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Surrey Girl

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  1. It's that lower band which interests me... says a couple of things, I think. Firstly it says that the less expensive first time buyer type houses are the ones which are not selling, which in turn suggests that the second steppers are scuppered because they can't sell... neither of which is news to us, I guess, but it is interesting to see the figures.
  2. That is a very interesting chart... very telling, actually.... you can really see where the stagnation is.... Is the figure on the left in absolute millions or something?
  3. My current view, for what little it may be worth, is that interest rates will not be changing any time in the near or possibly even medium term. Even if the US does start to eek up rates over there, that does not mean a thing in this country. Unless we see steady consistent economic growth for 6 or 8 consecutive quarters (that's 18 months to 2 years) or unless Sterling crashes, there is just no reason to change them. Inflationary factors are external and increasing interest rates will not quell that... in fact, in theory it could add to inflation in quite a serious way. One of the effects of putting up interest rates is to reduce disposable income (which is why it is used as a tool for cooling the economy) but when disposable income is already stifled, deliberately forcing it down further is likely to result in wage inflationary pressure, which can only go one of two ways... either it adds to general inflation as employers seek to increase prices in order to satisfy wage claims, or else it results in increased defaults on debts if employers claim poverty and are unable to pass on increased costs whilst still remaining competitive in the market. No, at the moment the status quo suits everyone. House prices are unlikely to crash so long as things remain as they are. What they will do is very slowly over a period of years continue to become more affordable in real terms as the effects of inflation take a toll on the real house value without impacting the headline figure. Everyone's a winner.
  4. Interest rates are typically increased in order to cool the economy. Our economy hardly needs cooling! The other main reason to increase interest rates is to defend the value of sterling... well, in the context of the world economy, it's a race to the bottom, so that is out of the question. Rampant wage inflation would force up interest rates, but in the usual way of things this would go hand in hand with price inflation as one usually drives the other. Inflationary pressures are currently external for the most part, so fiddling with interest rates wouldn't have much effect in any event.
  5. Following on from this recent article on About Property, I wondered whether the current Stamp Duty thresholds effectively act as a dampener on any potential house price inflation? Houses in the £250K+ bracket are more expensive to buy by many thousands of pounds beyond the actual asking price simply because there is three times as much Stamp Duty to be paid on a house costing £250,000 as there is on a house of £249,999... so instead of having a £2.5K levy, you have a £7.5K levy for a sale price difference of just £1. This, I should imagine, serves to reduce the effective saleable value of many, many millions of houses, with sellers not wanting to put off scarce potential buyers by being over that threshold by a small amount, and buyers wanting to make offers below that amount for houses offered to the market in the £250-£300K range? I am, of course, aware that this has been the case for many years, but it seems odd to me that the thresholds have remained the same when even now house prices are more than double what they were when those rates were first introduced, and when in many parts of the country, a £250K house is really a fairly modest family home. It's not like it was back in 1999. I sold a three bed garden maisonette in a reasonably nice area of suburban London, close to a mainline station (20 minutes from Victoria) for £99K back in 1999. That same property came back on the market a few months ago priced at £260K (I couldn't help thinking that it was priced with a view to the current owners accepting an offer of under £250K) which just goes to show that at the time the threshold was introduced, a house costing £250 was aspirational... were as now it is fairly ordinary. I would have expected that if there were any real political desire to heat up the housing market, they would change the thresholds... but they haven't. In fact, they have introduced new ones which server to restrict the market still further. The bell (Laffer) curve principal dictates that with very few exceptions, the more you charge beyond a given point, the less revenue you actually receive because of the effect of quelling demand. Reducing the upper levels of Stamp Duty, or moving the thresholds, would almost certainly result in a windfall for the Treasury because it would open up the markets... and yet they do not do it? So unless you firmly believe you can achieve £300K+ for your house, many are probably going to be realistic about it and either put the house on at £249,950 (even if it is theoretically "worth" more) or else put it on at a little over that knowing in advance that you will probably end up taking an offer under that all important threshold. I've been thinking for a long time that there is an active (although unspoken) policy of restraining house prices, but at the same time overtly operating a policy of "propping up" the market to prevent a freefall, thereby securing future affordability simply through inflation. The same method used to inflate away debt might be being used to inflate away house prices with minimal impact on the actual headline figure. We all know that HPI is the theoretical "key" to unlock this recessionary cycle, but we also know that it is potentially a Pandora's box. So perhaps, just maybe, a decision has been made to try to manipulate the market into stasis, and maybe the £250 Stamp Duty threshold is a tool employed with the aim of achieving that? (just thinking out loud - actually I don't think anyone in power is capable of thinking up such schemes, let alone effectively operating them!)
