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easy2012

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Everything posted by easy2012

  1. Exactly, interest rate is only one of the factor (of course if they go to a high real rate like +5% above inflation) then of course everything will start to crash and at that point, people with big pot of cash can then just stop working and 'rent seeking' using the saving pot although the 'interest' obviously have to come from somewhere.. Other factors would be supply and demand, credits terms, type of people buying, earning capabilities, tax treatments, inflation expectation - and anything that affects the cash flow (in and out) of the purchase. The only sensible way out of this is lots of building (else we are just playing musical chair) and LVT.
  2. Another attempt of you to misrepresent thing. On second read, I suppose (again without a full page of glossary, I can only guess what you mean) that answer the question. I am afraid at this point the feeling is mutual. Best wishes.
  3. I take it that you do actually understand the word 'unlikely' but simply decide to ignore the word ?
  4. Totally out of context, obviously. I think you used the word bubble and leverage too and I suppose that must mean you are also telling people to buy on high leverage ?! The other thing - and yet you still have not answer basic question about your position - whether someone who definitely want to buy and is comfortable to buy should buy or should stay out given known facts.
  5. Firstly, I totaly agree with you where the housing market SHOULD be (for the young, affordability etc), but that is totally different from where it is likely TO BE in the sensible future (1,3,5,10 years). It may not be relevant to you, but it is relevant to the message (according to my interpretation) that you want to express, i.e. staying out at all cost even if one feels strongly about buying and can do so comfortably. Does that mean that leave 1 committed (high, say >80% certainty) meaningful nominal price fall (i.e. 20-30%) poster on this board? Where was a misunderstanding there then. Now, should someone who can comfortably (can cover the mortgage payment easily and with low leverage <3.5x) and feel strong about buying - should they jump in or stay out at all cost in anticipation of the 5% SVR in 5 years? I take that to mean 2-3% or even 5% SVR. Combination of supply and demand, attractive credits, type of people, earning capabilities, tax treatments, inflation expectation - and anything that affects the cash flow (in and out) of the purchase. If say cost of living ex-housing has been reduced to £100 per month (say invention of replicator), then house price will go up even if SVR is 5% if the current supply constrained (planning) remained. Yes, that is what I meant. Is the change stable in the reasonably future (1,3,5 years)? I don't know. Is this stable in the long run? No, but 'long run' is not meaningful to people. I thought this was obvious. If the average mark in a class of 100 is 50, then maybe 95 people will have marks that are 10,20, 75,80,90 etc rather then 50 exactly. The same applies to inflation index and earnings. No. Either you can afford a particular house NOW, or you can't. Whether you can afford the same particular house 5 years from now is another matter. I agree. The same apply to renting though, you enter into a 12/24/36 months contract and the discovered that later whether you can afford it. If circumstances change, you may also discover that you are unable to rent the next one. Ah - STR does not imply massive present massive earning. The chance of a sudden and high inflation through currency collapse is always there and people who get the 'fresh cash' may well be different from the people who do the STR. The chance of another credit bubble is not likely, but nevertheless not zero and local housing availability/price can change rapidly too. Ah.. I think you need to do some research into the true meaning of each to his/her own. Your feeling is not the one true feeling that the world must share.
  6. Good to have your usual sensible self back. I take that as you believe Mr Carney. I don't. Even, that, the limit when QE3 was launched was a lot further from when QE1 was launch. You still have not answer my questions on your view on nominal price changes. I understood your no symmetry as a extremely skewed probability of a nominal fall, e.g. a >80% or even 100% chance of a nominal fall - which I reject. Anything say 30-70 to 30:70 reflects some level of symmetry. The flaw in your analysis is that your the only consideration is the availability of mortgage at attractive rates. No doubt, this is an important factor, but it is not the only one, or an overriding one. Even if SVR is 5% by 2018 (again, I put a less than 50%, probably close to 25% chance on this), that would not affect those on sensible leverage and their nominal salary may have increased by then (say even at 1.6%. that is about 10% higher, and if they moved up the salary scale like BooLoo keep pointing out, it will be higher). The most crucial flaw in your analysis is that it is not the same people who are buying the £250k (or £100k or whatever) house today compared to 10 years ago. The £250k may went to a manager couple 10 years ago, it now goes to a senior manager couple. Another flaw of your analysis on general wage inflation vs general price inflation is that the average rate of wage/price inflation is the wrong rate of inflation for most people (and hence average). It is those with wage inflation above general price inflation who will then be able to buy - and there probably are enough of them to soak out the very limited supply. The only thing that will move this is a lot of force sellers (mind you, voting ones) forced to liquidate their stocks at once which will at the same time crash the housing market - I put less than a 50% chance on this. ( The other option is a lot of building ). Now, come back to my main focus, the STRs with pot of cash as a result from their attempt to short the housing market. They may well be right, or they may well be wrong. These are the individuals could have a bird today, but staying out hoping for 2 (or 1.1 or 1.2 or whatever) in the bush for the same price. This is speculating - which is fine as long as they are comfortable with it. Each to his own. The final crucial point is whether someone will feel a sense of regret and unhappiness at say 50 if they let the chance to buy slipped by them. For people like LiveinHope who doesn't mind buying or not as long as the price is beyond his estimated fair value - that is absolutely no problem at all. For those who may endure year of unhappiness because of a modelled £30k / 20% or so of 'overpricing' it is hardly worth it if they could 'buy' happiness with their cash comfortably (i.e. 30% deposit, 3.5x salary or much less, the less the better). At the very least, your model appear to suggest at least a 5 year 'wait'.
