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non frog

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Everything posted by non frog

  1. Supply and demand are quite basic economics. Increasing the supply of credit increases the demand for it. It is not the physical property that changes value, simply the amount of credit that can chase a finite resource. You cannot build fast enough to change the physical availability at a macro level. This is why Greece (and others) got into bother. The availability of credit and cost of borrowing fell (with entry to the Euro) and so the demand for credit increased. No matter that the ability to repay is constant it is simply the offer of more buying power that in itself drives borrowing. House prices will rise for as long as borrowing secured on houses is made available. The multiples of earnings is not the determinant. If the banks would lend NMW earners 300k to buy a house they would buy. (Japan had intergenerational mortgages at one point). The more you borrow, the more interest you pay. As interest rates fall it is necessary to borrow more principle so that the repayments increase to make up for the percentage loss. Eventually (as in Japan) the mathematics mean that a lifetime's earnings is insufficient to repay the loan. You have become the fabled HPC "wage slave". To "crash" house prices by supply requires over supply (as in Eire and Spain). Over supply is not possible in the South of the UK in my view. Artificial over supply in the form of social housing has been removed. Anyone that thinks the HPI has not been deliberately engineered is mistaken IMHO.
  2. Fraud is part of the issue. Also the removal of self-imposed limits on income multiples or LTV. Banks do not do honest. Or risk assessment. If house prices keep going up there is no risk to them. Can't pay? Take it away. The risk is an HPC. That is why the banks and the government will try to stop prices crashing. So far they have done that very well.
  3. Think of all the money they have wasted on food in that time. Eating food is just dead money.
  4. Our letting agents let themselves in to inspect. They then make some comment like "the carpet needs hoovering". I find this so funny I really don't mind them looking round. What sad little people they are.
  5. We get at least three or four "funding circle" mailshots a week begging us to borrow money. The bank sends us an invitation to borrow money at least once a month. Everywhere I look the newspapers tell me small businesses can't get money. Something doesn't add up.
  6. A discussion on the way to work this morning with the other half raised an interesting point. Is BTL now too big to fail? Just like the banks. When house prices "correct" and interest rates rise will HMG come to the rescue of all the Telegraph and Mail readers with their 2 house portfolio? A lot of votes in this I suspect. The chancellor might well have taxed the big players, but the votes volume is (I think) the "amateur" that fancy themselves as a player. The sort that often think we tenants owe them a living and shouldn't complain about the wallpaper peeling off the damp in the kitchen or the letter box lid falling off after 20 years of junk mail going through it.
  7. People do not want to understand this concept. They want to spend Saturday in Ikea choosing curtains.
  8. If you look carefully you will find people do not work primarily for money. Jobs provide social status and give purpose to life. Examine unemployment patterns and you will see it is the poor who suffer unemployment and the educated wealthy top decile that have the best jobs. This is not because the top decile are any better at "work", but because they keep the best jobs for themselves and their friends, family and peer group. There is an almost limitless need for carers as the boomers age. The cost of employing those carers is infinitesimal compared to the cost of bailing out the banks and the QE and ZIRP. There will never be a "crisis" of unemployment - as the population grows unemployment always remains at about 5-10%. The problem is distribution of jobs, just as it is distribution of wealth and (more pertinent to this forum) the distribution of housing. The young suffer unemployment and they too suffer lack of housing. Older people continue in the workplace and are rewarded by not having to pay NI so they can afford to work for less than the young (even the immigrant young who are desperate). The older workers have much lower housing costs. All ways you look at it, the "work" they do is primarily for something to do, to feel wanted, needed, part of society and most important NOT because they need the money. That is why discussions like this never reach a conclusion because the reasons people go to work are as varied as the workforce itself and the work goes to those who "need" it least. My missus' ex-boss was rich - rich enough to do nothing for 10 generations - but he "worked" (and still does AFAIK) 60 plus hours a week. Work is not about money. Labour is not sold to feed the family. Even Marx got that wrong.
  9. My aunt and the missus' granny both self funded from houses with an insurance product. I understand now that these insurance products are no longer available (both these lovely ladies lived long enough to take much more out than the initial payment and any interest). With the ZIRP the money spent needs the capital in the first place and cannot rely on income from the amalgamated capital of the many generating income. I think your observation is going to be pertinent (much) sooner rather than later.
  10. If people knew what that was house prices would be half the current level. Even at 2% return living in a £1.4m house in London "costs" 28 grand a year. A lot of people sitting on that kind of theoretic money would cash up if they could see the chance.
  11. The BTL mob will be after that extra little bit of disposable.....
  12. Top post of the year. Indebted nations are under the bank's control, just as individuals are. Control the creation of debt and you control the world.
  13. This. The term "demand" simply refers to the amount of people/companies that want to buy. BTL rides over the salary multiple "norm" of previous generations. If many people want to buy, in order to rent out for profit then they are the "demand" that drives the price. In effect BTL LLs compete with each other and are willing to pay more than OO because they (LL) see a return whereas the OO sees a cost. House prices will collapse/correct/crash (chose your poison) when/if BTL stops being the highly popular route to riches that many people imagine it to be. As we have discussed so very many times on here - that is sentiment driven. Timing is therefore guesswork.
