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Posts posted by Jonnybegood

  1. I can understand your argument here and also see it as distinct possibility. However, your characterisation of it as occurring in the context of economic growth seems rather odd. What you have described is economic contraction.

    Either the world economy stagnates or even contracts. In which case the price of oil is held down (for a time)

    Or, the world tries to grow again, in which case the price oil oil will go ballistic again

    Energy efficiencies will only slow the speed of contraction.They can't halt or reverse it.

    Economic growth can happen with companies taking a greener approach, at the end of the day cheaper energy costs improves a companies bottom line.

    Since oil went above $110 our company has taken steps not to get caught out again, electricity costs for us were huge, now we have wind turbines (Partly funded), all our PCs shut down at 7pm every night automatically, lighting now on sensors, all company cars going forward are hybrids.

    There are other measures also being looked at, we have been told the above steps are going to reduce our pull from the grid by 55%.

    Now if this was repeated over and over then future oil / energy demand will be down and from our point of view it will in no way hinder our productivity when the recovery comes.

    On a purely oil related saving, travel is now the last option, all meetings are held via video conferencing unless absolutely essential.

    The economies will still grow, just with less demand for oil as weaker less green companies / industries go to the wall due to rising energy costs, i think we would all be foolish to think that oil will last forever and never increase above $100 again.

    Its all about being fit for the future

  2. Was having a look around Stratstone Land Rover Cardiff on Saturday and was suprised by the number of people test driving and having a look in the various vehicles on display.

    Now all the media reports point towards a fall in demand for new vehicles and the problems LR have been facing recently, very similar to the reports on housing.

    But still people have an attraction, they know a new vehicle falls in value and possibly even more in the current climate, again just like housing in the current climate but people do not seem deterred, yes numbers are down as we all know car sales are down but you still get those who want to buy no matter what the economic environment.

    The LR dealership had some good deals, £2k off list price etc, again just like the 10-15% people are reporting to see off houses.

    Just like people returning to the forecourt to pick up a vehicle reduced by a few thousand they are returning to EA now houses have fallen 10-15%.

    My point there are buyers at all levels, everyone seems to have a trigger level they set themselves, once that level is reached they buy even though they know further falls cannot be ruled out, and with vehicles this is almost 100% guaranteed.

    One other thing, posters on here tell others to put in cheeky offers of 30% off peak prices, I did'nt see or hear anyone ask for 30% off a new car even though it is guaranteed that the same car is going to be worth 30% less in a couple of years.

    No problem with supply here, around 15 unregistered LR's lined up on the forecourt, but no chance of getting 30% off list price even though I could show the dealer hard facts that the same vehicle is valued at 25% less in 18 months.

    And don't tell me that these cars are not overvalued, so what makes people think that sellers will reduce their house price by 30%, when I cannot get even 15% off the price of a new LR.

  3. I think we are in for a short spike in the price of oil towards the end of the year $100 before it falls back to $40 and remains there for the next 2-3 years.

    The last decade has seen an exceptional boom, even when we get a recovery I do not think things will get back to pre boom levels, vehicle production will be suppressed for a number of years with more greener fuel efficient vehicles coming on line.

    Industry worldwide may be reduced by 15% as many companies do not seen through this downturn, China, Russia, India are getting badly hit, companies are going to be more cautious going forward.

    When fuel prices went above £1 then car sharing became more popular, public transport and cycling seemed more attractive.

    Car useage quickly reduced 15% here, even though many of the greener fuels and energy sources cannot completely replace oil it will help us lower our reliance on it each year.

    I can see demand for oil over the next decade decline by a large amount keeping it from going above $100 a barrel even though supply will also weaken.

  4. So in other words you are wanting us to buy your story and buy property.

    It is quite the opposite actually, many are waiting for prices to fall and moan about the high price of houses.

    I think it is the consensus that buying a house is not the problem its the price and the amount of debt you put yourself into in doing so.

