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Hawk

Good Post On The Fool Discussion Board!

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You won't learn anything new from this, it's just very well written...

http://boards.fool.co.uk/Message.asp?mid=11927745&recscode=2

Thankyou very much for that - Wise tale from a wise man.

And his conclusion is absolutely spot on:

"What is really needed is a massive collapse in house prices"

And that is the only way we can recover and have a sustainable future for ourselves and our children.

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I see a lesson here which may not meet with the agreement of some Fools. The lesson is that high house prices destroy wealth. In comparison with the next generation QueenMcKong and I are very wealthy,

Exaxtly. We dont get paid in/ exchange our labour for houses, we get paid in/exchange our labour for pounds.

Thats why i find Browns BoE so insulting and disingenous; Where they should say 'we're making every pound in your pocket, every hour of your labour worth less, theyre actually saying..

Total wealth increases when higher asset prices make some people wealthier (page 7)

http://www.bankofengland.co.uk/monetarypolicy/pdf/qe-pamphlet.pdf

Those some people are the 1.5% of the population that own more than one house. For everyone else it either makes them poorer (non-home owners), or makes no difference to their 'wealth' but reduces there purchasing power anyway (homeowners)

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Also, you're right about there is sanity out there...even on yuppie board pistonheads, where most the membership seem to be estate agents, property developers and city types, there seem to be quite a lot of dissidents saying unsustainable house prices might not be such a good thing.

http://www.pistonheads.com/gassing/topic.asp?h=0&f=205&t=850765&i=0&mid=0&nmt=CGT increasing from 18% to 40% to fund lower paid people

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woohoo

so next time hamish or sibley or one of the other idiots posts on MSE about "that lot over at HPC are the only ones who care if prices go down" we will be able to add "Yeah plus the idiots at pistonheads, TMF and everywhere else" :lol:

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There is of course an alternative answer and that is high inflation. I know this argument goes on and on but it remains a fact that the older generation made money because inflation melted away their debts.

believe me folks it will happen again.

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Also, you're right about there is sanity out there...even on yuppie board pistonheads, where most the membership seem to be estate agents, property developers and city types, there seem to be quite a lot of dissidents saying unsustainable house prices might not be such a good thing.

http://www.pistonheads.com/gassing/topic.asp?h=0&f=205&t=850765&i=0&mid=0&nmt=CGT increasing from 18% to 40% to fund lower paid people

And to think of the backlash this forum received when the skin changed following the vBulletin upgrade (a truly horrible software platform - my sympathies to the tech team). That forum made my eyes hurt. And the smilies: I thought I'd stumbled in to the MSE mirror universe for a moment. But anyway...

"quite a lot of dissidents saying unsustainable house prices might not be such a good thing"

About time! Any quotable comments?

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woohoo

so next time hamish or sibley or one of the other idiots posts on MSE about "that lot over at HPC are the only ones who care if prices go down" we will be able to add "Yeah plus the idiots at pistonheads, TMF and everywhere else" :lol:

The problem is that, although everyone has an opinion, only a few people's opinions will count.

If 99% of the population want house prices to fall, and the decision makers don't. Then it's not going to happen is it?

Sadly the decision makers don't want it to happen.

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The problem is that, although everyone has an opinion, only a few people's opinions will count.

If 99% of the population want house prices to fall, and the decision makers don't. Then it's not going to happen is it?

Sadly the decision makers don't want it to happen.

Assuming that:

  1. The decision makers really don't want falls to happen (and I'm far from convinced).

  2. They can actually do anything about it.

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The problem is that, although everyone has an opinion, only a few people's opinions will count.

If 99% of the population want house prices to fall, and the decision makers don't. Then it's not going to happen is it?

Sadly the decision makers don't want it to happen.

The reality is that the vast majority of the 70%(?) or so of people that own (or part own, i.e. have a mortgage) have a vested interest in prices rising.

If 99% of the population wanted house prices to fall, they would fall - regardless of what 'decision makers' want.

You get the odd bloke like that guy on that forum, and me, and my eldest brother come to that - who recognize that high house prices are a poisoned chalice - mainly because we have kids and we can't see how they are going to manage and realise our unearned wealth comes with a big price tag for the younger generation.

