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Scotland 'not immune' to housing crash



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Published Date: 22 May 2008
A HOUSING charity today warned that Scotland is no longer "insulated" against a housing market fall-out.
Shelter Scotland said that the market north of the border is now more in line with England, where house prices have risen dramatically in recent years.

The warning came as experts gathered in Edinburgh today for the Scottish Housing Bubble event, organised by housing and homelessness charity Shelter.

It aims to examine prospects for the housing market in Scotland and look at the bigger economic picture.

James Jopling, head of campaigns at Shelter Scotland, said soaring house prices could mean the country will face difficult times.

He said: "The average first-time buyer property has rocketed from £38,845 ten years ago to £108,446 at present – a rise of almost 180 per cent, compared to 204 per cent rise in England.

"As such, Scotland is no longer insulated against a housing market fall-out."





The full article contains 158 words and appears in Edinburgh Evening News newspaper.
Page 1 of 1

  • Last Updated: 22 May 2008 9:39 AM
  • Source: Edinburgh Evening News
  • Location: Edinburgh
  • Related Topics: Homelessness
 
1

Bien E. Bien,

22/05/2008 12:21:33
Never mind Shelter Scotland - let's have a countervailing view from the ESPC that Scotland *is* immune to the housing crash.
2

Annoyingboi,

Edinburgh 22/05/2008 13:13:13
#1 Yup as per usual
3

A Friend of Fernando Poo,

, Newington 22/05/2008 13:26:27
I was last night reading an interview with David Tice, an investor who spotted back in 1997 what the problems with mortgage-backs and CDOs was going to be. He was laughed at for years when everyone thought house prices could only rise further, but is now popular with interviewers because he nailed it so exactly.

His view is that most of the world is in for something between a deflationary recession and a deflationary depression like the 1930's. He's quite firm that where the quarter century credit bubble drove prices up, the deflation will drive them down again.

His website, prudentbear.com, has a great deal of research into the history of previous credit bubbles. The average fall in the primary asset when a bubble bursts is two-thirds of the gain during the bubble. That's two-thirds of all gains since 1982 are likely to be lost by the time this is over.
4

Spicey,

Glasgow 22/05/2008 14:34:04
#3 Didnt we already have a housing bust in the early 1990's, so surely it should only be the gains since then that are under threat?
5

A Friend of Fernando Poo,

, Newington 22/05/2008 16:31:47
#4: The mistake a great many commentators have made is to conflate the UK's 18-year housing cycle with the three-generational credit cycle. The last housing cycle did indeed peak in 1989. I'd be the last to say that the new peak in this cycle in 2007 won't affect things for the worse.

However the greater effect is the long credit cycle which last peaked in 1929. The real bubble in the past 25 years has been in credit, More credit (in relation to national earnings) has been extended to more people (as a proportion of total population) than at any time in history. Where credit bubbles are concerned, the bigger they are, the harder they fall.

Previous housing bubbles have burst through rising interest rates and rising unemployment. That this is a credit bubble bursting is shown by there being falling interest rates and no great increase (yet) in unemployment. Instead, credit is being withdrawn from markets as the debt-deflation begins. The ultimate effect of this will be considerably greater than any mere housing cycle. For example Japan had interest rates at zero and unemployment no higher than 60%, but saw 50% through 90% falls in house prices in major cities.

By the end of the cycle, as the expert Charles Kindleberger put it: credit will neither be offered nor sought.

6

JRA,

Edinburgh 05/07/2008 21:50:11
#5 That's right, and a 1 bed flat in the centre of Tokyo which is no bigger than a Marchmont lounge will still set you back £140k.

Don't listen to the rambling Fernando when it comes to comparing our market with that of Japan. I have lived in Tokyo and I have friends there - Japanese property was the mother of all bubbles making ours look silly by comparison. Totally different property market in almost every single concievable way.

Fernando knows this but he continues to peddle some perverse agenda - whatever it is. It appears that he thinks about nothing other than 'the property market'.

 

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