    I was pointing out that whilst many keep waiting for these prices to fall and fear that buying now will see much of their equity wiped out that there are other alternatives and in the current volatile market place there are opportunities to make enough cash to offset any further falls in house prices and enable many to pay down a larger part of the property from day one allowing them to reduce the amount they may need to borrow.

    An example of a FTB property costing £140k at peak may now have fallen to £110k (20%) if you believe the stats (With low volume of sales should be taken with caution) now someone waits for this same property to fall a further 20% = Total fall from peak of 40% (very unlikely on a FTB property in the current market and could take another 2-3 years to be realised) gives a further reduction of £22k from todays prices.

    Having invested in the same portfolio as myself over the past 4 months they could now be looking at a 100-150% profit on £20k deposit a return of over £20k hence they could buy now without waiting for any further falls (that may never happen) at a good IR and no longer having to pay rent.

    Its not for everyone and I am down on some of my investments, but spread the risk and overall I am up 135%.

    Its not all about waiting for house prices to fall, when people say houses are overvalued and the stock market is going to fall it does not mean its not a time to buy as long as you have a clear direction of what you want out of your investment.

  5. Lets forget about long term because for me and many others out there its the here and now that counts, I personally have to many other things going on in my life to worry about 15-20 years down the road, and since I took this decision to change my thoughts to short term my personal finances have blossomed.

    I have used this site on many occasions to guide me, but usually opposite to what is preached and its worked.

    I am not gloating just giving everyone some true facts:

    I have no BTL property but will be looking to enter that kind of market within the next couple of years, the last family property I moved into was 2003 and currently have approx 70% equity.

    My most recent purchases of Legal and General, Lloyds TSB and RBS shares along with Taylor Wimpey have generated enough profit to cover any of the equity that is removed from my property over the next few years.

    Why did I take the steps to purchase these shares, because many on here warned against it, the FTSE will fall to 2000, we are a long way from the bottom, then it suddenly rises just like the current property market and its called a dead cat bounce.

    So what if it is a dead cat bounce, I have gotten out with substantially more than what I invested, enough to cover a possible decrease in the value of my property for the next 5 years, its called winning and losing, spreading the risk.

    People on here have been predicting that house prices would fall from around 2004, but they did not until late 2007 and even now early 2009 the falls that people on the streets are seeing are far less than the official figures and still struggling to get sellers to lower their prices, all the while I have been buying into these failed financial institutions and making enough money to clear off my existing mortgage and should have enough spare cash to buy a BTL when the right one comes along at the right price.

    A FTB with a £30k deposit having invested into the portfolio I used the last 4 months would of been able to now put forward a £80k deposit, instead followed the advice of many on here and is probably still waiting for that further 10-15% fall before entering the market having secured the house for £20k less than todays prices.

    Some of the advice on here is good but you have to filter out the c**p and see whats right for you personally, everyone has their own agendas like saying do not buy now, hoping this will force prices down further, but what if they do not fall that much further and you have paid out in rent for another 2 years, maybe your in a position with a good deposit and good mortgage deal and a house 20% off peak prices in the right location for you, then go for it, it suits you!! If you lose another 10% then hard luck but you still have a house that one day will make up that 10% and a very low IR, if it goes up value then so what?? Unless you sell you will not realise this gain anyhow, so just see the family house as a home and not an investment vehicle and you will be fine.

  6. Or a third option, stinging honest bill payers with enforced metering/rationing.

    Every little measure is a sign we're living in an increasingly backwards country with continually falling standards.

    It will get to the stage where more and more stick their fingers up and refuse to pay, especially now when households are under so much strain.

    Next it will be the TV license and then the council tax, lets be honest our prisons are full, our police are stretched, our government is in disarray, if enough people do it what could they actually do?

    Our infrastructure would quickly collapse.......

  7. There are people out there that just love owning property.

    To some it becomes a did of an addiction, a way of passing time for those with more money than sense.

    I was having a coffee this evening with a friend from work who was telling me about her nephew, a self made millionaire who made his fortune selling on refurbished telephones from multinationals.

