Bank Of England Inflation Report

[Sledgehead]

He was forever going on each August about how all the Arsenal fans were going to be crying at the end of the season.

<{POST_SNAPBACK}>

Great: HousePriceCrash's cummulative IQ surges on admission of new Arsenal supporter!

Q: who exactly do you intend to buy in the next transfer window to prop up house prices?

Edited August 10, 2005 by Sledgehead

[nodumsunreader]

And you're reason for being here is???

<{POST_SNAPBACK}>

To provide a counter argument to those who slavishly follow the loudest sheep in the flock.

[RJG18]

The only indications that this is occurring in the early stages will usually be:

1) Significant drop in transaction volumes

2) High and rising levels of unsold stock on EA's books

<{POST_SNAPBACK}>

The equivilent can also be seen in stock market activity, where a drop in prices will usually be acompanied by a somewhat hidden drop in liquidity (again characterised by falling transaction volumes, and in increased spread between offer and bid prices).

[Sledgehead]

To provide a counter argument to those who slavishly follow the loudest sheep in the flock.

<{POST_SNAPBACK}>

When distinguishing between sheep and wolves, the best trait is size of flock. Sheep ALWAYS make up bigger flocks than wolves.

The loudest sheep have the biggest megaphones. This one uses national press.

Choosing who are the sheep and who are independent of thought is obvious to intelligent people:

Guess what: you've chosen poorly.

Q: why do you read The Sun? (trap)

Edited August 10, 2005 by Sledgehead

[Guest Bart of Darkness]

To provide a counter argument to those who slavishly follow the loudest sheep in the flock.

Plenty of loud sheep over at the Sinking Pig.

"To provide a counter argument"; This would be welcome if your contributions didn't display a basic ignorance of elementary concepts in finance. Still, amongst Sun readers you're probably considered a financial guru.

Sun readers. Now there's a good example of sheep.

[Sledgehead]

News 24 currently has THREE inflation report / market commentators in the studio: Julia Ceasar (duh), Karen Bowman (who gave that correspondent a brain!) and Jenny Scott (who gave that correspondent two brains!).

Trouble for the bull is, as the IQ rises the rate cut count reduces!

[Sledgehead]

7 investment management think only one more rate cut. Cites inflationary pressures.

[ExeC]

25 years ago, where I am (NHC) you could have bought a 'starter' home for around £15-20k. Repayments were well over £100 per month (12% IR). Extrapolating those figures ten fold to todays values makes current monthly payments on the same house reletively cheap. Still in those days we had a rising SM and a rising PM so what do I know

<{POST_SNAPBACK}>

Nodumsunreader, i aint read all thats on here...

But heres a simple fact for you,

We live just outside london, we earn £39,000 between us per year and CANNOT afford to buy a house. The best we could possibly get if we tried would be on an ex council estate at like 5.5x our wage, which would be too much.

Its a fact for us, so if this is happening to us, surely we aint the only people in this country with the same problem. And im sure us FTB's are the key to the property chain ?

[nodumsunreader]

Plenty of loud sheep over at the Sinking Pig.

"To provide a counter argument";  This would be welcome if your contributions didn't display a basic ignorance of elementary concepts in finance. Still, amongst Sun readers you're probably considered a financial guru.

Sun readers. Now there's a good example of sheep.

<{POST_SNAPBACK}>

The problem for you self appointed 'intelligent' sheep is that you fail to see what will happen if your wished for HPC actually happened. Ok so you get your 30-50% reduction in HP's. And just where do you think that would leave the economy and your prospects for generating earnings to pay a mortgage on all those cheap properties? The best thing that could happen to HP's over the next few years would be static or small increases below inflation and earnings NOT a HPC. The whole philosophy of an HPC is dangerous to the very people who think they will gain from it. The only winners will not be those who want to get on the ladder or want to remain in employment, it will be those who own property, no longer need a job and have ready cash to invest in cheap houses. Come to think of it, an HPC might be a good thing after all.

[MarkG]

The best thing that could happen to HP's over the next few years would be static or small increases below inflation and earnings NOT a HPC.

No, by far the best thing would be for prices to drop 60% tomorrow. Then we could get on with our lives, rather than wait thirty years for wages to catch up with prices (if they ever do).

