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House Price Crash Forum


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Posts posted by vzzzbx

  1. As we all know by now, house prices rising to silly levels basically screwed the world economy.

    So how come nobody in power is talking about the blindingly obvious step that would permanently sort the problem out?

    The obvious thing? A law setting a maximum cap on loan-to-value and loan-to-income.

    Houses are for living in, not speculating on. If the maximum anyone could pay for a house was limited to a maximum multiple of their income by law, it would be impossible for them to bid up house prices to the daft levels we've seen, which means they wouldn't get the banks, themselves and the whole world economy into the trouble we're in now.

    All the other proposals have been, to my way of thinking, just fluff. Separate retail from casino banking? A good idea, but it didn't help Northern Rock. You can still lend stupidly even if you just do retail banking. Greater capital requirements? That's just treating the symptoms and not the cause. It's a good idea in that it will insulate the bank from losses due to reposessions arising from higher unemployment in times of recession, but it's not going to solve the problem of lending too darn much to people who can't afford to pay it back.

    Perhaps the main reason is that the fools who think they can make a fast buck on rising house prices will get annoyed when they can't borrow way more than they can afford due to the government interfering in the market. I think however that when Greece finally does cause financial meltdown #2 there will be even greater public appetite for politicians to make sure this never happens again.

  2. For me the instant no-nos are (in no particular order):

    No internal photos (means the place needs lots of redecoration)

    Trying to hide the fact the place is spitting distance from a train line / busy A-road

    Back garden overlooked by neighbours

    Lounge facing the front of the house with no possibility of moving it to the back - especially if the front of the house is north-facing

    Tiny garden

    New build - usally poorly built and so closely crushed up to the neighbours it resembles a pre great-fire-of-London des-res

    On the other hand, I'm prepared to tolerate:

    Price too high (can always be negotiated or you can wait a few months until reality begins to sink in and they drop the price)

    Decorative order (you're going to redecorate eventually anyway and it really doesn't take that long to slap a new coat of paint on in the mean time)

    Windows needing replacing (assuming you get to pay a lower asking price to compensate for this, it's easily fixed)

    Rubbish conservatory that's too hot in summer and too cold in winter (nothing a sledge hammer and a bit of building work won't fix)

    Wiring needing replacing (again, needs a price drop, but if you can get it at the right price, it's a chance to put in a bunch of extra connections and future-proof the place)

  3. It's nice to see the mainstream media finally admitting that house prices could fall further and fall by big amounts. It wasn't too long ago they were saying that they'd be stable or drop only very slowly. Perhaps this will scare enough people into selling their houses for a realistic price because they fear further price drops.

    On the other hand, I'm still not convinced it is going to be enough to break the dam regarding stubborn sellers who can afford to wait indefinitely for "the right price". Really we need a whole pile more distressed sales to force the price indices down. Preferably coupled with people like Robert Preston doing that "doom, I say, DOOOOM!" thing he does so well.

    Still on the bright side those mortgage rates are starting to look pretty close to 2007 rates. I'm wondering if 5% will be the tipping point? That's the same as when a lot of them bought at the peak, but with lots of additional costs added like higher fuel prices, train fares hiked to "you've got to be joking!" levels and even higher food prices.

    Credit crunch V2.0 anyone?

  4. When I hear about the Facebook IPO I can't help but think of 10 years ago with the Lastminute.com valuation.

    Doesn't Facebook already have 1 billion users? Surely the number of people globally with regular Internet access can't be much more than 2 billion or so? I'm fairly certain your average starving child in Africa isn't going to be accessing it any time soon.

    Plus then there's the whole advertising angle. I don't have a Facebook account, but if I did I would use it to contact my friends and acquantances, not to buy stuff. How much value is there in knowing that Alan is friends with Bob and they talk about eating curry? So you flog a few ads for curry places to them, but you can't target it too closely because it starts to feel really creepy if you mention you like restaurant X in location Y and suddenly you start to see ads right near there. It's a far cry from doing a Google search for "curry restaurants in X" - you're clearly saying you want to buy something there. With Facebook, not so much. If I was an advertiser, I know where I'd spend my advert budget first.

    Also surely the novelty must wear off after a while. You've got the contact details for those people you haven't spoken to for 10 years. You exchange a few messages before realising there's a reason you didn't speak to them for 10 years and then the messages stop.

    Doubtless there'll be a huge first day jump due to the hysteria pumped up by the media and the pump-and-dump people in the know. I predict a bunch of greedy and ignorant mom-and-pop investors will lose on their investment.

  5. Because, of course, low interest rates are a universal panacea and have no undesirable consequences. By jove you've cracked it.

    Actually I should have said; overall living costs now are probably lower than in 2007, if you factor in lower mortgage payments more than compensating for the increased cost of

    fuel and food and other living costs. (I didn't actually calculate this, I just assume they are. Please feel free to call me a moron if I'm wrong on this).

    Likewise the real bloodbath point really is going to be where mortgage payments + food money + other bits and pieces > my monthly take-home pay.

