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 !

"Central banks provide about the same social function as a distillery"

So says Bill Bonner over at The Daily Reckoning blog.

The post's great - if only for a series of illustrations like that in this posts title. Its about how easy credit has made us stop thinking. I strongly recommend giving it a read here.

I'm not qualified to tell if Bill has it right - but it certainly looks worrying. Somehow the fundamentals of our economy just look wrong right now. We have too much debt, produce too little and have what looks like a house price bubble.

A few months ago no one could imagine a run on a British high street bank - now they can. Are we held back by a lack of imagination ? Politics is currently about optimism - so no warnings from politicians that might affect their poll ratings can be expected ( except the need for economic suicide to transfer our wealth to China and India to prevent global warming).

Today on the news I heard more warning about Housing price reductions in the UK. Something I have regarded as inevitable as soon as houses became too expensive to buy for enough people ( is it really rocket science ? ).

The denials have been out - only a 10% chance said the Royal Chartered Institute of Surveyors ( guess which side their bread is buttered ) a few months ago.

As an electorate we find it very hard to imagine circumstances other than those just now or in our recent past. That's a shame, because if we could we might be able to avoid what is coming.

On returning from our half term holidays let out a shout of amazement as I drove past a block of flats - I have never seen so many For Sale signs. Perhaps less imagination is now required.