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IMHAL

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Everything posted by IMHAL

  1. I hope what you are saying is true. I am not ruling out wage spirals which like it or not will have an effect on where the bottom is and when it will be acheived. HAL
  2. No - what I am saying is that secondary round inflation will be the next battle. The current level of inflation IS hurting people - it is what will cause the next battle to begin. When the government lose the battle against big pay rises then we will get hyperinflation - or at least a significantly higher level of inflation than now. I think someone mentioned a time frame of 12 to 18 months - I don't know what the time frame will be, or even be certain that this will be the outcome (i.e. I am not 100% guaranteed!). All I am saying is that we need to keep a look out for what wages are dong and that this in my view is a key indicator of how the housing market will pan out - will it continue to slide or will the bottom be shallower than if wage inflation lets rip. HAL
  3. Sounds like its hyperinflation then - eventually! - unless the BoE disconnect from the actions of the yanks - which is unlikely in my opinion. The real issue is that this could unfold quickly or slowly - the quicker it unfolds the less time there is for a housing correction to take place - again its going to be about timing - but this time its not about waiting for the bottom - its about timing the point when the inflationary spiral will hit. In my view the measure to observe is wage inflation - I still feel that governments and central banks will look disaprovingly on this at the moment. So my conclusion is - hyperinflation will only happen after much disquiet and rioting in the streets at the effects of inflation on the ordinary persons decline in standard of living. HAL
  4. Thoughts... Wait - the parties just started - soon the next phase will hit - these go by the name of forced sellers egged on by redundancy. Then we will have the real drops and some degree of realistaion in the market that prices need to go lower. HAL
  5. Being a cynical I think the BBC are priming us for an IR cut. The message is recession is here, its better to have a cut in IR's and tolerate higher inflation than to suffer from a recession where you all lose your jobs. HAL
  6. Lets not forget the Terrier B1tch From Hell Yvette Cooper. She gets my shoot the TV set vote of the year when ever she graces our screen. HAL
  7. Well I agree that superimposing the last crash values on this one looks 'not quite' right to me also. It will be interesting to see how this one pans out - no one can predict its real course that is for sure. As you can tell my current metric is wage inflation - I get a nasty feeling that this will be tested unless job insecurity worries come into play pretty soon. HAL
  8. I think I have done that so lets look at wages again: Average wage 25k: After 6 years the average is about 33k with a wage inflation of 5% per anum: During the previous crash average wage ratio to house price was about 2.75 to 3 times. To me his makes for average houses being prices at <£100k. This of course assumes that banks will revert back to normal lending criteria as they continue to learn from the lessons of loose lending and mitigate risk in the face of the downward drift of house prices. Forget about CPI/RPI/RPIX inflation adjust house prices - the only thing that matters is wage inflation. If wage inflation takes off at a greater rate than 5% then as I said before then a shallower bottom in house prices will result. If wage inflation is 10% pa then the bottom will be at about £140-150k - currently this looks unlikely but who knows. If you are looking to buy at the bottom then I think your expected £150k bottom is too soon in the current wage inflation environment. Personally speaking in the current situation anything below the £150k mark is Ok for me - but I will wait until at least £130k before looking to enter and I will only do that when I can get a 10% discount on prices then. HAL
  9. I think he/she my have a point here. In a depression alot of people lose their shirts/homes ect.. At that point only do they want to seek security and save. A recession is not a good enough lesson for most and they quickly revert back to the old spend today and pay tomorrow habit. HAL
  10. No - you just dont get it - a nominal £140-150k bottom would only be possible with 10% per anum wage inflation over a 6 year period, and that is assuming that there was no resultant economic fallout from this type of wage growth, i.e. IR's stayed the same and deep recession did not follow due to the wage price spiral with all the forced selling that entails. I maintain that the bottom will be around the £100k mark - or around 50% - in nominal terms. If you take inflation into account the bottom will be even more severe. It is indeed diferent this time around. HAL
