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Tommy

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Everything posted by Tommy

  1. Not quite, people have been expecting this bubble burst to occur any time soon since "the end of 2003 - beginning of 2004" ! So far since the beginning of 2004 the market has slowed down a bit, but there has been no crash yet. The market might continue to slow and eventually stagnate for a few years or it might actually crash. The only thing that is certain is that so far it has not been following the HPC script to the letter.
  2. An investment usually involves risks... If you open your own company, you have a high level of risks. If you invest in the stock market you are taking risks. If you invest in the property market you are taking some risks. etc... Usually the more risks you take the more you can potentially earn. For instance a saving account has very little risks, but low earnings. Investing in stock shares is much more risky but could potentially give you very big earnings. Investing in property has proved to be low risk in the long term. In the short term it can be a bit risky however.
  3. > - negative savings Not necessarily true. It's not too hard to find a way of investing money that gives you more than inflation, especially if you exclude HPI from the inflation figures as well. > - static wages what do you mean by static? > - rising unemployment yeah, it's rising but it's still not at a worrying level > - rising interest rates it depends where they stop. Again 5.25% - 5.50% is not a worrying figure, but 6% would start to be... > - rising inflation inflation has been very very low in the past few years, so rising from a very low point is normal. The big figures we were given recently are not final yet, we will have to wait until the end of the fiscal year. I am not sure they will be above 3% (CPI) by the end of the year. The economy is probably slowing, I agree, but recession might be too strong a word! Recession is generally defined to be a decline in GDP (gross domestic product), the GDP might increase less this year than last year, but I have serious doubts it would actually decrease even if you took HPI out.
  4. Some agencies reported RPI in march to be 4.8% annual. So your ISA needs to be >4.8%.
  5. Considering: - salary increases - changing company - promotions / new positions I am my girlfriend are both well above RPI on average.
  6. All the Germans I speak to do tell me that it's very hard to get a mortgate to buy a house. Most people rent. Having said this house prices are much better than here. Can you clarify this?
  7. I do not understand what you mean. Not true: Thu, 02 Feb 1995 6.63 Wed, 07 Dec 1994 6.13 Mon, 12 Sep 1994 5.63 Tue, 08 Feb 1994 5.13 Tue, 23 Nov 1993 5.38 Tue, 26 Jan 1993 5.88 Fri, 13 Nov 1992 6.88 Fri, 16 Oct 1992 7.88 Tue, 22 Sep 1992 8.88 Tue, 05 May 1992 9.88 Wed, 04 Sep 1991 10.38 Fri, 12 Jul 1991 10.88 Fri, 24 May 1991 11.38 Fri, 12 Apr 1991 11.88 Fri, 22 Mar 1991 12.38 Wed, 27 Feb 1991 12.88 Wed, 13 Feb 1991 13.38 Mon, 08 Oct 1990 13.88 Fri, 06 Oct 1989 14.88 Fri, 08 Sep 1989 13.75 Mon, 04 Sep 1989 13.88 Thu, 31 Aug 1989 13.84 Thu, 25 May 1989 13.75 Fri, 25 Nov 1988 12.88 Thu, 25 Aug 1988 11.88 Mon, 08 Aug 1988 10.88 Thu, 21 Jul 1988 10.38 Thu, 07 Jul 1988 9.88 Fri, 24 Jun 1988 8.88 Fri, 10 Jun 1988 8.38 Fri, 03 Jun 1988 7.88 you can see that before the crash in 1988 it was 7.38%, the crash starts with interest rates at 14.88% towards the end of 1989. when the crash ends in 1995 the rates are about 6%. notice that in June 1988 some people bought a house with ir at 7.88 (maybe stretching themselves). Just a bit more than a year later, with interest rates at 14.88% their mortgage repayments almost doubled! Trust me, this can be a very good trigger for a crash. I am sure it's not the only reason for the crash (there are reasons why IRs have been increased in the first place), but it's a very good reason. I am glad we both agree a 15% is very unlikely in the current near future.
  8. > they're all working down t'pit or on the rhubarb farm again you want to paint a picture that it is much worse than what it actually is. In 2006 the uk average weekly pay was 447.1, in south east 470.1, south west 417.0. In yorkshire and humber 412.4, not very far from south west. The only big difference is compared to london which has 572.4. [http://www.statistics.gov.uk/pdfdir/ashe1006.pdf] So the picture is not as bad as you describe it!
  9. no. wage inflation is important but it in proportion to interest rates it is far less important. from 5% to 15% interest rate: your monthly mortgage trepayment riples (interest only) from 5% to 15% wage inflation: you salary incease is three times as high, not the salary itself. So you find yourself earning 15% more but having to repay 300% more. Also wage inflation during the crash of the 90's was certainly higher than now, but not as high as in other years.
  10. I never said Headingley was a bad area (and not even Burley). However, I doubt that Kirkstall is much nicer than Armley. Again it depends what part of kirkstall and what part of Armley. Overall I think they are pretty similar. Chapel Allerton is quite nice, but it is not as close to town as Kirkstall, Wortley and Armley, so it does not break my logic. Yeah pudsey is not particularly nice, but it is a nice area. Would you put it in the bad area list? I do think Armley is much better than Hyde Park, and I think it is about the same as Kirkstall. I do not think this because I have bought there. I have always thought this, even well before buying there. The "scummy wasteland" you are describing (your words not mine) has seen a decent house price increase and if I was to sell my house now I would be in profit and as I have said my neighbour has just done so and he's a proof of that. I am not here do defend Armley, which I do not even particularly like and I have put it into the "not very nice" list myself. I just think you're describing it much worse than it actually is and you are saying that you lose money if you buy in Armley while all the people who have sold in my area since I have moved have actually made money. There are much better places to buy in, I agree, but you are taking it too far...
