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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.
The Nineties
...are never coming back....
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#1
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Posted 15 February 2012 - 12:10 PM
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#2
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Posted 15 February 2012 - 12:14 PM
JonoP, on 15 February 2012 - 12:10 PM, said:
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.
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.
You think that people will never realise or be bothered that they have become debt slaves and the government can print wealth?
Am I right?
If you say "democorruptcy" quickly, it sounds a bit like "democracy". In a "democracy" people vote for politicians who represent their interests. In the UK's "democorruptcy" people can only vote for expense fiddling thieving MPs who are in the hip pocket of big business and the finance sector.
The Funding for Lending Scheme (FLS) is stealing from savers to make them pay for crimes by bankers. Via lower interest on savings, all the bank fines for PPI, LIBOR and interest rates swaps are now being paid by savers so that bankers can keep pocketing bonuses.
"We need to make a really big change: from an economy built on debt to an economy built on savings" - David Camoron Jan 2009
"Printing money is the last resort of desperate governments when all other policies have failed" - George Osborne Jan 2009
- So what do Camoron & Osborne do? Print money and leave interest rates at 0.5% when inflation is over 5%
If it is asserted that civilization is a real advance in the condition of man -- and I think that it is, though only the wise improve their advantages -- it must be shown that it has produced better dwellings without making them more costly; and the cost of a thing is the amount of what I will call life which is required to be exchanged for it, immediately or in the long run.
http://classiclit.ab...en-Part-2_4.htm
Did you recognise the two robbers in my avatar? Clue: One got a knighthood and inflation linked pension, the other a 150 year prison sentence.
The Funding for Lending Scheme (FLS) is stealing from savers to make them pay for crimes by bankers. Via lower interest on savings, all the bank fines for PPI, LIBOR and interest rates swaps are now being paid by savers so that bankers can keep pocketing bonuses.
"We need to make a really big change: from an economy built on debt to an economy built on savings" - David Camoron Jan 2009
"Printing money is the last resort of desperate governments when all other policies have failed" - George Osborne Jan 2009
- So what do Camoron & Osborne do? Print money and leave interest rates at 0.5% when inflation is over 5%
If it is asserted that civilization is a real advance in the condition of man -- and I think that it is, though only the wise improve their advantages -- it must be shown that it has produced better dwellings without making them more costly; and the cost of a thing is the amount of what I will call life which is required to be exchanged for it, immediately or in the long run.
http://classiclit.ab...en-Part-2_4.htm
Did you recognise the two robbers in my avatar? Clue: One got a knighthood and inflation linked pension, the other a 150 year prison sentence.
#3
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Posted 15 February 2012 - 12:16 PM
you are wrong
cycles happen and overvaluations follow undervaluations follow overvaluations
undervaluation will come again, not sure when, but it will
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.
the proportion of productive working adults indeed does affect the disposable income available for house purchase and rentals (propping up yields and by association)
however, the increase in working couples is smaller than the increase in retirees and in education, ergo the direction of the affect is down not up
you are extremely wrong here
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.
in Japan house prices are 70% down in real terms since peak, interest rates are only low because of a weak economy
JonoP, on 15 February 2012 - 12:10 PM, said:
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.
cycles happen and overvaluations follow undervaluations follow overvaluations
undervaluation will come again, not sure when, but it will
Quote
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.
the proportion of productive working adults indeed does affect the disposable income available for house purchase and rentals (propping up yields and by association)
however, the increase in working couples is smaller than the increase in retirees and in education, ergo the direction of the affect is down not up
you are extremely wrong here
Quote
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.
in Japan house prices are 70% down in real terms since peak, interest rates are only low because of a weak economy
#4
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Posted 15 February 2012 - 12:17 PM
Democorruptcy, on 15 February 2012 - 12:14 PM, said:
You think that people will never realise or be bothered that they have become debt slaves and the government can print wealth?
Am I right?
Am I right?
no, he's either an estate agent or just bought a house
#5
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Posted 15 February 2012 - 12:20 PM
What about the trend for increasing precarity of employment? Okay, so both husband and wife might be employed but they are more likely to experience unemployment with permanent jobs increasingly hard to come by. The difference between now and when a single wage earner was supporting the household is also that the single wage earner, barring the loss of the industry they were employed in, may well have had a job for life.
Would like to see some statistics about when having two wage earners became increasingly common but I think that trend was on the rise long before the mid-nineties bottom for the housing market.
Would like to see some statistics about when having two wage earners became increasingly common but I think that trend was on the rise long before the mid-nineties bottom for the housing market.
#6
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Posted 15 February 2012 - 12:22 PM
Wow, after such a robust analysis, I see that the economy is not FUBAR'd, and having a £4 Trillion debt mountain is nothing to worry about, and won't affect house prices at all.
