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Everything posted by KingBingo

  1. 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. 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. 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. 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. 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. 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. I don't think the people at the BBC buy any other paper ever, do you? Its basically their entire research department.
  9. 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.
  10. 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".
  11. 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.
  12. 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.
  13. By the same token they are not going to be under any pressure to sell 'for less than its worth'......
  14. Lucky for them they don't need to. Houses are of course overvalued, but measured in government fiat that they can print at will and leveraged by banks they control through swathes of regulations and powers. They can keep the price of house high indefinitely when measured in government fiat providing they are OK letting everything else that is dependant on fiat go to hell, which they are. I think Gold is a great investment, but I can't live in it (well not until I'm a billionaire anyway). After that houses a dodgy investment, but a lot less dodgy than stocks/bonds/cash. After some serious HPC'er doubting for the last few weeks I am now delighted to have exchanged contracts. I pay about the same in rent to the bank on a 3-bed family home with big garden/driveway as I paid rent to a LL for a 2-bed flat, and I can do what I want with it, which for a control freak like me is perfect. Better still I now have the Government/Bank of England and a whole swath of other elites in my tent pissing out, where before the aforementioned stood around to rain it down on me from outside my little HPC tent, and I was fed up of getting drenched. Now I'm a 'VI' I don't suddenly think its OK, its all a shite situation, but I decided that the government/money/planning etc could all stay corrupt as hell far longer than I was prepared to wait to get a house. Which is what the vast majority of people on this site really want to do. It might be time to sallow your pride, and take a fresh look at buying if you can get a cheap enough fixed rate deal. This market has been a few weeks from collapse since 2008 now.
  15. The sadder thing is I can make a good case for paying that. Your rent to the bank with a 10% deposit is £525 on a 10 fixed @5%. For only slightly less money you could rent a double room in a house share, and it would take almost double that rent to get a 1 bed flat. If you want/need to live in a hell hole like leytonstone (which I did for a couple of years) you could actually do a lot worse than buy that place.
  16. Was slightly tempted, but they may well have just said bugger off then. Exchanged now so moving day is soon.
  17. This pisses me off. She spent a decade being a 'lady that lunches' in some phatt house with no doubt bountiful living expenses provided and now wants to get paid as if she spent that decade working 80 hours a week on the off chance she would have had a top career. No **** you bird, you could have agreed with your husband that he says home swanning around in a silk dressing gown spending your money hand over while you toil long hours at some desk, but no, you sent him out. So don't ****ing come back now expecting to have eaten your 20 cakes and get another 10 a year for life. Being offered £48k a year is more than you deserve, good for him for sticking it to the greedy ****ing cow, now she gets **** all which is how much he would have been left with anyway. Well done sir!
  18. When I was shopping around everyone wanted me to take out a 35 year mortgage. I actually took 30 years, because the repayments were slightly lower than 25, and I will re mortgage anyway after my 10 year fix runs out. Hopefully with my savings habit/gold/bonuses/pay rises I can pay off a proper chunk then and go onto a short term on my second mortgage in ten years time.
  19. Cognitive behavioural therapy my left **** cheek. He needs his dad to slap him round the back of the head and tell him to stop being such a poof.
  20. Houses are priced in money, which is not the product of a free market, rather government fiat. No reason nominal houses prices need to fall under fiat.
  21. There seem to be enough parents for now. And its not central london, I claim its Kent really. So its sub 200k
  22. It will be debt. The new money will be lent in some form plus interest. Expect to see Gilts go negative in most countires that are not falling apart at the time.
