EmpiricalBear

Its very dangerous to generalise from cases like these. That looks expensive when comparing it to general prices, but as more general prices have already fallen, these outliers don't necessarily indicate further falls of 50% for the market as a whole. Its basically a big beach hut, not viable as a first home and as its essentially just a second holiday home its going to be far more affected by the fall in values than say, a home in the south east an hours commute from a banking job. I think we will see average nominal falls of up to 50%, but an oddity like this could see a 75% fall while houses that are more desirable might only fall 15-25%

I'm going through the same calculations as the OP The numbers are as follows. If I was to buy my current rental (not an option) then with my large deposit it would cost me £740pcm on an IO mortgage. My rent has been static since 2003 and is £1400 pcm. So I'd save £660 pcm if I bought it. I would need to pay probably £1600 pcm if I now moved to another rental. When I first bought I was getting £600 pcm in interest on my STR deposit. The maths are simple, buying a house is much cheaper in terms of monthly outgoings. Provided someone has a large enough deposit, its nearly a no-brainer today to buy rather than to rent so long as you are not in a postcode or kind of property that will fall 50% in the next 5 years. I would not apply this logic to buying a flat over a kebab shop in a riot prone urban area, but for nice houses... I'm thinking of getting one myself.

It seems increasingly that we are in for if not a 30's style depression, then at least a newer form of the beast. If this is the case. Then what will this be like, particularly for the housing market. What will happen to interest rates through a depression? Will they necessarily stay low. I'm assuming it will be a gradual progression of joblessness, greyness and falling asset prices. It won't take more than another five years for people finally to reach the opinion finally that increases in house prices are not a law of nature but that this might change. A friend of mine bought a rural ruin in Northern france for approx 50k in the late 1980's then spent £300k over the years rebuilding it and its associated barn. He's planning to sell it for around what he paid for it. You see, property in France doesn't necessarily rise in price and there's less expectation that it will. If that psychology got embedded in the UK what a different place it would be.

There are mortgages for people with low LTV's or for BTL. As a self-employed I can get a BTL mortgage at the drop of a hat, but need good proof of income to get a PPR mortgage. Interesting times. This should be named the 'Houses are getting cheap' thread as it seems some of the posters feel that a quarter mill in one of gods waiting rooms is a good buy. This makes half a mill anywhere commuting distance from London a steal.

It IS overpriced, but its in one of the most expensive and desirable locations, 3000 square feet and overlooking the common. Those houses in that area have been expensive for a long, long time. The person who buys this would probably come with a big chunk of equity and have huge banking bonuses in addition to their pay. On a 5 times salary multiple this house could still cost about 1-2 million if you think of bankers who earn 200k and get bonuses of up to 400k on a regular basis. So I'd think that at the very lowest thats what it would go for in the world of housing in London would be 1 million. But 2 million is probably a more sensible price. Houses like this are no longer for 'ordinary' folks. So you can't judge the price by ordinary standards or by comparing it to a shithole in some irrelevant location. It might not be 'right', but thems the facts.

The alarming thing to me about this thread is that there appear to be many of a bearish position who are beginning to contemplate property purchases. The artificially low interest rates and fear of unfairness in debt forgiveness are causing this. The end result would be the same, higher property prices. So here's my thinking. I could spend my entire STR fund and buy a reasonable house outright in a cheaper part of the country where I'd be happy to live. That's the ultimate protection against bank failure. While it might be possible to play the game of taking on more debt hoping it will be 'forgiven' I see the possibility of the erosion of savings through inflation, or destruction of capital via any number of possible financial disasters as being fairly high. Owning a house would mean at least I had a house. One of my friends in Germany has done exactly this about 6 months ago because he saw the coming crisis in the Eurozone and feared for his savings.

It rather feels that we will see another banking crisis before this year is out. Traditionally bad financial events happen in October. I'm not sure we will have to wait that long. Drove past Spinks today and nostagically remember buying my first Kruger in there for £204, in 2004 (nice little numerical rhyme there). If only I'd bought a hundred of the blighters! Don't see a point in putting paper money under a mattress. The gold is less likely to burn when the molotov cocktail is pushed through the letterbox.

