campervanman Posted April 15, 2012 Share Posted April 15, 2012 (edited) Nope. Last time house fell back to a ratio of 2.5 earnings - 1996ish. Not going all chartist is that the bust tends to be proportional to the boom. Mainly due to the boom dragging speding in years earlier then the person having to pay interest. Best example of that this time has been new cars. +100 on the demographics. Although the age cohort is 1950->1965. This is a huge bulge of people. I would wager that the bulk of these are in the public sector - not playing to the crowd here but the early 90s recession gutted out the seat warmers of this generation in the private sector. Anecdotally, when interact with any public body the bulk of the people are late 40s upwards. Just as well we've got such a booming economy and surplus to hale 3m as they switch from (I hesitate from saying working) paying tax to drawing a pension. Havn't you heard, they are not retiring anymore, they are taking all the jobs away from school leavers. Edited April 15, 2012 by campervanman Quote Link to comment Share on other sites More sharing options...
xiox Posted April 15, 2012 Share Posted April 15, 2012 They could... but so could the currency. The only reason property prices aren't 50% of peak is the currency crashed 30%, property prices are 30% lower than you think they are. But how many people does this affect? It's mostly rich people who have their money in non-property assets like gold. Why should a currency devaluation affect property prices outside London? If anything, prices should drop further as people have to use more of their income to pay for increasing costs on food, energy, etc. Quote Link to comment Share on other sites More sharing options...
sims Posted April 15, 2012 Share Posted April 15, 2012 Nope. Last time house fell back to a ratio of 2.5 earnings - 1996ish. Not going all chartist is that the bust tends to be proportional to the boom. Mainly due to the boom dragging speding in years earlier then the person having to pay interest. Best example of that this time has been new cars. House prices will fall back to those levels only if interest rates get as high as they were in the 90s. Ultimately the equlibrium price for houses is the point where mortgage rates are affordable and relatively cheap compared to renting. Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted April 15, 2012 Share Posted April 15, 2012 House prices will fall back to those levels only if interest rates get as high as they were in the 90s. Ultimately the equlibrium price for houses is the point where mortgage rates are affordable and relatively cheap compared to renting. Don't underestimate the undershoot. Quote Link to comment Share on other sites More sharing options...
bmf Posted April 15, 2012 Share Posted April 15, 2012 Havn't you heard, they are not retiring anymore, they are taking all the jobs away from school leavers. Defined contribution pensioners (outside the public sector) are staying in work because 30 year retirement never adds up. Defined benefit get theirs paid by people working today (who are not allowed to join these schemes) so they are not staying in the labour market. Quote Link to comment Share on other sites More sharing options...
bmf Posted April 15, 2012 Share Posted April 15, 2012 House prices will fall back to those levels only if interest rates get as high as they were in the 90s. Ultimately the equlibrium price for houses is the point where mortgage rates are affordable and relatively cheap compared to renting. Because strict planning means prices bear no relation to cost to build. They are instead a function of the maximum mortgage available at the time. So people always pay the most possible for their house, even if the mortgage is smaller and the interest rates are higher. What a great system. Let's also tie milk and bread to average wages instead of the cost to produce them. Quote Link to comment Share on other sites More sharing options...
silver surfer Posted April 15, 2012 Share Posted April 15, 2012 How odd. I'm in Hants and prices are well down from the peak. Sadly not the case in Lymington. Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted April 15, 2012 Share Posted April 15, 2012 Because strict planning means prices bear no relation to cost to build. They are instead a function of the maximum mortgage available at the time. So people always pay the most possible for their house, even if the mortgage is smaller and the interest rates are higher. What a great system. Let's also tie milk and bread to average wages instead of the cost to produce them. Not all people are stupid. Quote Link to comment Share on other sites More sharing options...
grandmaster Posted April 15, 2012 Share Posted April 15, 2012 It's going to take a 2008 style "event" to make any difference as far as I can see. Since that drop we've seen volumes in house sales stagnate resulting in small to middling drops. Personally, I have been surprised at how resilient the market has been bearing in mind the complete calamity that has befallen the country. I'm also rather surprised that the value of the GBP hasn't plummeted further - instead it seems to have perked up a bit as hilariously it's seen as a much safer bet than the cluster that is the Euro. I guess at the end of the day, if you're paying interest of 1.5% on your mortgage (as I am on the £500 I have remaining of it), why bother selling up and losing a fortune? I'm currently looking for a house to buy. Easy to spot the repos (no carpets, taped up sinks/toilets etc) but even these are going for relatively good prices (Rightmove helpfully posts public notices of the offers). Quote Link to comment Share on other sites More sharing options...
bmf Posted April 15, 2012 Share Posted April 15, 2012 Not all people are stupid. Agreed, but if you think a small minority trying to buck the trend in a closed system is going to effect the overall outcome then that is, I'm afraid, stupid. Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted April 15, 2012 Share Posted April 15, 2012 Agreed, but if you think a small minority trying to buck the trend in a closed system is going to effect the overall outcome then that is, I'm afraid, stupid. What are the volumes currently? Quote Link to comment Share on other sites More sharing options...
