Property prices will go down!

A special report by Bill Adlard of Chart-Guide.com

This chart in today's Times very much caught my eye. It shows the classic diverging shape in mortgage equity extraction leading up to the changeover in early 2009 to mortgage equity repayment, reducing debt. This is a massive change in psychology, and it's what Robert Prechter has been forecasting for the whole of the previous decade. Now it is actually happening.

Here's that graph as an indicator under the chart of the house price index. It's classic bearish divergence, leading to the biggest plunge in property prices in a long time. This surely indicates a much more prolonged bear market in property prices. Note how the black bars are coming up to the zero line from below. And we only have the first two quarters of this year. It would be again a classic confirmation of a bear market if this indicator came up to zero and then turned down again with a vengeance, while the index itself failed to make a new high and turned back down to new lows. That's what I believe we will see.

- Bill Adlard

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Described as “the intellectual powerhouse of UK Technical Analysis” Bill Adlard is a world expert in detailed charting techniques, particularly in the area of Elliott Waves. Bill provides institutional quality technical analysis twice a day on Chart-Guide.com. To subscribe click here.