Backseat Economist

OK, so I missed quite a bit then.....but you're spot on. In short, the bigger the mortgage, the more onerous the interest payments - the less flexibility you get to do with the rest of your life. That's what I should have said at the start. GT.

Yep, I'd go along with that too - well said. People are surprisingly resilient and innovative when their faced with adversity. GT.

Pls have a look back at my earlier post - a lot of this is about education. Part of the problem my generation have had (and I suspect you're with me on this) is that we've grown up in a time of relative, or at least illusory prosperity for a good chunk of the population. It's quite a feat to turn it all on it's head and to understand why it's happened. Most have accepted this current state of affairs as the norm. That's why you get economic cycles in 18-20 year slabs. I was chatting to my Dad a few days ago, and he compared where we're going into was like 1990 AND 1974, all rolled into one - which didn't make me feel much better (cheers Dad ), but I'm sure people were feeling equally confused and worried at those times too - just at the start of the downward curve. The important thing is to recognise that you can't change the situation you're in, but you can be prepared for what may follow from it. I have days when I want to emigrate and get away from it all, but, for all this country's faults, we could all be living in Zimbabwe, or Iraq for that matter. It's all about perspective. GT.

What matters is your ability to pay based against your earnings. Depending on how old you are - if it's more than 3.5 times your earnings - leave it until the price drops to that level. If you've got a sizeable deposit - it will help, but, again, if we have price falls, that will be eaten away as well as a proportion of the house value drops. And, the other thing to consider is your job and likely future earnings. Factor in a recession and then ask the same question to yourself, and you'll come up with the right answer. Have I missed anything? GT.

To anybody new to the site, firstly, welcome and nice to have you on board *waves manically* Next - I'd tell you, in the following order, to...... 1. Go back and look through history to see the number of times that speculative bubbles have occured in all societies of one sort or another. And check out the outcomes to said bubbles. 2. Compare the price of housing we have today and the prices that housing was, say, 20 years ago, and ask - is this actually rational? 3. Have a look at interest rates, inflation, debt, wealth, economic cycles, FIAT money, and dare I say it - GOLD! 4. Have a read of some of the posters on this site who clearly know their onions - keep an open mind, and at least be aware of all the opinons and options that are out there - some of it will be scary, some of it will make you laugh and some of it will make you angry - the one thing it will do eventually is to make you take a balanced, informed view of the whole situation. 5. Get a decent overview of how the housing market works - how the banking system works - you don't have to be familiar with every single nuance - there aren't many people in the world who know it all inside out - if you can understand the basics but need more explanation, most of us will be happy to elaborate. 6. Above all other things - don't panic - but do start to see the other side of what you're told by both media and government, while giving one picture, usually gives a biased and unrepresentative version of what's REALLY going on. It's not that everyone lies to you - it's just that no one has a clear understanding of the real picture at any one point in time, and all of the editorials, facts, opinions and rants on here won't change that. After you've done all that - sit down, make a cup of tea, or put together something stronger, turn off the TV, the radio, throw away all the printed press etc and THINK!!!! Also bear in mind that most of you won't have learnt this stuff in school - it took me a year to fully get my head around about half of the subject matter that gets floated on here -but, it's time well spent, and will end up shaping how you see the world, your own part in it, and what you can do to prepare for the future. But above all, don't forget to have a life as well. GT.

If this is true, then solvency was most definitely the issue - not liquidity. How close were/are the banks to the precipice? I agree - this is worrying.... GT.

Snap......that mirrors what I'm planning on as well...buying in the same year.....that was a bit of a weird moment GT.

I'm renting in BS3 (up the posh end, by the river) which is one of the reasons I'm looking at them as well. The other is that the area is a typical product of the amount of speculation there's been in property over the last ten years. Huge amounts of executive flats - modernisation and gentrification of the victorian properties, BTL'ers and the creative media making it their special play area (god I sound bitter!) - and lots of small businesses, cafes and pubs starting up as a result of all the leverage and opportunities. Two bed terraces used to go for 80K back in 01/02 before things went crazy. Hard to believe, but true. I know about the flats you mean - all of them, each and every one that's down there will be absolutely mullered - 50% off minimum. The running track is a complete joke - and one of the most absurd marketing gimmicks you're ever likely to see bearing in mind that part of the city, in particular, will always will be white trash central. Thanks Kagiso - I'll give it a go. Might stop my eyes falling out of their sockets! GT.