  7. Your are normally quite sensible but I suppose I hit a raw nerve here. I am happy to consider a 30% down and 3.5x salary as being comfortable enough. Many of the STR here obviously fall into this category. A 2 years salary worth of saving as a cushion will be an added advantage. 10 year fixed is rather unnecessary. As for house move, you need to know that the housing market is fairly relative, if the one you buy goes down, the one you have to buy will also go down. I am afraid you made this up and continue to mis-represent my position. I have restate the clearly above. So now you are disciple of Mr Carney ? Perhaps it is helpful if you state your expectation of the future here - do you expect nominal fall in 1,3,5,10 years? And if so, what is the confidence level and by how much. If you don't expect (or rather put a low probability on) any meaningful nominal fall - then I suppose we are in agreement and all the above was nothing more than a misunderstanding. Ultimately - each to its own and there is no need to be rude about it.
  8. But the hard part is to know whether the stitch = buys, or stich = stay out (and for how long).
  9. I suppose I am struggling with those who take an extreme (staying out at all cost) posters here - which is fine as long as they are aware that their view is just that - their views of the future - which may well turn out to be right (or maybe not). I am just trying to make sensible judgement based on known facts. If we know that 1million house will come to the market is 3 years (like Ireland/Spain situation) - then at least it is a reasonable speculation to hold out. There is no such overriding factor in the UK housing market (and plus the constant meddling from BoE/HMG) and to me, the correct answer is to say "I don't know where this thing will turn out". And when you don't know, the best option, if you can comfortably do so, is to grab the bird in your hand. I do suspect that HP will continue to fall in real term which is based on RPI which does not reflect most individuals spending pattern. HP nominal changes are anyone's guess I am afraid. It is not an investment, so it cannot turn out to be a rubbish investment. P&L is not supposed to be relevant here at all. One is buying something to bring up and family and be happy (if renting makes one happier, then that is fine too). I think it is the post WW2 HPI + inflationary policies (post 1914 Fed) that made people get into this mental state they have to profit / they should never 'loss' money on a house. In fact, if we don't have this inflation craze (plus the good productivity break through), the building should depreciate at about 2% pa while the land price stay constant. The land part is merely a tool to extract excess productivities and monetary inflation.
  10. Ah... please don't try to mispresent what I said. For some reason my caveat on those who can "comfortably do so but choose not to (especially the STR)" tend to get dropped. Never did I say buy at all cost. You are perfectly entitled to do what you think is right, whether it turns out right or not, that is another matter and I don't have a crystal ball. May I also repeat that your home is not an investment. This may also be relevant: "A bird in the hand is better than two in the bush"...
  11. Exactly. I saw going to post this but then I could not be sure this is from PB. Header's won't help though as most of these mails are sent via 3rd party mass mailing platform. Given the number of us who get it, there is a chance that it does comes from PB database though - but we should make no such claim/complain under this is verified.
  12. It is all in the mind.. Each to its own. It is a matter of barrier, otherwise, you can say that people choose to be in England rather than somewhere else.
  13. I agree - which basically means coercive forces - the government and the BoE interferences, and the Town and Country planning act should be rolled back. However, we live in the real world and we know that is not going to happen...so make the best of it - whatever that make you feel happy and comfortable.
  14. Thanks for the update. The thing with housing market is that it is always transacting at the margin and there is always people who feel they have to buy at all cost.
  15. A good structure. However, how do you distribute the 20% of the profit? In equal share to everyone or differently based on seniority ? What is the size of the business? <10? <50? <100? A lot of these very nice structure tend to breakdown over about 200 people as the feeling of collectivism breaks down beyond that point as for evolutionary reason, the brain is not very good at tracking association much larger than 200 people.
  16. That is really employer dependent and many employer will have a rota system where you will know in a few weeks advance whether you are needed or not. The manager will ask people if they can work at a particular time before putting them on rota. If one agrees to the rota and then decline to turn up at a later time, then of course the manager is less likely to bother with the worker in the future. Calling people up at random is as much risk/problem to the employer as to the employee. The real killer of the ZHC is the ability for employer to reduce the hour to zero during slow season - i.e the ability to pause the contract which is of course advantageous to the employer in a world where supply of labour exceed demands most of the time. (On the other hand, if 25% of the working population suddenly move to Germany, then ZHC will, at least temporarily work in favour of the worker who will turn up to work where the wages is higher for that day).
  17. I don't think it is that simple anymore. The structure of the economy has shifted so much in the past 40 years or so and manual / simple jobs have been automated and yet not everyone is capable of becoming a software/robotic engineer. Further, complex employment and tax legislation means a lot of one off casual work are no longer viable too. No one needs to register as 'self employ' 100 years ago offering one services. The proverbial option to just turn up at the dock as the last resort simply no longer exist today too. CI plus regional basic and cheap hostel is probably the only way to go. Alternatively, we need to get rid of most taxes and relax employment protection (especially for the small businesses) although this will be at the expense of those who currently have a job.
  18. If their circumstances (and psychological circumstances, including the nesting instinct + arriving babies, bad experience with renting etc) require them to buy, then they are just victims of the HPI as you are. The 'investors' / speculators of course deserve no sympathy.
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