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About KingBingo

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  1. KingBingo

    House Prices Vs Broad Money

    Yeah, I work in finance. I personally think its absurd the amount of people that work in finance. All these bright people should be working in engineering, or medical research, or farming, or anything else that was vaguely useful to society. However, the important point, one that is I think too often over looked on this board, is that we have to deal with the way the world actually is, and not how we would like it to be. So while I would much prefer a nominal HPC a return to the gold standard, an end to big government, a greatly reduced financial sector, we also have to consider that instead we will see more and more fiat money being created to inflate away the threat to 'nominal' asset prices. Probably more finance, more government. Now sure one day the fundamentals will catch up, and Jim Rogers will be right. That is probably certain in the long term, but I am looking at the short to medium terms. And in the short to medium term the great ponzi scheme will probably roll on. Maybe this will be the moment it all ends, but then again if you wait for nominal falls, rather than accepting real falls you may wait forever. And as I show in my OP, if you look at house prices in real terms against broad money we have already had the crash, and if prices stay flat in nominal terms the real terms crash will have been huge. BUT THIS IS NOT THE SAME THING AS A NOMINAL CRASH. For the simple reason that it is within the power of the state and central banks to print as much money as they like.
  2. KingBingo

    House Prices Vs Broad Money

    Well I have made no attempt to hide it either, I did start a post about it and even mentioned it in various other posts. But to be fair its not like I am a over-leveraged BTL LL desperately clutching at straws. I am a long time HPC'er who came to the conclusion that the house market could stay rigged, and politicians and central bankers could remain corrupt longer than I was prepared to wait. So for full disclosure, I came to this view earlier this year and started looking around. I exchanged contracts last week. However, I did protect myself by skipping the starter homes like flats and 2-bed terraces, waiting until I had a good deposit,and getting a good family home that I could retire in if need be, then taking a 10 year fixed. That way if I am completely wrong, at least I get stuck in a house I want to live in, and not feel trapped the way people who bought flats are.
  3. KingBingo

    House Prices Vs Broad Money

    Which is why I showed that the growth in the housing stock is less than the growth in population. If anything the divisor decreases. Really?? look at the growth of broad money since 1960, more or less doubles every 7 years. Are you really going to say that its different this time. We have had these kind of economic fook ups before since 1960, and every time the state responds with more and more money. Now is this the end of the road....maybe, but I don't think we are necessarily there yet, maybe not even within my lifetime, this paper money thing could run for ages yet. Well they spotted something, it was actually the money supply doubling, they just mistook an outcome of that that (houses) as being the driver. I don't think we will see
  4. KingBingo

    House Prices Vs Broad Money

    I knew you would say that! I know it must seem like a fair point, but I genuinely bough because of my views, I did not buy and then come to my views. I did not buy thinking I could single handedly turn the whole of HPC into the greater fool. (which seems a wildly ambitious undertaking even for someone of my stature) I would suggest that's pretty easy to prove in my case, I have been on this board engaging in the economic what not's for yonks now. I've been through every case for a crash that has been produced on this site since well before I even signed up my account years ago so I could post. Its just that I am a retreating bear. I still believe deep down that the fundamentals are fooked, but I also see a tsunami of freshly printed notes sweeping across developed economies that will, and I'm fairly sure of this, render mute the arguments for a crash in NOMINAL terms. Thus the house, thus the ten year fixed rate.
  5. KingBingo