  23. Due to exchange contracts next week and feeling oddly clam about it despite still feeling every bit as bearish as I have for the last ten years. House prices are plainly a farce, and what’s more real loanable funds seem to be dry. I find it highly unlikely that the value of my new house will increase. But at the same time I also don’t think it’s massively likely that the price will do much in either direction. The place I’m buying is on the London/Kent Boarder, 15 minutes to Victoria, but still just far enough out to feel suburban rather than blockish London hellism with fried chicken shops that you get if you go much closer in. It’s a reasonably well off area, plenty of decent restaurants and schools, even a bit of culture. The house is a decent sized 1930’s semi, with scope to extend to even a 5 bed (loft+side extension) one day. The bear in me feels that’s important, as I could be stuck in it for 25 years if the market goes tits up. But I would be cool with that, it’s a family home I could retire in if needed. I spent years renting, passing over the normal chain of 1 bed flat -> 2 bed terrace, and gone straight to family home and driveway. The bear in me also went with a 10 year fixed rate mortgage. If I maintain my saving habit I have had for the last few years I will pay of a decent chunk at the end of those 10 years. Very glad I skipped those earlier steps. There was a 2-bed terrace just around the corner from the place we are buying that for me summed up that market segment. These house, and there are a lot of them, contain a young professional couple that bought the house in their mid 20’s as it was all they needed. 5-10 years later and they already have at least 1 kid and another on the way. They are bursting at the seams and desperate to move, but these houses are not moving without a substantial reduction. In this particular house I turn up and the EA flat out says “look you’re a serious buyer, so I’m not going to mess you around. Its on for £290k, but they bought for £245 back in 2005, offer them that and you can have it.”. These couples are in an odd situation. They have probably done well in their careers, and have plenty of budget to play with. They all want to move into 3/4 bed family homes with driveways and gardens, but can’t shift their starter homes. Or at least not without loosing the money they spend redoing it from top to bottom, they always have immaculate new kitchens, bathrooms, fixtures and fittings etc. The starter home market is tight as a nuns chuff, even in the London commuter belt. But interesting not from a lack of money. The reverse, too much. The guys in their early 20’s can only afford flats, and these sell fast, weirdly. The guys in their 30’s can afford a family home, but can’t find a buyer for their starter homes, unless it’s a downsizing boomer. However the family homes market is uber-competitive. Stick a house like the one we are buying on the market and your get 8/9 viewings in the first weekend, and a raft of offers. And that’s because there is so few coming on the market. Normally you have to wait for an old timer to die. We got our place because everyone else was in a place they need to sell first. ‘Chain-free’ seems compelling to EA’s right now. I’ve spent some time on our new street and almost every house is a boomer, if they do have kids they are fully grown, although not always moved out. Our new Asian neighbours has a daughter living with them who is older than I am. Although most of the street is boomers rattling around in half empty family homes. The decision to buy was not easy as a HPC’er, we tend to always assume we are 6 months away from housing market armageddon that never actually appears (London and SE anyway). I won’t bother mentioning the reasons I hesitated all those years, instead I might as just well list the reasons why I decide to take the plunge. Firstly I am paying £950pm in rent for a 2 bed flat on a shitty road with crappy neighbours right now. After I move I will be paying £1,150 rent to the bank for something twice as large with a garden and next to a great park. The type of road where the neighbours rivalry manifests itself with everyone trying to outdo everyone else front garden. That is an extra £200 that I will be very happy to spend. So just on a basis of rent vs mortgage I am happy with the move. But also if I was not buying this I would still need to do something with the money. If I leave it in the bank its destruction at 3-5% a year is guaranteed. If I buy stocks or bonds I’m buying into markets that have become addicted to freshly printed money and long since disconnected from the actual economy. I like gold, but its manipulated to hell. That’s said I still have a strongbox load of Krugerands should the worse happen. They just are not building a new houses in the areas people want to live, but they are printing money. In that environment I feel fine buying a desirable house in an area I want to stay in. So yeah, I know maybe I should defer until Autumn/Next Spring/Next Autumn. But I’m getting older and governments/central banks are not getting any less corrupt. I’ve had 2 months since offer-accepted to get cold feet, and I don’t. I’m looking forward to my moving in day immensely.
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