  6. Going to play devil's advocate for a while here;

    Someone who bought at the peak in 2007 when the interest rates were 5% presumably ignored the actual house price and concentrated instead on the monthly payments and thought "I can cover that". That is; mortgage payment + food money + other bits and pieces < my montly take-home pay.

    Logically then, the real "bloodbath moment" happens when mortgage payment + food money + other bits and pieces goes above whatever it was when these people bought their house (assuming their fixed mortgage has expired by then and they're back on some kind of variable rate).

    So I'm not surprised a lot of people can sit and wait for the bigger sucker to pay their unrealistic asking price. Mortgage payments are lower now than in 2007, even when you factor in fuel and food price increases.

    Until that happens, the only sellers feeling the pressure are those who need to move due to jobs, divorce, deaths, unemployment or retirement. Even then, they can always rent out their house and move into cheaper rented accomodation for themselves until house prices return to a level they're happy to sell at.

    If anyone has the time, they could probably have a good stab at working out those numbers to see the real tipping point.

  7. Actually I've been wondering for a while now if the UK's obsession with home ownership is in part down to the crappy protections the law gives tenants. Really you need to be able to say "no" to the letting agent and/or landlord entering your house when you're not there. If there's any kind of sensible law-making going on (ha! chance would be a fine thing!) then they'd face prosecution for trespass if they entered without your permission in all but the most dire circumstances.

    Maybe Germans don't mind renting because they have such strong protection for their tenants? I'm not sure about the exact laws, but it's probably something like this; as long as you pay the rent on time, there's nothing the landlord can do to take the place back from you.

    Let's face facts; some people will never earn enough to buy a house. Well, not one bigger than a shoe box anyway. If they have a big family, that's just a non-starter. When we had council houses it wasn't a problem because you could live in them long term with some sense of security and I guess you could make improvements to them (correct me if I'm wrong on this).

  8. Stuff others haven't covered yet:

    Rental disadvantages:

    * Regular inspections by letting agents who always want to be able to let themselves in and snoop around when you're not in

    * Magnolia paint everywhere

    * Generally furnished and decorated to a lower standard than an owner-occupier place

    * Problems getting repairs done promptly (got to go through the letting agent and the landlord has less urgency to fix something if he's not personally bothere by it every day)

    * Can be hard if you want to have pets

  9. This has never been the case in the whole of human history. The normal human way of reproducing was to have many children in the hope that at least 1 or 2 would survive to adulthood. The notion that all children are special darlings who will all be successful in life is a consequence of affluence. If it is true that a resource crisis is our future, humans in the west will just have to revert to the normal way of reproducing.

    Perhaps I was being a bit too inflammatory there. The point I was trying to make is that we can't keep on having the birth rate higher than the death rate indefinitely. One of two things must happen; either we all take personal responsibility for not breeding too much, or we don't - with the inevitable result that eventually we exceed the ability of the planet to support us all. This is where it gets really messy (starvation, wars, fighting over scarce resources etc.).

    Personally I'd rather have people have a smaller number of children with a high survival rate than have people go through all the heartache of having lots of kids where lots of them die or are killed in wars over the planet's scarce resources.

    I'd also like to see green groups making the point that the most eco-friendly thing you can do is have less children.

  10. I might amend that it's your right to have children, but only if you have sufficient means to provide for them. Whatever fancy technologies we use, more population is always going to mean more demands on food, fuel, jobs etc. Eventually we reach a point where the planet simply cannot support any more people.

    My personal view is that child benefit should only apply to the first 2 children, if at all. You'd be free to have more, but if you do so you'd be on your own financially. This would put an end to those families who seem to have kids only to get more benefits and a bigger council house all paid for by the taxpayer.

  11. The really irritating thing is that the central cause of all of these problems is easily fixed. Land itself isn't expensive - a quick search of farmland prices and you'll see it's rock-bottom. £40k for a dozen acres maybe. The only thing that makes it silly expensive is once you have planning permission. I don't see why local councils can't just buy or compulsary-purchase-order the land they want to develop on at agricultural prices and then grant it planning permission afterwards. They could then sell plots for people to build their house on. All that lovely profit would go to the council. Put in a few restrictions to stop them concreting over everything in sight in a mad grab for cash and you've got yourself a workable system.

    I'm surprised the quality of new build houses isn't in the news more often. They're shockingly bad, caused in large part by stupid planning policy dictated from central government. They're the slums of the future and only an idiot would buy one unless they really couldn't afford anything else.

    I think the whole Nimby-ism thing regarding new houses could partially be addressed if the new houses were actually good. Nobody really wants a new housing estate built next to them, but it makes it much worse if it's tightly packed, badly-built rabbit hutch housing you just know will be inhabited by the dregs of society in a few years once the shine has worn off. However if it's a nice estate, your own house benefits from the halo effect and could actually rise in value as a result.

    We should really compile a list of the most mind-numbingly obvious good ideas they could use to improve housing. You don't need to set up a 3 year £25m quango to study it to come up with stuff like this - it should be plain old common sense.

