Growing evidence that the downturn is upon us....
Here's some growing evidence.
http://www.pprune.org/forums/showthread.php?t=324842
SAS airlines post a £73m loss, bigger than expected and announced cost cutting plans which include cutting their fleet by 5%. You'll find plenty of those Norwegian/Swedish/Danish pilots have EXCELLENT english language and EXCELLENT CV's...
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http://www.pprune.org/forums/showthread.php?t=324842
SAS airlines post a £73m loss, bigger than expected and announced cost cutting plans which include cutting their fleet by 5%. You'll find plenty of those Norwegian/Swedish/Danish pilots have EXCELLENT english language and EXCELLENT CV's...
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Mortgages approved for home purchase (as opposed to applications refused OR re-mortgages)
Down 44% Year on Year
Seasonally Adjusted:
March 2008 - 64000
March 2007 - 114000
Non- SA:
March 2008 - 64000
March 2007 - 133000
There seems to be a 52% cliff fall in Estate Agents Profits, Builders Margins and Bankers Sales. This will feed through to airlines and the wider economy. Big Time.
Protect yourself,
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Down 44% Year on Year
Seasonally Adjusted:
March 2008 - 64000
March 2007 - 114000
Non- SA:
March 2008 - 64000
March 2007 - 133000
There seems to be a 52% cliff fall in Estate Agents Profits, Builders Margins and Bankers Sales. This will feed through to airlines and the wider economy. Big Time.
Protect yourself,
WWW
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In order to keep the house price boom running and thus maintain a feelgood factor allowing Labour to win the 2005 General Election, Gordon Brown changed the MPC inflation target from RPI to CPI.
CPI excludes housing costs. You know, that little bill each month called the mortgage.
CPI excludes housing costs. You know, that little bill each month called the mortgage.
They used RPI-X before, which was RPI less mortgage repayments, and changed it to CPI with an equivalent decrease in inflation target (due to composition of the index) to ensure comparability with other countries.
You can't have an inflation target with mortgage repayments in it in the UK, as mortgage repayments tend to be variable in the UK, hence raising the base rate would raise RPI, denoting greater inflation, necessitating a rate rise, which would raise RPI etc etc - completely circular.
The real inflation we are exposed to is not CPI or RPI at all - these are economists' measures for policy calculations and are not designed to be real inflation measures at all!
The government reclassified the unemployed and then let a couple of million Poles in to do all the work. Its really that simple.
Ask your local GP how many idiots ask for "sick notes" and "disability certification" and you would be surprised. Sure, there are the truly ill, and the truly unemployed who need a hand getting back to the labour force, but there are a huge number of idiots out there as well.
On another note, I am quite sure that most of those laid off in the City this year probably won't bother signing on - and hence won't be counted - as it is not worth their while. They will live from savings and wait for the market to come back upward.
Re-Heat - I was simplifying. So you are correct in what you say. If you want to escalate the inflation targeting debate to Jedi level then so be it.
As is well known, CPI inflation is likely to be around 0.8 percentage points below RPIX inflation in the long run (see Nickell {MPC member}, 2003)
http://papers.ssrn.com/sol3/papers.c...#PaperDownload
Most of this difference (0.5 percentage points) is down to the varying formula used to aggregate the inflation rates of all the different goods. The remaining 0.3 percentage points of the long-run difference is down to the exclusion of housing depreciation and Council Tax from CPI.
While the long-run impact of this exclusion is somewhat small, in the short run it can, and recently has had, a very substantial effect on the difference between CPI and RPIX inflation. Actually, because of the fact that the housing depreciation element of RPIX is based on house price inflation, throughout 2003/4/5 RPIX inflation was significantly above target whereas CPI inflation was below its subsequent target.
During this period the difference between the two measures of inflation was well over a percentage point.
<Jedi mode off>
House prices will crash 20%+ there will be a major recession and lots of airlines will go bust.
That's the easy bit to understand. The causes will only properly be understood in 2070 by Ben Bernakes Grandson.
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As is well known, CPI inflation is likely to be around 0.8 percentage points below RPIX inflation in the long run (see Nickell {MPC member}, 2003)
http://papers.ssrn.com/sol3/papers.c...#PaperDownload
Most of this difference (0.5 percentage points) is down to the varying formula used to aggregate the inflation rates of all the different goods. The remaining 0.3 percentage points of the long-run difference is down to the exclusion of housing depreciation and Council Tax from CPI.
While the long-run impact of this exclusion is somewhat small, in the short run it can, and recently has had, a very substantial effect on the difference between CPI and RPIX inflation. Actually, because of the fact that the housing depreciation element of RPIX is based on house price inflation, throughout 2003/4/5 RPIX inflation was significantly above target whereas CPI inflation was below its subsequent target.