And just where do you think that would leave the economy and your prospects for generating earnings to pay a mortgage on all those cheap properties?

What makes you think we'll need mortgages if prices crash? Many of us could buy houses _for cash_ if prices dropped back to historically normal 3.5x income levels.

[Hairlocks]

Weather we wish for a HPC or not is not going to affect if it if/how it happens.

But I,and FTB's will be in a much worst position if they buy now and a HPC does happen, then if they rent and a HPC occurs.

[nodumsunreader]

No, by far the best thing would be for prices to drop 60% tomorrow. Then we could get on with our lives, rather than wait thirty years for wages to catch up with prices (if they ever do).

What makes you think we'll need mortgages if prices crash? Many of us could buy houses _for cash_ if prices dropped back to historically normal 3.5x income levels.

<{POST_SNAPBACK}>

Good for you but I suspect there are many who could not - and would you want to invest your capital once employment prospects became less secure?

[Sledgehead]

The problem for you self appointed 'intelligent' sheep is that you fail to see what will happen if your wished for HPC actually happened. Ok so you get your 30-50% reduction in HP's. And just where do you think that would leave the economy and your prospects for generating earnings to pay a mortgage on all those cheap properties?

May I point out the following:

                           %UK profitsBP                                  18AstraZeneca                         22Vodaphone                            8Glaxo                               5HSBC                               18Source : Company Refs & Telegraph

These figures are typical of our largest companies (excluding specialist UK mortgage lenders). Our leading companies, by quirk of our historical past, are benefitting from trade in emerging economies. In short, the consumer may get nobbled, house price may get nobbled, but the wider economy need not suffer as badly as you make out. Why? Gordon Brown can take his taxes from bumper company profits, so his spending plans aren't completely trashed and a fall in property assest need not be accompanied by a rise in taxation. The key thing is not to be levergaed into it a HPC.

An obvious way of doing this (NDSR aside) is lowering ones exposure to property, which, let's face it, has the disadvantage of not being abl eto take advantage of growth in the Far East and Eastern Europe.

.....if your wished for HPC actually happened .....  The only winners will ....be those who own property

<{POST_SNAPBACK}>

You really are a dumbass fool old boy!

Edited August 10, 2005 by Sledgehead

[munimula]

Good for you but I suspect there are many who could not - and would you want to invest your capital once employment prospects became less secure?

<{POST_SNAPBACK}>

The majority couldn't, only a pitiful 2.5% or something of the under 35s save any money (National Savings & Investments figures). This is another reason prices are not sustainable because FTBers aren't saving money towards house deposits - what's the point at current prices, you need tens of thousands now. In the past you needed only a few thousand.

Stick that in your pipe you sun reading gimp

...and all the FTBs of the future are starting work with £15K and rising student loans, they'd need to save 20 years to pay that off and save for a deposit at today's prices...which is why they won't have to because they won't be buying at today's prices

Edited August 10, 2005 by munimula

[nodumsunreader]

May I point out the following:

                           %UK sales    %UK profitsBP                       10                18AstraZeneca               5                  22

These figures are typical of our largest companies (excluding specialist UK mortgage lenders). In short, the consumer may get nobbled, house price may get nobbled, but the wider economy need not suffer as badly as you make out. They key thing is not to be levergaed into it.

Yeah, dream on!

You really are a dumbass fool old boy!

<{POST_SNAPBACK}>

You say the wider economy 'need not suffer as badly as you make out' from a HPC but I suspect you have your doubts eh! ?

[CrashIsUnderWay]

Hey Muni!

Aren't you being a bit unfair to gimps there???

This 'NoDummyThrownOutOfPram' person makes the average gimp look educated, witty, and charming...

[BoredTrainBuilder]

Great: HousePriceCrash's cummulative IQ surges on admission of new Arsenal supporter!

<{POST_SNAPBACK}>

As a Scot living in England I have been able to increase the average IQ in both countries.

[nodumsunreader]

The majority couldn't, only a pitiful 2.5% or something of the under 35s save any money (National Savings & Investments figures). This is another reason prices are not sustainable because FTBers aren't saving money towards house deposits - what's the point at current prices, you need tens of thousands now. In the past you needed only a few thousand.