    She was telling me that Christmas time was the first time she had seen him in 2 years, he owns loads of property she said and enjoys driving around pointing out what he owns, told her that he prefers to have his wealth on display than simply tied up a bank behind closed doors.

    He does not seem like one of these big headed landlords or anything, he actually sounds like a nice chap who has worked his way up through the system and now reaping the rewards.

    I think there is alot in this, some people just like to own a number of properties, it makes them feel secure and like in control of the monopoly board, buying at different stages to offset different losses, i personally know of a few landlords who have continued buying and selling right through, some with portfolios of over 30 properties.

    Buying when property was £60k on average and buying when property was £185k on average, spreading the risk.

    There is also the social side to it as well, when we went to watch Wales V Scotland this year we stayed at a friends apartment in Edinburgh, he drinks at the local and just loves giving us the keys to his prime penthouse in the centre of Edinburgh and coming back telling everyone how nice it is, he gets a real buzz out of it, something he probably would not if his money was tucked away in an account somewhere.

    These people have money and are still around and will keep buying, even more when prices fall to offset the higher priced purchases made a few years prior.

    Its like a bug for many

  8. Without reading through 20 pages of posts, I feel its a pity that a social system that this country could be proud of has been abused and abused to the point that in many cases it makes you feel that working is a pointless exercise.

    There are youngsters out there today leaving school at 16 and then living off the state by the time they are 18 with no intention of working, bang out a few kids and way set up for life in a nice 3 bed, do a bit of work on the side and rent a nice private property in a nice area for 40% of its true rental value with the rest paid for by the state.

    More kids = More money - What bigger incentive is there to have more kids that you cannot control.

    I have my thoughts that I will keep to myself, but lets just say that large parts of Nazi Germany spring to mind

  9. Of course approvals are up on the historic lows we had over the winter. Did anyone believe they could go less than that, especially as we enter Spring? Fact is approvals are still down about 50% on a year ago, and even then approvals were down massively from Feb 07. Recovery? Only in the bull's wildest dreams.

    I don't think anyone is saying recovery, but stabilisation in the market is now a possibility 4-5 months from now based on this increase at a time when market activity should be in its most active period over the next few months.

    Even stabilisation to a bear is a bad sign as it points towards a bottoming of the market not necessarily a complete turn around and a sudden increase in prices.

    I would be very surprised to see this figure under 60k by summer end

  10. That would be me and it is about 60K approvals to just stop declines in house prices.

    Going on the current figures we could be at 60k within the next 4-5 months, which does come at a time of the most activity in the housing market anyhow (March - June).

    I think we are certainly at the peak of MOM house price declines, 2% per month is not sustainable and I expect to see smaller MOM declines from here on as approvals start to increase, I really do think this is a turning point.

  11. Chief economist at the BoE says recession will be over by end of 2009.

    I personally think it will be coming to an end in the US by the end of the year (Sept/Oct) with the UK as usual 12mths behind, so I think realistically the UK will not see the gloom and doom gone until mid to late 2010.

    However once the US comes out confidence here will improve and the bulls will be back in the headlines, the ordinary man on the street will see it as the UK recession coming to an end which will in turn get us out that little bit quicker.


    Prices will be suppressed for a few years afterwards with the only gains following inflation

  12. These figures are from February so we still have the (Spring bounce) period to come where activity has always been known to increase.

    38k now, I see no reason why this figure will not continue to increase, I believe many areas / property types are near the bottom of the market, take an inner city apartment at 50% below sale price during 2006, so around 60-70% below peak prices.

    There is still alot of other property that needs to fall further but now see enough at the lower end to attract FTB back, I can speak of Wales as I travel to many areas during the course of a week and always have a little nose at local prices, picking up a FTB property in many parts of Wales is now possible for under £70k (Peak around £110k)

    Add to this low interest rates, lowering LTV and an altogether more stable financial market to 12mths ago.

    Governments doing all they can to support it, which does like anything not happen overnight and will take time to filter through, this should be seen in the next couple of months and I really see nothing on the horizon to suggest that these approvals will not continue rising.

