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Everything posted by abharrisson

  1. The true craziness is not that the insurance costs three times that of the asset it is that in many cases if third party cover is taken then the asset only has limited cover. As is always the case with motor insurance it's the damage a car can do to others which costs the bulk of the money. On an aside every time I renew my insurance ( recently they tried to raise it from 285 to 598) I am struck by 1/ How little a no claims bonus seems to really count ( or at least the further you go the less impact it has) 2/ How it seems the market revolves around other sales to make any money. As a result it appears the only way to get a good deal is to switch policy each and every year..... I had to do the same yet again this year to get the policy back down below £300.
  2. I'd go with the view that assessment of affordability on a household income basis is here to stay.. that's not to say that the amount lent against specific income won't change or that classification of allowable income won't change. I have never been convinced by the argument that kids/ divorce redundancy makes it unviable or riskier to assess vs both..... as an example if you assess on one income and they lose their job you're in big trouble as a lender, if you assess on two incomes and one loses their job it's not quite as difficult, having kids may well knock out one earner but equally it has a cost impact on the whole household whether theres one earner or two and that is taken into account through the calculations only when said kid has arrived, lenders will also have stats that cover those returning to work etc, with a divorce the games up whether theres one earner or two... these things often end with the house being sold, and you might well find that arrears etc are more likely to arise in a one earner household than a two earner household. I remain unconvinced that lending to two people is necessarilly riskier than lending to one. I am still also not convinced that the FSA is actually going to dicate how much lenders can lend in any given situation, when it actually comes to it I suspect these proposals will be heavily watered down and the regulators will pull back from this... but we'll see I suppose in due course what they actually decide.
  3. The technical driver of this correction was the credit crisis.... just becasue the initial slide stopped and was largely reversed doesn't mean we are not in the same phase. Don't doubt the degree to which credit availability is still driving this market as it did to its heights when it was in the opposite direction. I do agree about the flatness ( ish) ... I just reckon that's what we'll see from here on in terms of nominal pricing ... my money's on this correction being driven largely through below inflation performance over the next few years.... which to Joe Blogss will feel like the L you describe.
  4. I love france and have many friends who are French. Three things for me though signify the problems that lie deep within but it's been going on for so very long I wonder if it will ever explode. 1/ French employment taxes and business red tape are such an issue that France has the smallest number of new business start ups for any developed country pro-rata. 2/ Those that hear that and say rubbish, normally say while these things certainly discourage new businesses its not the real reason behind it.. The real reason is that with a state as generous as France is there's really no reason to work hard and risk capital when if you choose the right career the state will look after you very comfortably indeed. 3/ A few years ago in a market town in rural france I saw some strikers marching through the streets. I learned it was the unemployed "striking" for improved benefits which they duly got.
  5. We'll see I suspect theres more mileage in different councils sharing service provision rather than actually sacking people and handing it all over to private contractors..... however there will I am sure be a number of situations where freed from union constraint different and more efficient working practices can be brought in and perhaps equally capable people employed at a much lesser cost... clearly there will be a human cost to that sort of change but from a commercial point of view it wouldn't surprise me if some savings could be made from the switch.... of course the council may mess up the negotiation resulting in spoof savings today but greater cost tomorrow.
  6. I suspect it means that they'll pay you 5% more than they say your house is worth.. which might well be considerably less than you might otherwise sell it for.. such is the way of these things. They'll also be using theor "generosity" to try and persuade you that having done you a favour they can't possibly offer you any money off their exhorbitantly priced and probably jerry built new build.
