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abharrisson

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Everything posted by abharrisson

  1. I'm not so sure it does "speak volumes" as you say... while housing is currently overvalued I seriously doubt you can get any fix on its true vlaue from these figures... lets look at some of the issues those who seem to lick their licks with glee have when relying on this kind of data. - Some average type property ( two or three bed terraced housing) is worth less than this figure is some areas... does that mean they are due a boom ? - Average salaries vary greatly region to region, anyone thinking £23,000 is a decent average for london or its outlying regions must be barking mad. - There have been demographic changes .... there has been an increasing trend of both couples working, of partners buying together and dual income households generally.... you simply cannot dismiss this out of hand. This coupled with the above measn you really need to start to look at regional household income rather than national averages vs regional house prices rather than national prices. - You need to be sure that the income figures take into account all the extra's people get by way of bonuses etc ( they don't always achieve this) - You need to adjust the figures to reflect the much higher proportion of self-employed people where the tax breaks available serve to under count their true level of earning. You then need to think about the financing changes we have seen and recognise that 3 plus 1 is long gone and more likely for a home buyer you are likely to see a couple buying with both in employment and the lender offering something like 3 to 4 JOINT.... apply a conservative 3 joint to the current averages quoted and guess what you get to around £140k which is probably a more reallistic target figure ( does anyone really believe the averages are going to correct to £70k odd..... I think that scenario is most unlikely to put it mildly) So in summary why oh why do people still get excited about these ratios, they are by and large meaningless unless you apply some more filters to them... sitting there and saying that this surely indicates that prices are going back to £70,000 is surely bonkers.
  2. Oh come on its surely beneath you to try and argue that point isn't it... I wouldn't think six times is available anywhere within the lloyds banking group, RBS, santander and nationwide and every other building society...... I think you'll find something like 4 times is about the outside of it currently. The average stats you know are meaningless when trying to prove the point you are making... as an example.. how many of the applications are joint etc etc. Lets face it the abuses have gone to all intents and purposes both in published form and general availability and in terms of true self-cert products which no longer exist. You might just about be able to get six times but it would be in the rare ether of high net worth individuals and private banks I should think. Of course the question is now that the abuses have gone , mortgage availability has been severely restricted for three years etc... should we really lay all the blame for the increases we saw at the door of mortgage availability.. if that was all that was holding prices up then I would have expected them to adjust more quickly to the new realllity
  3. You must be blind if you haven't seen comments from I'd say the bulk of people on here who are expecting a serious adjustment of say 30% + within the next two years... they reckon theres a " bull trap" currently and that pretty soon its going to time to welcome in 2% + monthly falls. Some even believe the market will end up 15% down on Jan 2010 by dec 2010. I do think it will take a long time, I would agree adjustments of the Jap degree could be called a crash but I just don't see it happening here. On wages it depends a little on where you think "normal " is ... again there are plenty of sheeple out there who are backward looking on this point to the extreme and seem to think average for average that 3 times income is about right..... I think that's baloney and at its tightest I'd say 3 times joint for an average property would be about right implying a cost of circa £150k... but you could make a perfectly reasonable argument for this being too conservative.... so I reckon what we'll see is something very slow, probably driven by inflationary adjustments rather than nominal adjustments. I'm no great believer in wage inflation fixing things... if anything we'll have wage stagnation ( in real terms) but we'll property reducing by inflation each year so 3% ish. over five years with a bit of nominal thrown in.. maybe 20%.... of course people's real experiences will be very different depending where they are.