  12. A thousand times this. At some point we'll be looking to get a larger place, spending in the region of £250-300k. In much of Europe, Australia, Canada and the US what you can have built for that money makes what you can get in the UK look like a joke.

    It's also worth mentioning that most of the new build stuff in Japan is also like this. You buy the land, then choose what you want built on it from a building company. They have a bunch of options and you choose what you like. It's a good counter-argument to the "but the UK doesn't have enough land!" argument because Japan has about the same land mass as the UK and roughly twice the population, but only around 20% of the land is actually usable for building (you don't build a house on a steep hill in a place prone to major earthquakes).

    The drawback to this is every house is different, which can lead to some major style clashes between houses. Say what you like about the British system, but at least you can somewhat control how much one house fits in with its surrounding buildings.

  13. Since we've got the experts all watching this thread, I'd like to ask them something.

    My current letting agent likes to send a letter every few months saying they're coming to inspect the property. It's always sent more than 7-10 days in advance, but it's always between the hours of 9-5 Mon-Fri, which is obviously difficult, especially as they use the old "between the hours of 9am and 5pm" trick so you have to be there the whole day waiting for them.

    The bit that annoys me is they say that they will enter the house to inspect it if nobody's there. I actually asked the citizen's advice bureau about this but came away with the impression that they seemed to think it was legal for the letting agent to do this.

    Personally I don't think this should be allowed. Nobody but me should be allowed to enter the place while I'm renting it without my permission. (Unless it's something like the Police come to bust me for something or the place is on fire and it's a fireman with a big-ass hosepipe come to put it out).

    Opinions anyone?

  14. So one of the proposed ways to drop house prices is supposed to be building new ones. This I wouldn't mind if they actually built good houses, but they don't. Instead what you find is that they pack as many houses onto a plot as physically possible, sometimes so close that you can almost reach out of your window and shake hands with your neighbour. Just like London pre 1666, and we all know how well that ended.

    All I ever seem to see are postage stamp-sized gardens, massively overlooked by your neighbours and with fences that an umpa-lumpa could easily look over. Add this to the build quality - the walls feel like they're made of balsa wood or cardboard so that you worry if you lose your balance and try to brace yourself against the wall, your hand will go straight through it.

    Then there's the garages. At one time a garage was supposed to be a place you could put your car. New house builders seem to think that this means you can physically fit a car into the space, but don't seem to want you to be able to get out of it. For crying out loud - this isn't rocket science: Make. The. Garage. Big. Enough. To. Put. A. Car. In!

    Then there's the propensity to chuck the lounge at the front of the house. If I wanted people to be able to peer in through the window to see me relaxing after a hard day's work, I'd sit in the porch. I don't. Put the dammed lounge at the back, away from prying eyes and somewhere I can look out onto a relatively private back garden. Put the kitchen at the front - you don't spend much time in there and it being at the front means you can easily watch the world going past or any visitors arriving.

    But the bit that really gets my goat in all of this is that they then have the cheek to try to ask the same price for these poorly-built, tiny hellholes as a house built back in the 60's when build quality meant something and houses had gardens. Think about it a moment - if I tried to sell you a suitcase made of paper that's half as big as a normal suitcase for the same price, you'd laugh in my face. Why should a house be any different?

    Not to mention that almost every high-density housing estate tends to end up being slum housing because the only people who will live there are the ones who can't afford to live anywhere better.

    Personally I think that the town planners could solve this with the stroke of a pen by stipulating when they grant planning permission for a new housing estate that only a certain number of houses can be built per acre and specifying a minimum garden size and house separation.

  15. As a wild guess, it's probably people who haven't lost their jobs (and there's a lot of them, despite the media doom and gloom stories) and who bought their house before the prices went silly. With record low interest rates their mortgage payments are going to be pretty daft - something like £300 per month as opposed to when the rates actually meant something and they were perhaps paying northwards of £700 per month. So magically they now have an extra £400 per month. If you're a responsible saver you'll keep on paying £700 per month on your mortgage to reduce the overall amount of interest you pay, but that requires long-term resistance of temptation.

    More likely they're going to spend that extra cash on the shiny baubles shoved into their faces by the advertising they see every day. I liken it to an experiment with children where they're sat in front of a sweet for 5 minutes and told they can either eat that sweet now, or wait 5 minutes and get 2 sweets. A goodly portion of those children will just eat the sweet now.

    My personal strategy to beat that is to avoid as much advertising as possible - install Adblock in your browser, only ever watch recorded commercial TV and skip the adverts. Oh and buy shares in the companies that make all the fancy baubles.

  16. Last time I checked, more than 50% of the jobs available don't require a university education to do, so why bother going?

    If the government's worried about costs, how about charging people to study the useless stuff (media studies anyone?) and provide some funding for the stuff that we need more of: scientists and engineers etc.

    In any case the assumption is if you go to university you get a job that pays more. Since earning more means you pay more tax, surely that means you're paying for the cost of your tuition in those extra taxes?

    Or am I being ludicrously simple in this?

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