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House Price Crash Forum


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About SeenItAllBefore

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  1. As I couldn’t afford to live anywhere else I spent the late 80s to mid-90s in Hackney, Tower Hamlets and Walthamstow. I remember sitting outside my local pub in Hackney with a mate who was visiting, he sat there surveying the view and said “if they ever give London an enema, this is where they’ll stick the pipe”. In the late 80s there were a lot of up and coming actors and Comedy Store types living around there. You’d see a quiz team made up of “Whose Line Is It Anyway” participants in my local pub and The Bill cast members in the off-licence. I remember shaking my head reading an interview in the paper with the actor Jerome Flynn, who lived round the corner from me, extolling the vibrant, diverse virtues of the area. Sadly a while later his pregnant girlfriend was attacked by a burglar in their house and lost the twins she was carrying. He now lives in Pembrokeshire apparently. The problem with those areas is that the only way they’d be “gentrified” is if most of the long-term residents were deported east of the Urals. Each of the places I lived in were burgled, 2 in broad daylight, and, no matter who you are, it just isn’t safe to walk around by yourself after dark. It’s not necessarily safe during the day either. In the first couple of months I lived in Hackney there were 4 murders within a couple of miles’ radius of my flat. I can’t imagine how naive you have to be to want to buy there at any price, let alone the sort of money you’re talking these days. Prices halved there during the last proper crash and if, as I expect, this country ends up in the same state as Greece someday soon, those areas will be war zones.
  2. If this data relates to 25 year loans taken out in the mid-80s it doesn't tell you much about what's going to happen when the sort of mega loans that have been taken out in the last 10-15 years reach the same stage.
  3. Two reasons for the UKIP surge: (1) The chaotic state of the Eurozone means they’ve comprehensively won that debate. The rest of the political establishment just looks idiotic trying to defend it these days. (2) Many people are sick and tired of untrammelled mass immigration. And I mean really fed up with it and want something drastic done to shut it down.
  4. I was surprised Moody's report attracted so little attention when it was published last year, I thought its findings were explosive. Now the new FCA has chosen to highlight the I/O mortgage issue as its first overt public act. I wonder why? Maybe it's an attempt to point out the scale of the lunacy that went on under Ed Balls' idiotic tripartite regulatory regime and the now defunct FSA. One thing Moody's mentioned was that by 2007 75% of all lending was I/O which explains why prices went up so stupidly far, somebody buying with an I/O mortgage can afford to pay roughly 1/3 more than someone actually intending to pay the loan back. Considering house prices are at their current levels due to a mortgage product that is pretty much outlawed for new lending, how are those who borrowed in this way going to find someone to pay anything like the price they did if they have to sell? And exactly how overvalued is UK property? What a horrible mess, all down to the greed of the bankers, the people they were lending to and the shocking incompetence of the last government. I blame them all equally.
  5. Moody's research suggested the problem was a lot worse than that
  6. I had a brief contract in a civil service department a few years ago, in the team of about 10 people I worked with there were 4 people who had joined as teenagers in the 70s who were coming up to retirement after getting their 40 years in. They were looking at retiring in their mid to late 50s on pensions of half their final salaries with a 1.5 times final salary lump sum thrown in for good measure. As far as I recall they were earning around the £30,000 mark at their grades so God knows how much that sort of pension deal would cost in the private sector, more than £1/2 million I would guess. Considering the mess the public finances are in today these are obligations we plainly can’t afford now, let alone in the years to come. Perhaps we should have a “planning for a poverty ridden future” thread to discuss the best evasive measures to take.
  7. Rents might seem high now but I’m pretty certain they were a lot higher in the past. I’ve rented in Outer London, the South-East and the Midlands for 25 odd years but when I check current rents for places I’ve lived in previously they always appear to have fallen in real terms. For instance I paid £900 a month for a flat in Twickenham in 1996 and I know someone who now lives in the same block and is paying £1200. Only a 1/3 rise in 17 years, and that’s in a very desirable area, easily commutable to the high paying areas of London. The RPIX compounds to more than that over that period. That’s a relative success story, in central Nottingham flats are about 25% cheaper in nominal terms than they were 10 years ago!
  8. I agree with you about the Heath comparison but I think the coalition’s main problem is that it just doesn’t have a mandate to do anything about the mess 13 years of New Labour created. I thought this snippet of information from Moneyweek was interesting: From what I remember the dire state of the public finances were made plain enough both during the 2010 election campaign and afterwards when the coalition was laying out its plans but, if this poll is to be believed, half the electorate have chosen to believe the completely specious “unnecessary, idealogically driven Tory cuts” message pushed by Milliband, Balls, the unions and the BBC - who blather on about “austerity” at every opportunity. I really wish the coalition would fall to bits ASAP so Milliband, Balls and Co. can finish the demolition job they nearly completed by 2010. At least when we’ve got that out of the way the electorate might be a bit more focussed on reality, although I wouldn’t bet on that being the case.