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Assuming that:

  1. The decision makers really don't want falls to happen (and I'm far from convinced).

I think Clegg, Cameron, Osborne, Laws and Cable are all (a) individually wealthy enough not to worry personally and (b ) clued up enough to realise that a correction is a healthy thing in isolated terms

the previous New Labour lot - were a huge massive vested interest

Edited by Si1

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I think Clegg, Cameron, Osborne, Laws and Cable are all (a) individually wealthy enough not to worry personally and (b ) clued up enough to realise that a correction is a healthy thing in isolated terms

the previous New Labour lot - were a huge massive vested interest

Of course it is healthy....one reason why we are now in such a mess financially, is because we have been trading and spending so unhealthily. ;)

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The reality is that the vast majority of the 70%(?) or so of people that own (or part own, i.e. have a mortgage) have a vested interest in prices rising.

snip

a vested interest in an even bigger mortgage when they move up....talk about upside down thinking.

cheaper housing would mean more money spent on things made in factories....lower rates are supposed to do this too, but no...the upside down thinkers try to pile all their savings into a new, bigger, mortgage.

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The Money lenders make exponential gains on lending:

By lengthening the mort_gage term, so the more they can con people into borrowing higher amounts (by pretending it's cheaper coz monthly payments suddenly look lower! :rolleyes:) the more they make out of debtors in their serf-constant debt-lifetime!

As Govt/MP's surround themselves with ex-banker type "advisors" is it no wonder this charade (and major Con against the people of the UK) carries on and on!

Have you noticed how each successive house price 'boom' is constructed to go higher and higher whilst you are conned with "There will be no more boom & bust"?

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There is of course an alternative answer and that is high inflation. I know this argument goes on and on but it remains a fact that the older generation made money because inflation melted away their debts.

believe me folks it will happen again.

I don't believe inflation will occur. CBs will QE again and again, but the blackhole of debt really is so deep that they will never generate a surplus.

If I'm wrong, I still don't see how that inflation can boost people's working incomes. Please lead me through it.

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a vested interest in an even bigger mortgage when they move up....talk about upside down thinking.

cheaper housing would mean more money spent on things made in factories....lower rates are supposed to do this too, but no...the upside down thinkers try to pile all their savings into a new, bigger, mortgage.

But it isn't really upside down thinking is it? Well, it is - but not from most people's point of view.

Simple fact is that 99% of people save feck all in their lives. And, assuming they eventually pay back their mortgage - one way or another - regardless of how big it has got over the years as they have climbed the ladder - the equity in their house is the only bit of money they make in their lives.

As you move up the ladder, there comes a point where you don't need/want to go any further up, and other people taking on bigger mortgages pushes house prices up and creates the equity.

I'd say most of my contemporaries are living in houses they now either own outright or have relatively small mortgages on them. So they have I guess an average of 400k or more of equity.

I know it's not sustainable - but when younger people see how much older people have made out of property, it's hardly surprising the majority still want to get in on the action.

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That house is the one I have mentioned on TMF before. It’s the one that cost £12k when I was getting paid £4,500 (which was at the top end of the scale for a 28 year old sales engineer). The exact same house is currently on the market at offers over £500k and if you reckon the equivalent 28 year old might be on £35k, the we’re on a ratio that’s gone from less than 3 to over 14 times.

And that’s the next lesson, because even with a good income and all the DIY savings we made, it was sometimes a struggle to make ends meet. How then can anyone hope to manage on a HPI ratio of 14 or more?

The answer is that they can’t, and it has shut out a whole generation of young people who might otherwise have benefited from the sort of community that we enjoyed.

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If I'm wrong, I still don't see how that inflation can boost people's working incomes

And if it does not then that inflation will further erode people's ability to service their debts. I'm sure eroding the bargaining power of the employee in favour of 'flexible' labour looked really clever at the time, but now there are few left who are in a position to stand against the tide of cheap immigrant labour, outsourced or insourced expertise or automation. All against a background of 2 million plus unemployed.

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And if it does not then that inflation will further erode people's ability to service their debts. I'm sure eroding the bargaining power of the employee in favour of 'flexible' labour looked really clever at the time, but now there are few left who are in a position to stand against the tide of cheap immigrant labour, outsourced or insourced expertise or automation. All against a background of 2 million plus unemployed.

Amazing, yes? How does this not end in violence?

Unions are crap, but I just got myself permission to join a closed shop. Was happy with my earnings in debt recovery, but saw a cap being put on them because gubmint wouldn't allow defaults to reach their natural end.

Didn't expect it would come to this, but have now prepared by moving up to an exclusive level. Good luck, everyone!

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  • 259 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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