    House Prices Vs Broad Money

    Much the same at first guess. However, the US like say Spain and Ireland also had construction booms. We did not. Which is why I showed only 1.8m dewellings being built over those 13 years. It a proof of something I has thought for a while. That the money supply got houses up, but dracionian planning restriction are helping keep them there....along with many other policies, a huge one being money printing, i.e. Even more money growth.
  6. I did a little looking at the growth of the board money supply in the UK economy, and compared it to UK house prices. Principally comparing 1997 to 2010. My main sources are here: http://www.indexmundi.com/facts/united-kingdom/broad-money and here: http://www.housepricecrash.co.uk/indices-nationwide-national-inflation.php and here: http://www.communities.gov.uk/publications/corporate/statistics/housebuildingq42010 When you start to look at the power of monetisation it starts to look convincing that we are not going to see the nominal falls people are waiting for. In nominal terms a house cost £61,800 in 1997, today it is £162,722. But in 1997 UK Broad money was £739,478,000,000, whereas the most recent figures I have for 2010 have that at £2,629,130,000,000. So in 1997 one million average UK houses would account for 8.4% of Broad Money. By 2010 that was down to 6.2%. So yes of course, houses cost a lot more than in 1997, but while they have rocketed in price, they have not rocketed as fast as the amount of money in the economy. Indeed, had the price of a house kept pace with the growth of the money supply houses would cost £220,846 today, or 35% more than they do. Of course there are very mitigating factors. In 1997 we had just experienced a long competent Tory government and the economy was in a very strong position, the state was about a third of GDP, (half of GDP today) as such people were better off and it would seem reasonable to expect people to be prepared to pay more for a house they like. Then again, the population was also 58,000,000 in 1997, against 61,000,000 as it is today. During that same period 1.8m new homes were built, with an additional 4,330 new local authority homes. Given a lot of those were flats you have to wonder if the population growth occupied these new flats at a rate of not more than 1.6 per dwelling. I would suspect the number is lower. Today we have had a ruinous long Labour government that have destroyed the economy requiring (in politicians opinions) the need for central bank life support. Interestingly this fly’s in the face of conventional wisdom that houses were very cheap 1997 and very expensive today. But consider this. Given the way that every central banker is going at the moment is it unreasonable that in 2019 Broad money will maintain its current trajectory of at least doubling every seven years. Indeed, when you consider the approach central banks have today you would most likely argue that the money supply will double a lot faster than every seven years now. In 2019 that would give a conservative estimate for broad money of £4,100,000,000,000. If house prices remain flat between now and then that would mean that a million houses then account for a mere 4% of broad money, which is 50% lower than today and 100% lower than in 1997. Let’s rebase house prices to 1997 money supply to get a ‘real’ price of houses as against money supply. That give us an adjusted baseline price of a house in 1997 of £220k, against £163k today, falling to £104km in real terms by 2019. And that is on flat nominal. So for the above reasons, people on here who insists prices will fall by 30% within the next seven years start to look a bit deluded. You can’t simply ignore the fact that money itself is losing value even faster than houses are, indeed, when you look at it like I have above, it becomes hard to see that house prices won’t ultimately be higher in 2019. Indeed, if they remain their current proportion of the money supply the average house will be worth £254k by then. You have been warned! Of course house prices could go from £162k today to £254k in 2019, but going via say £110k or less for several years. This is NOT necessarily an argument that we will not see a HPC. This is simply an argument that the direction of travel over the decades is utterly inevitable. Ultimately prices will go higher, with our fiat money and system of government/central banks it is a cast iron certainty. The only debate is if prices dip and then soar. Furthermore, some of the wildly optimistic expectations on this site need to be consider in the light of what’s happening to our money. Notes: If I was going to spend more time on this I would do the same analysis of Average wages and of the growth of government. One of the arguments which I sympathise with is that we are all getting a lot poor, because its all going to a vast and bloated state. For that reason there is very little money left to bid for houses. If you look at the way the government has ballooned you could well suggest that houses must as a result account for far less of broad money because far more goes to the state. In addition of course I also overlook the effect of foreign money. As sterling slides you could view it as being the case that another huge heap of foreign money needs be considered, especially when analysing London and the South East. UK Broad money every 7 years: 1961: £10,705,000,000 1968: £15,905,000,000 1975: £40,101,000,000 1982: £106,398,000,000 1989: £473,282,000,000 1996: £589,201,000,000 2003: £1,299,870,000,000 2010: £2,629,130,000,000
  7. KingBingo

    Pound Collapse = No Hpc?

    Yes, but our currency is still priced as if we are ice-cream in a bowl, easy scope to see the pound tumble, and the OP's point is a good one. At least for London and the surrounding area, there would likely be a disconnect for the rest of the country. They could just unwind QE if they really had to in order contract the money supply. But they won't do that, or put up interest rates as they would just argue (and the BBC would pull out the stops to help them) that its all external factors and we haver to live with paying more for Gas and imported toiletries. They might levy some windfall tax on the banks as well to distract us.
  8. Maybe they don't want to look like smug tw@ts?
  9. I don't think the people at the BBC buy any other paper ever, do you? Its basically their entire research department.
  10. Yes, I have not taken leave of my sense altogether. Even though I expect a 85% chance rates will remain near zero for the 10 years of my fix. I have insurance for that, and a wife that can work. Yes, and that might be true for another 10/20 years, I cannot wait forever.
  11. They can do that now......and don't 'get it'. A mate of mine tries explain that exact concept to vendors every day. He points out that if they offer less for the house they are buying they can afford to sell for less. To a boomer they fail to understand. They just listen smiling then say "but I need to sell for X to get the new house".
  12. I doubt investor want a particular yield and if its unachievable they sit empty for ever ( well a few probably do). Nor do I feel LL desire a certain yield, then refuse to take a penny more, they just charge the maximum they think they can get away with. No there would likely be few rentible houses and few renters. Can't say if rents go up or down from that. Maybe prices half because all mortgages are banned, and all sales are cash sales, if so the young become even more dependant on LL's until they get to 40 and have saved up the £130k required.
  13. No its not, rent is based on what renters are prepared to pay to home themselves given their alternatives. A decision to become a BTL LL should be based on yield.
  14. By the same token they are not going to be under any pressure to sell 'for less than its worth'......

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