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Brian Hall

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About Brian Hall

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  1. Yes, but graduates will now be saddled with huge student loans, taxation will be rising to pay for all the bale outs, public sector pensions and a range of other issues (not least increasing housing benefit demands from those forced to rent in the private rental sector and the those less able to provide for long term care when they retire, with the retired population doubling by 2050), prices will rise on imported goods and supplies and now we have pensions auto-enrolment and benefit cuts for the vulnerable. Landlords will not be able to reduce rents by much before their cashflows go negative
  2. I found your observations very interesting and I plan to read and reread them several times to ensure I understand all the points. But in the final analysis would you not agree that someone who owns a property outright by the age of 50 will generally be better placed to weather a range of economic scenarios than someone renting for life, say through to the age of 80 (providing these scenarios fall short of lawless anarchy that would make one wish to relocate)? I read When Money Dies recently and I am interested in what lessons can be learned from extreme examples of when systems become dys
  3. There is nothing clever or new in what you are saying and much of it is incorrect. You say that rents are not rising, but they will over a 25 year period, while mortgage repayments will depreciate. We can argue about the extent to which this will happen (and I have offered to develop a version of the model that allows anyone to play with the data), but this will definitely happen. You say that house prices are credit availability based. This is an oversimplification. For example, if there were an oversupply of properties today then prices would fall like they have in Spain. There are a wh
  4. Understood. I rationale in looking to the past was to get some sensible looking seed data for the model. I agree with one of the other individuals that commented suggesting that things were very different in the 1980s. The model looks to the future using this averaged historic data but as I have said elsewhere I think I will productionise the model and put it on the website to anyone can plug in any data and read off the results.
  5. True, but my concern was with those that are excluded from homeownership, not those that are already homeowners but can't afford to remain so.
  6. I agree that wages are an important constraint. While prices were rising at 6.5% background inflation was 5.6% and we might assume that wages increases were somewhere around this level. To better answer your point I have just looked at the effects of reducing house price inflation to background inflation levels. Someone buying at 37 with 6.5% inflation would be £866,114 better off than someone who rents for life and with 5.6% property price inflation they would would be £533,572 better off. I am very interested in how the market functions and how it will boom for a while and then the bubb
  7. Yield data over time is very difficult to get. The oldest data on yields comes from the Association of Residentlal Letting Agents but this only goes back a few years. The Royal Institute of Chartered Surveyors may have older data but I haven't followed this up and there is always the problem of consistency over the years. The model was based on public domain data from one of the large stakeholders - Countrywide I think, without going back to my notes. Why do you ask?
  8. I assumed that one either rents or buys. The cost of buying with mortgage repayments calculated to average interest rates over 30 years and the cost of renting using current rental yields were similar amounts at the outset. I took this as my base. As the mortgage depreciates away in real terms, the homeowner can save the difference between this and the cost of the ever increasing rent. Obviously if one lives with parents one can save for 13 years but if one rents one can't save as much as someone who is buying and will increasingly fall behind. After 13 year the homeowner will be signif
  9. In my experience the simplest models can be the most inciteful, particularly if they stimulate debate. Moving a few times introduces new variables: the frequency of moving and the cost of selling/buying/moving. Typically people move up and so the benefits from owning a more expensive property will be greater than a smaller one (and the costs of renting will be proportionally higher too). I suspect these returns would be greater than the costs although I haven't modelled this. So one gains very little in terms of insights by adding to the complexity. KISS is better. A more important iss
  10. Exactly - so the earlier you buy the sooner your mortgage will be paid off and the sooner you live mortgage and rent free. Also mortgage repayments remain static while rents typically rise, which means that you will increasingly have a surplus to save in a tax-efficient savings scheme or pension (free money anyone). Finally, the earlier you do this, the longer compound interest has to work its magic. I never said the model was rocket science. One can change the variables but the logic is sound.
  11. I think rates must rise because we need to get people saving and reward those that have done so in the past. The prospective homeowner only has so much disposable income and so this may require that property prices fall so increasing mortgage repayments don't price them out of the market. But I am not an economist. With respect to the model I worked with 30 year averages to even everything out. But I have had so much interest in this specific point that I think I will go away and build a model that allows anyone to come onto the website, plug in their own data and read off a result. This
  12. No apology is required. One of the reasons I embarked on this initiative was because I got so tired of all the inaccurate, incomplete and biased data and all the self-serving, subjective opinion coming from the industry. Do you know you have to pay the Council of Mortgage Lenders over £10,000 to get access to their data. Otherwise you get given what they want you to hear. So I am not surprised you took my work to be part of all the background propaganda.
  13. Sorry I missed it. During the 30 years over which I calculated my average seed data, house prices rose by 6.5% per annum. Incidentally, the average savings rate was 6.4% per annum, which puts this figure into perspective. As various points through this period there were times when prices rose, times when they were static and times when they fell, but generally the trend was upwards. The model tracks a period of 62 years from 18 years old (the earliest one can buy) to 80 (which I took to be an average age of death) and calculated the results of buying at those ages (actually to age 60 wit
  14. Enormous profits are possible with geared investing but so are enormous losses. Please see the attached extract which looks at profits and losses for both cash buyer and gear investor buy to let speculators before and after the credit crunch. By my reckoning geared investors are currently making losses (the rental income in the example just about covers the mortgage repayments and other costs). BRH Extract.pdf BRH Extract.pdf
  15. I understand your concerns. Perhaps I should develop some kind of sensitivity analysis that explores how far one can push the data before one gets a different result. I will explore this idea, thanks.
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