  7. If the cuts push us back towards or into recession then I think QE is pretty nailed on. But it really is such a complicated picture and I do think everyone is getting really rather excited about the cuts and that this will die down over time. Until the detail of the cuts is revealed we don't know the exact scale , speed or impact of them. What we do know roughly is that govt expenditure needs to be cut by about 20% which is about £120BN and will be done in the next five years... what we know won't happen ( but which I suspect there is a lot of hysteria about) is that we won't see cuts delivered over night, we won't see higher forced redundancies than there need to be ( they'll use natural wastage where possible) , in some cases we'll probably see pay and benefits reductions take the place of full redundancies ( as has happened in the private sector)... so the actual impact of the cuts will be slowly slowly.. we won't see unemployment suddenly jump by a million etc. The key however is that growth in the economy is a must have alongside the cuts , without it we are in a very difficutl place indeed so they will I think keep interest rates as low as they possibly can throughout the parliament while we have slowish growth and an ongoing cuts process and if they think growth is not strong enough then it wouldn't surprise me if they err on the side of caution and throw in some more QE. It is clear to me that the best outcome for the govt is going to be to try and manage us down slowly rather than things go into freefall, and that's the sensible thing to do as freefall causes more casualties than necessary. The funny thing is that we suspect ( to a degree ) that low rates and QE and some bank arm twisting are pretty powerful weapons and yet there are still those who seem to think we will see BOE rates rising very rapidly ( in a low growth environment), massive sudden unemployment dragging us into a double dip recession and the knock on effect of both of those to be a triggering of a massive leg down in the property market.... I just can't see it... we won't see high rates becasue we won't see high growth, we will see QE if growth lags due to cuts and they will slow down the cuts to avoid a new recession, as we won't see triggers like rapidly increasing unemployment, rapidly increasing rates or rapidly increasing repossessions there won't be this huge housing crash... there will be a correction but it's going to be long and slow.
  8. Quite... I think the general concencus is that two or three per cent is a good place to be for inflation.... but the germans appear to be one of the very few nations to have managed to deliver consistent growth levels and consistent inflationary figures ( even the german property market didn't go double bubble I think.. wonder how they managed that). I am not betting that interest rates will rise anythime soon neither do I think wages will rise.... which is a problem on the basis that headline inflation certainly will what with VAT, rising fuel costs , perhaps some sterling pressure, rising food prices, exported chinese infaltion etc etc
  9. The point is land or housing ( that you live in) doesn't pay you an income... it is a capital asset... taxes which are due yearly are based on money coming in t o you from various sources. You could of course reverse to a system of tax on rentable value, but what you'd find is that say where I live a £400,000 might rent for £1200 p/m while a £1.5m house might rent for only £1800. While in cities the same £1.5m in a house would produce a rent of say £3,500 p/m...... if you taxed the rentable value ( as effectively happens in the commercial world) you'd get huge disparities that wouldn't report to the "tax the rich" headlines dear old Vince is putting forwards. Equally you'd have to deal with the thorny issue of renters.. would they pay the tax or would it be the landlords ? Abolishing capital gains wouldn't help re-balance the burden betwen the very rich and others as they make far more out of unearned profit on their assets than they would pay for the odd mansion. I can confidently predict that we won't see a fundemental change to land taxes in anyway shape or form in this parliament.. Personally I remain a convert of taxing what people earn ... remember also in the same way that VAT is a tax on the purchase of some goods.. so stamp duty is a tax ont he purchase of property and with stamp duty at one end and cap gains at the other I don't see any value in property taxes in the middle as they wouldn't target either speculators or the rich with any degree of efficiency.
