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House Price Crash Forum


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About paolo88888

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    HPC Newbie
  1. I wrote the script for this video the intention that it should have just enough Credit Crunch to justify a link on this website! Enjoy! http://www.youtube.com/watch?v=Jz2DrPNUots&hl=en&fs=1
  2. Where I live, the plot cost for a detached house is well over £100k. Depending on whether the planning permission you could get would allow a larger replacement house, and the flood risk, £80k may be a good price.
  3. To bring HPC back into the topic, I remember the following question being posed by a reader in my local paper around 1989, and the answer given by the newspaper : Q: If wages are only going up at around 10% per year, then how is it possible for house prices to be going up at 30% a year? A: Because you can get a mortgage for three times your salary. The moral of the story is that when someone gives you a percentage, always ask what it is a percentage of. The confusion here is that the answer only works if the house prices are going up at 30% of a salary, but the questioner meant that they were going up at 30% of the price of the house. Soon afterwards, they stopped going up at all.
  4. I thought the idea of sale and rent back is that the sale of the property clears the sellers debts, so immediately after the transaction they are debt free. If they continue in profligate ways and then become bankrupt, would the official receiver really be able to unwind transactions from a time when the seller was solvent? If what you say is true, then it is a cautionary tale for anyone who sees HPC as an opportunity to pick up a bargain in the housing market if the keen price they get can be overruled by an official receiver at a later date. Would the buyer not have recourse against their own solicitor for not checking that the property was "free of all encumbrance"?
  5. I have recently heard things which have shocked me about peoples knowledge and views on finance. In discussing shares, it became apparent that some of my colleagues do not know what PE ratio is. To my way of thinking, you must know this to have any opinion about share prices. If you were offered brocolli for £1, you need to know whether you will get a kg, a box full, or just one sprig. PE tells you how much earnings you will get for the price of a share. Of course there is much more you need to know, but then the box full of brocolli for £1 is a poor deal if it has all gone mouldy. But these are people who get share options from their employer and make decisions about if and when to exercise them. In a separate discussion, it was clear that there was a widespread belief that the actual price of one share was of great importance; i.e., £1 shares were much better than penny shares. I know of a company that had a 100 for 1 share consolidation which converted the share price from a few pence to a few pounds overnight. The discussion on the message boards about this indicated that many people think similarly. Mathematics is now considered to be very "un-cool". As a maths graduate I may be biased but I think you need to manage numbers to manage money. On a BBC Money Box special on share buying, an interviewee was trying to decide whether to buy shares or pay off her mortgage. In the end she chose the latter to get a "clean slate". I would have hoped that the program would have made the point that repayment of debt is a risk-free, tax-free investment; whereas shares are risky and taxed, so you would have to have an expectation of gain from the shares of well above your mortgage rate to make the gamble worthwhile. But no, the program was entirely maths-free. The interviewee may have made the right decision, but the program did nothing to de-mystify the issue. Thing is though that however contrary to logic these views seem, these people comprise the market, and their buying and selling decisions affect the share prices just as much as the the most sophisticated fund manager. This aspect of markets becomes crucial to those that have STRed at various points in the inflation of the housing bubble: they do so because their analysis of the 6X or 10X avarage house price tells them to, but if the rest of the market doesn't act on these mathematical observations, then it won't follow the prescribed route.
  6. I bought a house and my solicitor advised me to take out this insurance. There was no question of the seller paying for it, and I don't see why they should. They were selling a property for an agreed sum; if the buyer wants to take out insurance, that has nothing to do with the seller. In your case, when the buyer's solicitor gave their client a quote for the conveyancing, the possibility of this insurance being required should have been included. Perhaps it was left out and the solicitor is trying to avoid admitting to the cost overrun by trying to get the seller to pay.
  7. I think that your friend should only buy a house if he really wants to buy a particular house irrespective of market conditions. Buying a house is like marriage - renting is like living with someone. You would not put off getting married because wives are going to get cheaper next year, but then you wouldn't get married just to save tax.
  8. AD said several days ago that the government would "stand behind the bank". That is as good as saying that they will guarantee the deposits, so todays announcement is not a real change. The "queue interviews" reveal the queuers as compulsive worriers, who once they get the idea into their heads, will never be satisfied. The problem is that the NR only offered good rates for "Silver Savers", so they have ended up with the "Bank of the Living Dead".
  9. I meant from the tenants perspective, if they have cash and pay top rate tax. No case at all for the landlord I agree!
  10. Suppose you have the money to buy the house, so that if you want to rent you need to place the money in a bank account at 6% - but then pay 40% tax on the interest. Then the using the "opportunity cost" of the lost interest instead of mortgage, the figures of 23% and 59% become -26% and -5%, giving a prima facia case for buying.
  11. From a book on Nick Leeson and Barings, "All That Glitters" by John Gapper & Nicholas Denton, p. 74: "In the end everything came down to money. So Heath wanted people around him who liked to spend money. That would impart a drive to earn more and work harder. 'Are you hungry?' he would always ask, as he peered at potential recruits. That was what he wanted around him: an army of Christopher Heaths."
  12. It is becoming more usual to just sell without looking for your next house, and plan to move into rented so that you become a cash buyer and can take your time over finding the next property. Since EAs are nearly always "no sale, no fee", you only lose your solicitors fees if your buyer tries to gazunder and you stand firm. Your solicitor normally has discretion over how much to charge for the aborted sale, and if you do go on to complete the sale with another buyer it is unlikely to be a large amount. Also, it you plan from the outset to move into rented then you can advertise with "no onward chain" which attracts the right sort of buyer - one who will actually go through with the deal. I did this last time and so did the people I bought from and that was the plan of another seller who didn't accept my offer. Gazumping and gazundering just make the process of buying and selling houses unreliable and the option of setting up a chain so that people can move straight from one house to another unachievable. A shame for people who need this option. It is normal when putting in an offer for a newbuild property to be asked for a non-refundable deposit of, say, £750. Can one do the same in a private sale?
  13. I think that the lack of replies may be that bloggers are wary, quite rightfully, of giving financial advice without being properly qualified and abiding by FSA regulations. Doing so could expose the respondent to legal risks. There are exemptions used by "agony aunts" in the press but whether or not they would apply to blogs of this nature, I suspect that the uncertainty is enough to deter replies to the specific questions you ask.
  14. ETFs are shares so you need to find a low cost stock broker, not a fund supermarket. iShares FTSE 100 (ISF) has a management fee of 0.4%. Some are more. They are a share so they don't have exit fees, they have bid-offer spread and dealing costs. They shouldn't be more profitable if they are trying to track the same index. They will be more profitable to the investor if their charges are lower, but some tracker funds have very low charges too - Fidelity MoneyBuilder UK Index Fund has an annual mangement fee of 0.1%. ETFs are a more sophisticated product for investors who have already decided that they want to take a position in a particular sector or market, and there is a wide range of them. Unit trusts and oeics are a more mainstream product. Financial advisers will not get commission if they recommend ETFs.
  15. Thats my feeling. I hold Aspen Insurance Holdings AHL (AMEX). PE 6.14. The share price was hit by hurricane Katrina, and has not recovered, although the earnings were only hit in one quarter of 2005.
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