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PotNoodle

Are We About To Hit The "fear" Part Of The Bubble

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Well, if you will post a question in the middle of everyone's lunch break...

"Due to the economic downturn, any member of staff seen to be using the toilets,

looking out of the window, talking about non-work related subjects or having any

kind of lunch break, will be immediately counselled for outplacement and put

on the redundancy list."

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Then you tell me as all the others here seem to be blanking it.

WHY IS GORDON BROWN LETTING THE NORTHERN ROCK DO 90% LTV MORTGAGES WITH TAX PAYERS

MONEY WHEN THE HOUSING MARKET IS CRASHING?

Because he has agreed with the banks not to let it go pop all of a sudden, because 90% of 100k is OK for the bank wheras 90% of 200k is not etc etc. I have not inestigated NR mortgages, but I will bet they are not being ladled out as in 2007. the HEADLINE is just as important to the government as the actual facts, because they want to be seen as "helping". Things have moved on though, Darling and co. seem to have sidelined Brown and are trying to pr-emp Tory policy, so all bets are off, but I am convinced Brown accepted months ago that house prices had to fall for their to any pick up in volumes and for the banks to do any business.

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Things have moved on though, Darling and co. seem to have sidelined Brown and are trying to pr-emp Tory policy, so all bets are off,

Well Darling and unelected Brown need to forget about Tory policy and start thinking about their voters for a minute,

the hard working Labour voters who would like to buy a house of their own at a fair price. Fu*k Brown house prices

need to fall so everyone can buy one not just the middle class Tories.

If Brown doesn't get a grip soon, stop thinking about hinself and what the Tories are doing they will lose millions of

voters to the far right and then what, Labour have lost the plot about time they started thinking about their voters

interests

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I've been misquoted for the second time.

Being misquoted three times is nothing to complain about.

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So, I should take £320K out of the bank and buy the house now when I think it will be worth £250K next year? Not bloody likely, I'll leave the money in the bank thanks.

And what has indexation got to do with it?

Someone with 320k in the bank can buy the house you live in, rent it out to you and get a gross return of 2.3% I think you quoted. But that income will rise broadly with inflation, rents comprise around 10% of CPI iirc. There isn't any other investment that will give you such an income indexed long term with long term capital protection.

Obviously everyone who lives in a house represents demand for one house, your point was?
That graphs showing "typical" bubble market activity don't necessarily apply to the UK housing market because, whilst not everyone needs gold, equities or bonds, everyone needs somehwere to live, whether rented or owner occupied.
No, please don't bother to answer that, I've had enough of your fatuous arguments for one day.

Make sure you put your fingers in your ears before you stick your head back in the sand, it's much easier that way round and you're less likely to hear anything that will upset you.

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Many thanks . Interesting stuff. As you say, it all looks very volatile. I was wondering about AndyKN's post re 2.5% yield being a good thing, partly cos it was index linked.

Based on your data below, property doesn't look like index linking for the faint hearted ! Some on here talk about it as if it perfectly tracks inflation over short, mid and long terms, not much different to an index linked gilt. Your data shows that it clearly doesn't.

Sorry, my point about the 2.5% being index linked is that rental income will generally rise in line with inflation; I think rents comprise around 10% of the index used to calculate inflation. If you leave the money in the bank you can get a better income today but it will only go up if interest rates go up. And your capital is relatively safe long term.

That doesn't necessarily mean that now is a good time to buy, it just means that rental returns aren't as bad today as they first look.

It's the income that's index linked long term, I would only describe the capital as "protected" long term (i.e. it might even go down but you won't lose the lot like an unwise equity investment could do for you)

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That graphs showing "typical" bubble market activity don't necessarily apply to the UK housing market because, whilst not everyone needs gold, equities or bonds, everyone needs somehwere to live, whether rented or owner occupied.

that sounds very 2007

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Someone with 320k in the bank can buy the house you live in, rent it out to you and get a gross return of 2.3% I think you quoted. But that income will rise broadly with inflation, rents comprise around 10% of CPI iirc. There isn't any other investment that will give you such an income indexed long term with long term capital protection.

Listen and try to understand, you argumentative SOB.

I have a lot more than £320K in the bank (currently earning over 4% interest) and could buy the house I'm living in if I so wished. But why the hell would I want to given that I expect house prices to fall at least another 20% over the next year or two and probably a further 20% over the following five years.

Keep on trolling.

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Sorry, my point about the 2.5% being index linked is that rental income will generally rise in line with inflation; I think rents comprise around 10% of the index used to calculate inflation. If you leave the money in the bank you can get a better income today but it will only go up if interest rates go up. And your capital is relatively safe long term.

That doesn't necessarily mean that now is a good time to buy, it just means that rental returns aren't as bad today as they first look.