Quick, anyone know the number of any decent estate agents, I need to call one asap, so that I don't miss the boat.
Quick, anyone know the number of any decent estate agents, I need to call one asap, so that I don't miss the boat.
---------------------------------------------------------------------------------------------------------------------
Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible behaviour drift into behaviour akin to that of Cinderella at the ball. They know that overstaying the festivities...will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is a helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There's a problem, though: They are dancing in a room in which the clocks have no hands."
My favorite post ever:
By Ruffles the Guinea Pig
Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible behaviour drift into behaviour akin to that of Cinderella at the ball. They know that overstaying the festivities...will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is a helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There's a problem, though: They are dancing in a room in which the clocks have no hands."
My favorite post ever:
By Ruffles the Guinea Pig
#7
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Posted 15 February 2012 - 12:27 PM
JonoP, on 15 February 2012 - 12:10 PM, said:
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.
My first thought on seeing this title was "no return to the good days"; it didn't even occur to me that this would be a HP thread.
In the mid nineties the economy was growing well, unemployment was on the way down and government finances were in a good state. 15 years later and the rest of europe is on the edge of meltdown, unemployment is going up, the economy is going down and govenment finances are a disaster.
No return to mid nineties multiples? Are you sure?
Caveat emptor - let the buyer beware - anon 1523AD
Told you - Young Goat December 2007AD
We are all waking up to the reality that our houses aren't worth what we thought they were. - David Willetts MP 15 March 2011.
Join today: British Goat Society
Told you - Young Goat December 2007AD
We are all waking up to the reality that our houses aren't worth what we thought they were. - David Willetts MP 15 March 2011.
Join today: British Goat Society
#8
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Posted 15 February 2012 - 12:30 PM
Lepista, on 15 February 2012 - 12:22 PM, said:
Wow, after such a robust analysis, I see that the economy is not FUBAR'd, and having a £4 Trillion debt mountain is nothing to worry about, and won't affect house prices at all.
Quick, anyone know the number of any decent estate agents, I need to call one asap, so that I don't miss the boat.
Quick, anyone know the number of any decent estate agents, I need to call one asap, so that I don't miss the boat.
try "JonoP Estates, Woking, Kent - your path to a better sale and higher house value - call now for a free quote"
#9
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Posted 15 February 2012 - 12:34 PM
Si1, on 15 February 2012 - 12:17 PM, said:
no, he's either an estate agent or just bought a house
I bought a two story house. One story before I bought, and another after.
WARNING
Your
country is at risk
if you
do not keep up repayments
on a gilt or other loan secured on it
Your
country is at risk
if you
do not keep up repayments
on a gilt or other loan secured on it
#10
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Posted 15 February 2012 - 12:37 PM
JonoP, on 15 February 2012 - 12:10 PM, said:
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.
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.
Most people typically believe the way things are, or have been of late, will persist into the forseeable future.
In terms of near term action you are probably right. But you have to rule out some dark cygnet like things and also other changes we know are happenning such as the ageing of the surge of people wanting larger houses that has put their prices up more than average and thereby increased the overall average. In the next few years, some of that stock may start to be relinquished by the old and infirm in increasing numbers.
I would argue that more than most of the changes you mention, it was the devaluation of the pound by 35% and the flood of money into London picking up bargains stopped the house price crash being even bigger. It distorted the overall average and will have resulted in a ripple effect.
it is, until it isn't tm
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Posted 15 February 2012 - 12:38 PM
Bloo Loo, on 15 February 2012 - 12:34 PM, said:
I bought a two story house. One story before I bought, and another after.
very droll
#12
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Posted 15 February 2012 - 12:40 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 !!!
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 !!!
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Posted 15 February 2012 - 12:43 PM
30 years at least of living of the never never have come to an end. Only a massive reset can happen, it's game over.
Latest news, 5000 jobs to be created transferred to ASDA, the new high tech, knowledge based economy is powering ahead.
McDonald's says it will create 2,500 new jobs across the UK this year, taking its workforce to 90,000
McDonald's says it will create 2,500 new jobs across the UK this year, taking its workforce to 90,000
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Posted 15 February 2012 - 12:43 PM
JonoP, on 15 February 2012 - 12:10 PM, said:
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.
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.
shouldn't you be fixing initial entry's on right move,you'll never get all these houses sold.
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Posted 15 February 2012 - 01:16 PM
JonoP, on 15 February 2012 - 12:10 PM, said:
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.
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.
high unemployement,
upto 5 years of no pay rises and wages erroded by inflation
Mortgages harder to obtain, regardless of house price/worth
rising energy costs
rising everying in price
job security low
sentiment low
and that JUST in the UK, feed in sentiment from abroad as well.
but none of that matter, as IR's are still at a historically low level, and Merv is printing more money