  4. Quite but the sheeple will read a lot into the figures.. personally I'd be surprised if they are not down.... but just you watch... down 0.1%... cue excessive statements of glee.. down 0.5% cue people talking baout momentum building, x months of consequtive falls, down over 1%.. massive levels of bed wetting as the sheeple get hopelessly overexcited and start to try and use the figure to back up previous statments about believing prices in 2010 would end the year 15% down etc etc. The fact is, its a very small sample size, nationwide themselves urge extreme caution when using the figures, most of the results using reasonable rounding error rates could just as easily be the saem the other way, everyone who lauds the figures when they are down suddenly remebers how unreliable they are when they are not presenting the news they want to hear, too many people still remain convinced theres some great steep and deep correction coming which will almost overnight allow them to buy at half the current price.... dream on, its not going down that far or that soon... try 20%/30% and five years and you might be closer to the answer.
  5. The item club have it right.. rates will remain low.. certainly below 1% for years and years. You'll find all sorts of rationale to offset the inflation news.... imported inflation, tax rises, oil driven inflation casued by short term instability, non-consumption led inflation, chinese currency inflation led results etc etc... as long as they can say the casue is shorter term and no-consumption led they'll be able to make a case that the economy is not overheating and that therefore there is no reason to raise rates... in many cases they are right. We'd have to see GDP growth galloping along before rates are rasied in my view... anyone pinning their future on interest rate rises triggering a wider fall in te housing market is in my view being very unrealistic.
  6. Well thanks thats really cleared things up for me !. Sometimes I really wonder what woodwork the crazies come out of... quoting articles going back to 2003, using "this is london" and "wikipedia" as a reference and then saying at the end they don't trust the media, better to stick with the stats.... Everyone knows what went on in the past ( well most people) , thats not in debate.
  7. Does this mean you are backing down on your origianl assertion that 6 times is generally available today.. I hope so.. becasue it ain't .. even on a nudge nudge wink wink basis.
  8. I'd say there are those on HPC who suffer from positive feedback syndrome.. maybe also simulated by some deep seated frustration at not having been able to buy a home for whatever reason ( believe it or not if price was the major hurdle then many would have bought.. as likely they are not sufficiently organised, can't make up their minds, aren't bright enough to earn enough, spend too much save are also likely reasons for continued rental). I have found whenever you say that we might be in for a long term slow correction rather than a very sharp crash.. one gets harrangued by the usual suspects. Make the point that the majority of loans during the boom period were not "liar" loans and there are those who suffer an abnormally rasied hearbeat. Point out you cannot in any way rely on the housing stats , even when they point in the direction you want them to and I sense that many just glaze over. In short there are very many here who clearly cannot think for themselves and clearly believe despite evidence to the contrary that the only possible outcome is a very sharp crash followed by an overcorrection and resultant bargains galore which of course they'll be able to take part in becasue of course financing will be generally available at the bottom of the market, the house of the dreams will suddenly be available and of course the deposit monies will have been save d without breaking sweat.... hand s up dreamers... there are plenty of you out there.
  9. I notice you haven't responded to the rest of my statement. Ok lets look at your ridiculous point... there's a difference between fraud and general availability... those who got those kind of multiples were committing fraud, theres no way out of that. It would be like say, its generally possible to get free money from a bank ( by walking in with a gun and a mask). theres a difference bettwen lenders policies and availability of products and fraud but you don't seem to get that... you also seem to think that six times is alos possible in this day and age... its not as I said before. You are plain wrong.
  10. Maybe the relevance of the agricultural wage board has long gone... precious few genuine staff are employed full time in agriculture anymore and those that are have pretty good skills farmers don't want to lose. Probbaly from a "protection " point of view the only thing worth monitoring is the actions of the labour gangs who bring in workers or organise workers for construction/ agriculture as like them jonny foreigners or not there are quite a lot of dodgy practices in thise areas...... so I think there no political angle in ditching the agricultural wages board.. it had just had its day.... bit like a miners wage board if ever a thing existed.
