MississippiJohnHurt

heh I was thinking that - must be a natural salesman. Respectfully suggest that someone buying a tracker with rates at practically zero might not be a great asset to the gene pool.....

definitely keep and clear the mortgage, the improvements you've made and food production are a good hedge against wild inflation! If you can live away you could get another lodger and pay most of your rent in Herts too. Def worth keeping - although i bet if you did want to sell you could get a few people from the site interested (me first

Few thoughts: 1) Olympic effect was priced in pretty much overnight in 05 when Olympics were awarded. Considering both the general economic environment and the "regeneration" effect in previous Olympic areas, it's a high risk area to buy IMO - can't see the upside but can see plenty of downside. 2) Think people are overplaying how dodgy it is. I've been out there quite a bit (big up the Railway Tavern!) and it's the same as most of London, if you keep your wits about you you're generally fine. Nowhere near as bad as Whitechapel or Shadwell further in, and going out on the Central Line, Leyton and Leytonstone are also worse areas as people have said. 3) Excellent transport links - in the end you'll even be able to get to Paris from there. 4) "Stratford Village"

Like in the last crash?

yes, if the house was right and I felt the agreed price was fair. I have no deep philosophical roots as a bear, I just look at market conditions. There's a house right now that we'd love, but imo it's 30% overvalued (on at 2007 peak price). If this came down to something i considered sensible I'd buy it now, as it would be a family home for 20 years plus if we wanted.

The supply point is another debate entirely. I do think they exist. But I certainly don't think that they've led to the differentials as illustrated in that post, and I'd be interested in any views to the contrary. In another thread probably, as it's a big subject. Didn't follow the rest of your post - did you mean that the bottom in 83 was (say) 2.2x income and that it was (say) 2.5x income in 95? if that's the case, I'm not sure I'd have a view on whether it's reasonable to assume that the next bottom will be higher as you're only comparing 2 events. I do think it's reasonable to expect any market to undershoot from long term trend though, following a large boom

This is when a bull steps in and tells you that supply issues have caused that level of change since 1983. Personally, I agree with you. Way out of kilter.

renting in IG10 for £1100 a month so 179k. I know that one sold at peak for 475k, so using these calcs it needs a 63% fall from peak. Looking at Land Registry figures over the last 8 or 9 years I'd say that 179k is too cheap. Probably, we got a good deal on rent (owners have no mortgage). Comparing to other properties, it shd be probably about £1500 pcm, which would be £245k or 51% from peak based on these calculations. At this level the figures are consistent with Land Registry data from 2001/2002, and consistent with my own views (comfortingly!) Going the other way, I shd be paying £2900 pcm to cover £475k! Interesting exercise, although I have to confess no knowledge of how rent and mortgage costs compare in boom, bust or normal times - would be interested in any further data on this.

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Interesting that he put emphasis on consumer confidence. The aggressive rate cutting is the only reason retail sales haven't collapsed. As it is, the most dramatic rate cuts in history meant that spending has just about held up. Rates on the rise would kill consumer confidence and lead to stage 2 of the crash, so Kaletsky is basically pinning all his hopes/forecasts on our "government" being able to keep interest rates down in the near future.

ok I see your basic position. I agree that house prices are rising in the long term, and that supply is a reason for this (wd caveat with caution about assuming the UK's population profile in the last 30 yrs will remain the same for the next 30....won't get into that particular sociological debate at this time in the morning!) But I think you overstate the effects supply has on short term prices, esp following a large boom which wasn't primarily related to supply. I think the weight you are lending to these issues might give you an inherent bias towards assuming price rises in short/mid terms, as supply issues disproportionately increase hpi vs wages and cushion each bust. My position is more that these supply issues only influence the disparity between hpi and wages over a long period, and that this disparity not increasing by any material degree (certainly not enough to put a floor beneath this particular undershoot of only 5-10% less than trend). So I think this bust will be deep in terms of actual values , although I agree that timescales may be shorter than before, simply due to the velocity of it all. But as you say, only time will tell. I think 40-55% from peak, you think 30ish, I think hpi will start again in 2012/2013, and you think 2011 onwards, so it's not like we're on separate planets.

