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Realistbear

Telegraph: Grave Fears House Prices May Become Affordable

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http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/8215272/Mortgage-lending-hits-10-year-low.html

Construction and Property
Mortgage lending hits 10-year low
Mortgage lending has been at its weakest in a decade for five months in a row, according to the Council of Mortgage Lenders (CML),
reinforcing fears about a further slump in house prices
.

Anyone on here fearful about the future downward direction of house prices?

IMO it is not something to be feared but embraced with gusto.

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The experts making predictions always make me laugh.

Few people in the world must spend more time reading about and studying UK house prices than us, and yet none of us have got the feintist clue what might happen.

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The experts making predictions always make me laugh.

Few people in the world must spend more time reading about and studying UK house prices than us, and yet none of us have got the feintist clue what might happen.

I disagree, prices falling for their peak over several years until they approach the 3x average earning levels are not so much predictable as inevitable.

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I disagree, prices falling for their peak over several years until they approach the 3x average earning levels are not so much predictable as inevitable.

I've been reading that for years.

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I disagree, prices falling for their peak over several years until they approach the 3x average earning levels are not so much predictable as inevitable.

Why should they, and why will they?

The 'the average house should be equal to 3x the average salary' argument is just nonsense.

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Why should they, and why will they?

The 'the average house should be equal to 3x the average salary' argument is just nonsense.

I agree but there is a correlation nevertheless.

If average household incomes decline, then so will house prices sure as night followd day.

The proportion 'owned' via credit is massively bigger than that owned outright or by people of independent means.

Plus there will be a magnifier effect when propery investors blink and sell their portfolios short (the pros did this a couple of years ago).

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I disagree, prices falling for their peak over several years until they approach the 3x average earning levels are not so much predictable as inevitable.

It was only inevitable before because that's what all the financial institutions agreed with each other it should be.

I Sincerely HOPE they return to that standard, but I wouldn't say it's inevitable.

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Why should they, and why will they?

The 'the average house should be equal to 3x the average salary' argument is just nonsense.

So is having IRs at 300 year lows to prop up the experiment of moving away from 3x salary...

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Good title RB, I added a comment to the article with the same feel. who are they writing for?

HPI is so ingrained into our culture that affordability is a non-issue. Just shows how brainwashed we have become by the bankstersand those who profit directly and indirectly from unaffordable housing. We have become a very sick nation.

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I fear for the future generations.

Imagine a world where they could afford to buy their own homes with an average salary, and still save some money for retirement?

Imagine a world where your personal status isn't closely associated with the type and value of the building you live in?

Imagine a world were houses are seen merely as somewhere to live, not a highly leveraged speculative investment?

What a terrible, terrible place.

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I fear for the future generations.

Imagine a world where they could afford to buy their own homes with an average salary, and still save some money for retirement?

Imagine a world where your personal status isn't closely associated with the type and value of the building you live in?

Imagine a world were houses are seen merely as somewhere to live, not a highly leveraged speculative investment?

What a terrible, terrible place.

Sums it up beautifully.

Imagine, if enough people just said no more HPI would be no more.

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Why should they, and why will they?

The 'the average house should be equal to 3x the average salary' argument is just nonsense.

Yes, a size of loan dependent on the income that will repay it? How insane! :lol:

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Scenareo 1

We get an inflationary bust where credit is nigh impossible to come by unless you are prepared to pay huge interest-rates on the debt and where massive deposits will be required. All of the inflated money wont be heading your way anyway. Instead, it will head straight for the commodity markets pushing up the price of goods and services. All in a context of static or falling pay and conditions.

Scenareo 2

We get a deflationary bust causing prices to significantly fall. But, this will be of little comfort because credit will be even harder to come by and even more massive deposits will be required. Pay and conditions will fall dramatically.

Either way, those at the top of the tree who are asset rich and debt free will be sitting pretty. For the rest of us, we're stuffed either way.

