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The Nineties


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#16 DabHand

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Posted 15 February 2012 - 01:19 PM

Houseprices are a function of credit.

Credit = debt

Debt is a claim on future productivity.

Debt bubble requires exponential growth to ensure that future claims do not become entirely unserviceable.

Peak growth/productivity = peak energy production (primarily fossil).

Peak energy = 2005*

Future claims on productivity no longer viable.

Debt ceases to have any value.

No more credit.

* course if el greco e-cat man or some other dude pulls a viable LNR out of the bag then l'll turn on a sixpence and be buying a house immediately.
'In order to stop men with guns stealing 50% of your income, you must give 50% of your income to men with guns'

Financial Innovation = Obfuscation of fraudulent practices.

"A government which robs Peter to pay Paul can always depend on the support of Paul." George Bernard Shaw

How can Britain compete internationally when the expense of a worker includes the astronomical cost of housing them?

#17 Milton

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Posted 15 February 2012 - 01:23 PM

Houses in the mid nineties were undervalued, in the same way that they are overvalued today.

The median vs. mean wages is pretty stable - 60% of working people earn less than the mean. Did then. Do now.

The same people also often quote the 'long term' trend of average house prices averaging 3.5 times average income.
Again, I think this model is flawed.

I agree. It is flawed. Affordability should be nearer 2x average individual income, as the staples of life, bills we all pay, are so much more expensive against income than they were back then.

The long term average spans many years where it was the norm for the husband to work and the wife to stay at home as a housewife. That model is now long gone. Both husbands and wives now routinely work so the new norm is the double income family.

The 'New Norm' is stll subject to the historic rigour of comparison.
£26k is average individual wage, £32k average household income. Over Two thirds earn less than average wage. And how many individual FTB are there, compared to couples?

Finally, interest rates were historically a lot higher than they are now. This meant historically the cost of servicing a small loan was similar to the current cost of servicing a large loan. People argue that IRs will rise, and indeed I believe they will. But not by much and not very fast. I think that it is quite conceivable that someone taking out a new Mortgage today could see IRs stay below 2.5% for the entire duration of their mortgage.

Senior Bankers would disagree with you. 'A raft of repossessions' is one quote. Doesnt Matter what your guess is. Can you get a 29 yr fixed rate, from your bank, and the BOE in writing? [And why would you unless you enjoy being robbed and raped?]

Its all a scam. Government are Paid by the Bankers to ensure the population does nothing about it.

The average age of a FTB is reported as being 38 years old, because people who are 38 have been unable to afford to buy a house since they began working. Next year it will be 39, the year after it will be 40.
[And yet people, who are 42, 43 years old, who are in the same job on the same wages are sitting on £250k assets which they bought for £80k]

[Yet to allow this fascist situation to continue, they had to bail out banks, and steal our taxes and future's, so we contiue to pay for other peoples houses. ]

If it didnt mean 20 years in Prison, I would have paid a visit to my local MP's house by now. With a Bat.

Our elected officials have orchestrated this to happen so a few crooks can extract untold hundreds of millions from the rest of us.

And seriously damaged or destroyed our lives in the process.

And not one of them gives a F@ck.

Edited by Milton, 15 February 2012 - 01:53 PM.

Under Labour the Average House Price TRIPLED in a decade, whilst the median UK wage rose by just £6.5k.
Utilities also
TRIPLED under Labour, and Council Tax DOUBLED, plus we saw rising inflation in other staples like Food.
It was all a giant Ponzi scheme.
Basically if you didnt get onto the 'housing ladder' at the appropriate time, and ended up 'priced out' as house prices rose year after year, YOU ARE F*CKED FOR LIFE.
Youve worked for over 13 years hard graft, with nothing to show for it. No Capital.

-----------------------------------------------------------
THERE ARE SOLUTIONS FOR THE FIRST TIME BUYER
-----------------------------------------------------------
Excuse me...... I believe you have my stapler.........ok, but I could set the building on fire.......

#18 8 year itch

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Posted 15 February 2012 - 01:29 PM

The median vs. mean wages is pretty stable - 60% of working people earn less than the mean. Did then. Do now.

I looked at this recently. Its worse than that. Much closer to 70% of people earn less than the mean now, closer to 60% back then.

There is no ladder.

JY


No need to sell up, the next phase of the economics cycle is going to be very positive for anyone that owns property.

All I'm sayings is, don't listen to the property bears people, they are wrong.


#19 Milton

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Posted 15 February 2012 - 01:30 PM

I looked at this recently. Its worse than that. Much closer to 70% of people earn less than the mean now, closer to 60% back then.


Thankyou.
Under Labour the Average House Price TRIPLED in a decade, whilst the median UK wage rose by just £6.5k.
Utilities also
TRIPLED under Labour, and Council Tax DOUBLED, plus we saw rising inflation in other staples like Food.
It was all a giant Ponzi scheme.
Basically if you didnt get onto the 'housing ladder' at the appropriate time, and ended up 'priced out' as house prices rose year after year, YOU ARE F*CKED FOR LIFE.
Youve worked for over 13 years hard graft, with nothing to show for it. No Capital.

