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lampkin

What Drives Prices Up?

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I hope this hasnt already been discussed to death, if so please feel free to ignore this thread.

Anyhow what really annoys me about this whole 'Doom and Gloom' thing is the fact that people bring it on themselves. Why do people keep on accepting that houses only go up and continue paying higher and higher amounts for houses? Why are people pushing so hard to get on the ladder and pushing 5, 6, 7, 10?? times there wage on a mortgage?

I just fail to see why it gets to a point where everyone thinks they can no longer negotiate on the price of a house and just accept that theyre expensive. It seems to be some sort of mass sheepism! What really gets me though is after paying this insane prices they then turn around and cry when the houses havnt continued going on up for ever calling anyone asking for price reductions all 'Doom and Gloom'.

How many times does history have to repeat itself...ah yes, this time is different.

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In my opionion in the fast the property ladder worked because of high inflation, you bought a house, it went up in value, your salary went up in value you sell up for more and move to a bigger house. With low inflation this process is much slower....

However myth that property prices always go up has continued even though we dont have the (natural?) high wage inflation to mask everything, infact the lowering of inflation and intrest rates has only made the ramping worse this time....

Edited by moosetea

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Your thoughts are general points and have been discussed before, but it seems that the main reason is that people have been 'trained' to think of (current) affordability only. Nothing else has mattered for the last few years.

"We were told it was affordable. Nobody said interest rates could go up!". Some people may think there's scope for our compensation culture to kick in here but I don't see them getting very far.

The old maxim of "3.5x salary" simply went out the window, as people focused on the new paradigm of "low inflation, low interest rates"; the "economic miracle".

Some people say that it's all the buyers' fault(s) and I agree that stupidity should not be rewarded via compensation. However, the banks, government and the financial world are supposed to be the experts.

We are constantly bombarded with the propaganda that we are simply consumers, incapable of doing anything for ourselves. We must all have a plumber, a painter, a mechanic, ready-meals, financial advisers, automatic this, automatic that, etc. An expert for everything and do nothing for ourselves. Thinking for oneself is not to be encouraged.

Is it any wonder that people think that the banks must know what they're doing if they're giving away huge sums of money for you to buy a house? People actually believe that their interests are being looked after. They've seen how friendly the bank is on the adverts, after all.

On this basis, I blame the banks and government far more. They have the knowledge, history, analysts, even experts to know where this was all going to end.

Therefore, they have either allowed it to happen through neglect or actively encouraged it. I think it's the latter; all part of a short term 'arms race' for growth and market share.

Stupidity or sheep behaviour is not conscious, deliberate action.

I think the government and the banks are squarely to blame.

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Your thoughts are general points and have been discussed before, but it seems that the main reason is that people have been 'trained' to think of (current) affordability only.  Nothing else has mattered for the last few years.

"We were told it was affordable.  Nobody said interest rates could go up!".  Some people may think there's scope for our compensation culture to kick in here but I don't see them getting very far.

The old maxim of "3.5x salary" simply went out the window, as people focused on the new paradigm of "low inflation, low interest rates"; the "economic miracle".

Some people say that it's all the buyers' fault(s) and I agree that stupidity should not be rewarded via compensation.  However, the banks, government and the financial world are supposed to be the experts.

We are constantly bombarded with the propaganda that we are simply consumers, incapable of doing anything for ourselves.  We must all have a plumber, a painter, a mechanic, ready-meals, financial advisers, automatic this, automatic that, etc.  An expert for everything and do nothing for ourselves.  Thinking for oneself is not to be encouraged.

Is it any wonder that people think that the banks must know what they're doing if they're giving away huge sums of money for you to buy a house?  People actually believe that their interests are being looked after.  They've seen how friendly the bank is on the adverts, after all.

On this basis, I blame the banks and government far more.  They have the knowledge, history, analysts, even experts to know where this was all going to end.

Therefore, they have either allowed it to happen through neglect or actively encouraged it.  I think it's the latter; all part of a short term 'arms race' for growth and market share.