  11. I have never bought into this bear trap nonsense. It makes for pretty charts etc but I think as we move forward it's simply not relevant. To be relevant you'd have to be expecting a precipitous fall just around the corner, while the small upswing has now stopped, it's been pretty flat for quite a few months now and I'm afraid as the months drag by and falls are 0.1%, 0.3%, 0.6% rather than 2.6% the whole bear trap story looks more false by the day.... theres no broadly falt period if you believe the chart.... so I don't share your view and don't believe the fear phase has started. What I do think we'll see is a reduction in prices but over a long period of time, typified by periods of rises and periods of falls... inflation will do a lot of the work, there won't be falls everywhere and in some instances nominal prices at the very bottom might well be the same or higher than today. i don't think we'll see the bottom for another five years. People generally are not frightened by real prices falls , its the nominal prices which they fear... you can't have negative equity if the nominal prices don't change, the banks won't enforce repossessions if nominal price falls don't force it on them etc etc. The chart you quote is all very nice and of course many like to see their lives predicted for them and will happilly sign up to it without thinking too hard, but I just personally don't buy into it at all. apart from anything else to get the type of steep falls the chart predicts you'd need a pretty big trigger and I just cannot see one coming ( and just for the record I don't buy into interest rates rising while the economy stays weak either). I don't share your fear.
  12. I am not going to call you a liar eric lets just say I don't believe your little story to be true and here's why 1/ It's pretty rare these days for BTL lenders to not check salary. 2/ It's pretty rare these days for BTL lenders to accept £15k salary they often want more. 3/ If the rental value of the property is around £950-£1000 then its impossible that a lender would have accepted her if her loan is £1000 interest only. 4/ If her loan is £1,000 repayment then its still dicey as its unlikely the lenders rental calculation would work. 5/ Despite what you think I'd be amazed in this day and age if you could find a broker who would do this as its so so risky especially as its clear it wil blow up as the net figure she takes home isn't much more than £1100 per month. 6/ Knowing what her take home is I think extremely unlikely that a struggling couple would commit to financial transaction risking all their £50k equity knowing that as a couple with a child they will have to survive on one persons unemployment benefit post mortgage. 7/ Even if they are dab hands at DIY if they are in the financial situation you said its also unlikely that they could afford the materials to do the place up which you say needs doing after having been lived in for 50 years. 8/ Is finally also unlikely that a valuer would say that the property is rentable if its condition is as you describe it, and to be accepted as BTL they have to be rentable with no further work . I am sure you will protest your innocence but for me your little story does not have the ring of truth for all those reasons.
  13. Six times single salary was NEVER generally available, and I doubt if you went to a lender now you'd find a single one who said thats what they would do. You might find some private banks who know theri clients well who might be willing to do it for selected clients but you can bet these will be HNW individuals not the run of the mill populous.... why is that hysterical HPC voices appear to leap to extremes.. I made a point that the days of 3 times forst plus 1 times second are long gone and you have tried to counter that by stupidly claiming I am somehow supporting six times salary.. I'm not I am simply saying we have seen affordability measures in place for so long now that we won't see them reversed. If we were going to it would have happened by now. Now lets look at your second assertion... I wonder how many banks out there you think actually operate on a 3 times plus 1 basis.... you have claimed they are fast retunring , I am not aware of a single lender who operates such a cast iron system... and if there are none then what do you mean by fast returning. I wonder what percentage of loans to couples are underwritten this way, you surely must have the figures to have made the claim and seem so very very sure of yourself I am sure the percentages are veritably leaping in your direction month by month. yeah right... another worthless HPOC sheeple type post
  14. Forcasting is such a tricky thing... I was looking at your own... HPC will gather pace in the spring 2010... ( hardly , perphaps crawling along if that).... 15%/20% falls by year end... we'll be nowhere near that compared to Jan 2010........ you never know with your luck at forcasting you might find those you call VI's might very well be right about a 5% fall in 2011.