-----------------------------------------------------------
THERE ARE SOLUTIONS FOR THE FIRST TIME BUYER
-----------------------------------------------------------
Excuse me...... I believe you have my stapler.........ok, but I could set the building on fire.......

#20 8 year itch

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Posted 15 February 2012 - 01:37 PM

Thankyou.

I asked FreeTrader about it on one of his threads, looked up some figures for myself

http://www.housepric...ic=173699&st=30

I was trying to illustrate how few people earn this average. If, historically, Halifax have used the ASHE figures to give their earning multiples, it would be interesting to know the historical deviation between median and means. In these times of income inequality is there a greater divergance in mean and median than ever before? A quick look on google yields the 1998 ASHE figures. It is on a weekly rather than annual basis but the Mean figure 'appears' closer to the 60th percentile than the 70th back then. I've no idea if this change is statistically significant, nor is a linear interpolation of the Mean figure's percentile correct but how far wrong is it?

1998
median/50th 372.7,
60th 420.3
Mean 438.3 (linear interpolation - 63rd percentile?)
70th 479.0

2011

median/50th 28409
60th 32218
Mean 36511 (linear interpolation - 69th percentile?)
70th 37197

Maybe FreeTrader has some nugget from the stats regarding this. Is this yet another of the indicators of how the imbalance in the housing market is distorted by quasi-official figures? Using the same stats for consistency but not reflecting the changing trends in those 'consistent' stats?


There is no ladder.

JY


No need to sell up, the next phase of the economics cycle is going to be very positive for anyone that owns property.

All I'm sayings is, don't listen to the property bears people, they are wrong.


#21 RufflesTheGuineaPig

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Posted 15 February 2012 - 01:38 PM

Buying now, is the wrong time !!!


Tommorrow isn't looking good either.

Come back when people say houses are a terrible investment... it's probably a good time to buy then.
It's time to pay the piper. There is no magician who will magic away the debt. Someone is going to have to pay it. Bend over and prepare to make payment.

In this glorious nation of ours, if you work hard and keep your head down for 25 years then you too can aspire to own one-eighth of a one bedroom flat in Manchester.


My mum and day always tell me how important it is to save to buy a house. They should know, it took them nearly 6 months to save for theirs. As teenagers, they bought a 3 bed semi.

#22 Imminent_plunge

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Posted 15 February 2012 - 01:56 PM

Thankyou.

Salaries in my industry are about 60% higher than in the 1990s but work paid overtime, which used to bump up my earnings considerably. Add in lower housing costs, food and utility bills and I am significantly poorer now than I was back then.

Sure, some things were more expensive in relative and absolute terms then. I still have CDs with £15.99 stickers from the 90s but they were all discretionary, whereas the hikes in prices since them have been non-discretionary. The situation is unsustainable.
"Any country that screws younger generations by denying them affordable housing is sick and twisted and deserves to go down the toilet."

#23 crashmonitor

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Posted 15 February 2012 - 02:18 PM

I know of two people that bought in the 90's both lost a fortune.

My girlfriends mum and dads house was valued at £450K in 1991...they sold it in 1996 for £250K...Someone offered £220K and they nearly accepted.

This is the reality. Buy at the wrong time and you loose a fortune.


Buying now, is the wrong time !!!



Yep got to be clear about what point of the 90s we are talking about. Although 1991 was crash plus two years, it took another 4/5 years into 1995/6 to see those record low income multiples on Haliwideof three. I tend to agree with the OP we will not get to those levels again, but maybe 3.5 in around 2015. After all we are at 4.33 on the apples with apples Halifax index from 6 and I reckon a bit of flat-lining and gentle falls should get us to 3.5 in about three years.

One thing for sure the crash aint over, seven years last time, dream on if you think Brown and King's Mother of all f**k ups has corrected where we are now at crash plus 4.5 years.

Edited by crashmonitor, 15 February 2012 - 02:21 PM.

When the Debt is in the Stratosphere

And Carney has left his scars

Then fear will guide our planet

And despair will steer the stars

 

This is the Dawning of the Age of Deflation

Age of Deflation

Deflation

Deflation

 


#24 Si1

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Posted 15 February 2012 - 02:22 PM

I agree but how long can you wait for. I've waited 4.5 years and still no crash here in Essex. I dont have the luxury of time on my side therefore at some point I need to get on with life.


what a load of b0ll0cks

what is this 'get on with life' b0ll0cks?

Is having ball-crunching negative equity 'getting on with life'?

if so, buy!

or have some balls

#25 rantnrave

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Posted 15 February 2012 - 02:42 PM

As others have mentioned - the cost of fuel today is way higher. Didn't oil hit $10 a barrel in the '90s?

