There is a lot of people who are throwing blame around, blaming the media, blaming those who talk down the market.

Sure there are people who have a vested interest in seeing a big house price fall, including myself. First time buyers are the biggest VI's in this regard.

We are not the villains in this story.

You do not blame gravity when things fall, you just accept that it has to happen.

The situation with the housing market is the same, big falls must happen due to the actions of the true villains of this story.

Who are the true villains in this story I hear you ask?

At this point I could turn to all those people with a VI in seeing house price rises and blame them - but that would be no good, what would be the point?

We have to look deeper than that, humans are opportunists after all. It is those people who make money selling the concept that house prices will always rise - when they truely know that this is false. It is the architect of this false economy we must look to when attributing blame.

The engineer of our false economy based on an economy of excessive debt and never ending property value rises is Gordon Brown and the Labour government. The very government that promised to eliminate boom and bust economics - what a joke.

No, the press are not to blame for the fall since they merely reflecting negative sentiment. Where they are to blame is when people with vested interests for rises, purchase papers and print house price propaganda, thus further artificially expanding the property bubble.

The banks are not to blame either since it was the US government that kept the interest rates low after the Iraqi war to prevent a recession - opting to postpone the recession for political advantage & thus fueled the easy borrowing that excessively inflated the property market. At the end of the day it is the governments that are at fault. Humans are naturally greedy and to blame the banks for what happened is like blaming animals for being animals. We cannot blame them for wanting the party to keep on going; however it was the government that allowed it to happen, actively encouraged it.

You may wonder what my take is on this ......

Strong growth is dependent on the availability of credit, thus there will always be property bubbles (strong property inflation) followed by recessions, - deflation (destruction of credit) followed by inflation, since it is all part of the engine of growth with the boom times lasting longer than the destruction of credit phase. This is why the property cycle is king and why if you want to make the most of the boom times, you just have to get out at the right time or somehow compensate for the down times.

This url explains the property cycle in terms of emotion, see if you can identify where we are in this situation?

http: / /img101 .imageshack .us /img101 /9533 /bubblepsychologyck8 .jpg

Hi Richard,

please don't take this too personally, but why don't you take a long holiday in some warm and relaxing third-world hideaway, cut yourelf off from the media, and stop worrying so much about the current, transient problems in UK housing.

Those of us who have lived through much worse than this are not really bothered about the doom-mongers. I admit I was scared in my youth when I was in negative equity, and paying 14% interrest, but like most of my peers, we got through that, and have done very nicely thank you.

There will be loosers in the current troubles - the weak and the foolish will be gobbled up by the army of property investors looking for an easy kill. The only difference this time is that there are a lot more predatory investors in the game and they are now much better at what they do.

Try to be a bit more relaxed about all this, it's not the end of the world.

Hi Richard,

I was going to add that your vested interest in seeing a downturn has caused the markets to hemmorage. Please dump your gold, so everyone can follow, and I have confidence that you can turn around the property market in these dire times!!!

I can see that you are on the "inside", being in one of the big four....."Richard, coming to a High Street near you..."

Keep the gloom coming!

Chris.

Hi

I can't help but agree.

Reminds me of a book I have never forgotten reading back in 1992 - The Great Reckoning by James Dale Davidson and William Rees-Mogg. It was all about how the world economy was pretty much going to implode in the near future and that you should basically sell land and real estate (this was in the early 90's remember, so that WAS good advice!), and keep cash - basically US dollars in the form of US T bonds - another corking tip there!

At the time the book scared the heck out of me.

After all, how could these eminent people be wrong? (This was long before Mr Rees-Mogg's predictions were satirised by Private Eye for being wildly wrong - they called him 'Mystic Mogg' after the News of The World's star gazer, Mystic Megg.)

Far as I know they never wrote a sequel - I wonder why!

Anyway, it was a good title!

Robin,

Some points I should mention.

1. The only reason I started posting my "prediction" was in response to Property secrets bullish stance at the UK property market at the beginning of 2007 and before.
2. I am not a economist but rather a wide reading interested party that takes economists predictions with a pinch of salt (since they are usually wrong).
3. My "predictions" are base on fundamentals - and then sentiment.
4. James Dale Davidson and William Rees-Mogg were a joke because they were wrong, but what if they had been right?

My point is I have yet to be wrong.

I am by nature an optimist, but I can't turn away from reality.

Hi Richard

Yes, fair enough.

But, I have to point out that every one of your points was made by the two gents that penned the book (except for the one about them being a joke, obviously).

1 They made their forecasts because of the excessive bullishness of the eighties - junk bonds and yuppies
2 Neither were or are economists and they projected the idea that economists are usually wrong - although actually it isn't an economist's job to make predictions in a narrow sense.
3 Their predictions were based on fundamentals - and then sentiment
4 They made the point - 'imagine if we are right'.
5 They spent the late nineties and beyond telling everyone who would listen that they weren't definitely, absolutely wrong ...not yet anyway!

These guys were not 'a joke because they were wrong' . Many great minds have been wrong and were certainly not jokes. As Keynes once said: "When the facts change, I change my mind, what do you do sir?.”

No, they were sincere, well-informed, intelligent, learned.....and hopelessly wrong!

The point then is this: the only really smart forecast - in my humble opinion - is the one that says certain things appear likely. One that is categoric and inflexible about what will happen is not really worth listening to. They may, of course, turn out to be right, but it will be pure luck.

That, for what it's worth, is my view.

cheers

Spot on Robin. "James Dale Davidson and William Rees-Mogg were a joke because they were wrong, but what if they had been right?" Exactly the same comment applies to you now Richard.
Huw

"When the facts change, I change my mind, what do you do sir?.”

Absolutely, couldnt agree more - just common sense.


So far I have been right, and the fundamental facts haven't changed, nothing has happened that will prevent the house price 25% fall + over the next few years. I am always looking for the next investment opportunity.

Right now i'm optimistic about sugar!

Richard - I don't mind you airing your opinion and having some opinions different from me. Thats what forums are all about.

However, you lack humility when you present your opinion. It seems in your mind that only you are right and everyone else is an idiot.

Maybe act like an arrogant ass when you've really made it but until then why don't you present your opinions with a bit more humility?