  9. This story was around in November but didn’t attract much attention, can’t think why! I think this is because the City boys and their bonuses distorted prices in the South so comprehensively that those in the professional classes who wanted to play in the same property sand-pit had no option but to go the IO route. When the base rate got pushed up to 5.75% in the summer of 2007 I remember a colleague of mine talking about some friends of his, a GP and her husband in their early 30s, who were struggling with a £600,000 IO mortgage. So it wouldn’t surprise me if these big IO loans are concentrated on the professional classes who are considered good risks as they’re highly unlikely to stop paying the interest every month. How they come up with the capital they’re on the hook for at the end of these loans is a different matter altogether though.
  10. I’m surprised this particular revelation hasn’t attracted more attention. I knew that I/O borrowing had grown to a point where it was roughly half the market by 2007 but the fact that more than half of ALL the outstanding loans in the South are I/O strikes me as extraordinary. What sort of regulatory regime allowed that to happen? It’s insane. It says something that this BBC journalist spends the whole article lamenting the current and future lack of available I/O loans, completely missing the real implication of this story. I know there are some “sophisticated” investors out there with irregular incomes or capital they can better invest elsewhere but how many are there really? I certainly don’t know any. Even if it’s 10% of the market, and that’s probably a stretch, it still leaves a huge number of borrowers who have no chance of ever paying back the capital. The whole edifice is rotten to the core. I always wondered why there were so many £1/2 million plus houses in the South but so few households with the £150,000 a year incomes that would support, what I would consider, a proper (i.e. not I/O) mortgage of that size. Now I know why. Those of us that thought “buying” a house actually involved paying for it had it completely wrong. I have no idea how or when this charade will finally end, but with millions of “homeowners” effectively owned themselves by the banks, it won’t be pretty. The amount of inflation that would have to be generated to shrink those debts down to a repayable level would destroy the currency and take the economy with it but the banks can’t repossess that many houses either. The scale of the economic misrule during the Brown era still surprises me to this day. I sincerely hope this all blows up when Balls is back in the Treasury. That would at least be some form of justice.
  11. I really wonder what sort of experience of life you would have had to make a statement like this. The idea that, broadly speaking, all men are born equal is just plain wrong, anyone who went to a comprehensive school should have seen that. It’s just a conceit maintained by Labour politicians pandering to their core vote. How many votes would they get telling the bottom of the pile that they are there mainly because they are thick and, or, lazy? Much better to send the message that it’s all a middle class conspiracy to keep them down and absolve them of blame.
  12. I can see the point they are trying to make about our house building rates vs population growth though. We were building at an annual rate of 150,000 new homes plus for many years before the financial crisis. When you add all the extensions built on existing properties into the equation we must have added accommodation for a fair few million people in the last 20 years. I’d always assumed this was why we’d managed to absorb the biggest mass migration in our history without any discernible increase in rental prices.
  13. But it’s astonishing how many lefties do try and defend Brown, Balls & Co. If you listen to them it was all the fault of Tories and their banker friends. The part that irresponsible, overspending governments and the greedy buy now pay later public played in the insanity doesn’t come into it at all apparently. Then we get the insistence that “it would have been worse under the Tories”. I’d like to know how. Yes we’d probably have had the same problems in the financial system and the same rampant crony capitalism but there is no way on past behaviour that they’d have ramped up public sector employment by 800,000 and borrowed hundreds of billions during a boom. The public finances would have been in a far better state than they are now if Brown had not spent 13 years controlling them. I grew up swallowing the “Thatcher is the anti-Christ” message that the BBC promulgated during the 80s and voted against the Tories at every opportunity. I still have an ambivalent attitude to them in their current incarnation and I wonder whether the “Party of Business” can really be trusted to sort out the shocking governance problems we now have in the crony capitalist corporate sector. But Labour and the UK left in general I just cannot stand. They need a serious kick up the a*se. They purport to be the party of ordinary working people but I struggle to identify anything positive they’ve done for this supposed core constituency of theirs in my lifetime. Left-wing thinking has utterly dominated the state education system since the 60s and all they’ve presided over is plummeting standards of literacy and numeracy. On top of this they seem to have an inexplicable enthusiasm for completely unfettered immigration, leaving the already badly prepared school leaver without any pricing power when they are trying to sell their labour. They have been a complete disaster for ordinary people in the UK and until they face up to how abjectly they’ve failed they offer the electorate absolutely nothing.
  14. Michael Howard did in his 2004 Budget reply speech.
  15. Agree with you about the Poles by the way but I think you’ll find that the British Empire was a net exporter of capital for most of its existence and, by dint of our tiny population compared to that of India for instance, there was no way we could have imposed British rule and subjugated people militarily in the way you suggest. We just didn't have the manpower.
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