Growing Evidence That The Upturn Is Upon Us
As those that have followed my postings for some time I believe that House Prices are a close proxy for the depth and timescale of the recession. As House Prices are an area open to detailed study they can provide a good guide to the near future.
I've just been reading data that suggest that my most bearish predictions of a 35% peak to bottom fall is actually going to happen. I'll share it here:
The lead indicator here is the level of new mortgage approvals, which indicates the upcoming buying power entering the UK property market. The latest numbers were released on the 2nd January, and the record low number continues to point to further weakness, as illustrated in the chart.
The Red Line is recorded house prices to date. The Blue Line is recorded mortgage approvals to date PLUS a 7 month prediction. This prediction comes from what the bond market prices and the lenders themselves seem to indicate is their view. IF the Red Line continues to closely follow the Blue Line as it has done for many years then 2009 looks likely to bring about a 30% house price fall.
That will be the deepest, fastest most vicious correction in several generations. A 1980-82 style recession rather than a 1990-92 one. Negative equity for around 4 million households. Mass unemployment, spiraling crime (its tightly linked to economic prosperity) and civil unrest.
Given that averages mask a wide spread of values there would have to be a considerable number of properties that would fall by more than half from their peak valuations. Many city centre flats are already there. For those caught in such dramatic debts bankruptcy is probably the only solution.
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ps Happy New Year.
I've just been reading data that suggest that my most bearish predictions of a 35% peak to bottom fall is actually going to happen. I'll share it here:
The lead indicator here is the level of new mortgage approvals, which indicates the upcoming buying power entering the UK property market. The latest numbers were released on the 2nd January, and the record low number continues to point to further weakness, as illustrated in the chart.
The Red Line is recorded house prices to date. The Blue Line is recorded mortgage approvals to date PLUS a 7 month prediction. This prediction comes from what the bond market prices and the lenders themselves seem to indicate is their view. IF the Red Line continues to closely follow the Blue Line as it has done for many years then 2009 looks likely to bring about a 30% house price fall.
That will be the deepest, fastest most vicious correction in several generations. A 1980-82 style recession rather than a 1990-92 one. Negative equity for around 4 million households. Mass unemployment, spiraling crime (its tightly linked to economic prosperity) and civil unrest.
Given that averages mask a wide spread of values there would have to be a considerable number of properties that would fall by more than half from their peak valuations. Many city centre flats are already there. For those caught in such dramatic debts bankruptcy is probably the only solution.
WWW
ps Happy New Year.
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"Happy New Year" indeed...
An amusing slant on a depressing topic...
BANKS TO NOT LEND YOU MORE OF YOUR OWN MONEY - The Daily Mash
I shall ring and ask for a loan..
p.s. It's tradition, or an old charter, or something, to link to indicators of impending doom. I was looking at the beeb site last night counting the name brand businesses that look like they're going to the wall. I had not the energy to cut and paste them.
BANKS TO NOT LEND YOU MORE OF YOUR OWN MONEY - The Daily Mash
I shall ring and ask for a loan..
p.s. It's tradition, or an old charter, or something, to link to indicators of impending doom. I was looking at the beeb site last night counting the name brand businesses that look like they're going to the wall. I had not the energy to cut and paste them.
Last edited by JohnRayner; 6th Jan 2009 at 10:17. Reason: adding another ray of sunshine onto the end
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WWW - A supporting cautionary tale....
Back in 1996, I bought a flat in Cardiff Bay for £50k. In 2005, I sold it for £140k. A mate who has a similar flat in the same area has just been offered £80k for theirs... in all this time, the Bay area has been getting better and better as a place to live, so you have to wonder what would the price now be if the place had gone to the dogs...
Heaven help me had I borrowed that mythical £90k against my property to fund an ATPL or anything else... I fear that many people will have though.
TA
Back in 1996, I bought a flat in Cardiff Bay for £50k. In 2005, I sold it for £140k. A mate who has a similar flat in the same area has just been offered £80k for theirs... in all this time, the Bay area has been getting better and better as a place to live, so you have to wonder what would the price now be if the place had gone to the dogs...
Heaven help me had I borrowed that mythical £90k against my property to fund an ATPL or anything else... I fear that many people will have though.
TA
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Karl Marx was right about this system...
one day people will understand why capitalism system fails.
It will be too late.
Economy goes up an down, up and down, but will definately go down.
I have just read its books and it so logical why our economy is fragile.
anyway I am not here to give my opinion just tell you: be safe and open minded.
one day people will understand why capitalism system fails.
It will be too late.
Economy goes up an down, up and down, but will definately go down.
I have just read its books and it so logical why our economy is fragile.
anyway I am not here to give my opinion just tell you: be safe and open minded.
Back in 1996, I bought a flat in Cardiff Bay for £50k. In 2005, I sold it for £140k.
For a flat to have increased in value by 280% in a mere 9 years, it would have had an average annual increase of 12.1%. There is no way that salaries increased by even half that rate, so the gulf between average income and house prices increased and increased until the ridiculous greed bubble finally burst. Taking with it the bankers and other white collar criminals who'd lent money to people quite clearly unable to afford it.
Whereas £50K to £80K in 12 years is a more reasonable average annual rate of 3.99%. Not far off annual RPI, in fact.