bmf Posted April 15, 2012 Share Posted April 15, 2012 What are the volumes currently? Low - because banks turned off the money. My son has stopped eating chocolate this easter. No voluntarily. I put the eggs in a cupboard he can't reach. My point was that mortgages are quoted as a multiple of wages. Nobody ever questions this. What other product not tied to the cost to produce? If you quote in wage multiples even if we lived 2000 years later in a world of unimaginable productivity, you would still have to save the equivalent of 3.5 years wages to buy a house. This is yet another aspect of house prices that bears no relation to underlying realities that is unseen by 95% of people. Just like inflation and the true worth of money it is unquestioned. Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted April 15, 2012 Share Posted April 15, 2012 My point was that mortgages are quoted as a multiple of wages. Nobody ever questions this. Really? I see it questioned frequently on this site. Many here, myself included, may consider buying when mortgage multiples return to about three times salary. Until then we sit and wait. Quote Link to comment Share on other sites More sharing options...
bmf Posted April 15, 2012 Share Posted April 15, 2012 Really? I see it questioned frequently on this site. Many here, myself included, may consider buying when mortgage multiples return to about three times salary. Until then we sit and wait. Bruce - are you being deliberately argumentative? :-) I did qualify my prior comments with "most" and specifically talked about a minority not being able to influence the system. Gotta get on with my Sunday. Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted April 15, 2012 Share Posted April 15, 2012 Bruce - are you being deliberately argumentative? :-) I could ask the same question. Quote Link to comment Share on other sites More sharing options...
bmf Posted April 15, 2012 Share Posted April 15, 2012 I could ask the same question. Bruce you replied to my post with a question that was not directly related then did that again and now you are just being silly. It came from you saying "not all people are stupid" when I had not said this. I'm not sure what your original point was or where you want this to go other than in circles. Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted April 15, 2012 Share Posted April 15, 2012 Bruce you replied to my post with a question that was not directly related then did that again and now you are just being silly. It came from you saying "not all people are stupid" when I had not said this. I'm not sure what your original point was or where you want this to go other than in circles. You seem determined to argue that house prices will not fall. I happen to disagree. Quote Link to comment Share on other sites More sharing options...
bmf Posted April 15, 2012 Share Posted April 15, 2012 You seem determined to argue that house prices will not fall. I happen to disagree. No I think they will fall but as I said people will pay the most possible under the available credit so long as strict planning remains and prices are quoted in multiple of wages. Applying the above given the reduction in credit prices will fall. However I think this is missing a bigger trick. Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted April 15, 2012 Share Posted April 15, 2012 No I think they will fall but as I said people will pay the most possible under the available credit so long as strict planning remains and prices are quoted in multiple of wages. Applying the above given the reduction in credit prices will fall. However I think this is missing a bigger trick. Not when sentiment changes. Quote Link to comment Share on other sites More sharing options...
Democorruptcy Posted April 15, 2012 Share Posted April 15, 2012 Not when the data is manipulated in an attempt to convince me that what I'm seeing with my own eyes is not true! You could answer him by posting a couple of recent sold prices that are 20% lower than when the same house was previously sold in 2007 Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted April 15, 2012 Share Posted April 15, 2012 You could answer him by posting a couple of recent sold prices that are 20% lower than when the same house was previously sold in 2007 I could, but that would mean revealing my exact location and I'm not prepared to do that. Quote Link to comment Share on other sites More sharing options...
bmf Posted April 15, 2012 Share Posted April 15, 2012 Not when sentiment changes. No that's correct. I believe the British are mental when it comes to houses and a change in sentiment will require some kind of epic change that would be so disruptive I would simply leave the country, or will take so long I'll be dead. Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted April 15, 2012 Share Posted April 15, 2012 No that's correct. I believe the British are mental when it comes to houses and a change in sentiment will require some kind of epic change that would be so disruptive I would simply leave the country, or will take so long I'll be dead. Sentiment changes like the wind direction, you'll see. Quote Link to comment Share on other sites More sharing options...
Democorruptcy Posted April 15, 2012 Share Posted April 15, 2012 I could, but that would mean revealing my exact location and I'm not prepared to do that. I don't see why it has to be your exact location. You say you have been watching the market and seen prices are 20% down, it should be easy. You can prove it and silence the doubters. If you don't you are going to add to the doubt. Quote Link to comment Share on other sites More sharing options...
bmf Posted April 15, 2012 Share Posted April 15, 2012 I could, but that would mean revealing my exact location and I'm not prepared to do that. That's fair enough. However as I've said time and again on this forum I really could not care less about anecdotal evidence of one street. I'm interested in the UK as a whole as I would like to see our country get back on it's feet. I would not be happy if I could buy a house cheaply whilst the rest of the UK continues in a crap situation. Hence my other post, that clearly got you excited, about prices in Hampshire. The data shows prices have not fallen (albeit repos excluded). Even if you bought somewhere at 25% of the peak the average person is still screwed. That's a very sad situation IMHO. Quote Link to comment Share on other sites More sharing options...
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