During this period the difference between the two measures of inflation was well over a percentage point.
<Jedi mode off>
House prices will crash 20%+ there will be a major recession and lots of airlines will go bust.
That's the easy bit to understand. The causes will only properly be understood in 2070 by Ben Bernakes Grandson.
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Yes, but letting them in resulted - on all economic measures - in them creating new jobs through their own economic activity. The unemployed lot stayed unemployed and unemployable in some cases.
Totally agree. Now explain how bad the reverse effect will be. A tax-paying hard working workforce with no family or historic ties with this rain sodden island will be faced with a recession. They'll be on the first easyJet to either Home or somewhere not so rain sodden and not in recession.
Leaving the disability scroungers still scrounging and the remaining tax payers bearing a greater burden whilst being unable to find a decent plumber again.
It will be worse this time.
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Totally agree. Now explain how bad the reverse effect will be. A tax-paying hard working workforce with no family or historic ties with this rain sodden island will be faced with a recession. They'll be on the first easyJet to either Home or somewhere not so rain sodden and not in recession.
Leaving the disability scroungers still scrounging and the remaining tax payers bearing a greater burden whilst being unable to find a decent plumber again.
It will be worse this time.
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Yes, I was just pointing out that you can't blame the index that is not designed to be used as a headline figure.
I don't believe a 20% crash is in order - what will happen is that people will not move house for a while, instead sitting there until they make little capital loss on sale.
Prices as a % of salaries will fall back to a more reasonable figure, and lending will contract (it has already) from 100% plus of property value to c.80%. Pent-up demand will be satisfied when developers sell off stock of houses at cheaper-than-expected rates, but I really doubt a crash per se is in order - the reason being that speculative second-home purchases were nowhere near as high as occurred in - for example - Dublin. (and the buy-to-let mortgage market remained reasonably sensible...)
I don't believe a 20% crash is in order - what will happen is that people will not move house for a while, instead sitting there until they make little capital loss on sale.
Prices as a % of salaries will fall back to a more reasonable figure, and lending will contract (it has already) from 100% plus of property value to c.80%. Pent-up demand will be satisfied when developers sell off stock of houses at cheaper-than-expected rates, but I really doubt a crash per se is in order - the reason being that speculative second-home purchases were nowhere near as high as occurred in - for example - Dublin. (and the buy-to-let mortgage market remained reasonably sensible...)
You are ignoring the Buy To Let disaster.
Sure lots of people will sit tight. Which means estate agents go bust as do the paint sellers and carpet makers.
What about those getting divorced, dying or losing their jobs? How do they sit tight? They can't - so they sell - so defining the new valuation of your house.
Its a spiral just like a boom but in the opposite direction.
The BTL brigade are nursing negative equity as house valuations fall. Many of them will not be able to refinance without much higher costs which they will be unable to pass on to their tenants. Many were already making a negative monthly return but were enjoying annual capital appreciation. With this removed they have a stark choice:
Sell the portfolio and stop losing money every month, or,
Stick with losing money and hope the crash doesn't continue.
Rock and hard place.
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Sure lots of people will sit tight. Which means estate agents go bust as do the paint sellers and carpet makers.
What about those getting divorced, dying or losing their jobs? How do they sit tight? They can't - so they sell - so defining the new valuation of your house.
Its a spiral just like a boom but in the opposite direction.
The BTL brigade are nursing negative equity as house valuations fall. Many of them will not be able to refinance without much higher costs which they will be unable to pass on to their tenants. Many were already making a negative monthly return but were enjoying annual capital appreciation. With this removed they have a stark choice:
Sell the portfolio and stop losing money every month, or,
Stick with losing money and hope the crash doesn't continue.
Rock and hard place.
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BTL disaster? Not necassrily.
With the tightening of the credit market people, esp first time buyers, are going to find themselvers stuck in the private rented sector for a lot longer than they planned, this will swell the demand for private sector rented accomodation and keep rents bouyant.
There are also a number of people who sold up at the top of the market and are now in the rented sector waiting for the market to bottom out before buying again.
I think that the only place that will see a real price and rents depreciation is the SE of England where prices/rents were artificially high in any case. Up here in Scotland we still have above ave GDP growth, c8-10% house price growth and private rents are growing nicely
With the tightening of the credit market people, esp first time buyers, are going to find themselvers stuck in the private rented sector for a lot longer than they planned, this will swell the demand for private sector rented accomodation and keep rents bouyant.
There are also a number of people who sold up at the top of the market and are now in the rented sector waiting for the market to bottom out before buying again.