Looking at the graph, I don't think it would be that wide, taking out the recent boom - so I don't agree that supply issues are accelerating house prices at the speed you're suggesting. Your position seems to be that supply issues play the most important part in house price inflation, and will lead to increasing volatility in the market in future? But in other posts, you suggest that prices have nearly bottomed - do you think that only think the booms are growing "exponentially" (and that the busts will only revert to trend and never undershoot?)

Yeah I understand the supply argument (not sure whether I agree with it but it's a different debate) But even taking it into account (based on scott's graph), if you did remove the last 8 years hpi would very slightly outpace wage inflation. perhaps due to these long term supply issues. If we both accept that the last 8 years was rather abnormal for house prices, for whatever reason, then maybe we'd agree that prices will at least bottom out against a long term average vs wages? Or are you saying that house price inflation will dramatically accelerate vs wages in the next few years? Assuming no overcorrection of price vs wages, this graph suggests peak to trough fall of 40%. IMO that is the best case scenario, unless all the long term supply issues present themselves at once, and quickly - like within the next couple of years, we suddenly need 10m more homes for some reason. (As an aside: do you really think securitisation will be back on any scale within the next 10 years?)

bump Good graph , shows it simply. When was it last updated btw? Doesn't seem to show any falls yet?

On wages....what do you think of that graph that's just been posted by scott? 35ish year series of wages vs house prices, clearly showing that houses still remain way overpriced compared with historic ratios (whatever basis they're calculated on).

so we're not seeing increased sales on lower prices?

Ahhh, you beat me to it. Pls explain the above to a simpleton .... you are saying that the increased transactions led to increased prices?

Lol, lower prices attract higher volumes. How surprising! I await the next explanation from our bovine friends. Perhaps Mr McTav could get into even more granular detail than usual, whilst continuing to completely miss the very simple point. I enjoy that stuff.

at the base level there has to be. Price / earnings is a fundamental valuation tool used in the equity market. Also the level of profits influences dividend payouts which are also important in the valuation of a company. In the long term these are crucial factors, although it doesn't always play out in the shorter term (easy example wd be the internet boom, plenty of absurd valuations based on future profit estimates when companies were losing money hand over fist and some were not even viable businesses at all. As always, the market was not fooled forever). I do se the arguments about what currency debasing would do to an index (ie to make prices "rise"). It's also tricky to predict currency effect on FTSE100 because it is made up of quite a few dollar earners, so earnings, dividend levels and therefore valuations can be affected quite significantly by fluctuations in dollar vs sterling. So , as with lots of other things at the moment, views on the equity market are tied in with the individual's wider view on whether inflation or deflation will prevail (although rising equity prices due to inflation would be kind of a pyhrric victory....) For VicMac to argue that FTSE will fall below 1000, as I've consistently seen him do, he must favour the apocalyptic deflation argument. EDIT for Hotairmail: apols, don't know you, i did wonder if your q was serious but as the OP doesnt seem to have a detailed view on equity thought I'd add to the thread

17%ish off peak then. Already down more than that on some indices....depends whether you think prices are at the bottom now I guess

how did the asking price compare with peak selling prices in that street? (ie mid to late 2007) ?

Utter rubbish. House prices are not overvalued, most normal people can afford a house, interest rates weren't abnormally low in the last few years, prices are now in line with average earnings, and transactions will soon be at the fabled "price neutrality" point. We're basically at the bottom, and the next boom will come soon, and be massive. And that's a good thing, because it will save Granny. Anyone who doesn't want to buy a house now is just bitter that they're priced out, and should work harder. Hamish McTavish and Anatole Kaletsky told me.

where's that stupid wine glass smiley when you need it, Rinoa? Anyway I'm gonna say the same as if it was 9% up - transactions/lending so low as to render this pretty meaningless. Still, at least we might not get so much bull from the bulls this month.

I have stopped believing you're a bull Rinoa. I'm beginning to appreciate your evil genius.