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MrB

House Prices Rising 7 Times Faster Than Wages

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http://www.nationwide.co.uk/hpi/historical/Aug_2009.pdf

Wage growth at 1.5%, annualise the last 7 months data from Nationwide, HPI of 11%

It's a comedy mini boom, reminds me a lot of 2006. How can anyone keep a straight face when this is touted as the 'return to normal'?

A poster on another board was arguing that YoY growth would be at 20-25% in the next few years, seeminlgly backed up by some sensible analysis. This is what 25% growth (adjusted down for wages) looks like on a graph.

hpi2.png

Doesn't look sensible to me.

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The idea that you had to have earnings to pay down debt is old fashioned nonsense. All you need is the magic money engine owned by the BOE and the Federal Reserve. Next year they apparently will be bringing their new perpetual motion machine to the market so we wont be needing any energy either. That is why they have not been building new power stations for years.

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The idea that you had to have earnings to pay down debt is old fashioned nonsense. All you need is the magic money engine owned by the BOE and the Federal Reserve. Next year they apparently will be bringing their new perpetual motion machine to the market so we wont be needing any energy either. That is why they have not been building new power stations for years.

700 Billion.

700 billion is the amount of additional lending we can afford at a 4% rate of interest before our current net savings are absorbed by interest charges alone.

The last government expanded lending by around 700 billion. If they do the same again, we will be past the point at which we have any chance of paying off the debt, and that is taking savings at a time that everyone is putting loads away due to the recession, its also at a time retail spending has taken a huge hit. Thats assuming record low rates we have stay the same. If ACTUAL rates go up by 4%, we cant even afford what we currently have loaned.

I have been looking at houses in france of late and am thinking, why bother struggling here when I can just retire to europe at 38, live off my pension quite comfortably, living in a lovely country home? I whill have 400K-450K saved bythe time I am 38, so why stress about paying off a slave box in the UK forever?

Edited by mbga9pgf

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Doesn't look sensible to me.

Look again.

House are now cheap after the recent falls.

The banks will soon be lending > 5x salary (if they aren`t already).

If HPI slows, the BoE will just print more money.

Fill yer boots.

;)

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looks about right.

i personally quite like fergus wilson's "house prices double every seven years" rule of thumb, i.e., assuming the BoE's inflation target of 2.5% will hold (ha!) about 8% real growth p.a...

an average house today costs £160k, GDP is about £1.5 trillion, so if real GDP grows at 2.5% p.a. then sometime early in the year 2317 the average UK house will cost more than the UK's entire GDP. recovereh! krusty should get herself cryogenically frozen so that she's around to see the day....

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I hear Epsom and HP are working on home money printers. 20 ppm ( thats pounds per minute ).

Makes sense if the BoE can do it, we might as well all print what we think we might need.

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Hi Can anyone say roughly how long they think this mini boom will last?It is defintiely happening where I live in the SE because mortgages seem to be easier to get now and the low interest rates ease the fear a bit.

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