I think that the only place that will see a real price and rents depreciation is the SE of England where prices/rents were artificially high in any case. Up here in Scotland we still have above ave GDP growth, c8-10% house price growth and private rents are growing nicely
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If new entrants are not coming into the property market (historically known as first time buyers) will they stay in the rental market..just like you ?. New entrants will continue to appear ( age, new relationships etc)and want /need to rent. So demand for rental property will go up....and therefore rentals. 
Nice idea. What about 1m Poles going home, the largest UK house builder quitting building houses because they can't sell the empty ones they have and the hundreds of flats and small houses going under the auctioneers hammer every weeks for tens of thousands of pounds less than they sold for last year or the year before.
I'll buy a couple of flats at auction for £100k less than you paid for them last year and start renting them out for £400 a month less than you need to rent your out for. I'll be making a small profit and you'll be bankrupt by Christmas.
Thats the reality facing many landlords.
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I'll buy a couple of flats at auction for £100k less than you paid for them last year and start renting them out for £400 a month less than you need to rent your out for. I'll be making a small profit and you'll be bankrupt by Christmas.
Thats the reality facing many landlords.
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I can only comment on the reality of rents on the South coast that are going up !. House prices may be looking shakey but not rentals. General Zod seems to think all is well in Scotland. I would imagine someone, if not the poles are going to have to build the Olympic stadiums, (if they ever get around to it) they will need rental accomodation..so should be OK there. So that leaves the Wales, Midlands and N England with rental problem ? and massive price drops on flats !
General Statistics are jolly interesting but can hide a multitude of variances
2 bed flats in Manchester may get cheap (rents and price) but larger properties in the N.W may be subject to a range of differing national and local factors
General Statistics are jolly interesting but can hide a multitude of variances
2 bed flats in Manchester may get cheap (rents and price) but larger properties in the N.W may be subject to a range of differing national and local factors
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Eggagerated - sells papers
I've just sold for more than last year by a large margin (up north)
Its all Daily Express driven is this doom and gloom
We will all die horribly AHHHHHH
Its all Daily Express driven is this doom and gloom
We will all die horribly AHHHHHH
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Lurking not possible to predict recovery..but history is your best guide.
1972 World Revenue Pax Miles (RPMs) increased 13% on the 1970 figure.
1973 World Gross Domestic Product also increased by 13%
Mid 1973 start of official recession period.
1974 World RPMs year on year increase 4%
1975 World GDP year on year increase 1%
Mid 1975 end of recession
1976 World RPM increase 9%
1976 World GDP increase 10%
Mid 1980 Start of 80's recession.
1980 World RPMs up 1.5%
1981 World GDP up 2%
1983 recession ends
1984 World RPM up 8.5%
1984 World GDP up 9%
The begining of 1991 was the start of the shortest recession in recent history
1991 World RPMs down 3% (the one and only time year on year RPMs went down since 1970).
1991 World GDP up 0.5%
Begining of 1992 was the end of recession period (but there was a very slow recovery).
World RPMs up 2.5%
World GDP up 1.5%
I was working for British Aerospace and Airbus during the early 1990's and although our orderbooks were full initially there were cancellations the likes of which had never been seen before. Ultimately we had to sell A320s to Swissair for $18 Million each (roughly the sticker price for engines alone) just to keep production ticking over.
Between 1990 and 1994 IATAs member airlines suffered cumulative losses of $20.4 billion. This figure was greater than the cumulative profits since WW2.
Be in no doubt guys that the health of our industry is directly related to the world economy. Probably the most significant difference this time is that there will be jobs for those made redundant in the Middle / Far east.
On the housing front we are (probably) in for a slump (although no one really knows) but the 20% figures being suggested are estimates UK wide. I currently work in Scotland which is still doing well. Most of my properties are in NW England (and they are unlikely to fall more than 10%).
1972 World Revenue Pax Miles (RPMs) increased 13% on the 1970 figure.
1973 World Gross Domestic Product also increased by 13%
Mid 1973 start of official recession period.
1974 World RPMs year on year increase 4%
1975 World GDP year on year increase 1%
Mid 1975 end of recession
1976 World RPM increase 9%
1976 World GDP increase 10%
Mid 1980 Start of 80's recession.
1980 World RPMs up 1.5%
1981 World GDP up 2%
1983 recession ends
1984 World RPM up 8.5%
1984 World GDP up 9%
The begining of 1991 was the start of the shortest recession in recent history
1991 World RPMs down 3% (the one and only time year on year RPMs went down since 1970).
1991 World GDP up 0.5%
Begining of 1992 was the end of recession period (but there was a very slow recovery).