  6. Alternatively..... just keep it? Indefinitely....
  7. Not sure that I've seen this posted here yet... http://www.mortgagestrategy.co.uk/latest-news/capital-economics-forecasts-5-drop-in-house-prices-in-2013/1064290.article
  8. Oh... and on that thought... they know full well that if they build lots of houses when demand is low, all they will actually do is flood the market and force prices down. They ain't stupid - unlike the politicians....
  9. Quite right! I have a feeling that these house builders are not stupid... and they ain't short of a bob or two... if they aren't building houses, it's because they know they can't sell them at the price they want. They are better off laying people off and just sitting tight. So long as they build enough high value homes to keep profits up and shareholders happy... they can tick over for years and years and years just picking up more land, getting it through the lengthy approvals process... and waiting for the turnaround. The one thing they do NOT want to do is get caught out with a large inventory if house prices begin to head south at any significant pace. Shrewd lot, these house builders.
  10. Everything changes eventually.... if you keep saying the same thing for long enough, then sooner or later you will be right and then you can say "look, see! I've been warning you about this for {weeks/months/years/decades - delete as appropriate according to how long you have been wrong for]" It's the stopped clock thing. So for sure, we can say with 99.9% certainty that interest rates will go up at some point in the future... and probably sooner than we expect And we can also say with similar confidence that they are unlikely to go down from here. So what is he saying that we don't already know? Ahhh... yes... bond collapse. Well, for me, I'm sceptical on that one. I mean... I'm not sure that I quite understand what the mechanism of this impending collapse is? I think I have a pretty good grasp of economics for a silly little girl from leafy Surrey... and I kind of think that I have understood what has happened so far... and I think I kind of understand where it is going... but I really don't see how the figures add up to bond collapse?
  11. I think one ought to exercise caution when ever any article uses emotive language in it's headline... like "Fly"
  12. I'm not altogether convinced that the government has any intention of looking too hard at this sort of stuff. I think that as far as they are concerned, failing to collect revenues simply put more money into the private economy. They will take action in order to avoid looking foolish or encouraging people to avoid or even worse evade tax... a few people will have to serve some time I guess... but on the whole, if you are tunring over less than a few million quid, they aren't really very interested just at the moment. And that is why they have reduced the number of inspectors. If they wanted to actually get the tax which is owed, it would cost them very little, proportionally speaking, but the actual result would be a reduction in the amount of money flowing through the economy at large thereby squeezing real world liquidity and productivity and ultimately resulting in reduced revenues. Of course they can't actually say that... they have to talk tough... but they really, really don't want to do anything about it unless they absolutely have to. I reckon that they will deal with it once they can genuinely see "green shoots"... until then it is the lesser of two evils.
  13. I dunno... I wouldn't say he talks sense, exactly... but at least he acknowledges the problem and seems to realise that the best way to cure a boil is to lance it and get all the puss out, because only then can you start to rebuild value... as opposed to the current trajectory which will result in a lost generation. I met a young girl today... 24 years old... same age as my daughter. Lives in leafy Surrey, not far from me. She has a 2 hour commute every day for work. 20 minute walk to the station, and hour and a half on two trains out to where she works in Hampshire, then ten minute walk from the station the other end. And then she does it all back again in the evening. Four hours a day travelling to what is, essentially, a clerical job paying little more than minimum wage. That's what you have to do these days if you are a young person and you actually want to work. And this is in prosperous Surrey! And that is the way it will stay for the next ten or twenty years because the political will does not exist to do what needs to be done. Everyone knows what needs to be done... it really isn't rocket science. But all politicians on all sides realise that if they actually did it, it would prove so unpopular that they would become unelectable for a generation... again.
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