  13. How can these latest figures be anywhere near a true reflection of current market conditions.

    I must point out this works both ways, alot of auction property does not get taken into consideration so many of the lower priced property does not show up in the stats.

    Then you have the volume, some of the counties listed on the LR report are lucky to see 20-30 sales a month if they are lucky.

    I am not sure how they record the data but when prices were rising and volume of sales were high then surely this did give a more accurate picture of the market unlike now.

    Take Bridgend, its the next county over from the Vale of Glamorgan but its fallen nearly 20% and the Vale under 8%.

    Now if its correct that LR data lags by 3 months then a large number of what looked to BTL gone bust type sales in Maesteg and the ogmore vale around christmas time may have thrown the figures, I remember these in the local rag, all sold at around £55k each, some in the same street.(A year ago they probably would of fetched 70-80k each).

    However in Cowbridge and the surrounding areas there is very little for sale, what I have noticed recently is a large number now being let so these do not show on the stats (Any property for let seems to get snapped up pretty quickly as the vale does have limited supply in the nicer areas), if they had been sold it could quite well of been at over 8 percent less than a year earlier.

    So this very low volume of sales can quite quickly change what the figures show MOM

  14. We have always had poor housing, those pre fab things from the 60s with tin sheeting were just awful, however these properties were often designed for lower income households and often when sold priced far lower than solid brick buildings.

    What we have experienced over the past decade is expensive private housing that is of poor build quality with people often having snagging lists with over 100 problems relating to their new build.

    When the housing market was booming and money no object developers were selling property quicker than they could build them regardless of the quality.

    I was over a friends house last night, they bought it new from one of the countries biggest housing developers in 2005 it does look very pretty from the outside and has all they need, 5 bedrooms, utility room, en suite, double garage etc, they paid around £490k for it with part exchange etc.

    I was quite shocked to be honest of the way these houses deteriorate, the brickwork already looks well weathered, leading around the porch seems to be lifting and just the inside seems really tired, they have 3 kids the youngest 5 and with toys and things a few of the rooms the walls look knackered.

    They are only plasterboard and my friend was saying that he has already had to patch up 2 walls were the kids hit them with a cricket bat whilst playing in the bedroom.

    Around the interior doors the architrave looks to have only a couple of years left, splits and cracks everywhere, he told me they have painted them twice just to cover some of the cracks.

    The only real plus point from me was the efficiency of the property, his Gas bill is around half that of mine.

    We have 3 kids and over the years they have banged the house about and still it stands the test, they used to run up and down the stairs, swing on the banister and still its as solid as the day we bought the house, a few squeaky floorboards ain't bad after nearly 100 years and 2 world wars.

    Its worth mentioning that our property has also seen off the great depression and the various other recessions and ups and downs of the market and still today they often sell before many of the new builds that are built locally.

    A proper driveway (20ft), proper gardens (40ft) and living / sleeping areas.

    It will be interesting to see how these recent new builds fair when it becomes a buyers market and more choice is out there and the next phase of new builds improve.

    20 years from now, how will some of these current new builds look and the 10 year warranty has expired.

  15. Near the bottom? LOL !

    First the average person on an average salary of 25k is not a first time buyer but someone in their thirties probably has kids and most often has a partner not working or on a lower salary and often also has credit card debt.

    Your scenario assumes 5x average salary (2.5 x joint) when real normality we are heading to is 3x average salary - so 75k not 125k. Then there's the inevitable overshoot sending us to 66.6k

    Get real, he puts over a valid post.

    He is stating average house prices and average wages, so where does FTB come into it?

    Then you mention credit card debt and partner not working, so I assume you work for the ONS or have a very strange group of friends.

    I can honestly say that in my family and friends circle only around 10% are not 2 income families, only when the husband is earning over twice national wage do I see only 1 income.

    If you think that kids stop people working then you really need to get out, once kids are over 4-5 years old they are in full time schooling, so where is the problem there? You think that women these days just want to sit around at home, they may not work the same hours has their partner but still earn.