It does look rather like 'things are different this time' as the old saying goes. The structure of the housing market seems to have changed fairly radically since the falls of the 1990's. However I'm still not sure about the impact of market psychology. No one likes to buy an asset when the prices are falling. Yet its the way to get a cheaper asset. So I think that sentiment could cause cyclicity to return. Having said that. Maybe a large number of properties hitting the market due to repo's would just get absorbed by renewed demand. The number of negative supply factors appear to outstrip demand side factors now. My own experience suggests we are only just starting to experience the down cycle psychology. The situation will be much clearer in a years time. With negative sentiment in the general economy it will be the toughest test for the theory you are espousing. There will be no 2005 style reboot of HPI by the government this time.

+1 The likes of her are part of the cause of this problem. Hypocrisy and a materialistic view of life and 'what is good for me is right'. A dreadful person whose hypocritical platitudes grate on ones spine. I seem to remember no full apology was offered by this creature.

Heh yeah. It does rather feel like the cure has been worse than the illness.

Very nice utility. Actually I'm on Safari but it seems to work fine. I'm a sad mac fanboy, and Safari on the new Mac OS is really great so thats that. Keep up the good work.

Well they do seem to have twigged around here. Half decent houses are flying off the EA's shelves. Anything decent is selling within a month or so. My EA mate (a decent one who agrees with us that prices are 'eye watering') has had his busiest month in two years. It all depends where you live. In this area, South Oxfordshire, prices seem to know no ceiling.

No you didn't make the right call. I made the same call and it was wrong. I've got over it. If you can't learn from your mistakes then you are far poorer than just being 100-200k out on the price of a house.

More pathetic behaviour by government and large organisations. A bunch of financial incompetents the lot of em. I remember picking up one of the Post Office leaflets and thinking to myself 'Here we go again'.

You are obviously too bright to be working in the kind of jobs you are doing if you can write as cogent a post as this. . If you can use your time on benefits to get more education, knowledge and skills, then that could be a better investment of your time than wasting it in jobs that barely pay for living. I'd say it would be a good investment by the tax payer as well in that case. Libraries, the internet, the open university, etc, etc, mean that a world of knowledge and self learning is open to you. Just decide where you want to go, and go there. Working is for people who can't do anything else. The French Situationist had a slogan 'Never Work'. To me this means, never do anything you don't want to do. For me work is a pleasure, I'm addicted to it, but thats because I made my interests and hobbies my work and found people who would pay me to do it. The main thing is not to have a boss, they cannot survive without taking your 'surplus' ie: they rely on you to get rich. To me its obvious, I need my surplus. I can only afford to have a boss once I am earning enough for what I need, and providing they can help me get richer. Once we are both enriching ourselves it becomes worthwhile to have a boss. In the early stages one often needs one, but they are best avoided unless they are providing suitable training in return for that 'surplus' they need from you.

Funny, but New Scientist is renowned for its April Fool hoaxes and this is the nearest publication date. Anyhow, the argument appears to be based on the absurd premise that trees are blown around by the wind when everyone now knows that the wind is caused by trees waving their leaves around!

Move more business North, and regenerate the area. Simples. Create one or two enterprise zones. One in or near Liverpool, the other in Sunderland/Newcastle area. In these zones company taxation and NI is set to 0% for a period of ten years. Rules to be applied to ensure this only applies to genuine SME's that create employment rather than a) single person companies that are really just contractors mega-corps looking for a tax dodge. Hard to avoid some distortions and abuses, but it might kickstart a real economy in these doomed places, then you'd see houses brought back into use rather sharpish.

Yes, but the great idea about this nano-tech way of containing Hydrogen is that the existing oil/petroleum infrastructure can be used to distribute it. *If* it works, and that is a big if, this is a huge point in its favour. Couple this with the fact that the countries with the petroleum infrastructure also have ideal conditions for large scale solar. USA, Saudi Arabia... and its a potent story. So the equation becomes the relative cost of building the solar infrastructure/ funky nano-hydrogen generating plant versus the cost of future oil exploration and extraction. Given how much it costs to develop new oil fields this seems very compelling to me.

