quantinghome

NSA -3.16%. Largest ever, if you exclude the odd blip in Dec 2002 19.0% nominal fall from peak 23.6% real fall from peak 20.1% real annual fall. My forward prediction using mortgage approvals is 26% annual fall by early next year.

I would divide the public sector into three areas: Investment - civil infrastructure, education (the ultimate long-term investment), R&D, industrial support. Necessary Expenditure - Health service (would be expenditure in public or private sector), essential welfare, defence, police, prisons. Unnecessary Expenditure - hey, y'all can fill this in yourselves! The examples given are not exhaustive by any means. We could argue forever about whether certain areas are best in the public or private sector, but ultimately their status as investment or expenditure would not change. The trouble is that in many cases it's not easy to decide whether something counts as investment (is a healthier population more productive?) or whether expenditure is necessary or unnecessary. I suppose we could solve the problem by having two or more 'parties' which broadly reflect the opinions of the country, and every few years we could decide which 'party' runs the country... you never know, it might just work.

Darn!

Sorry to hear you lost your job. You are using the money released from your house sale to maintain your payments on the other properties. Is the rental income insufficient to cover these payments? If so I think you need to consider how much the rents would need to increase by to return to profit and make a judgement as to whether such a rent increase is viable in the next few years. Remember there's a lot of accomodation being built by Leeds Uni and the Met. I imagine it would be very difficult to obtain a BTL loan for the next few years. Lenders are not in a position to lend for BTL, even if they wanted to. Unless you are in a strong cash position, it's going to be very difficult to buy property, even though prices are coming down. What are the terms of your rent-back? Are you aware that under the standard shorthold tenancy agreement, you can be evicted with two months notice after the initial fixed term expires. How long is the fixed term in your rental contract? Six months is the norm.

More fool them then...

Look at what they do, not what they say: link

If only he meant it. Scroll down this page and you'll see who started racking up the zillions of US government debt.

Luke 9:58

2/ Would have been alright had he actually done so 3/ Annoying but frankly there's bigger stuff to worry about 4/ and 6/ are basically the same. I'm not too fussed to be honest - Major, Callaghan, Douglas-Home all became prime-minsters without calling an election. I would add: 7/ PFI 8/ Failure to get to grips with poor vocational and technical education 9/ Encouraging the debt binge rather than new productive industries 10/ Erosion of Civil Liberties 11/ Choosing to be a US satellite/poodle instead of equal partner with European nations of similar size and power to ourselves. 12/ Above all, a huge missed opportunity to undertake radical policy shifts. New Labour has mostly been tinkering with existing structures, rather than conducting a major and necessary overhaul. In 1997 the country was at peace, had a healthy economy and Labour had a huge majority. It was a golden opportunity, totally squandered. But hey, let's not be negative. The positives are: 1/ Peace in Northern Ireland. err... help me out here

Simple - Thatcher didn't allow them. Sales were heavily discounted (up to 50% I think), so there wasn't enough money from the sales to build housing. More critically councils were legally obliged to use the proceeds of sales to reduce debt rather than construct new houses. Even if they could, there was little point as any houses built could potentially be sold to their occupiers after three years (at the heavily discounted price, remember), thus losing councils vast amounts of money. More generally, while council housing has exacerbated housing problems, it's not the cause of the boom-bust cycle. The first one occurred in the early 70s when the Heath government started experimenting with credit policies later associated with The Blessed Margaret. The immigration angle is interesting. It's only become an issue in places like Dagenham because of right-to-buy. Prior to this, immigrants didn't get a look in because they lacked residence qualification. So while the rest of London was becoming racially mixed, Dagenham stayed white. After right-to-buy, when ex-council houses started to be sold on to private landlords, the racial mix changed as anyone could move to the area. The law of unintended consequences at work: Right to buy caused the rise the BNP.

From a political viewpoint, it's interesting that Labour need to get the Tories' buy-in. It's similar to 1996/97 when Heseltine had to go to Tony Blair's office to get his buy-in to The Dome. Long term decision making appears to be moving away from Labour now.

Yes, though it looks like it's levelling off. That said, it needs to be up at about 100,000 for +ve HPI, so we'll be seeing large falls for some time to come.

So predictions are fine when house prices are rising, but 'futile' when they're falling. OK.....

I'm in a similar situation - looking at Yeadon/Guiseley. Propertybee is showing a few price reductions per week, and they seem to be increasing, although it's still quite variable. Some haven't dropped at all. Others have reduced asking price by up to 25% in the last 6 months. I suppose it depends how much they need to sell and how overpriced their initial price was. I'm looking at rightmove only occasionally at the moment. I don't see any point buying until prices stop falling. Every pound off the price is two pounds off the mortgage, and all the while your deposit is growing bigger, which will mean a better house or a better mortgage deal. The only trouble is working out when prices have reached bottom - you can only see it in retrospect.