    I could go on and talk about social benefits, working credits etc that do not show up in national stats, self emplyed that do not declare real earnings, cash in hand, hobbles.

    Actually I think the national wage of £26k is more than likely £28-29k when you factor in the above.

    Finally, what is so different about me and my wife who earn similar amounts being offers a 3x combined income mortgage instead of being restricted to 2.5x combined incomes or 3x 1st plus 2nd income combined or me buying a property at these drastically reduced prices for 3x income and my wife going out and getting another property on 3x her income mortgage on another drastically reduced property.

  16. Not sure if its already been mentioned as the article is almost a week old.


    EU approves 5% VAT on home improvements
    Lifeline for builders as UK given option to reduce VAT on maintenance and repairs

    The UK is to be given the option to charge VAT on home maintenance and repairs at a reduced rate of 5%, after a ruling by European Union finance chiefs.

    A 5% VAT rate on home improvements was one of the main points of the Get Britain Building manifesto set up by a coalition of MPs and trade bodies last month. It has also been the focus of a long-running campaign led by the Federation of Master Builders (FMB).
    “News that the UK government now has the option to reduce VAT to 5% on home maintenance and repairs is very exciting, as it can no longer blame Brussels for not being able to take action. If the UK government goes ahead and implements the VAT cut

    I can actually see something like this working, many homes in poor state of repair and this will be seen as an opportunity to improve for many at a time when trades men and labourers are becoming cheaper and easier to find.

    Many are staying put and extending, £10k extension or loft conversation suddenly becomes £1k less.

  17. I think its best we all wait for the small print, I have no doubt the time the documents are published this will somehow be watered down and sold in the interests of the borrower and to help protect them from getting into too much debt and over stretching themselves.

    There will no doubt be loopholes and the special cases they mention will probably apply to a large number of borrowers, criteria may go something like, minimum 20% deposit, full employment, no previous ccjs etcs, average earner, working min 2 years with proof of income and references.

    If they enforce 3x single income across the board then new builds would crash overnight and builder after builder would go under, they would of swung completely from one side to the other in one move instead of gradually bringing the borrowing levels down.

    I am not saying they are not overpriced but these 2 up 2 down starter homes not far from where I live are selling for £140k, they are aimed at FTBs and part of a government scheme (Most FTB property goes for £160k), they would need to fall to £70k just so they are mortgageable, it would be a complete joke, 18 years ago they were selling new builds of similar size 2 miles down the road for £58k and I know for a fact that the developer paid 5x the price for the land compared to 18 years ago.

    2 sold last week, how could the government with one piece of regulation be allowed to wipe out £70k from a FTB property that is being backed and promoted by the government as a cheaper alternative, some have the 50/50 shared ownership, that would instantly be wiped out.

  18. circumstances my dear watson, circumstances.

    the "rules" were rule of thumb.

    the pain we saw in 2007 when rates were only at 5.5% was caused by lending over the guide.

    if your argument was correct, there would have been no pain, no crash, no bailouts, no bank failures and so on.

    All the documentaries I have watched lately on repossessions and people getting into difficulties is when the household only has 1 bread winner and they suddenly lose their job.

    These are often self employed or bonus related jobs where they have been given mortgages of 5-6x single income based on potential earnings that may only happen every few years.

    I see nothing wrong in giving a 2.5x joint income mortgage to a couple who have secure jobs with good credit history and stable earnings, like my example of a couple with 2 kids and between them earning just under £100k, how can you ignore someone earning a second income of nearly £50k.

  19. Why the big fuss about second incomes, illness, babies etc.

    A few scenarios -

    An unmarried 32 year old female city lawyer earning £80k per annum wants a mortgage for £240k with LTV of 85%.

    Yes or no? She may have a baby next year? She may fall ill? She may get the sack? She may want a less pressured lower paying job?

    But its ok because she is still only borrowing 3x income and earning a good wage with good career prospects and future earnings.

    A married couple in their early 30s want a mortgage, 2 kids aged 5 & 7.