Dead right. I can only claim mileage. Actually because I rent, thats an advantage, I can claim back a good chunk of the rent because I use two rooms for my business. No worries about capital gains.

Just to point out, I am self-employed and do several different kinds of work, sometimes IT contracts, sometimes more creative industries stuff. My contract rate hasn't really gone up since 1998. OK, if I had consistently worked in banking I could probably have seen a better rate, however I hate working in the bloody banks. So guess, compared to house prices, my real earnings from contracting have halved in that time. Been contracting for 15 years, I'll never go back, even after bad years like the last one where I made a loss because I couldn't find suitable work and my other work areas dried up at the same time. The golden days of buying a new car with a switch card on my earnings have long gone, its more of a slog now. But its my choice, I choose lower paying work so I can be more flexible, not work in an investment bank and be treated with some status rather than just treated as a contractor. For me its a price worth paying, but I can say that because of my somewhat bohemian approach I don't have a fat pension, but then you have the freedom to do what you want.

The answer can only be in a technological fix. Humanity (or 95% of it) will not take 'less', its just not in its nature. It consumes and wants more. There is plenty of energy falling on the planet from space. You only need to cover a small amount of one of earth's desert with PV to create enough energy. So the problem is in the cost of the infrastructure to capture some of that energy and convert it into a portable form. While this would be expensive it would need to be compared with the cost of extracting ever reducing oil reserves, or cracking hydrocarbons from oil shale... I guess the energy input cost of that is pretty bad too. In this case the input efficiency would be less important if it came from an abundant source. Cost of infrastructure would be a big issue. However the ability to take solar in a remote sunny environment and turn it into a distributable form that matches the existing petroleum distribution network makes it a lot more interesting. So few new infrastructure costs once you had paid for the generation. Perhaps giant desert PV plants would generate this Hydride based fuel and ship it in pipelines and tankers... er a bit like petrol. So the distribution infrastructure, and the vehicles would already be in place. Not only that, its precisely the countries with large amounts of desert that have the distribution infrastructure - US, Saudi etc. The article is probably just based on the fantasies of a couple of deluded academics anyway.

I find this "likely to happen as soon as possible" to be quite surprisingly strong as a statement. I think the public statements of Andrew Sentance, followed now by this, could represent planned 'news flow' warning the public and markets. They are going to have to work hard to correct a general public expectation of 0% interest and falling prices. I think they may not be able to time it right. The time they have to raise rates is also a time where they can't not hurt growth. Its called stagflation. I note a new high in gold against sterling, I don't think the timing of this is a coincidence.

I agree with your posts, very insightful. There is a very unlikely black swan risk, but it seems far remoter to me now than it did before. Couple where we have been (and I'm also a grudging Darling fan) with the fact that we are now on a new political part of the cycle that should lead to more growth and the UK is looking better than it did. We are Thatchers Children and that means we have better labour flexibility than many competing economies. The still have to fully come to terms with globalisation and this may help the UK over the next ten years. (I was amused to see that William Hague described himself Cameron and Osborne as Thatchers Children in one of the wikileaked cables... though we may have been using it in a different sense.)

Its not just the gear, it's the time that goes into these gigs. I know a wedding photographer team and the two of them probably spend about a week on each wedding. Plus imagine the awful boring shit they have to put up with, brides, dresses and endless tediousness. I once spent a weekend at a house party where one of the women was getting married at the age of 36, so no spring chicken. Despite having a degree and a professional job all she talked about was what colour and texture the paper should be for invitations, bridesmaids, blah, blah. I'd happily pay not to be a wedding photographer.

We have created a society in which people now refer to themselves as 'vulnerable', its going to take a generation or two to work that out of the culture. Another challenge will be to give people back the sense of dignity that would mean that would rather go hungry than refer to themselves in that way, the way my mothers generation thought about themselves.