of the NASDAQ, a liquid market, which has been moving up and down to 10% a day. I must apologise if the US housing market has been more volatile, this means on a daily basis prices are moving up and down by more than 10%. If so it must be real difficult for a valuer, imagine you have to market to market your valuation daily and exchange must run so many issues.
70% losses are pure pie in the sky, whether we term them as pure 70% or 50 % plus over – reaction of 20%.
Keynes once stated,
“Prices are sticky on the downward side”
I know I am correct, 70% losses are pure pie in the sky. But I guess that’s the problem with people who believe all movements can be charted. When I view “M” I fear that,
“The candle in that great turnip has gone out”
Churchill On Stanley Baldwin
In the case of housing prices, people do not chose to take losses but hold onto their investment, unless they are lulu of course. Of course, lulu argues that people can sell to avoid a crash. This is overly simplistic – as someone has to purchase the said dwelling to divest the said risk. Of course Lulu, in not inhabiting a dwelling now as they stated, must therefore have become a traveller, in a caravan or a tent. I will presume that they have not become a traveller, but are infact renting, which could be considered as inhabiting a dwelling and contributing to the housing market. Although I am interested, there was a guy at my University that lived in a mini van in the car park, its not you is it?
Unfortunately, “M” also gets confused at this point. Extrapolating “M”’s theory you have to be a shareholder to influence the price of a share, not a stakeholder of any other form. Which is contrary to current financial theory.
Secondly renting leaves us with a direct expense from retained earnings. Thus they will be seeing a loss anyway – if the market drops or not. Whether you expense the whole figure, or the differential between letting cost and interest expense, is your choice both have pertinent arguments. Further, losses in endowments, for those that own them, by their cessation have tangible losses.
My reference to the stock operator is pertinent, only a child would see it any other way, I believe the gentlemen chose to exist before and beyond 1923. But unfortunately the main party, Livermore, died bankrupt – I presume from investing in liquid markets such as housing, termed deposits and land purchases.
But apparently “I show errors in all my assumptions”; I think someone is taking postings personally?
Such a statement is clearly childish, although I am flattered that the individual looks on google for responses. But I must warn them that,
Self-conceit may lead to self-destruction.
Ibid.
A previous essay I viewed, on the tempest, I believe covers this approach take by the said individual. Although modesty prevents me accepting the role of prospero – I will believe that honour is Si’s. I presume the words language and Chartism are interchangeable.
"You taught me language, and my profit on it is I know how to curse."
Shakespeare, The Tempest
In Shakespeare's The Tempest, the magician Prospero reminds the monster Caliban that he taught Caliban language when the monster had "no language but a cry." Caliban is unappreciative of this boon because he is still a monster, albeit a monster who speaks. Animals can convey information with cries and gestures, but only humans have the vocal and neurological equipment to speak, create meaning, communicate, and understand spoken and written language. The German philosopher Ernst Cassirer believed that humankind's acquisition of an elaborate symbolic system has transformed our lives, so that we live in a "new dimension of reality."
M Mairese |
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Bored?
by Extradry Martini
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#1000750
of 3278
14 Nov 2002
03:51 PM |
Bored, bored bored:
Please explain where you see "trivialised arguments" (sic). All my arguments are rational and supported by deep analysis and economic fact.
Perhaps you see my numerous explanations of supply-side recessions, of the nature of capital, of the basis of technical analysis, of the credit crunch currently sweeping through the debt markets or of how the money markets work as "trivialised"?
You must then see every other post here as the same. So what are you doing in the forum, much less posting in it?
Even Hoogstraten has contributed more... |
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Oh dear
by Slapper
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#1000749
of 3278
14 Nov 2002
01:42 PM |
Gareth dear, lets not be too deviant. Even if your gentle future came to pass, it would hardly justify rushing out to buy a house right now, would it?
Methinks a sharp slap on the bottom may be preferable to a dull, drawn-out nagging pain... |
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Hoogstraaten Bubble Trouble
by Rob G
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#1000748
of 3278
14 Nov 2002
01:25 PM |
Hoogstraaten, funny you should point out global wealth as being a 'bubble', presumably with wry smile on your face and pointing out that the housing market might go on expanding at the same pace ad infinitum.
Well, sorry to point it out, but what you're referring to is the rate of use of the natural (non-renewable) resources of the planet.
And yes, when we run out of oil that bubble too will burst in exactly the same way and the graph of global wealth will go back to its origins in exactly the same way. Probably a mirror image of its growth pattern in fact.
[This message was edited by Monitor_CS on 14 Nov 2002 at 01:38 PM.] |
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Put your money where your mouths are
by Bored, bored bored
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#1000747
of 3278
14 Nov 2002
01:22 PM |
I don't think that Hoogers and Extradry are ever going to see eye to eye. They have bored us all enough with their increasingly trivialised arguments. Why don't you give us all a break and have a straight bet with eachother on for example the Halifax or Nationwide house prices index.
It would certainly be more interesting than your current exchanges ! BTW Hoogers you were much better before they asked you to dull your wit and cut out the insults. They are probably feeling a bit sensitive and insecure that they have less houses than you. |
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Hoogstraten
by Si
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#1000746
of 3278
14 Nov 2002
01:03 PM |
| Zorro is clearly a rational investor and likely to gain more than he loses, but an awful lot of people are piling into the market irrationally, so THEIR particular investments look unsound. A correction seems likely just because a large number of people are being daft, and national lending-levels surely bear this out compared to savings? And how much would a correction need to be before we looked back and proclaimed it the popping of a bubble? |
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Found the link now!
by Knowledge is Power
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#1000745
of 3278
14 Nov 2002
12:58 PM |
here's the link to the article as just mentioned!
http://www.thisismoney.com/20021113/mh55494.html |
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Which figures to belive?
by Knowledge is Power
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#1000744
of 3278
14 Nov 2002
12:56 PM |
In the Daily Mail yesterday was a semi-objective article, covering house price growth across the UK, and discussing the relative merit of a rise fall, according to regional areas. (I know not the greatest read, but the financial comment has been pretty good over the last 6 months).
However the most interesting bit was at the end of the article, where is dicussed the differences of 4 key House Prices Index's (namely Nationwide, Halifax, Hometrack?, and the Land Registry).
Each calculate their figures differently, and use different data.
Just wondering what people think of the various index's, and how the figures are calculated?
I'll try & dig the article out if I can & put the discussion on this site if I can.
K.I.P.
On another note, it's obvious that the UK Firefighters strike on pay is fueled by soaring houseprices. Fair argument yes or no anyone? |
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