    He earns £50k as an electrical engineer and her £45k as a deputy head.

    They want a mortgage of £240k with LTV 85%

    Yes or no? Not much chance of any more children, both have good jobs and higher than average earnings, secure relationship.

    Their mortgage would be 2.5x joint incomes, if one of them falls ill or needs to have time off work then at least they do still have a second income coming in, unlike the 1st scenario.

    Finally FTB, early 20s earning £20k per annum wants to buy a house with his partner who also earns £20k.

    Wants a mortgage of £100k with 85% LTV.

    On his own max mortgage £60k (3x income) with partner £100k (2.5x income).

    What is the difference between 2 people buying a property together and a single person buying alone? Especially when both persons are earning similar incomes and buying together gives a lower multiply.

    I think that is what this article is about, 3.5x single income or 3x joint and I see no more risk in giving a joint mortgage compared with a single mortgage.

    People mention women going off to have children, how about gay couples? Couples who have no intention of ever having children, surely in this day its discrimination against high earning couples who want to buy a property suited to their incomes.

  20. There is lots of regulation regarding the building of houses these days, insulation and energy efficiency being a big one.

    You can go and buy 20mm thick kingspan and it will cost a fraction of 50mm as 50mm is what is usually required by law and these companies know this keeping prices inflated.

    Plus there are regs regarding ventilation, windows, electricity, gas and sound proofing, a friend of mine who built is own home 3 years ago with minimal outside help said the only thing he under estimated the cost of was insulation, it was needed everywhere, even in the walls between the bedrooms to increase the soundproofing.

    Still says its hard to build a good sized detached 4 bed for less than £70k and thats with a timber frame, it took him the best part of 6 months to build it, if he had majority of the work done for him then he would of broken £100k easily.

    Don't forget about the extras todays houses have, en suites, utility rooms, cloakrooms, I know they are naff but they do add cost to the builds

  21. Why do bulls always assume that when prices stop falling they will immediately start going up again? The likelihood is that when [rices do stop falling there will be several years of stagnation as per the 90s rather than an immediate rise.

    I don't for one minute think that prices will suddenly start to rise the moment they hit the bottom and get back to boom prices.

    What I do think however is that prices will over shoot on the way down by around 10% (Especially at auction) this will quite quickly be regained and prices then settle at a genuinely lower level for a number of years just following the rate of inflation (Wage inflation plus 1-2%).

    Even though there is talk of tighter regulation, I really do think that these multiplys 3.5x income are from a time gone by and 4x income with potential future earnings built into the equation will be the new acceptable way forward.

  22. Since property prices began to fall the media has quite rightly been giving us bad news after bad, a massive contrast to a couple of years ago and the feel good factor, prices up 10% annually, more jobs being created, record profits for companies etc etc etc.

    So where will the first piece of good news (or bad depending if your a bull / bear) come from?

    I expect a pick up in house prices around September of this year in many parts of the US along with an increase in the oil price a good indicator of the world economy, and has many (especially the media) believe that whatever happens in the US economy will be replicated here 6-12 mths down the road will this be an early sign that the world economy is stabilising.

    Will this sort of news give the signal we are almost at the bottom here and along with houses will many start to return to other investments and financial institutes be happy to lend.

    From what I have seen in many markets over the years its confidence that drives much of it and its clearly lacking at the moment, nobody can say we have had any good (bad) news in the past 2 years to give any confidence.

  23. I really cannot understand these figures, why Bridgend is the only county (remember Bridgend is not just the town its the county which does spread over quite an area) in Wales to make the list.

    How about blaenau gwent & merthyr? I remember looking at last months LR reports and these areas had the biggest falls.

    Bridgend does cover the valleys as well, Maesteg, Ogmore vale, nantymoel, so maybe its these areas pulling down the prices as in Porthcawl, corntown, Troes, coity still seem to be holding up well.

    I think with prices falling in Cardiff the appeal of Bridgend is falling and people are moving more towards the city, this 20% is just the froth from last year, although I do struggle to see anything more than 10% off since peak in many areas.

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