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Why Rapidly Rising House Prices Is Not Good For The Majority

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Was just explaining to a bird recently how everyone has been brainwashed. Came up with this little example to show how rapidly rising house prices is bad for the vast majority. Seemed to hit the spot. One more convert to reality.

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Simple fact - Most people when buying a house want something bigger/nicer in a few years time. Not all, but most.

Lets take the average punter buying their first place. Buy first one bed flat place for 50k. (Actual price doesn't matter - just an example - same end result)

SCENARIO ONE:

Doubles in price in 5 years. Woohoo !! Made 50k 'profit'. Plus maybe paid of 8k of your mortgage. 58k profit. Double woohoo !! Minted. Great.

So now you buy your larger two bed place. Loads of equity. Loads of profit. Brilliant. Unfortunately that has also risen by 100% so now costs 200k. No worries though. You are minted !! You can afford it. You have made 58k profit !! So you get the larger flat.

End result 5 years after buying your first wee place - You now have a mortgage on a 2 bed flat for 200k-58k = 142k.

SCENARIO TWO:

Let's say you buy your place and it remains the same price for the 5 years. Boohoo. No profit other than the 8k you pay off. Boo hoo. No profit. You are poor. How depressing.

Anyway you decide to buy your larger 2 bed place anyway. Why not. No huge equity though. No huge profit though. Boohoo. Still you go ahead with it. This has not risen by 100%. Actually now that sounds a bit better. Maybe not so boohoo after all. You only have 8k profit though. Still why not. So you get the larger flat.

End result 5 years after buying your first wee place - You now have a mortgage on a 2 bed flat for 100k-8k = 92k.

Difference between the two scenarios = 50k.

People are brainwashed into thinking that rising prices have made them 50k. In fact - rising prices have ended up costing them 50k. Plus interest.

Fair enough if you want to take the 58k profit and head abroad, buy a new car, have a drug fuelled binge or whatever. However how many people does this apply to ? How many simply want to move to a larger nicer place ? Yes - those wanting to downsize and retire can do better if prices rise rapidly. But even for this group they have to time it perfectly. Most do not. They don't have the knowledge, or more importantly the time to do so. Even for this group, long stable low levels of growth in the housing market are better for them. They don't have to worry about the right or wrong time to sell.

For most people rising prices at rapid rates is extremely bad news. The sooner people get unbrainwashed the better.

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Guest UK Debt Slave
Was just explaining to a bird recently how everyone has been brainwashed. Came up with this little example to show how rapidly rising house prices is bad for the vast majority. Seemed to hit the spot. One more convert to reality.

----------------------------------------------------------------------------------------------

Simple fact - Most people when buying a house want something bigger/nicer in a few years time. Not all, but most.

Lets take the average punter buying their first place. Buy first one bed flat place for 50k. (Actual price doesn't matter - just an example - same end result)

SCENARIO ONE:

Doubles in price in 5 years. Woohoo !! Made 50k 'profit'. Plus maybe paid of 8k of your mortgage. 58k profit. Double woohoo !! Minted. Great.

So now you buy your larger two bed place. Loads of equity. Loads of profit. Brilliant. Unfortunately that has also risen by 100% so now costs 200k. No worries though. You are minted !! You can afford it. You have made 58k profit !! So you get the larger flat.

End result 5 years after buying your first wee place - You now have a mortgage on a 2 bed flat for 200k-58k = 142k.

SCENARIO TWO:

Let's say you buy your place and it remains the same price for the 5 years. Boohoo. No profit other than the 8k you pay off. Boo hoo. No profit. You are poor. How depressing.

Anyway you decide to buy your larger 2 bed place anyway. Why not. No huge equity though. No huge profit though. Boohoo. Still you go ahead with it. This has not risen by 100%. Actually now that sounds a bit better. Maybe not so boohoo after all. You only have 8k profit though. Still why not. So you get the larger flat.

End result 5 years after buying your first wee place - You now have a mortgage on a 2 bed flat for 100k-8k = 92k.

Difference between the two scenarios = 50k.

People are brainwashed into thinking that rising prices have made them 50k. In fact - rising prices have ended up costing them 50k. Plus interest.

Fair enough if you want to take the 58k profit and head abroad, buy a new car, have a drug fuelled binge or whatever. However how many people does this apply to ? How many simply want to move to a larger nicer place ? Yes - those wanting to downsize and retire can do better if prices rise rapidly. But even for this group they have to time it perfectly. Most do not. They don't have the knowledge, or more importantly the time to do so. Even for this group, long stable low levels of growth in the housing market are better for them. They don't have to worry about the right or wrong time to sell.

For most people rising prices at rapid rates is extremely bad news. The sooner people get unbrainwashed the better.

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The whole idea of what is going on is the globalization of poverty and to achieve this they are destroying middle class aspirations such as owning property.

High house prices is a win win situation for the power elites. Existing homeowners, particularly those who bought overpriced property, are forced into a life of servitude to pay for it while a whole generation of younger people are denied access to real asset wealth. It is entirely deliberate.

Nothing will change because people just accept the Union Jack wrapped around a flagpole being jammed up their a$$holes for their entire lives.

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  • 404 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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