  11. In Feb '94, towards the end of the crash they were 5.25% like now and a year before the crash started they were around 8%. I do not agree with you. I do not think that 15% now would be the same as 30% at the time. At 15%, people would pay 15% interests, full stop. I agree with you that a 30% interest rate would have devastated the market much more that a 15%, I just have no idea how you've come up with your 30% figure ( a wild guess with not logical sense ). No! You have not read the previous posts. I have never claimed this! I am sure that if the rate was 15%, this would cause a huge house price crash. In fact my example was: - 15% interest rate - 50% house price crash (the 50% figure was just an example) Someone just said that the house price crash would be much higher than 50%. I disagree. I think 50% would be pretty much the worst you could expect. In the 90's they fell by ~18%, so my 50% was already a wild number!
  12. Yeah, I totally respect and understand your view. Time will tell, that's all I can say. For now all I can tell you is that people who predicted a crash in early 2003 and decided not to buy have probably made the wrong choice as house prices have, since then, increased so much that a HPC is very unlikely to be able to bring prices back to what they used to be in 2003. So I think that someone who bought in Armley in early 2003 is better off than someone who decided not to buy. (I did not buy in early 2003 though). People who are not buying now because they fear a crash might be doing the right thing, depends on what is going to happen, only time wil tell... So I respect and understand your views.
  13. Leeds is full of "not very nice" areas: - kirkstall - bramley - armley - wortley - harehills - crossgates - beeston - seacroft - hyde park - etc... The nice areas are mostly further away from town: - adel - alwoodley - horsforth - pudsey - shadwell - etc... so, in leeds, if you say that the "not very nice areas" are having house price increases it proably means that most places in leeds are having house price increases. I know Armley is not the best area around Leeds, but it's close to the city centre, easy access to all motorways and it's going through a decent (but slow) regeneration scheme. What is more, houses are affordable. Also there are parts of Armley that are not bad at all (and others which obviously are). I am much more happy owning a house in Armley than to rent in Alwoodley, and I do not think that Armley is necessarily a bad long term investment.
  14. I think you've problems and you should seek advice ;-)
  15. a 3 bedroom terraced house with a small garden in the Armley area.
  16. No, during the crash that started in 1989 interest rates peaked at 13.88% but house prices only fell by ~18% during the whole period! I cannot see how house prices could ever fall by 50% and you're suggesting they would fall even more?!
  17. My neighbour has bought his house in March-05 and has just sold it for 8% more than original price. This is a very small increase for a 24 month period but it is not stagnation. If you factor-in inflation it would still not be a complete stagnation. This is just a bit less compared to what the nationwide calculator says: "A property located in Yorkshire & Humberside which was valued at £100000 in Q1 of 2005, would be worth approximately £112471 in Q1 of 2007."
  18. Ok, I do understand your view. My only comment is that many bears wish for things that would in fact turn out to be bad even for them... For example imagine if interest rates went up to 15% and house prices fell by 50%. Because of the higher interest rates houses would still be less affordable than they currently are now. What is more you would run the risk of finding yourself unemployed. If you are very lucky (from your perspective) house prices will fall, interest rates will not rise, unemployment will also not rise and wage inflation will be extremely high. This is usually not the way it goes however. I am certainly not a bull, but I am also not a bear as I do not think that a house price crash would be a good thing (but I also do not want house prices to continue to rise forever. I hope and think that we're heading for a stagnation).
  19. House prices in Yorkshire have not increased as much as in other parts of the UK, but they have certainly not stagnated completely.
  20. So you think that a high number of repossessions and a high number of people struggling is good news?!
  21. I think the mean average wage is about 24k at the moment. Tommy
  22. I have heard people say not to buy because a crash was imminent since 2003. The average house price in 2003 was: 119,938 The average house price in March '07 was: 177,083 since then they have increased yet a bit more. If we were having a crash tomorrow it is very unlikely that the price of the average house would go down to 119,938 again. So people who did not buy in 2003 and are still waiting for a crash should have bought back then (easy to say it now, i know!). - if you buy now and market crashes... you could have bought after the crash for much less - if you wait for a crash... a crash might never happen. Prices will not continue to rise forever, but they can still rise in the short term and then they could stagnate. So it sounds like a bet. You can bet for the crash and not buy. Or you can bet for more rises in the short term and then stagnation and buy now. In 2003 it was very clear that house prices could have well continued to rise for a few more years. Now it is very unlikely they can continue for much longer, so it would make sense to wait... but wait for what?! I think the best option is to make a smart buy now: - buy a property that needs a bit of renovation, that is close to something exciting that is about to come (new tube station, new shopping centre, new grammar school, etc..) This type of house is likely to rise in value even in the event of a small crash. But do not take my word. You have to think it through yorself and come up with your own plan. Tommy
  23. in the crash of the 90's rents were generally going up (while house prices were generally going down). Tommy
  24. Bradford is going through a massive regeneration process... Maybe in half a decade it will be much nicer... Tommy
  25. Just squeeze three students in the same property ;-) Tommy
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