It's the income that's index linked long term, I would only describe the capital as "protected" long term (i.e. it might even go down but you won't lose the lot like an unwise equity investment could do for you)

I certainly see what you are getting at. However, it is no more a sure thing than anything else. When I moved into my current house, the house over the road rented for £650 a month. That was in 1999. The rent is still £650. If rents were index linked to CPI then it would now have to be £771.27 nominal to have the same real value.

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graphs showing "typical" bubble market activity don't necessarily apply to the UK housing market because, whilst not everyone needs gold, equities or bonds, everyone needs somehwere to live, whether rented or owner occupied.

Mange tout, mon ami ! Bonnet de douche ! (as Delboy would say)

Not at all.

Any market in which buyer and seller negotiate an individual price for an

asset which is resellable back into the same market, is going to be

subject to exactly the same market fluctuations as equities.

More or less.

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So to sum up in my view and for the good of the country, if Labour want to act like Tories then

they should do as the Tories did in the '90s, house prices soared anyone that was on the train

made a killing, then the Tories did the right thing and let house prices crash.

Cheap house prices for the people.

Get a grip Brown, before you turn the country into an even bigger basket case.

Edit to add, not that it matters. I'm not a Labour voter, just despise them for deserting

the working classes and letting in the far right.

Edited by time 2 raise interest rates

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I am a bit tired of posting this but here goes again. Whichever side of the fence you are sitting, people keep pontificating about LTV. LTV is "loan to value" not "loan to price quoted". I am not doing any mortgage stuff at the moment ( I live in the US) but I keep in touch with my old mates. I know what's going on despite what our "leaders" in the RICS say. Surveyors are not going to be caught napping like the last time (in the 90's) and have lenders screaming blue murder. Although we value "as is" not to future value we will err on the cautious side and mark stuff down. Lenders (according to my old mates) are happy with this. In fact they are encouraged to do so. If this results in a sale falling through then the leners have been seen to have "done something" to try and get the market moving whilst not actually completeing. That's the reality on the ground and Hamish and co. can believe all they want. No RICS valuation for mortgage purposes=no mortgage=no sale.

Tom MRICS.

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Bruno's back

I am quite sure that website could be sued for liable! Bruno is quite bonkers isn't he.

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we will err on the cautious side and mark stuff down.

Tom MRICS.

Just as, in the boom, you erred on the incautious side and marked stuff up.

Pot Noodle

MRICS

(Member with the Right to Incite Chartered Surveyors)

Edited by PotNoodle

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I am quite sure that website could be sued for liable!

Don't you mean salamander ?

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Listen and try to understand, you argumentative SOB.

I have a lot more than £320K in the bank (currently earning over 4% interest) and could buy the house I'm living in if I so wished. But why the hell would I want to given that I expect house prices to fall at least another 20% over the next year or two and probably a further 20% over the following five years.

Keep on trolling.

It's hardly trolling to point out that someone else with 320k in the bank might decide that prices aren't going to fall as much and buy with it. And that a 2.3% gross yield income, index linked long term, with capital protected long term isn't a bad investment.

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But no one can point to a similar "bull trap" in previous UK House price crashes. That's why you have to use this made up graph.

People need somewhere to live, they don't need Gold, equites or bonds; markets that the graph you know and love is based on.

they also need jobs to buy houses, which do depend on the aforementioned markets.

housing is the biggest interlinked market to all these others ever, particularly the price of said house(s).

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It's hardly trolling to point out that someone else with 320k in the bank might decide that prices aren't going to fall as much and buy with it. And that a 2.3% gross yield income, index linked long term, with capital protected long term isn't a bad investment.

Whatever :rolleyes:.

Keep on trolling.

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I certainly see what you are getting at. However, it is no more a sure thing than anything else. When I moved into my current house, the house over the road rented for £650 a month. That was in 1999. The rent is still £650. If rents were index linked to CPI then it would now have to be £771.27 nominal to have the same real value.

Given the capital appreciation and low inflation I'm sure the landlord isn't disappointed.

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Given the capital appreciation and low inflation I'm sure the landlord isn't disappointed.

Yes I am sure you're right.

Nonetheless via your argument earlier, the landlord should expect an index linked income stream and not worry about the principle,

whereas in reality he has had

good capital gains (provided the market doesn't slump by more than (48% - maintenance costs (which judging by my identical house will have been around 5 or 6% of peak value over that period)) from peak (living there I know the purchase price and the peak price of course)) and a poor dividend performance.

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Mange tout, mon ami ! Bonnet de douche ! (as Delboy would say)

Not at all.

Any market in which buyer and seller negotiate an individual price for an

asset which is resellable back into the same market, is going to be

subject to exactly the same market fluctuations as equities.

More or less.

Clearly not as the equity market is far more volatile.

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Whatever :rolleyes: .

Keep on trolling.

"Trolling" is not pointing out facts that disagree with your personal world view, and certainly isn't answering questions that you yourself asked.

The sooner you realise this the happier your blood pressure will be.

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