  15. I don't think theres very much excess in the market these days, its all been washed away alongside the lenders who used to provide it........ but we will of course see its return in the next boom. These days lenders want a greater deposit, are less tolerant of bonuses, there are no real self-cert programmes left, borrowing at the lower salary end is very restricted and probably the only time you'll see much larger multiples is with larger deposits and very large salaries. of course those who hark back to 3x first plus 1 times second will think anything is excessive but the old measures went out years ago and are no longer relevant or useful. I am sure plenty will try and argue otherwise... I'd save your breath if the industry hasn't gone into reverse on these things by now its not going to., the heats off.
  16. We can agree to differ here I think... bank lending margins are very high currently thats a fact, and they are high not becasue mortgage lending is risky etc , but becasue theres very little competition and they can effectively charge what they like.. Banks would not take a hit to profits from base rate rises, they might if they cut vs LIBOR rises but the two arenot helpfully connected as before. The key here is not whether they would cut overall profit levels its whether they would cut their margins ( two very different things). I think a base rate rise would trigger greater competition in the marketplace and that you might very well see cuts in margin as a result. As for savers again I think you are wrong... banks are even more reliant on savings for funding now and there will be someone out there that breaks ranks and tries to attract a greater share of the cake, and thats all it will take to trigger a litle more competiion, so I wouldn't bet the farm on savers not benefiting froma rate rise if I were you.
  17. In normal economic circumastances you of course be correct, however you haven't fully understood the situation. The reason the pound would not strengthen if rates were raised is that by raising rates the economy would weaken , tax revenues would fall even further and our ability to put it bluntly to pay interest and pay back debt would fall... as a result the pound would weaken. Currently if something happens to indicate that the UK is going to go into reverse economically it is going to overrun any traditional upward movement in sterling you'd normally get from a rate rise.
  18. Far from being idiots I think they are very sensible..... the economy is weak, raise rates and it gets worse, the debt grows, the pound weakens, stuff we import costs more and guess what you get higher inflation.... raising rates is not a solution to anything especially as BOE rates have decoupled from lending rates. The bank I think would raise rates if they thought the inflation was consumption led, actually it isn't it. I have long held the view that rates will be low low for ages and ages. The bank might nudge rates up 0.25% here or there in the next couple of years but any change is likely to be very very slow while the economic recovery ( such that it is) remains very weak...... it really wouldn't surprise me if we don't have a rise until spring 2011 and then only 0.25% and then wait until post summer for the next rise or a track back depending on the effect of the first one. Also anyone hoping that rate rise will feed through into mortgage costs I really believe are howling at the moon... with profitability and margins sky high I think all we'll see from the banks in that sitauion is greater competion and lower margins. It wouldn't surprise me if the BOE rate moved up a full 1% but that mortgage costs stayed broadly flat ( for new borrowers and remortgages).
  19. The benefits issue is complicated but there is certainly a felling out there ( rightly or wrongly) that a lareg number of people are taking the piss. My views are. 1/ While there are loopholes, for proper claimants I am not convinced our benefits are overly generous... I'd leave the payments where they are broadly ( bar simplifying where possible or cutting loopholes where possible) 2/ I do believe for unemployment benefit people should be either doing voluntary work, training or actively searching in a checkable way for work. ( the latter might for instance mean doing the research in a centre)... I think it broadly shouldn't be allowed to have people on unemployment benefit just knocking around at home. 3/ I do think it appears we relaxed the rules on incapacity to stop unemployment numbers going up too far.... I should think there are those on this benefit who are fraudulent..... so for instance doing medical checks, forcing them into training for jobs they can do and anything else that makes the shirkers think twice. At the same time where we have people who are genuinely incpacitated I'd look at the benefits levels ( it can't be right for them to be on the breadline). 4/ housing benefit needs reform.... this needn't hurt people, just reduce the costs. the state as arguably the largest "renter" has huge firepower here. Items 3 and 4 I suspect will deliver the greatest savings. At the same time though there's more I think to go for at the other end of the scale with catching those who ( even legitimately) avoid tax. here are some examples ( and it might surpise some that the biggest gains are to be had not attcking the very rich) 1/ Classification of self-employed.... the construction industry has played huge fun and games for years on this and there are companies out there who avoid all NI contributions for ALL their staff as a result. There is I think a huge sum to be gained by tightening this area up. 2/ Companies paying dividends only... many small companies only pay themselves dividends , the scale of tax savings they make is humungous.... you could have a couple taking out £40k per year each in dividends, they'd have no personal tax to pay and no NI and the compnay would have paid just 20% on that money.... again huge savings to be made, especially when you think of the number of contractors who fly very close to the wind basically working for a compnay ( often for long periods) but using a company set up to reduce tax bills significantly. 3/ Action vs offshore schemes...... some people ( not rich just switched on) use schemes that basically involve loans between companies in the UK and offshore to avoid paying anything more than 10% tax perfectly legally ( currently) 4/ 5/ 6/ I haven't gone on filling these out but there are countless instances where things could be tightened... just collect the tax thats owed. So yes benefits savings could and should be made but there's alos a lot to be had at the other end.
