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House Price Crash Forum


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Everything posted by pelican

  1. http://boards.fool.co.uk/Message.asp?mid=11028303 Worth a read seems DS has been deleting a few embarassing lines.
  2. Quote from Smith April 2007 - Priceless There are two things one should bear in mind about the housing market. One is that mere mention of a slowdown brings the “crash” obsessives out in force, their latest ammunition being the problems in the American sub-prime market. That has as much relevance to Britain’s housing market as the baseball world series has to whether Chelsea or Manchester United will win the Premiership
  3. I don't crunch numbers for anything you would have sold. Although I did in the late nineties - working out all the losses on the missold pensions - You really covered yourselves in glory. Actuaries have nothing to do with the credit crunch, that was investment bank quants and credit modellers. Actuaries work primarily in life, general insurance and pensions. Keep selling those financial products - you are my hero.
  4. I'm in the pensions and investment field also -work in Glasgow. To the question above perhaps he bought gold and shares in 2004. Many people did you know. Anyway given I know a friend who was selling near Liverpool and all he did was reduce his price for the last two years till it eventually sold, I dont think Liverpool property rises have exactly been stratospheric since 2004. Try driving through Frodsham, nice town close to Liverpool, its a sea of for sale signs.
  5. Hi Zafonic Im an actuary also who do you work for and in which field?
  6. If LGPS contributions by the councils increase, council taxes do have to increase unless central government money to Local councils is. The 25% figure actually came from some work I was quite involved in in my previous job.
  7. I am a pensions actuary who funily enough used to specialise in the LGPS. If you have any questions i'd be happy to answer them from what I can remember.
  8. Have to post afer seeing that it was like listening to a Pravda in the former USSR. Well done the beeb Four legs good
  9. What a load of rubbish you can get tracker funds with very low (around 0.5% per annum charges) If you want a specialist actively managed fund for a personal pension then you have to pay more. If it doesn't perform you can switch funds as easy as pie. You just cant take the money back out as cash and spend it. Some of the rubbish written about pensions is unbelievable.
  10. I dont understand your point. If an asset manager gets above his benchmark return on the assets he has under control from the pension fund then yes the bank will recieve more fees and the manager will get a better bonus but he has to outperform his benchmark to do this. In this case both the pension trustees who look after the interests of the members and the manager are happy. If he doesnt outperform he wont be getting a bonus. In this case both are unhappy and the trustees may look for a new bond, equity, currency or whatever manager he is.
  11. Pension funds are in deficit because people are living longer and the real return on long term bonds has fallen which mean the value of the liabilities have increased. The value of the assets held have also increased substantially but not as much as the liabilities. Its hardly the asset managers fault.
  12. In that case the 15 and 20% reductions you show are real not nominal falls. If thats the case its fine. So these are actually 12% and 17% nominal falls. This next line simply doesnt make sense then "If prices simply stay static for 3 years you lose £40,000 and still have to spend 10k to get back into the house if you bought it back. " Unless again you clarify that in fact this only occurs if house prices keep up with inflation i.e rise by around 10% over the three year period, which is alot different. Also your time vaue of money argument is a bit off as well.
  13. I think your your analysis is a bit flawed - you need to look at this to get the true profit of taking the sell decision over the stay put decision. Lets say he buys back in one year His costs are Selling fees (1) Rent for one year (2) Repurchasing fees (3) Reduction in released capital due to inflation (4) His income is After tax income generated for year from released capital. (5) If he stays for one year his costs are Mortgage payments (6) Repair/running costs on house (7) Reduction in equity due to inflation (8) Therefore 4 and 8 cancel and should be out of the equation to g
  14. I think its easy to think that a structural change has occured in Britain to cause prices to double or triple in last few years, but if this is the case can you say why in every country without high unemployment levels but with low interest rates has this occured. I think it just because rates were low for so long and now as the globalisation effect unwinds this will be reversed as inflation and hence rates increase. Sometimes the easiest explantion is correct. I.e. world rates went down - prices went up. There was no worldwide structural change to housing demand causing prices to rise so
  15. Buying Bear, Im a pensions actuary working for Public sector funds, the Local Government Pension Scheme, which they were striking about today, is funded I can assure you.
