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House Price Crash Forum


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Posts posted by loafer

  1. Not working myself but i'm hearing people are someone in Swindon on a Persimmion site reckons every plot sold and more being started.

    I met with 2 top 10 housebuilder CEOs last week.

    One was proposing to do a bulk trade into a private rental fund to cut stock and deleverage.

    The other one confirmed that they had good sales activity because there was no private stock on the market so virtually all buyers needed to buy new. He was bearish going forwards.

  2. An increasing market gilt yield has two impacts.

    On new issuance, the government has to pay the higher market rate.

    On issuance already in the market (i.e. sold previously) the government still pays the original rate and the value of the gilts reduces so that someone buying them today get's the same effective rate. This effective rate is a mix of the interest paid by the government and received by the noteholder and the fact that the noteholder would pay, say, 98p in the £ and get back 100p in the £ when the gilt reeems.

    Thus, when gilt rates increase, they do not immediately increase the existing cashflow cost of the existing government debt, but it does make the new debt more costly to service.

    For the wider market, higher gilt yields can reflect higher long term interest rates, i.e. an expectation of inflation and therefore higher interest rates coming down the track. On the other hand, they could reflect QE if they are lower or a lack of investor appetite / increased risk of counterparty (HMG) if they are higher.


  3. I do object to larger vehicles speeding down the motorways. The amount of destructive energy they carry is phenominal.

    I do object to numpties driving small cars at 40mph on both sweeping A roads and in villages. The amount of destructive energy they carry is phenominal.

  4. What?!

    So one bloke looks after repos for all the banks?

    Smells like...

    If I was a banker wanting to keep repos off the market I wouldn't be repo'ing them. There'd be no point at all in leaving them empty and paying someoen to manage it, even if one man can manage all of them. Might as well keep the defaulting "owner" in there until I thought I could sell it.

    No, you muppet!

    I'll explain.

    I met a guy who manages repos for banks. He lets some and sells some, depending upon the strategy of the instructing bank.

    The disclosed stats in a certain recent month say that all of the banks repoed, say, 1,000 BTLs in one month, yet in the same month he alone was instructed on more than 1,000 properties.

    This means that, as he is just one of several organisations doing this job, the stats must be underplaying what is going on.


  5. Is the interest on a gilt loan paid over the 25 years, or as a lump sum at the end of the 25 years ?

    Gilts pay through their life, and then return the face value at the end.

    In this case they pay 4.25% on nominal face value.

    As the prevailing yield is slightly higher than nominal, it means the price is a little below 100p in the £, so if you bought the gilt for 95p, you would receive 4.25p per year, plus 100p in 25 years.

  6. So we are both agreed that bigger houses in the SE still overvalued - by around 25%, and that the % would be more than 25% if it wasn't that there are older families who have built up equity because of HPI who can buy them.

    re: downsizing, my parents friends all had kids in their late 20s, and by the time they were 50 (around 5 years ago) the kids had all left home and they downsized, many of them now retired early eg at 55/60 - hence I was taken aback by the comment about buying the big house at 50.

    Yes, I agree with that.

    The increasing age before people have kids is an interesting one, particularly for higher income brackets. Lots of professional women leaving it until later to have kids.

  7. 1. we are agreed on!

    2. my point was that i didn't think a 50 year old would want to buy a big family house - surely more likely to be trading down? i would make the point that houses are too expensive if even well paid 40 year olds can't afford them.

    3. see point 2 - surely after 25 years owning propery you are ready to start trading down not taking on a new 25 year mortgage at 3 times salary. hence surely family houses should be affordable to younger people?

    4. judgement/arbitary - those living in London, and who can move to home counties might have made significantly more "magic money" that that, I have anyway and i'm 34, - but see 2/3 above - the point i am trying to make is that if there houses are only affordable to 50 year olds with £250k equity, prepared to take on a 3x salary mortgage then they are not really affordable!

    Certainly this is prime South East, commuting into the City, so your last point is true, subject to the proviso that it is all about affordability for the buyer of that type of property that is the key.

    Moving on to your main point, I chose 50 as an age because it felt about right, but I concede that 45 might be more like it. Many people nowadays who are 45 have kids sub-10 years old around where I live, so a family house is right, and downsizing only really kicks in post retirement in my view.

    In any event, the key issue is that even with my assumptions, the house I rent is still c.25% overvalued, and will probably fall 40% p2t.

  8. re: the £250k equity -

    1. that money could be in the bank instead, earning interest (although agree that at the moment this would be minimal), i'm not sure why should add it - surely the only benefit of it being in the house is the tax angle - ie saving yourself 40% tax on the interest income?

    2. why would typical purchaser be 50 years old? surely typical purchaser of a family home would be younger?

    3. if house prices stop rising, but don't fall either, then those starting later will not have built up any equity - so the higher price which includes the equity surely not sustainable?

    4. you have chosen a totally artibrary number!

    Ha ha!

    In answer;

    1 I completely agree, but your average house purchaser does not understand the opportunity cost of capital

    2 Not a £950k one, IMHO. You have to be earning relatively big bucks. Happy to bring it down a bit if you like.

    3 True, but if you look at your typical purchaser of this type of house, they will have 20-25 years of a market behind them, with many ups and many downs, but more ups than downs.

    4 You say arbitrary, I say judgement ;-). You are right that the number I have picked is arbitary, but it is based on the sort of finances I know my friends have, and who might be a typical purchaser earning £150kpa.

  9. Food



    Let's take one of your examples - Diesel. Why will there be inflation from Diesel?

    Falling demand is admittedly offset by limited refining capacity, but most importantly the oil price has dropped from $110 to $53 in the last 12 months. And before you say "FX", those figures are £55 and £36 respectively in their spot GBP rates.

    I don't see it.

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