Stupidity or sheep behaviour is not conscious, deliberate action.

I think the government and the banks are squarely to blame.

I agree. The problem is simple - easy credit. We all need somewhere to live, so the credit available determines prices. Tighten the lending criteria, and the prices will drop.

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I think the government and the banks are squarely to blame.

So do I. The government makes the rules and the banks provide the cash.

Everyone else (e.g. Estate Agents, Landlords, Kirsty Allsop) are just players in the game. We all love to hate them but they don't make the market, they merely play it.

Edited by doogie

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Mass sheepism and lack of regard for financial risk is exactly right. When I was looking at property I calculted what my mortgage repayments would be if interest rates hit 10% as a guide to what I could afford to borrow at very low risk.

Needless to say I wasn't impressed with the property I could afford to buy (rather than borrow the money to buy) :angry:

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.....the main reason is that people have been 'trained' to think of (current) affordability only.  Nothing else has mattered for the last few years.

"We were told it was affordable.  Nobody said interest rates could go up!". 

Yes this is the thing I'm glad I didn't gt sucked into.

Just because the servicing of an amount of debt is smaller than previously doesn't make an overpriced property "affordable".

I very nearly got caught ino it 2 years ago by enquiring about a £270K mortgage.... sure the interest rates on that sum where "affordable" to me....but how could I possibly hope to make any dent on repaying £270K worth of debt in the working years I had left :blink:

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Mass sheepism

Nice word, added to my diction.

I think greed and fear has driven the market up and, ironically, will conspire to drive the market down.

Just as people disn't want to 'miss out' when house prices were rising, people won't want to 'miss out' on the savings they can make by sitting and waiting.

Sheepism in action.

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Nice word, added to my diction.

I think greed and fear has driven the market up and, ironically, will conspire to drive the market down.

Just as people disn't want to 'miss out' when house prices were rising, people won't want to 'miss out' on the savings they can make by sitting and waiting.

Sheepism in action.

ok so we like nice words now...there's a good one from the states...it's called CONDOMANIA!!!!

...small apartments tend to be called condominiums there,but I think the word has a great buzz to it!absolutly hit's the spot!!!

Edited by oracle

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Needless to say I wasn't impressed with the property I could afford to buy  :angry:

Boo Hoo. This does my head in. My first house was a dump.

The world doesnt owe you a living pal. <_<

I think greed and fear has driven the market up and, ironically, will conspire to drive the market down.

Just as people disn't want to 'miss out' when house prices were rising, people won't want to 'miss out' on the savings they can make by sitting and waiting.

Sheepism in action.

Just like there was no downside to the upswing... theres no downside to the downswing.

Right.

All those mugs out there waiting for a bargain...sheeesh....Its so simple when you put it like that....

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ok so we like nice words now...there's a good one from the states...it's called CONDOMANIA!!!!

...small apartments tend to be called condominiums there,but I think the word has a great buzz to it!absolutly hit's the spot!!!

if only there was condomania we wouldnt have so many baby chavettes!.

:D

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In my opionion in the fast the property ladder worked because of high inflation, you bought a house, it went up in value, your salary went up in value you sell up for more and move to a bigger house.  With low inflation this process is much slower....

However myth that property prices always go up has continued even though we dont have the (natural?) high wage inflation to mask everything, infact the lowering of inflation and intrest rates has only made the ramping worse this time....

Indeed... people speak of "the bad old days of >10% interest rates", what they fail to realise is the reason the rates were so high was because inflation was also high, say in the region of >7% so in actual terms the interest rates were no higher than today (i.e. 3%).

Apart from saying "ohh, missus ain't that gone up in price" lots of people don't understand inflation, in the 70's house prices stagnated for 2-3 years so a house that sat at £20k for that length of time wasn't considered to have lost any value, despite the fact the currency was worth upwards of 25% less.

Edited by BuyingBear

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  • 301 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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