Well, a lot of them were around the 250K mark six months ago - there hasn't been a lot of movement, and I don't think you'll start seeing big drops until the back end of this year. The good stuff is on at 250 and above - anything below it is rabbit hutch size or has smaller bedrooms. It's as much a psychological/support level as anything else. Once that gets breached it's downhill all the way. As far as I'm concerned, anything that sits at that level now will be 150K in five or six years time - of that I'm certain. GT.

Well the spreadsheet itself can't really be adapted as such, it's a creation of the data that's being put into it. All I've done is to clean up what's been exported and do a few simple calculations on it. Property Bee can create the spreadsheet for you by exporting all the data to a CSV file which can be viewed in Excel. Once you've done that, it's a matter of removing all the wording from the prices column, so, for example, where a price may be stated as "Offers In Excess Of £250,000", simply use Excel to remove the words and leave the figures - yes, it's not perfect, but I don't think you can get it much closer. Then make sure that all the prices in that column are in the same format style. You can then do your calculations. Every time you do a search, what you will have to do is to either move the old search data away to another file folder, or to delete what you had created and start again. Again Property Bee gives you the option of saving search data to another location. You can also do this manually as well, by going through Windows Explorer and locating the search folder. The important thing is that you're doing a fresh search every time you go onto the website. Of course what it does mean is that you won't be able to monitor price or description changes on the fly, but, if you keep your old data and move it back to the location Property Bee is saving to, it'll pick those changes up. Still with me? The key thing to remember is NOT to change your search criteria from month to month, so that each search covers the same area, which is why I've plumped for looking at generic postcodes, so, for example, BS1, SW12, or failing that, an area that's registered by the website. Another thing I've done is to just count - yes, very boring - the number of properties in a, say, 25K bracket - but again, over time, you can build up a picture of how houses are being priced and at what end of the market. It's a bit fiddly, but well worth the time to do. PM me if you want further info - I'm assuming most people on here work with data on a regular basis but I'm happy to go through things if you want me to. As you can tell, I don't get out much. I'm looking specifically at three distinct areas - all 2 or more bed flats and apartments in the BS6 area, all 2 or more bed houses in the BS3 area and also the same criteria specifically in the Fishponds area. In all cases the price range is 100 - 350K. GT.

Rather than using Property Bee for looking at specific properties, I decided to use it as a trend tool for monitoring the overall rise or fall of asking prices in three areas of Bristol. Yes, you have to do a bit of work with Excel but it's not that stressful to manipulate. Anyway, put in the criteria for each, and then let it get to work. Organised the data and did some basic averaging. I originally decided to do it once monthly, but, seeing the drops over the last few weeks, decided to try it again last nite, same search criteria, just for the hell of it. The results: an increase in the number of properties on sale by over 10%, but also a fall in the average asking price by over £2000!! And this in just a two week period. The sample size is around 500, and clearly rising, so it's a pretty hefty lump of data. Things are not looking good out there.... GT.

Went out in Bristol on Thursday evening with workmates for a curry and some pool up round Whiteladies Road. We ended up in a bar along the area popularly known as "the strip". One of my friends knows the proprietor of the bar and we all got chatting. Apart from the fact that there was nobody there at what should have been a fairly busy time, the owner had spoken to a number of his colleagues who had bars and pubs along Whiteladies. The general feeling was that this is the quietist that it's been at this time of year since 2000. Nobody doing good business, lower sales, and huge numbers of drinks offers not really helping either. Lunchtime trade has also been significantly lower too. I also walked past a lot of places along there with hardly any punters in at all. Yes, it was a Thursday eve, but really did think at this time of year that things would be a lot busier. Don't think that many of them have put two and two together, but it does seem as if the wheels have started to come off, certainly much quicker than I expected. Judging by the speed of everything unravelling, we may well be in recession by the end of this year. GT.

Well, just come back from a day out and had a chance to sit down with a cuppa. Jeez I've missed all the fun haven't I? Having read all comments and the article itself I can only conclude that the balance has now inexorably shifted. Clearly we've moved to anger phase with the VI's and their now ramping up the vitriol against this website and anyone else who might just want to quietly suggest that HP's are not a one way ticket. Along with the days when the credit markets dried up, the run on Northern Rock happened, then the Bear Stearns bail out, for me, this has now been added to the list. I really think this represents the day when people started to wake up and understand exactly what's happened over the last six/seven years, but more importantly - WHY! I can't for a second believe that all the posters on there are here as well, so for some people clearly the realisation of what's about to hit has registered. It also shows the depth of feeling there is in my generation especially about what's happened to the housing market and why so many people feel powerless to do any more than work, then party and drink it all away. Kirstie and Phil will become the sacrificial lambs for the general public to spit roast, but it's the central banks' responsibility for lowering rates too much causing the initial credit surge who should be held to account. Lax financial and self regulation compounded the problems and this is where we've ended up. The TV property porn angle was really the icing on the cake, but dragged far more people into the mix than should have been the case. Throw in most of the populace having no real grounding in finance and economics and you have the recipe for big problems dead ahead. GT.

bear_or_bull - fantastic post, and I agree with pretty much everything you've said. Took the test and came back as a mildly left wing libertarian - which was what I suspected. Was also surprised at the number of questions where I strongly agreed or disagreed. Clearly being on this site has given me, a bit of a fence sitter at the best of times, some gnashers. GT.