Still overvalued though - it is, after all, in the Land of No Vowels....
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I was agreeing with you until the last line...
Unworthy of you.
TA
Still overvalued though - it is, after all, in the Land of No Vowels....
TA
Some might say unwise... 
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Ryanair's December traffic was 11% up on a year ago, load factors unchanged. Ryanair.com
Still no sign of the widely predicted collapse in passenger numbers. Could they be wrong?
Still no sign of the widely predicted collapse in passenger numbers. Could they be wrong?
Wouldn't it be better to look at pax figures across all European airlines and not just one with three billion 737s and a client base that spans only a few demographics? Would I be right in thinking that the majority of seats flown in December were booked at a time when the country wasnt in recession?
I know, I ask too many questions. Let's get quizzical.
I know, I ask too many questions. Let's get quizzical.
11% more passengers. Well there's no need to worry then. With that sort of passenger growth there's absolutely no problems for Wannabes or commercial pilots in 2009/10.
I must get myself to the Porsche dealership in the morning in anticipation of my massive payrise and lucrative share option for 2009/10. Do you think the GT3 is less useable than the Turbo?
Its FUBAR'd and we all know it.
WWW
I must get myself to the Porsche dealership in the morning in anticipation of my massive payrise and lucrative share option for 2009/10. Do you think the GT3 is less useable than the Turbo?
Its FUBAR'd and we all know it.
WWW
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WWW wot is your job mate, are you a pilot. You seem to have far to much time on your hands, with the amount of posts you put on here. I think we should swap names since all you seem to do is go on about doom and gloom, lightin up mate wot ever happens happens 
I must get myself to the Porsche dealership in the morning in anticipation of my massive payrise and lucrative share option for 2009/10.
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Would I be right in thinking that the majority of seats flown in December were booked at a time when the country wasnt in recession?
In addition EZY are showing Nov load factors up by 3.4% so maybe we are missing something in amongst the total gloom and doom
And, no, I'm not saying everything in the garden is rosy, but it is possible to find the odd glimmer of positivity if, ... you feel so inclined.
Aggregated house price statistics mask a number of things such as regional variations.
Whilst we have seen house prices in the SE fall by 16%, Scotland has seen only a 7% drop with an increase, (all be it small), in the last quarter.
I'm not suggesting everyone goes out and books an integrated course or orders a Porsche, but whilst it may be grey, but it's not all black..(the economy, not the Porsche)
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To be fair if I'm going to get a porsche, I'd go for a black 911......
By the way, easyJet are whispering about making a small profit for the financial year 09.
I knew there was logic behind the origins of this thread!
By the way, easyJet are whispering about making a small profit for the financial year 09.
I knew there was logic behind the origins of this thread!
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For all those fond of quoting Ryanair passenger growth numbers (which are slowing rapidly).... if you want to quote Ryanair here are the bullet points from a slide they used in an investor presentation on December 15th.... it is on their website so in the public domain... I would draw your attention to points 5 and 6... hardly points to an expanding industry does it?? And if passeger numbers are so rosey as you point out why are so many pilots having to join the doll queue??
• Oil prices and recession have devastated airlines
• Over 30 airline failures YTD 2008
• Small stand alone EU flag carriers are unsustainable
• Airline consolidation accelerating in EU and Atlantic mkts
• Short and long haul capacity rapidly contracting
• Collapsing air travel demand in recession
• Govts and EU support/approve airline consolidations
• Govts and EU endorsing consolidation over competition, e.g. banks
• Oil prices and recession have devastated airlines
• Over 30 airline failures YTD 2008
• Small stand alone EU flag carriers are unsustainable
• Airline consolidation accelerating in EU and Atlantic mkts
• Short and long haul capacity rapidly contracting
• Collapsing air travel demand in recession
• Govts and EU support/approve airline consolidations
• Govts and EU endorsing consolidation over competition, e.g. banks
I didn't think house prices *could* go down in Scotland Clear Prop! ? Certainly never in Edinburgh...
Scotland is just lagging, like England lagged the US/Spain/Ireland.
I'm very very pleased that EZY's load factor is inching up but that might be just a tad related to the capacity reductions made for the winter by parking aircraft up and offering acres of unpaid leave to its staff.
Do please all point out glimmers and reasons to be cheerful - its the point of the thread.
I believe the US will see a million Americans a month lose their jobs in 2009. I believe that the UK is closely following, with a lag, the US and will see a similar scale disaster. In 2008 we talked a lot about oil and inflation and bank bailouts. 2009 we will mostly be talking about unemployment and deflation.
WWW
Scotland is just lagging, like England lagged the US/Spain/Ireland.
I'm very very pleased that EZY's load factor is inching up but that might be just a tad related to the capacity reductions made for the winter by parking aircraft up and offering acres of unpaid leave to its staff.
Do please all point out glimmers and reasons to be cheerful - its the point of the thread.
I believe the US will see a million Americans a month lose their jobs in 2009. I believe that the UK is closely following, with a lag, the US and will see a similar scale disaster. In 2008 we talked a lot about oil and inflation and bank bailouts. 2009 we will mostly be talking about unemployment and deflation.
WWW