  11. Yes it has been done and posted before - you will have to search - or perhaps other posters have it to hand?. That graph is quite astonishingly revealing! It shows that during previous peaks the deviation from 3.5 time has been minimal - but this time around the deviation is HUGH! HAL
  12. That would mean that average salaries would have to be in the order of £50k - you can but dream. We are at nominal £172k today - another 12 months of -1% gives about the the £150k you are looking for. If on the other hand the bust carries on for 2-3 years your £150k bottom will be well and truly holed below the line. HAL
  13. If you take the period between the last trough and the last peak then inflation was generally higher, inflation was taken for granted - everything went up every year - 5-10% and so too did wages. During 1997 - 2004 inflation has been quite low (except for Council Tax and public transport). During the last few years 2005-2008 inflation has been higher than published - probably by a factor of 3. This point is conceded but it has not yet fed into wage inflation - it probably will - we will see how the gov reacts to the pressure build up. If you look at wage inflation between 1997 to 2008, which is the one that matters as this gives money to those that we are competing with for houses then by historic standards it has been low - back in the late 80's it was (at least for me) between 5% and 10% per anum - between 1997 and 2008 it has been 3-4% if you are lucky and between zero and 3% if you are not so lucky - in quite alot of cases cases wages have barely risen. If you take these factors into account then this time around would suggest to me that the trough will be lower than last time - and last time the trough went below the previous peak. So I think the trough could realistically be around £90-100k .... or it could go lower still - it depends on wage inflation. If we assume that the trough will roughly happen after 6 years and that average wages increase by 5%, and the average wage today is £25k - then we get the following: Year Av Sal 5% Mortgage 1 25.0 26.3 91.9 2 26.3 27.6 96.5 3 27.6 28.9 101.3 4 28.9 30.4 106.4 5 30.4 31.9 111.7 6 31.9 33.5 117.3 Historically house prices have gone below 3.5 times (around about 3 times) average salary at the trough - so I think that they could well go below £100k - this will depend on the resolve of the BoE and the government in dealing with wage inflation in the next few years. I also notice that savings are very low at the moment and it will take FTB's time to save the £20-30K they will need - this is hard to do in a high inflation environment - without them then there is no kick starting the market. BTLers are dead and will remain dead to all but the professionals and even they will be thinking twice so long as the correction carries on. When it comes to prices correcting the thing that matters most is wage inflation. My hope is that wage inflation will be relatively contained but who knows? If we start seeing reports of 5+% wage inflation becoming common place then this might change the situation - how much so? don't know but I'd expect to see a shallower trough. Lets take a worst case scenario of 10% wage inflation which is really really unlikely. We get the fllowing: Year Av Sal 10% Mortgage 1 25.0 27.5 96.3 2 27.5 30.3 105.9 3 30.3 33.3 116.5 4 33.3 36.6 128.1 5 36.6 40.3 140.9 6 40.3 44.3 155.0 Which would suggest that the trough would appear around about £135k (i.e. 3x average salary). I really do not expect wages to rise by 10% across the board for 6 years - I expect the average to be somewhere around 5% averaged over the 6 year period which gives rise to a trough around about the £100k mark and below this level if wage inflation remains below 5% which it might yet do. HAL
  14. I agree that the bottom will be lower - in fact if you look at the chart on the front sheet you will see that the bottom is usually below the previous peak - that would make the bottom some where around the £100k mark. Also if you take into account that inflation was higher during the 1990 crash then you migt even have a case for this bottom to be even lower than £100k - but not much is my guess - see attached. HPCchartGen.doc HPCchartGen.doc
  15. I agree - we still have half (or less) transactions - these will ensure that the market price is re-set. I'd ay that we have just passed the 'must price realistically' phase - sellers currently think this means that they need to take 2007 prices and knock £10k off. This market is like a series of seismic events - pressure builds and builds and then the tectonic plates slip. The pressure is mounting right now and the next trigger point will be more news of greater numbers of redundancies and the realisation that the trickle effect of MOM price falls has caused >10% falls. This will trigger the next big move downwards move. It might take 6 months for this to happen but happen it will - after this stage there will be a general desparation and panick phase. Having said that some very exposed sellers are allready there - but I am talking about the safe houses - they will also go through this phase. HAL