  10. I don't think we'll see a land tax any time soon.... I suspect rather that we will see a change in the tax regime but it will be to focus on corproate tax, usage tax , and spending tax. So for instance...... under corporate tax theres plenty that could be done to either attract more business tax payers or change the rules on tax to ensure we collect more of it..... an example of rule changes for instance might be in the construction world where about 300,000 workers do not pay NI becasue they are classed wrongly as self-employed. Under usage tax there plenty that could be done in terms of levies on water bills that would be used to drive system improvements or rubbish based taxes, or an increase in road usage taxes and changes to that system. Under spending taxes we could see chages to VAT. personally I think theres a big difference between someone who earns £1m a year and splashes out on a huge lifestyle and someone else who earns £1m a year and saves it... I'd prefer to see the former much more heavilly taxed than the latter. I don't think we'll see property taxes becasue it is really very very difficult to tax unrealised capital as income in any meaningful way, it is also a very expensive system to run ( the Vince proposed I seem to recall collapsed pretty quickly once he was challeneged on the details.. he looked like drowning man that day)
  11. Trouble is those things might be all well and good and exactly what we need but I suspect the only one the govt can deliver is lower house prices. If we are not careful what we'll have if we follow the Vince route is a housing crash ( causing untold knock on damage to the rest of the economy), with a destruction in the competitiveness of the city and a knock on reduction in tax..... but the bit I have not heard him spout a cogent plan for is what will replace the city's tax paying ability, how is he going to improve manufacturing , how is he going to drive forward employment in productive businesses. Like most politicians he is playing to the crowd, but has little idea of how to actually deliver the outcome the country needs. Many many people have long pondered how to rebuild manufacturing... arguably the person most successful at it was the one who destroyed a lot of it... during maggie's time we did manage to attract a lot of inward investment and a lot of that was in manufacturing....... not much of any significance happened under labour I think and I suspect thats not for want of trying it's just with the emergence of china and india it is really very very difficult to breathe life into a manufacturing economy...... Vince's speach was a crowd pleaser... but he won't attack the banks in the way he has suggested, his mansion tax was very poorly thought through and I suspect after a couple of years of huffing and puffing we'll see the end of Vince who while he had a couple of moments in the sun during the banking crisis really doesn't look effective to me... that's why I suspect he is business secretary, he had to be bought off politically and that was the least they could get away with..... nice guy but clueless when it comes to delivery I suspect.
  12. I'd agree with you.. the programme is littered with snipets like " the seller is asking £275,000 lets make a cheeky offer at £265,000 or £260,000"......... I'd say a cheeky offer would be more like £235,000... you can always go up, and after a few days of going up going over the £250,000 mark will feel like a huge success for the vendor ( the estae agent doesn't care as the difference in their commission is negligable)...... they never ever appear to negotiate hard. It might have something to do with the clients they have and the difficutly they have in finding a property that works for that particular... once found as others have commented they need the money shot of the sale and so never try too hard with the bidding. I thought the girl with cerebral palsy was great, though I'd share the view that buying at that kind of money in that area was pretty bonkers..... she could have got a three /four bed flat in parts of Kensington for that kind of money.... better still she could have gone for a long term rental. The one thing that was discussed on the programme was the service charges for the building which I suspect being in the penthouse she will pay the lions share of... wouldn't surprise me if these were £10k per annum
  13. Depending on the length of the contract and the potential direction the market was moving it's certainly something I would look at. a 10% return from AAA clients is not something to be sniffed at. Of course if there are A) Easy out clauses in the lease No rental escalator C) relaxations in the planning laws D) technology changes afoot which reduce the need for so many towers E) Need for capital investment by the owner Then its probably worht avoiding....... but if not then buying these could make a lot of sense for some people.
  14. I have always wondered what would happen if at the centre of local govt you had a purchasing group who were responsible for buying these services ( I suspect not all would be suitable for outsourcing) and ensuring that a good deal was struck and that the service was delivered properly. If ( and I am not saying it's a nailed on certainty) the result was lets say a 10% reduction in cost within an environment of service maintenance then I cannot see a single thing wrong with cracking on and doing it. I realise the public sector would cry foul but the issue is quite simply this... if the same service can be delivered for less cost then why pay more ?????..... of course if you believe the same service can't be delivered more cheaply then that's a different matter... but if it could be why not... I for one am certainly not married to the concept that all public services must be delivered by workers employed by local or state entities. I am sure it's possible in some places and if so I hope we take the strongest option rather than keeping the current process and cutting services. I think the above is by the most fruitful debate to be having when it comes to making cuts in public service expenditure... just nibbling 10% off here and 20% there isn't going to help us in the longer term there needs to be complete change in the way we do things. I'd like to challenge the state to never employ more than 20% of the workforce directly or 40% indirectly and to only spend more than it earns where this relates to extraordinary investment ( eg replacement of big ticket items like nuclear weapons, or very large infrastructure projetcs like a new dartford tunnel for instance) We must pay down the debt we have built up and to do that we must recognise that for the last 10 years or so we have been living beyond our means, the previous government spent money they didn't have, introducing policies and services ( with attendant employment) which we could not afford. Cutting back on these things now is painful but we should recognise that the money should never have been spent in the first place ( in which case unemployment would have been higher and givernement might have concentrated a little more on creating real employment rather than just papering over the cracks by cranking up the levels of state employment).