  16. Spline Thanks for the info, my calcs were quite quick and I can see there are a couple of errors. The latest FTB wage you give still looks a bit toppy but anyway I think the basic fact remains though that if prices are still affordable for FTBs why are they at their lowest level for donkeys years. I presume the same amount still want to own a home so why would the levels go down so low.
  17. MEW was pretty much the same level of post tax salary in 1989 as now. Assuming the same proportion was used to help childrens deposits then as now, this shouldnt be an issue when comparing the last peak.
  18. Spline Thanks for the graph. I would love to see how it is created as intuitively it looks rubbish. It is saying that 2003 prices are around the same affordability as 1996 despite prices exceeded wages by probably 150-200% and interest rates only being only slightly lower. It also shows the av mortage as 16% of income. If the average price for FTB is say 120-140k the mortgage would be 660-770 per month. If this is truly 16% of income the average FTB income must be 50-58K and thats assuming this is before tax income not post tax. This is clearly iffy.
  19. Because in a lot of cases the arrangemnt fee may be more and because people cannot stand having to pay a higher rate if IRs fall. If I bought tomorrow which I wont be, I would fix for 25 yrs at around 5%, it seems a no brainer.
  20. Very very few people taking out mortgages during the boom 2002-2004 yrs took out fixed rates above two years, I believe it was less than 10%. Due to no inflation erosion of the debt, if these people were at their affordablity limit then they are still very vulnerable to IR changes now. I think the number on longer term fixes has picked up but its nowhere near the majority of new mortgages. Interest only mortagages which are more highly affected by IR movements have also been on the increase recently. I would say many many homeowners are pretty IR sensitive at the moment.
  21. Spline Thanks for the numbers, although I dont think spot estimates are really the best way of looking at things. I have taken the average base rate from 87-88, i.e. when buyers were at there most active in driving up the boom and it is actually around 9.5%. The average rate from 91-92 when it all went wrong was 10.5%. Average wages had risen around 20% in this time. The average rates when buyers were most rampant this time i.e 03-04 was 3.75% and over 05/06 has been about 4.5% so far. Average wages have risen about 7% over this period. The level of monthly mortgage payment increase looks
  22. I agree that the inability to drop rates last time due to the £ being at the bottom of the ERM band prolonged the recession. Most of the damage in the housing market had been done by 1992 however. However last time interest rates were decided by politicians. This time there is some degree of independance and a set target to meet, the inflation level. The BOE would have to risk their hard earned reputation for stablity in these circumstances. I think that monetary policy could be constrained should the pound come under pressure due to changes in rate differentials and imported inflation rise
  23. Yandros If prices stay absolutely flat, after a time the 8% or so of post tax income taken out as MEW recently must dry up as there is no E left to W. Do you think that a 8% fall in net income equivalent to 10-12% fall in gross wages for the whole of the working population would not lead to a recession given 75% of GDP is currently generated from consumer spending. The dry up in available MEW would have led to the recession which then led to unemployment, mortage defaults, credit tightening and a house price correction.
  24. If you look at the amount of leverage these days, it is far more worrying. A half point move when rates are 12% meant little back then to either a recent purchaser and even less to someone who has seen inflation erode 25-30% of their debt, i.e. someone who bought three years earlier. Therefore a half a percent move mattered little to a very small highly overstretched sample of the mortgage paying public. Now a half a percent move is roughly 10% on the mortgage outgo. This is a very nervy occurence for both a recent buyer and anyone else who bought since 2004 in most of the country and 2001 in
  25. Good luck in your new place, they look decent flats. Ben Nevis is good for a range of malts. The Goat is a decent pub as well. Kit2two in states at the moment I think but when he is back we should meet up. PM me when you fancy a beer and if im around Ill wander up.
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