One thing everyone has forgotten - the reason why all the speculation has happened in the first place, regardless of salary multiples, proof of income, greedy bankers, Basle rules, BTL'ers, interest rates etc etc etc. Simply tax capital gains on ALL property sales. As an example written on the back of a fag packet:- Nil for property sold under 100K. 20% on property sold between 100 - 250K. 40% on property sold between 250 - 500K. 60% on property sold between 500 - 1M. 80% on property sold over 1M. Yes, a bit draconian, but that would take the steam out of things a bit. Easy really. On the subject of salary multiples:- should be part of a credit assessment with verifiable proof of income in all cases. Also think there should be a mandatory yearly review between the bank and client to assess if there will be any issues in circumstances or payments. 3.5 x single and 2.5 x joint should be the standard but with flexibilty at the top and bottom 10% of the income scale to take into account special cases/high earners. Banks should be going back to standard lending practices in the vast majority of cases. The whole deal with, if IR's are at 5% then 6x salary can be done is OK if you happen to believe that Britain can be immune from world events and f*** ups that the government makes at any time. It's lazy ignorant dangerous nonsense. GT.

I've put 5 - 7 down. We've got a long way to fall from current highs. If wage inflation really kicked in it would be over in less than 5 but I just can't see that happening at the moment. Despite the possible doomsday scenarios over the pond and our own banking issues, we'd have to have a major bank run to really elongate the downturn. As has been seen, Govt and the BoE will throw everything at the situation to make sure this doesn't happen. When to buy back in? Well, I did put as soon as I can afford it, but that would be based around the standard 3.5x multiplier. Hopefully a large deposit would mean I'd only need a mortgage on no more than twice my earnings. Wishful thinking eh? GT.

A quick ready reckoner on what the next twenty years holds. 2009 - Fear 2010 - Panic 2011 - Anger 2012 - Despair 2013 - Humiliation 2014 - Capitulation 2015 - Resignation (BUY HERE - AFFORDABLE AT 3-4x EARNINGS TILL 2020). 2016 - Acceptance 2017 - Pessimism 2018 - Caution 2019 - Optimism 2020 - Satisfaction 2021 - Happiness 2022 - Glowing (UNAFFORDABLE BY RATIONAL MEASURES TILL 2034). 2023 - Clever !? 2024 - Smugness 2025 - Arrogance 2026 - Euphoria - (STR HERE IF YOUR BRAVE ENOUGH). 2027 - Denial 2028 - Fear again. So, between 2015 - 2020 then...and yes, houses will be affordable again, I wouldn't worry about that. Happy? Good. Glad that's been cleared up. GT.

Agreed - again, investment is about protecting purchasing power, not making money as such - that's a bonus. Everyone looks at it the wrong way. You have to forget the numbers and look at what's real. Still don't know whether to plough a bit more money into gold - to me if looks like it's on a knife edge between going to $1000 or being knocked back to 800/850 or so. If it does climb further then it could go to $1500 very quickly. Hang on, haven't I just contradicted myself? Choices, choices. GT.

One other thing that I forgot to mention is that I still believe we'll have a short period of stagflation which started mid 07, and this will conclude sometime around 2010 when demand for most things will fall off a cliff - cue deflation and recession followed by a long period of soul searching and general stagnation of everything. As to when it will end - well, I've got 2015 down as the date for house buying. GT.