World RPMs up 2.5%
World GDP up 1.5%
I was working for British Aerospace and Airbus during the early 1990's and although our orderbooks were full initially there were cancellations the likes of which had never been seen before. Ultimately we had to sell A320s to Swissair for $18 Million each (roughly the sticker price for engines alone) just to keep production ticking over.
Between 1990 and 1994 IATAs member airlines suffered cumulative losses of $20.4 billion. This figure was greater than the cumulative profits since WW2.
Be in no doubt guys that the health of our industry is directly related to the world economy. Probably the most significant difference this time is that there will be jobs for those made redundant in the Middle / Far east.
On the housing front we are (probably) in for a slump (although no one really knows) but the 20% figures being suggested are estimates UK wide. I currently work in Scotland which is still doing well. Most of my properties are in NW England (and they are unlikely to fall more than 10%).
Rentals are crumbling but its like the house price drops that started in Sept last year - they are small and people don't see it unless they are looking. They will become widespread by the end of the year.
Get yourself the FireFox browser and get the PropertyBee add on. This logs every asking price on Rightmove as you browse and shows you any changes when you browse again in the future. Its very easy to keep a perfect record of For Sale and For Rent asking prices on every property in your area for a massive radius. Asking prices are already up to 20% down commonly. Rentals are just starting to soften. Try it and see for yourself.
I expect this year to decline rapidly towards a recession in Q1, 2 & 3 in 2008. There will then be a 2 year recovery from there. Normal growth I expect to see return in 2011.
But I don't know. I'm not in any way certain. There are far too many variables and I don't have anywhere near enough information nor understanding to make any kind of reliable prediction.
All I've been certain of so far is the UK house price crash and the economy slowing to below 2% and a recession next year. If you accept that then the implications for the airlines and Wannabeism are depressingly grim.
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Get yourself the FireFox browser and get the PropertyBee add on. This logs every asking price on Rightmove as you browse and shows you any changes when you browse again in the future. Its very easy to keep a perfect record of For Sale and For Rent asking prices on every property in your area for a massive radius. Asking prices are already up to 20% down commonly. Rentals are just starting to soften. Try it and see for yourself.
I expect this year to decline rapidly towards a recession in Q1, 2 & 3 in 2008. There will then be a 2 year recovery from there. Normal growth I expect to see return in 2011.
But I don't know. I'm not in any way certain. There are far too many variables and I don't have anywhere near enough information nor understanding to make any kind of reliable prediction.
All I've been certain of so far is the UK house price crash and the economy slowing to below 2% and a recession next year. If you accept that then the implications for the airlines and Wannabeism are depressingly grim.
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I think we both agree no one has the ability to predict the future of the housing market. There are pleanty of Doctorate trained economists ,with more knowledge in their little finger than you and I combined, who can't agree on this.
In EDI and GLA prices have not shown any significant drop. In my part of the North West there are still hot spots where prices are still increasing. I was out bid at auction for a old school 15 miles from where you used to live £111 K from an original guide of £50K!
Historically the significant down turn you speak of is more likely to be where the serious price rises have taken place over the last ten years (South of the Watfrod gap).
What we do agree on is the more important (and depressing) point that the economy is on the way down and with it the profitability of most European and US Airlines.
I think we both agree no one has the ability to predict the future of the housing market. There are pleanty of Doctorate trained economists ,with more knowledge in their little finger than you and I combined, who can't agree on this.
In EDI and GLA prices have not shown any significant drop. In my part of the North West there are still hot spots where prices are still increasing. I was out bid at auction for a old school 15 miles from where you used to live £111 K from an original guide of £50K!
Historically the significant down turn you speak of is more likely to be where the serious price rises have taken place over the last ten years (South of the Watfrod gap).What we do agree on is the more important (and depressing) point that the economy is on the way down and with it the profitability of most European and US Airlines.
Migas - knowing you don't know anything is nothing to be ashamed about or apologise for. I've never given an opinion here without providing sources, data or evidence of similar opinion. One mans fears on an internet discussion forum should and would be easily ignored if there wasn't anything to back it up. Unfortunately the evidence for a house price crash a recession and a period of airline bankruptcies is all too readily at hand..
MIKECR - Oil will touch $150 a barrel by Christmas. That's my guess, in print, lets see come Boxing Day.
RMC - your belief in the local housing maket into which you have just bought is touching if not naive. Your area will be down at least 10% as the UK wide house price crash unfolds just as it has in America. First in pockets, then in States, then Nationwide.
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MIKECR - Oil will touch $150 a barrel by Christmas. That's my guess, in print, lets see come Boxing Day.
RMC - your belief in the local housing maket into which you have just bought is touching if not naive. Your area will be down at least 10% as the UK wide house price crash unfolds just as it has in America. First in pockets, then in States, then Nationwide.
WWW