  15. While the national stats are interessting to the geeks ( like me) who are lovers of property price porn... they are ( lets admit it) actually pretty meaningless to the average Joe and here are the two key reasons why: 1/ They have have absolutely no relevance at all to a house that average Joe might already own or that average Joe might want to buy. This housing crash has regional, local and housing type variations of mind boggling complexity.... some houses today are worth MORE than they were in 2007 others have lost 80% of their value.... 2/ Whatever the rights and wrongs the fact is that average Joe does not look at the adjusted real figures that include inflation... all they are interessted in are the nominal prices... if they buy for £100,000 and sell for £90,000 they understand they have lost £10,000 but try telling them they have actually lost £25,000 inflation adjusted and it does not compute, or rarther simply isn't relevant. Interesstingly I saw one of these think tanks doing a bit of house price predicting and their view was that inflation adjusted house prices would be par over the next five years ( down then up I assume.
  16. The trouble with many left leaning jouranlists is that they all now rcognise that cuts need to made, none of them however will bite the bullet and propose one area over another and they all simply hunker down and say " we have to have cust but surely not this as it will be so damaging"... equally all these guys have all been incredibly silent over the last decade or so while labour has found money for anything which could find its way onto a list.... the welfare state should be exaclty that.. for welfare... to keep the poor and unfortunate from dying in a ditch , not what it has become which is a crutch for the vast majority of the country... and yet while this large uneeded cost spiral was being created these wonderful left leaning journos saw no problem with it, they had no desire to criticise it......... many of these journos wish to have their views treated with respect and wish to be seen as considered individulas unfortunately their past inaction measn that is frankly impossible.. they are in the ranks of the idiots who casued the problems in the first place.... cheerleaders for spending more than we earn.
  17. I too don't buy this whole private secotr is generally great and public sector generally not But and its a pretty big but there is a problem and its the human condition which lends itself towards a desire to empire build. In the private sector this is dangerous and sometimes results in a collapse caused by overeaching etc... think RBS and ABN, think worldcom, think enron etc. The problem is that it also persists in the public secotr where civil servants/ governement departments /local councils continue to want to do stuff/ introduce stuff/change stuff often without putting a value hat on. Many things doen by the public service have a value, but if they had been introduced/rejected within the much tighter budget that we should have been running over the last few years then cuts would not be necessary becasue we wouldn't have an overly bloated list of services. Many of which are luxuries which we simply canot afford but which now becasue they have been introduced people seem to think are a right. - Why should people with plenty of cash get a winter fuel payment ? - Why should people with plenty of cash get child benefit ? - Why should we pay unemployment benefit to people and not ask them to work doing something in return? - Why should people who do not pay NI get free healthcare ( think the thousands of foregn heath tourists or all those self-employed people paying themselves dividends and avoiding NI) - Why should we be paying to translate pretty every govt document into 30 languages ( people should speak english) why do we provide so many translators. The list is endless and I wouldn't necessarilly class evrything or anything as wastage its just that so much that we spend money on we shouldn't becasue the money shouldn't have been there to allow these "projects" to be prioritised in the first place. If many of these things had never been introduced becasue we couldn't afford them then ( which we couldn't ) then there certainly wouldn't be all this ballyhoo now about cuts etc. My view is lets be honest... cuts will mean cuts to both jobs and services but lets also be honest and admit that we shouldn't have been spending money on these things for so many years in the first place... its time to get real and spend within our limits and if that measn jobs will go, pay will be frozen, services cut then so be it. I am not one to claim these things are all valueless I do however think they should never have been "prioritised" in the first place.... it was Labour's desire to build it's empire and do pretty much everything that came onto its list with no degree of control whatsoever that casued the problem.
  18. Totally agree with you... we are in the porcess of thinking about adding a little more land to our house and extending it, I don't want to make any money out of it necessarilly but I don't want to chuck money away....... when you think of it like that and adjust your budget accordingly most people I think would be surprised by the outcome. You come across loads of people who say they have done a lot to the house over the years etc... but they overestimate the amount they have added to it, and underestimate the inflation we have seen in house prices. It's also a salutory lesson for anyone buying a "done up " house .... don't do it, you can almost guarantee it won't be worth the money after a year or two and you may well be spending 20% or more effectively on the developers profit... in this market , add in a bit of deflation and you could be waiting 15 years to see your money back which is frankly crazy.