Phil the Greek's birthday. Surely it can't be coincidence?

Agree, but to continue... An admission of failure of the monetarist approach to setting interest rates, the Tories joined the ERM. Entering at too high a rate proved disastrous, but being forced to leave the ERM was a blessing in disguise as it allowed interest rates to be cut. This allowed an export-driven recovery to take place so that by 1997 the economy was in reasonable shape with steady but not spectacular growth of manufacturing, government borrowing was dropping, consumer debt manageable, houses relatively affordable. I disagree. You've got to compare now to 1997, not the mid-1980s, if you want to judge Labour's record. Are we better equipped now as a nation to face the future than we were back in 1997? I don't think so. The Tories did terrible things to manufacturing in the 1980s, however as time goes by I'm beginning to think that John Major and Ken Clarke deserve more credit than they were given at the time.

There comes a time when the public prefer to hear bad news straight rather than soothing words. It happened with Churchill in 1940. It happened with Thatcher in the late 70s - early 80s. People knew that the country was in trouble. What they needed was a politician who said as much, explained within a historical narrative, and presented a clear idea of what they proposed to do about it. I think Thatcher's solution was wrong (Churchill's too, but that's another matter), and much of her popularity was down to being very, very lucky in her enemies, but I think it still stands that at some point people will reject 'peace for our time' in favour of a more realistic 'blood, toill, tears and sweat'.

I've worked on a few PFI projects as an engineer (civil, not financial). The problem with the underground PPP was that badly performing contractors could not be fired because they were also the shareholders. Their 'hit' was limited to their equity stake in the company, which was far less than the eventual debt they racked up. In the end the banks weren't willing to lend any more money and they couldn't get any more out of TfL either, which is why it went bankrupt. The situation wasn't helped by the project scope being so poorly defined at the start of the contract. Other PFIs I've worked on (roads mostly) have had a clear scope which means that although it's still a bad deal for future taxpayers, at least the thing gets built - usually on time and to budget. One supposed advantage of PFIs is that the consortium who build the project also maintain it, the theory being that they will ensure a good quality build to reduce future maintenance costs. In some cases you do get a design that's a bit more efficient in terms of maintenance costs. However, because the construction element carries far greater risk, the consortium usually protects itself by setting up two separate companies - one for construction, one for maintenance. Surprise, surprise, the construction company is only concerned with getting it built on budget, and consideration of future maintenance costs goes out of the window, so you end up with hasty repairs being made a few months after the thing's opened. And of course anything you want that's outside the contracts costs you.

Apologies to shindigger - his avatar has reminded me of a classic bit of Alan.

I agree. I quoted 8% originally, based on the old Landlord's rule of thumb: Never buy for more than 12 times the annual rent, and if the price is over 20 times the annual rent then sell because the market's near the peak.

Nah, it was the Treasury wot dun it. The IMF loan was never actually needed - the Treasury's statistics were faulty and the government had about £5billion more than it thought. No IMF loan would have meant less spending cuts. The winter of discontent would probably never have happened.

To summarise the above posters, so what if it's tax-free? There'll be no profit to tax. You'd achieve the same thing a lot quicker if you put your cash in a nice pile and set fire to it. NS&I Index-linked Savings Certificates are tax-free, pay out 1% above the RPI and are about as risk-free as you can get. You should use this as a benchmark to compare against any potential investment.

I (and many others, I hasten to add) use the mortgage approvals data to predict prices 6 months ahead. The accuracy of this prediction is improved by factoring in affordability (av. house price / av. earnings) and a measure of anticipated future growth (av. monthly HPI over the past 2.5 years). The huge drop off in approvals we've seen in the last six months will hit the house prices indices over the next few months. HPI for January is predicted to be -26% YoY in real terms, so about -21% nominal. Fall from peak is predicted to be approaching 30% by then. This implies average 3% monthly falls through the autumn. The July figures may be a sign that we've reached the floor of mortgage approvals. With no sign of approvals going up any time soon, we're likely to see HPI staying around -25% from the start of 2009, equivalent to around 2% falls each month. Improved affordability will be balanced by a negative perception of future growth prospects, which implies that prices will fall below the long term average.

A gross yield of 5.4% is not attractive. Professional landlords look for a yield of at least 8%. Bear in mind you've got maintenance costs and fees if you're using an agency, and possible void periods in the future, so your net yield will be significantly lower. Compare this yield to what you would get risk-free from a Building society high-interest account, or NS&I inflation-linked bonds. You may have noticed that house prices are falling. The average property is going down by a few thousand pounds per month. I'm not sure why you would want to buy an asset that will only lose you money in the next few years. Don't believe anyone who says it'll be different in your area.

Was getting bored, then it mentioned the Illuminati. Couldn't be bothered after that.