If Britain has done something well since the last war it's to adapt and change to the circumstances in the global marketplace. We're no different to America in our own way, and, while we may only be a fifth of the size, we will always punch above our weight. We're never going to rule the world again, by fair means or foul, but, take all the dross away, and it's still a great, diverse, tolerant place to live. That will never change. It's the island mentality that tends to keep people here, or pull them back. As for what things will be like - well, I think we'll all roll back to the way things were in the late 90's in terms of quality of life, house prices, yes, things will be more expensive, but generally people will manage - as has been mentioned before, those on the margins will get badly burnt, and, that will include most of the working/benefit classes and the lower middle classes, as has always been the case. To say that Britain will turn into some kind of disenfranchised, totalitarian state though is pretty wide of the mark. When recession comes, most will be found in the pub drowning their sorrows, which will cause issues all of it's own, but that's another story. No one will feel like protesting or rioting because they just won't have the energy for it. As happened with me, most will realise that their anger can't be directed at anyone other than themselves for being stupid enough to get themselves into such a pickle. I'm actually pretty hopeful that once recession comes and goes, (which will be a long, slow grinding process - it won't be anything else), that, as the mid/late 90's showed, we'll move to a new model of how to live which will bring all the same aspirational stuff, changes of culture and music we've had before - and then the whole thing will kick off as before. Rinse and repeat. GT.

Holy £%*!! Bear porn of the highest degree. I think I've just gone blind! Well, on that basis, I stand corrected. Frizzers - any idea where this graph is going to bottom out? Looking at the two previous recessions they seem to differ in the amount that gold has gone from peak to trough. A conservative estimate would have the gold/hp ratio back to something like 250-300ozs for houses outside of London. This taking into account the size of boom we've just had of course. GT.

Bull trap primed and ready for action! The 05 rate cut wasn't really designed to be such a thing, but did indicate the ludicrous lack of understanding about all things economic that most people have. We've been in the trap since just before the credit crunch - although food and energy prices are rising this won't really filter through properly till late Spring/Summer when the accumulated rises start pinching peoples' pockets. At the moment, it's just an inconvenience. I'd also hazard a guess that the amount of credit available by most mainline banks will be drying up too - then stagflation will appear for the majority of people. I'd predict that by Q3 all news will be truly bad regardless of where it's come from. The only people immune will be those with large MEW funds they've held onto, STR'ers and home owners with no mortgage overhang. GT.

Like Starcrossed, I believe we're looking at an ultimately deflationary scenario. There is too much debt swilling around in the economy which will be log jammned into higher commodity prices for a while - but not long, two yrs max and this has been happening since mid 07. The prices of general food, and, especially tinned goods are now rising quickly. Both the Fed and BoE know their powerless to prevent the downturn and are now only concerned with trying to contain the fallout. As I've said before, and am tired of repeating we will only go hyper if wage increases are fed through into the economy. Otherwise it's stagflation and this will only end when demand starts to fall and unemployment and repossessions really start heading north. Once complete - deflation sets in, regardless of if IR's are kicked to the curb. Stagflation is the struggle between paying your debts and being genuinely productive. And, as far as I'm aware, the UK has not been "productive" in the wealth making sense for the last twenty yrs or so. Wasn't the case in the 70's as we still had a solid manufacturing base and trade surplus. Not now. The inflationists are correct up to a point, but are only looking at the technicals, not the psychology, and this is what will determine ultimately what happens here and in the US. Yes, gold is a good bet on a depreciating currency, but the only way to keep the system going is to stop it breaking down, and that's what hyperinflation does. Deflation hurts, but it's merely the reset button, nothing more. I still believe people are reading far too much into the Bernanke helicopter drop scenario - either that, or he really does believe that he can control how people behave and markets act, and as has been seen in the last few weeks, he and the Fed cannot. He's an academic - that is his raison d'etre - never forget that. GT.

No, of course, you're completely right, I was still laughing when I wrote it and didn't have my brain engaged. My point was a more general one that it doesn't really matter what age you are now, we're all getting debt whether by CC's Bank Loans, Mortgages, whatever way you want to get your fix. If you're, say 60 years old with no mortgage and a shed load of equity but a high amount of credit card debt, you can MEW out to get rid of those debts; yes, you've still got the debt, but your credit score would improve.... or get worse - I'm confused now . The scoring fails to take into account the overall financial situation (in monetary terms) of a person but just states that because you're a home owner this makes you a better risk than someone who's decided to rent because of their lifestyle, work, personal beliefs - which is basically rubbish. To make it far more relevant and accurate it needs to take into account your o/s mortgage balance - if you have one, and savings - if you have any. GT.

Yes of course, the more debt you consume and the more cards you CAN actually make payments on, then you continue to provide good service to the CC companies and your rating shoots skywards. It doesn't even matter if you're earning that much. But I agree with a few other posters on here who've already said no wonder we're all in such a mess -this pretty much sums up the debt culture. Surely if you have a clean record, no CC's and a decent income then you're rating should be 1000 and then come DOWN in proportion to the amount of debt and cards you have. Perverse, but, there you go. Oh, and your age should have no bearing on this either. Debt is debt whether you're 33 or 133!! GT.