-Caveat Lector- UK and US Real Estate Usually Parallel
FINANICIAL TIMES Dr Doom' says UK house prices set to crash By Jim Pickard and FT reporters Published: April 12 2004 18:43 | Last Updated: April 13 2004 10:38 House prices are set for a dramatic crash, according to the prominent City fund manager who earned the nickname "Dr Doom" when he prematurely forecast the end of the dotcom bubble. Tony Dye, who is now head of his own hedge fund operation, Dye Asset Management, said the "silly" house price growth of recent years would "all end in tears". He predicted a 30 per cent fall in London house prices in real terms over the next five years and said "a national decline of the same order would not surprise". New data from the Office of the Deputy Prime Minister on Tuesday however showed a rise in the annual house price inflation rate to 9.8 per cent in February, up from 9.7 per cent in January. The ODPM index, designed to clarify any discrepancies between other data, showed the average house price in the UK was now �160,937. The latest figures from Halifax showed prices rising at 18.5 per cent a year. Mr Dye was widely criticised in the late 1990s when, as chief investment officer of Phillips & Drew, the fund management group, he was the UK's leading critic of high-tech stock valuations. He left the firm in February 2000 after his supposedly apocalyptic predictions failed to materialise. But with the collapse of the dotcom boom his scepticism was vindicated. Now he is turning his fire on house prices. Not only has the average house price to income ratio reached 5.3, higher than in the late-1980s, but borrowing against property is also at record levels. The Bank of England and many lenders expect a gradual slowdown rather than a crash due to benign economic circumstances. But Mr Dye's warning follows similar predictions by Capital Economics, a consultancy, and Durlacher, a small investment bank which, ironically, was behind many of the doomed flotations of the dotcom era. People had rushed into buying property because they were frightened of missing out on the boom, said Mr Dye, and rational valuations had gone out of the window. He said that his pessimism about the housing market was justified because he had spent the past 35 years watching markets go up and down. "I have thought this for some time but I think we really are probably somewhere near the end of it [the boom]." Recent interest rate rises were proof that the Bank of England's monetary policy committee had woken up to the problem, he said. But it was too late to prevent a crash. "The Bank of England has finally decided that household indebtedness is becoming a serious issue and I am sure the government is frightened of the prospect of a sudden slowdown. "Everyone is hoping for a soft landing but no, we don't have soft landings in things like this, ever. You show me a market with a parabolic rise followed by a soft landing - it doesn't happen. The only way you could stop that is by government interference but this market is just too far gone for that." Mr Dye warned that it was a combination of low interest rates, greed and the "herd instinct" that had caused the rise in property prices. People believed prices could only go up so they thought they were missing out if they did not leap into the housing market, he said. "Everybody's operating as a herd at the moment." www.ctrl.org DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are unwelcomed. Substance—not soap-boxing—please! These are sordid matters and 'conspiracy theory'—with its many half-truths, mis- directions and outright frauds—is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. That being said, CTRLgives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. CTRL gives no credence to Holocaust denial and nazi's need not apply. Let us please be civil and as always, Caveat Lector. ======================================================================== Archives Available at: http://www.mail-archive.com/[EMAIL PROTECTED]/ <A HREF="http://www.mail-archive.com/[EMAIL PROTECTED]/">ctrl</A> ======================================================================== To subscribe to Conspiracy Theory Research List[CTRL] send email: SUBSCRIBE CTRL [to:] [EMAIL PROTECTED] To UNsubscribe to Conspiracy Theory Research List[CTRL] send email: SIGNOFF CTRL [to:] [EMAIL PROTECTED] Om