Which decade did women start entering the workforce en masse, thus pushing up house prices according to the OP? It wasn't the '00s, that's for sure.

If the number of years up equals the number of years down, the best time to buy would in theory be between 2015 - 2018. That's a long time to go... Under such a scenario, Brown's housing bubble will be the defining moment of many a Gen X'ers personal fortune and career prospects.

#26 TheCountOfNowhere

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Posted 15 February 2012 - 02:49 PM

Tommorrow isn't looking good either.

Come back when people say houses are a terrible investment... it's probably a good time to buy then.


I'm with you on that....When I bought in 1998 or thereabouts My main worry was how much I was going to loose on housing and what if I couldn't sell it again.

#27 Bloo Loo

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Posted 15 February 2012 - 02:59 PM

I agree but how long can you wait for. I've waited 4.5 years and still no crash here in Essex. I dont have the luxury of time on my side therefore at some point I need to get on with life.


The trouble with owning a home is that no matter where you sit, you're looking at something you should be doing.
WARNING

Your
country is at risk
if you
do not keep up repayments
on a gilt or other loan secured on it





#28 Giordano Bruno

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Posted 15 February 2012 - 03:04 PM

Please try and answer in a more mature manner, otherwise dont bother.

Negative equity is only if you owe more than the property is worth so maybe I wont be in that position.

Maybe I'm in the process of buying.

Maybe I have more balls than you will ever have.


I would prefer if you think before posting.

I thought the forum was for expressing opinions and you are only one person, not the whole forum, and you are not even Si1 to whom the post might have been addressed.

----------------- ********************** -----------------


Regarding QE I think that Fiat Money Inflation in France is worth a read.

Property prices only ever go up ... except, of course, when they stay the same or when they come down.

You can go wrong with bricks and mortar.

The banksters need their lovely fat bonuses. The taxpayer has to pay.
Never mind, Taxpayer. Think of it as an exercise in generosity.

Profits will be privatized and losses will be socialized. - Thanks a bunch!

For educated opinion on the Kercher murder case, please read 'Injustice in Perugia' by Bruce Fisher and 'The Monster of Perugia' by Mark Waterbury.
RIP Meredith Kercher.

Friends of Amanda Knox

#29 marcusthe

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Posted 15 February 2012 - 03:05 PM

Surprised no one has mentioned BTL and the impact on home ownership. I cannot see a crash because as soon as prices slide enough to offer a potential good yield then they will be snapped up by cash buyers who are frustrated with low savings rates.

#30 cashinmattress

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Posted 15 February 2012 - 03:10 PM

Certain people on this forum are prone to posting that they will not buy until prices return to where they were at (in terms of income multiples) in the mid nineties. I think that this is deluded. Houses in the mid nineties were undervalued, in the same way that they are overvalued today. I do not, in my lifetime, expect to see houseprice/income ratios return to where they were 15 to 20 years ago.

The same people also often quote the ‘long term’ trend of average house prices averaging 3.5 times average income. Again, I think this model is flawed. The long term average spans many years where it was the norm for the husband to work and the wife to stay at home as a housewife. That model is now long gone. Both husbands and wives now routinely work so the new norm is the double income family.

Finally, interest rates were historically a lot higher than they are now. This meant historically the cost of servicing a small loan was similar to the current cost of servicing a large loan. People argue that IRs will rise, and indeed I believe they will. But not by much and not very fast. I think that it is quite conceivable that someone taking out a new Mortgage today could see IRs stay below 2.5% for the entire duration of their mortgage. Look at Japan.

So, although I would LIKE house prices to revert back to nineties levels in terms of price/income ratios, I do not think they will.


Glad you think so.

I'm sure plenty of Japanese folk said exactly the same thing over 20 years ago.

Seems you, like so many folk, do not equate the last 30 years of Britain's economic growth with the presence of the UKCS oil and gas sector; but perhaps you can acknowledge that the housing inflation was by design to sequester a whole generation out of productive independence and into wholesale debt servitude to banks?

If perhaps your scenario plays out and prices hover at current levels, or even go high again, how on earth are you going to pay to heat the home when we're importing 80% of our energy needs from Russia et al? Will you have a job and pension to support yourself as well?

Or how about who will be propping up elevated property prices when the last of the boomers are put into homes or buried?

Are the current generation, who are swamped in debt and have a dim future as far as job stability and wage inflation going to be able to survive in a system with 1950's era British socialism being supported by 21st century globalist monopolistic corporate culture; ie no money to support all the people out of work and the ever increasing army of pensioners seeking increasingly expensive medical care?

What happens to Britain when the BOE is forced to push up rates, which will happen at some point?

There's a big demographic discrepancy that's never considered, -10%++ YoY indigenous energy production, wage deflation and obvious loss of industrial output that's not going to change.

I don't think you've looked outside of your box very often.




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