  14. Our last place we had to sort out the inventory ourselves. The inventory lady did a good job and charged us 45 quid. She said in London it is about 150 quid, as they can get away with it there. Here she has to be "competitive". Very happy with the set up as she listed all the scuffs as "fair wear and tear"..
  15. I bought one of these off plan for £32,000. (Sold to BTLer in '97 for £40) They dropped to £27,000 after a while. There are subsidence issues.
  16. Its a Telegraph article so you have to ferret about to find the truth
  17. I'm not sure there is enough consensus to have a "HPC mindset" or anything like it. There are a lot of losers and angry people on here that are desperate to find some reason (external) for their predicament. Immigrants and Gordon Brown are the top two. I sold up all my UK property interest in 2007 and rented for a while when I was working in London. At the time it was a good move as the interest on the cash, even in a standard deposit account, was more than the rent. Then the crunch hit. My missus lost her job and we moved to the French property. I have just bought a business with the cash as property is still looking like a bad bet. Everything else looks too risky to me and at least this way I get 20% return. I may fall into your category when we go back to the UK as the capital is now spent. Time will tell if it was the right thing to do or not. You're right though that a 90s rerun would have been nice. Fall of 40% and crazy run back up again. Wasn't/isn't going to happen though. Residential property is a busted flush. Time to buy a caravan?
  18. Human nature. Immigrants, weather, whatever - everyone wants a scapegoat. Really? Have you conducted a survey> Post up the results old chap I'd like to see what an average Guardian reader thinks. The UK will not improve. The problems of the Thatcher years were the decision to go along with the Regan administration's blind faith in Monetarism and the globalised free market. Deregulation has allowed the banks to screw the economy and now they are bust and so is western capitalism. The inarguable ineptitude of the Labour party over the years has done nothing to address the problem. The evolution of "New" Labour and the "Third Way" sh1t of millionaire property speculator Anthony Blair put the final nail in the coffin. Thatcher's decision to squander the money from North Sea Oil on tax cuts to the super rich has left the UK ill placed to survive what now lays ahead of it. Government, big or small, has a vital role to play in rebuilding the west and its economy. The current fad for blaming government for everything and so logically thinking the less of it we have the better is to fall into the trap of thinking that the super rich (aka the free market) is somehow going to deliver when it has never delivered anything ever. The solution (if indeed there is one) will require co-operation between business and government at a level not seen before. (We do not get the Guardian here in France before you ask. I read the FT online. The Guardian is not worth the quid IMO even if you could get it here)
  19. It does seem to be near-universal retirement income planning. This sort of makes sense if you think there will be a rental market when you come to retire. The problem with that is the UK is too dependent on immigration to keep its population levels high enough for a future rental market to exist. Furthermore it assumes the ability of the rental market to pay whatever the going rate will be. Perhaps the current government lies about capping Housing Benefit will turn out to be true as the pressure to cut gets stronger? I'm no genius when it comes to investment strategy but I follow the old maxim "don't put all your eggs in one basket". It may turn out to be a basket case
  20. I am expecting 50% or more. I am not waiting for it. I guess it depends how you measure it. The income to house price ratio has been fairly constant for a long time and I would anticipate it to more back to more or less trend position. How long that process might take is debatable (that's kind of the point of the debate on this forum after all). The issue surely is what matters to the individual. If buying or selling a property on a speculative basis is important now is the dumbest time in history. If you need to buy somewhere to live then now is sub-optimal, daft even, but the cost-benefit decision is skewed differently. This is also the case if you hold enough cash. The fear of what might happen to the cash is real enough given the catastrophe that is modern banking and its massive fraud. Its hard to hold your nerve and its also imperative that you look for and seize any opportunity that having a cash holding allows. The great property bubble has burst. The UK is lagging in its crash but its baked in the biscuit as our American friends like to say. I cannot honestly see any set of circumstances in which residential property can hold its value compared to the current value of cash. (Cash might of course also lose its value). This makes holding cash risky for us ordinary folk who are not super rich. What to do with the dosh? The government is hell-bent on getting you to part with it. That tells you what they think - so maybe holding it is not so dumb? Too many people are far too reliant on property in the UK. When it starts to go it will take so very much down with it. Maybe even the currency. Interesting times.
  21. This, I think, will change soon. It must surely be the case given the maths? The missus' granny is in nursing care at a grand a week, many many times more than she ever earned in her life. Her pension has paid out more than she earned at work accumulating it. Her NHS bill stands at more than she paid in a lifetime's tax and NI. My MiL (also retired) could follow suit. The missus will retire when I am 77 - if I am alive still. How will the youngsters pay for all this? The next generation down - my nephew - will pay 20 odd grand to get a degree. I got a full grant. He will face a lifetime's debt to pay for a crappy flat - I made money on mine. The rich old boomers want a "small" government and no taxes? Fine. Pay for your own care - pay for your drugs - pay for your hip operations - pay your damn bus fare. Pay up or check out.
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