Stick that in your pipe you sun reading gimp

...and all the FTBs of the future are starting work with £15K and rising student loans, they'd need to save 20 years to pay that off and save for a deposit at today's prices...which is why they won't have to because they won't be buying at today's prices

<{POST_SNAPBACK}>

So how would a recession resulting from an HPC assist them? Without employment,they won't be buying at any prices will they?

[zzg113]

So how would a recession resulting from an HPC assist them? Without employment,they won't be buying at any prices will they?

Not everyone loses their job in a recession. And the average HPCer with high personal savings/rainy day fund will likely weather such an event much better than your average savings-short MEWed-out homeowning consumer.

[Sledgehead]

You say the wider economy 'need not suffer as badly as you make out' from a HPC but I suspect you have your doubts eh! ?

<{POST_SNAPBACK}>

Make no mistake, those who believe in ever increasing property prices, especially investors with multiple units and BTLers, are gonna get hit REAL bad. Why? After all, what about all those accumulated profits from the boom? Surely that will protect them?

th eproblem is one of mindset. When you've made a fortune from an asset it's hard to go to bed with another. You see a dip and think "it's doe well for me in the past, leverage up!" We hear it on HPC over and over again: "FTBs won't benefit from a fall as LLs will jump in first as FTBs / STRs don't have the nerve."

Nerve? It isn't nerve you are short of: it's perspective! Bulls WILL buy first. And prices WILL fall further. They'll buy again, leveraging further. Prices will continue to fall. Soon their leverage will be so great and their losses so large all their profist will have gone.

Guess what they suddenly aquire as tootal capital gains = zero? You guessed it: PERSPECTIVE.

That's when they start to read up on all those "boring stats" the bears have been familiar with for ages. BOO! say the stats to them in the fresh light of perspective. And the more they read, the more they sell at a loss, that is if theBank hasn't already foreclosed.

Meanwhile the bears recognise what they have waited for and buy the panic.

And the economy? Well, it absorbed a 50% stock market fall 3 years ago. It won't be pretty but I think it can handle a HPC.

Sweet dreams.

[nodumsunreader]

And the average HPCer with high personal savings/rainy day fund will likely weather such an event much better

<{POST_SNAPBACK}>

What all 2.5% of potential FTB's who bother to save anything!!

[Sledgehead]

As a Scot living in England I have been able to increase the average IQ in both countries.

<{POST_SNAPBACK}>

You stole that quote from the New Zealand PM when he commented on the NZ "brain drain" to Australia. However, speaking as an Englishman, I would agree, you are a bright lot, and it is a funny quote.

[nodumsunreader]

And the economy? Well, it absorbed a 50% stock market fall 3 years ago. It won't be pretty but I think it can handle a HPC.

Sweet dreams.

<{POST_SNAPBACK}>

I sincerely hope you are right. Helping to achieve what you want by continuously talking down the market, resulting in something much, much worse than how things are today would not be a legacy to be proud of would it?

[Rapid Descent]

So how would a recession resulting from an HPC assist them? Without employment,they won't be buying at any prices will they?

<{POST_SNAPBACK}>

What a brain dead remark.

A HPC will cause problems for the economy, yes, it might even provoke a short recession;

But no HPC will plunge the next generation into debt enslaved poverty.

The sooner the house prices correct, the less painful it will be - the longer it is put off for, the worse the underlying problems become.

So a HPC is not a great thing but it is better than the alternatives.

As for your affordability rubbish, the Nationwide keep a track of affordability as 75% LTV repayment on an average house, as a function of average wage. Long term average is 33%. It currently stands at 44%, the last crash occurred when this was at 50%. Interest rates as low as 6% would cause this and completely destabilise the housing market.

[Sledgehead]

I sincerely hope you are right. Helping to achieve what you want by continuously talking down the market, resulting in something much, much worse than how things are today would not be a legacy to be proud of would it?

<{POST_SNAPBACK}>

You dumbass. The readership here has NO influence on the housing market whatsoever. People like Kirstie Allsop et al however has herded ever growing numbers into property, aided and abetted by rogue mortgage brokers lending at ridiculous multiples / without real deposits, forcing prices to bubble proportions. If these prove unsustainable it wil be the fault of people like her and the lenders!

Edited August 10, 2005 by Sledgehead