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House Price Crash Forum

Graeme

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Everything posted by Graeme

  1. The reason that there's not an apparent drop in house values is that the asking price has remained fairly constant. Spending a bit of time on Rightmove with Property Bee will show this... At the same time a lot of places are getting relisted so it appears that they've only been on the market for a few weeks. If you look at Rightmove's index of asking prices, the average peaked in late 2007 at around 245K, dropped to 215K over Christmas, before "recovering" to 225K recently. I'm not sure if you can draw the conclusion that asking prices are around 30% higher than they should be. The Halifax,
  2. There was some talk earlier of the impracticality of electric vehicles. I've finally got around to doing some calculations. Petrol has an energy density of 13,000 Wh/kg, and a density of 0.73 kg/l. Most cars have a 50 - 55 litre fuel tank, and so contain about 40 kg of fuel. So, a fuel tank will hold around 500 KWh worth of energy. Petrol engines have an efficiency of 30%, compared with 90% for an electric engine, so we need 165 KWh battery capacity. The current cutting-edge battery technology is lithium sulphur. Pilot production has hit energy densities of around 400 Wh/kg (compared with 15
  3. Actually, I disagree with this statement: The financial sector accounts for around 11% of London's GDP, and about half that nationally. Manufacturing, which we are always being told is a dying sector, accounts for 17% of GDP nationally. Graeme
  4. I recall seeing some statistics a year or two back that showed that faster growth in the UK over the rest of the EU was down to Gordon Brown increasing public sector spending. Which kind of puts paid to the whole "isn't the British economy so superior to Europe's" line. As for comparison to the French model, parts of the North of England, Scotland and Wales are closer to the Soviet model, with 60% of the economy as part of the State. Lawyers are one of the professions that will be largely resistant to downward pressure for immigrants, as I believe that there are professional qualifications n
  5. My flatmate moved down to Brighton with her boyfriend in December, and they are renting a flat in a new development in the centre. They are paying around £900 per month rent, and an identical, unsold flat was up for sale for £300K at the time they moved in. The rent that they're paying would cover about half of a repayment mortgage, which shows how far out of line some of the prices down there are. My brother is in the process of fixing his house up for sale, and has been keeping an eye on the local market. He's been of the opinion that not much has been moving for a while. In general, good p
  6. I read an article a few years back that suggested that house prices and the stock market both indicated confidence in the future, and the fact that property was (and still is) expensive whilst the FTSE was low gave mixed signals. (High house prices indicate an expectation of future salary growth, whilst a low FTSE showed little confidence in UK PLC.) It's interesting to see it represented graphically.
  7. The Furness area was pretty cheap last time I looked. Barrow's not the easiest place to get to, and has high unemployment. A lot of Cumbria outside of the Lake District is relatively poor with high unemployment, and some parts are very rough, but prices have shot up. Barrow might be the same. If you want to take a punt on long term trends, there was talk of building a bridge across the bay between Morecambe and Barrow to improve access to the region, and hence regenerate it. I don't know if this project is anything more than a study, but it could help improve prosperity and hence house prices
  8. The Dutch get a tax break on their primary residence. I don't know the details, but the upper tax bands are around 50%, so it could be quite a discount. Anecdotally, prices haven't come down except at the top end, and even then not by much, even against the backdrop of a recession. A friend of mine over there was out of work for some time, and I think that he's at a senior level. I also saw a reference to some research that had shown that over something like 300 or 400 years, the average price of a house on the Herengracht had risen by 0.2% or 0.4% per year over inflation. Which suggests tha
  9. Even taking into account a 30% crash over the next two or three years, the figures on the Motley Fool suggested that buying is a better bet than renting over the long term. That's based on a comparison of the savings made through renting versus buying being invested in a high interest deposit account, and taking into account the build up of equity in a purchased home. However, the bears (that must be all of you ) will be pleased to hear that it'll take around 20 years for a house purchase to outperform renting and saving. So renting is still a better short term strategy, and investing the sa
  10. Contractors are paid more than permanent staff, and are cheaper to lay off in a recession. Look at the IT industry in 2001 - 2003, contractor headcounts were reduced first, and something like 40% were unemployed for part or most of that period. Where house prices are likely to go over the next few years? The most optimistic predictions are for flat or slow growth, the most pessimistic are for falls of up to 40% - 50%. There are things to factor into this, such as the effect that SIPPs and Gordon Brown's shared owner scheme will have on the market. An interest only mortgage increases the risk
  11. The average property currently costs six times the average salary, and would require a 40% fall to bring back in line with the long term trend of 3.5 times. But the price / earnings graphs tend to hit three times salary after a crash, so a 50% fall would be possible. The average price in London is eight times the average salary, which would need a 55% fall to return to trend, and almost 65% if they dropped to a three times salary level. I don't know if there will be falls of this magnitude, but I wouldn't discount them out of hand. Graeme
  12. The trouble with the Euro, and the EU as a whole, is that politicians are keen to blame it for problems that are actually of their own making. Hans Eichel blames the Euro for Germany's problems, rather than mistakes made during reunification, joining the Euro at the wrong exchange rate, and structural problems with the economy. There are some very good things about the EU (free trade, freedom to live and work in member states, fundamental human rights), and some bad things (decision making by an unelected commission, the CAP). The trouble is that the debate tends to be very polarised, and, in
  13. With regards to the earlier comments about Knightsbridge Court, I'm currently living in a similar sort of development (Sovereign Court and Regency Court) in the southeast corner of Jesmond. I've seen a couple of two bedroom flats for sale at around 190K, whilst the rents are around 650 - 750 per month. For some reason, my landlord is very keen for me to stay too. Graeme
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