  16. IVA Posrche, IVA Flatscreen telly, IVA condo on the Costa, and now IVA problem... Could'nt resist. HAL
  17. I forsee more of the same until Sterlng crashes and forces the hand of the BoE. These muppets will just keep banging their heads against the same wall until the wall collapses on top of them. HAL
  18. I agree - these are career politicians - fresh from uni with a degree in politics and some quaint ideology. These people have little life experience, no common sense and are frankly quite dangerous. The shining example of the stand out politician is Vince Cable - a business man and a wise elder. The rest are in it because they have chosen this career path - they have no where else to go. I really think that we should not allow politics as a career - as someone famous once said - power is not for those who seek it. Ergo Brown should not have been given the PM job. HAL
  19. I think that this can go one of two ways. Either the rest of the CB's raise too and we get a levelling of exchange rates and oil stays static for while - recession will be sure to follow as CB's positive biase is established. Or the rest of the CB's stay their hand in which case oil and inflation goes balistic in Non EU land. I think the other CB's are going to try to ride it out - its going to get brutal - for us that is. This is when we get to the end game - either Hyperinflation or Recession and maybe Deflation. HAL
  20. I think you'll find that the logic in moving it from 2.4 to 2.8 was to make the current houe prices not seem too far from the trand - its another manipulation to sooth the masses. HAL
  21. I don't think so - for as long as they publish they control the market perception. As they say - when the game is not going your way - just change the playing field. If they where to stop reporting that would allow some other org to do so putting the market outside their control. You can bet that they have met with Nationwide and are thinking about how to manipulate right now. HAL
  22. I agree with your assessment of 4% - funilly enough Declan 'Donought' Curry let splip that the BoE would raise IR's if wage inflation where to.. say go over 4%. He did this during the house price aticle this morning. I thought that it was a strange thing to say considering most of the public sector is anchored at 2% - I think this is government propaganda through its main channel i.e. the BBC. The government is preparing us all for wage inflation at 4% and is currently setting this as an expectation. They are trying for the middle road - moderate wage inflation, low'ish interest rates and they are hoping that price inflation does not take off any faster. Will this get them out of the hole? No - it will just make it a bit less deep. I also think that NuLabour have absolutely no resolve and I think the unions think the same thing - I expect the unions to stick to their guns and for them to get their way - NuLabour are a bunch of wusses, spineless rollover merchants. The next thing to observe is if the BoE will carry out their threat of raising IR if wage inflation rises - the problem with this approach is that there are no targets for wage inflation , it is purely arbitatry - so this means that they will probably do nothing about it in my opinion, at least until the market decides and then we enter into a Sterling crisis - only that will force the hand of the BoE and government. HAL
  23. What I find funny about all this squawking on keeping wage inflaion low is that no one challenges the Gov or the BoE. I thought that the deal is supposed to be 'you keep inflation low and we accept low wage rises'. Seems to me that the Government has spent everything so that they cannot give tax breaks as a substitute and the BoE also helped to get us into this mess by going with the herd, lowering interest rates and encouragng debt. I place the main blame on the government due to its stupidly narrow inflation target in the first place. So now that leaves us painted into a corner - wages rise then so do interest rates = reposession and recession - wages dont rise interest rates dont rise = conmodity inflation, bankrupcy, reposession and recession Either way they are screwed - I prefer the first option minus the wage rises because in this way we get a snappier recession and consquently come out the other end quicker which gives the people that matter (30-40 year olds) time to start over and rebuild for retirement. No doubt we will get the second option which will hurt those that cannot recover, mainly those on fixed income/pensioners. Good old new Labour - they care for the poor don't they? HAL
  24. That is an interesting point - are houses sold at auction also included in the NW and Halifax stats? If not then there is even more biase to the positive side. HAL
  25. Could it be because house prices have fallen yet again and the economy looks like it has had an iceberge shoved up its jacksy? HAL
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