  19. Surely if you can afford the deposit and afford the mortgage of a home you want to live in whether the price goes down after buying is somewhat irrelevant it doesn't matter in terms of "affordability"... the only time it does is when you sell. So if you are looking to buy a home now to saty in and have the deposit and have the earnings to support the mortgage where house prices go to while you live there is irrelevant and doesn't effect affordability necessarilly at all ( unless re-mortgaging which is unlikely)..... I don't worry about falling prices at all... nor do I get excited when they go up... I have a home , I like it , I plan to stay in it, the mortgage is being paid off.... house prices could drop by 50% and I wouldn't be overly concerned.
  20. I saw someones signature the other day still predicting the market would be 15% down in dec vs where it was in Jan this year....... improbable in my view as is 20%/30% nominal price falls in the next two to three years or indeed 50% real price falls over a longer period. I do think real prices will fall maybe 15%-20% over the next five years but thats going to made up mostly of infaltion adjustments with not much in the way of nominal falls. Either way it is somewhat irrelevant becasue as usual we have the HPC sheeple about who will guaranteed start to try boositn themselves with theories of why this is the start ( albeit foru or five months in) with bigger falls to come if the number is under -1%, if its over 1% it'll be a mutual love in from portsmouth to newcastle.... with perhaps no one recognising the numbers have little real world relevance espeically relating to any house anyone wants to buy... after all they will based on about 2,500 transactions which won't be statistically relevant. I suspect prices though to be down .... direction is about the only thing Nationwide is god for.
  21. I see what you mean, but actually by saying "give it time" he's saying the market should go below its long term average in terms of a comparison vs wages..... the problem is the long term average for wage multiples is not 50% of what it is today. Either way lets be clear that you did spin the headline.... why is that HPC'ers are so eager to call out those they think are spinning in favour of the market but don't recognise it when they spin themselves... seems odd and there really was no idea, it was a pretty bearish article without the unwanted enhancement ( even if the info on analysis of bubble bursts is old hat)
  22. Whats with the spun headline... the article doesn't say prices "could fall 50% from here" it says when the crash started they could have fallen 50% ( if this experience had been just like the last)... you wonder really why people bother.. this event was never going to be just like the last one ( regardless of how much people are crying out for it to be.) The differences in our economy then and now preclude it from being the same. For the record the author I don't hink says prices could fall 50% from here, or imply it . It's only the headline the OP put on which says that.
  23. Most people will find all this house prices in relation to years eg now at 2006, or by 2015 we'll be at 2003 pretty irrelevant to their daily lives as they have bought in the past at a previous price and have a mortgage... the two most important things to them is the rate they pay their mortgage at and the value in nominal terms of their house.... people do not seem to grasp that "real" prices are not the be all and end all for the vast majority of homeowners... if you tell them they'll get less than they paid for their house then that will get their attention... tell them in 2015 that they'll get £25k more but actually its 15% less and they'll not really be bothered.
  24. This is pretty much what I have been saying will happen ( to much derision from the HPC sheeple brigade who will consider nothing but a massive and rapid crash). Actually I think it will be a little more severe than this and would be surprised if nominal prices nationally are higher in 2015 than now, but I don't think they'll be lower. While actaully correct that its real prices that are important NOT nominal prices when judging value in the market, many overlook the importance of nominal prices.... ask jo blogs home owner if in 2015 the pirce of his home is that same as it is now if he feels it has crashed ( it would have a suffered something like a real terms 20% reduction)... and would say no.... In actual fact I think those who judge the market vs inflation ( the real prices brigade) only look at part of the picture in doing so.. nominal prices are important and equally pricing vs wage inflation is alos important. Either way its nice to see a decent forcasting body reach the same conclusion long held by some.
  25. I used to think you were one of the ones with a brain.. lets hope this is just a minor glitch... I think I'll leave you to keep digging but try not to dig yourself in too deep..
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