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Tempest

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  1. Plenty of people here get a principle along those lines but its too superficial a generalisation - its what it means and whether or how or when it is correct that matters. In terms of outgoing cash (whether currently or over life of mortgage) one can show examples where one can spend the same or less cash buying an expensive house at low interest rates than a less expensive house at high interest rates. However, that does not go to the value of the asset you have bought and whether it is a "good thing" (which is why the use of "cheaper" is misleading and inaccurate) - as the prevailing and l
  2. Interesting debate. I must say I tend to fall in the camp that says the factors/variables are myriad albeit that wages and debt costs have a much more significant weighting in the mix than other factors. One observation on the "long term trend" for HPI: as our middle class has grown over the last 100 years and the wealth of both middle class and whatever counts as upper class these days (moneyed class?) has increased one could argue that there has also been: (i) an increase in retained/inherited wealth within families - even if only of magnitude of tens of thousands of pounds (but often muc
  3. We looked at a house on Coleford Road in late summer 1999, not sure the exact house number but was "twenty something". We also looked and nearly bought one in Fullerton Road but it was too much of a stretch and we were worried (!) that prices were getting a bit too high (we still remembered the early 90s). The Fullerton Road place was then £325,000 - now priced around £800k. The Coleford Road place was in the same ball park price wise £300-350k but of course most of the houses down in the Tonsleys have had side/rear/roof extensions since then which will have "added value". I don't know what t
  4. The Daily Express et al are immaterial. Politicians worry about the Sun readers. The swing voters and the Murdoch effect which got NL to power and has sustained it. When will they decide that enough is enough and that they are soon going to fall behind their readers in where private economic matters are going? They will catch up soon and when they do it will "get interesting". You try selling papers to 3 million buyers (4-5 million readers) when they are in negative equity, strapped for cash, suffering inflation etc without eventually siding with them rather than the establishment... GB and c
  5. tend to agree but childcare is also here to stay - only those where one of the couple is wealthy/earning enough can avoid it. ie if as DINKYs you buy a house then unless that is your "final" house (unusual) you will need to trade up - that can only happen if either prices reduce to eradicate the DINKY effect (whcih in the 25-35/40 age group is not likely given later child birth/careers etc) or you both work for a bit longer to meet the cost. I am not saying it is universal, far from it just that it has has a marked effect (even allowing for the mums who decide not to go back to work (hence why
  6. First, I am a long time bear and am glad we are where we are (I thought we would be here 2 years ago but hey ho). I think the long run average has changed over the last 5-10 years from that before - someone has already pointed out that people are living and working longer, that may account for small element, but more importantly, even in the 80s the % of dual income supported mortgages was very low relative to the rest whereas now two working parents is pretty normal IMO(certainly for those between 25-40). Those mortgages need to be serviced over the long term. ie we have moved to a situation
  7. The AAA rated tranches should be ok if they ae wrapped by a monoline insurer as they are rated AAA. The problems are in te tranches rated AAA where they rely on priority of recovery in cashflow/downside sensitivities and AA or A tranches. If and when they fall there will be carnage. I think it is time to buy non leveraged equities which have no or little exposure to financ/debt....
  8. What we are seeing in action is the very systemic risk that central bankers fear and are powerless to combat on a widespread scale, PPT or no PPT. Once it spreads from a one institution problem to a multiple institution problem there is nothing (and no amount of available money) to stop it. The plug is just pulled.
  9. This is just too simplistic. It has nothing to do with the lending standards of the banks per se. It all depends on what product the investor/fund has bought - which can be nothing like the product sold to the house buyer. That is the mentaility of the period before the last House PRice Boom. If it is is true A/AA/AAA grade MBS bond debt then maybe fine but there is little of that around - much is creidt enhanced, either structurally voia CDOs where there is synthetic slicing up of the risk tranches to enable some to trade in the A-AAA range with most of the debt in the B range or beloe (toxic
  10. This approach is what I meant in my post - this is just cobblers. See some of the other responses above. The HPI in 88/89 was not as uniform around the country as it has been over the last 5 years and that is reflected in the UK average figures for that period. But in the SE, nominal falls of 30-40% were plentiful - although I agree that if one didn't need to sell or remortgage that may have been off one's personal radar (although it was plastered over the papers regularly for years so I don't believe homeowners from that period were unaware it was going on). Nominal figures are meaningless
  11. Didn't mean to be unduly harsh Dan. Well intentioned I realise. Its just I got annoyed that your graph was hijacked by some (not you) to argue with conviction that previous crashes somehow weren't really crashes or had little effect at all! There have been some good threads in the past on here about this - although I know the different views about what it means for the future have never been settled. I learnt about it from TMF a long time back - theory, nominal and real graphs and all. http://boards.fool.co.uk/Message.asp?mid=8...&sort=whole Graphs may be a year or two out of date b
  12. This thread is a waste of space - founded on an erroneous theory to start with. We have covered most of this in many other higher quality threads from an analytical point of view. Bottom line from someone around for the 1973-4, 1979-80 and 1989-90 periods is that there were nominal decreases in each case, increasing in their magnitude/severity as the inflation rates were lower in each case. Negative equity doesn't of itself cause unemployment/homelessness but it does prevent remortgaging (at least at affordable rates) or favourable work outs for borrowers. I leave it you all to decide what i
  13. Very interesting. If I have this right, that is 25% (100k/400k) more primary school places not taken up since 1999. Even allowing for immigration mitigating this (the migrant population tends, I understand, to have higher birth rates) over time, what will 15% (say) less "workers" do for house prices (to say nothing of tax revenues, social security funding and pensions....). I get a bit Malthusian at these moments as hitting one's stride income wise in the years 2025-2030 (if you were born say 1995-2000) looks like a bleak time unless (i) we take in as many immigrants as we possibly can; (ii
  14. What people forget in comparing IO mortgages (allowing you invest you principal elsewhere) and paying down principal as fast as possible is that if you pay down your mortgage in say 10 years rather than 25 you then you have (assuming the same cashflows/income for the period) the ability to invest debt free for 15 yrs...I would need to run it through excel but I am not convinced the usual arguments in favour of not paying down early tell the whole story. Over 25 yrs you compound your investment returns on the capital you invest which you would otherwise pay down but you always have the debt to
  15. It is a great article - perhaps it will only be seen to be accurate in several years time. We did of course discuss this back in Oct 2005 (!) when it was a draft the month before it was issued in my thread below where there is other input from HPC members. http://www.housepricecrash.co.uk/forum/ind...c=17977&hl= Of course, we now have Japan dying (demographically) but with huge savings anda slowly reflating economy (perhaps...). It will be interesting to see how the Japanese part of the model and history sticks to this forecast and if we can lift any inference about our own demographics
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