  20. I don't know where you live or what condition the margate flats you refer to was in but if in auction at £50k... you might assume that done up etc it might go for £80k/£90K.... so if its a comparrison its a little closer than might otherwise be assumed.
  21. Your analysis is quite correct.. of course we have a serious real debt problem and its getting worse and we need to deal with it.... but pretending that the real debt is 5 times higher than previously declared and that these things have somehow been hidden is laughable..... the real figure in terms of cuts and taxes that we need to be concerned with is the £900bn odd rising to somewhere like £1.4 trn in a few years... the PFI stuff, the bank stuff and the pensions issues can all be dealt with seperately. You rightly quote an example of the pensions solutions available... just push the retirment age out, or change the basis of the award, or change the basis of the scheme etc..... there are very very few countries who have a fully funded pension pot to provide for their pensioners... norway I think is one but I struggle to name any others... the £2.5 trn in pension committments is the amount we have to pay out ... if we had a fund of cash sitting there to delivr those payments it would be truly extraordinary and would be one of the if not the biggest sovereign wealth funds in the world ( with the probable exception of china)
  22. Quite it makes no sense at all to even argue the toss about overmanning or whatever as we simply cannot afford the labour force... it has to go... I have seen these poorly thought through socialist arguments before by Bob Crowe and his merry band of nutters... what normally happens is that they agree that the budget must be brought into balance but then say very firmly that their members "rights" cannot be breached... in other words they haven't a clue of how to bring the budget back into balance.... like it or not cuts are the only way..... I suspect we sadly find that the unions will stand in the way of a system whereby say hours or pay and perks are reduced so that more people are not made outright redundant....... I think using all the methods available including reduced hours/job sharing/ wage cuts/ perks cuts etc will enable the least wrost outcome in terms of outright redundancies from this programme but I remain convinced that the unions won't allow it as they will see it as a rowing back from their precious "rights" which they feel they have won.... nutters the lot of them.
  23. I'd agree that london and the south east will miss the worst of any correction... the worst of it will be felt it areas where public service employment is highest, where adverse credit has the highest penetration, where the benefit count ( espeically housing benefit ) is highest...... in addition though those areas( actually probably specific buildings) that were badly planned and built ( eg oversupply of two bedroomed flats) all over the UK will suffer, as will propaerties you can no longer get a mainstream mortagge for... flats over shops ( particularly pubs and restaurants and hairdressers), concrete construction, old built high rise, steel framed houses etc . The national stats are fairly pointless anyway but utterly meanigless for anyone actually bying a house.. for that its what goes on in the street you want to buy in which counts.
  24. Unless I missed that headline the government has expressed no such view..... I really wonder why people seem to think its sensible to put words into peoples mouths... you could have said you thought that was what their actions looked like they intended... but to say that their view is to have a short and quick correction is just a straightforward lie... where is your evidence... oh I see you made it up... its your own view of what you think their view is.
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