Tuesday, April 08, 2008

House price crash deniers

I've been blogging about house prices since Nov last year ( see figs at end.) I then had a go at calculating the direction of house prices - if you assume that something has changed about the economy and avoid using time averaged data from a period with different underlying assumptions. Now finally the BBC has caught onto the house price crash - with Evan Davis refusing to be cowered on R4's today program this morning and the following graph being placed on their web site.

However two groups of people are desperate for you to keep spending ( though lending is going out of fashion fast ) - those associated with the estate industry and the government. They try to assure us in every way they can, but the results of those assurances will be costly mistakes for those who believe them (which shows the form of cynicism New Labour is famous for ).

The truth is that the New Labour/Estate agent narrative and reality are diverging at a unsustainable rate, soon the dam which is holding the truth of these matters from the public will burst, you can see the cracks opening today.

PS If you want to scare yourself witless nip over to housepricecrash.co.uk and look at the predictions being made, and just as important who is making them. Those who's jobs depend on high house prices predict little drop (even amazingly growth), those whose jobs depend on getting right predict drops from 10-30% !! (Hat tip to the Wat Tyler if the TPA who had a link to this site ). Update: The IMF - whose job getting these things right is - predicts a house price drop of 10% today and a halving of the growth rate, ouch !

Update: The panic is now officially bad - even the RICS is admitting things are grim !

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