The bottom-line is that there isn't enough wealth to go round anymore(even in the illusory form of "debt") and those at the top are going to make damn sure that what losses are incurred are not going to be incurred by them. Whatever happens economically in the coming years, events will be designed to ensure the above outcome. Everything else is details.

Unless, of course we, the people, are prepared to do what we have to in order to change that outcome.

That is all you need to know.

Edited by tallguy

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Scenareo 1

We get an inflationary bust where credit is nigh impossible to come by u8nless you are prepared to pay huge inerest rates on the debt anbd where massive deposits will be required. all of the inflated money wont be heading your way. Instead it will head for the commodity markets pushing up the price of goods and services. All in a context of static or falling pay and condition.

Scenareo 2

We get a deflationary bust. Prices will fall but this will be of little comfort because credit will still be even harder to come by than and even more massive deposits will be required. Pay and conditions will fall dramatically.

Either way, those at the top of the tree who are asset rich and debt free will be sitting pretty. For the rest of us, we're stuffed either way.

The bottom line is that there isn't enough wealth to go round and those at the top are going to make damn sure that what losses are incurred are not going to be incurred by them. Whatever happens economically in the coming years, it will be designed to ensure that outcome. Everything else is details.

That is all you need to know.

I think thats about right, as for the multiplier it will likely undershoot to the same extreme it overshot which is pretty normal for all these historical credit busts, that may well be at about 2 times, i dont know what nominal price that will be but that sort of multiple will be driven by what you state a near complete and utter lack of credit at the bottom of the cycle, might well take another decade though who knows

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Why should they, and why will they?

The 'the average house should be equal to 3x the average salary' argument is just nonsense.

You work out what you can afford (XX of salary) to pay back on a mortgage loan at the normal 10% rate - coz that's what it will soon return to!

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those at the top are going to make damn sure that what losses are incurred are not going to be incurred by them.

What about all the guff we have heard about high risk/reward? Surely taking some heavy hits in a bust goes with the territory of making killings in a boom?

If those who have accumulated real wealth don't take their fair share (ie proportionally higher in line with the gains previously made) of the pain then the effects on those at the bottom will be magnified and truly dreadful.

Ultimately much of the rich's 'assets' are money owed to them by lots of poorer people.

There is nothing the rich could do if the vast majority say:

"Can't pay, won't pay"

Especially if the govt. just look on passively which they should because they are answerable to the electorate not their public school buddies.

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I fear for the future generations.

Imagine a world where they could afford to buy their own homes with an average salary, and still save some money for retirement?

Imagine a world where your personal status isn't closely associated with the type and value of the building you live in?

Imagine a world were houses are seen merely as somewhere to live, not a highly leveraged speculative investment?

What a terrible, terrible place.

That's a beautiful post. Thank you.

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Does the meeja represent it as a good or a bad thing when the prices of food, water, fuel (or anything much else) rise? Or fall?

Food and shelter, nothing more basic-need than that.

What a ******ed up commentary on a ******ed up country.

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Scenareo 1

We get an inflationary bust where credit is nigh impossible to come by unless you are prepared to pay huge interest-rates on the debt and where massive deposits will be required. All of the inflated money wont be heading your way anyway. Instead, it will head straight for the commodity markets pushing up the price of goods and services. All in a context of static or falling pay and conditions.

Scenareo 2

We get a deflationary bust causing prices to significantly fall. But, this will be of little comfort because credit will be even harder to come by and even more massive deposits will be required. Pay and conditions will fall dramatically.

Either way, those at the top of the tree who are asset rich and debt free will be sitting pretty. For the rest of us, we're stuffed either way.

The bottom-line is that there isn't enough wealth to go round anymore(even in the illusory form of "debt") and those at the top are going to make damn sure that what losses are incurred are not going to be incurred by them. Whatever happens economically in the coming years, events will be designed to ensure the above outcome. Everything else is details.

Unless, of course we, the people, are prepared to do what we have to in order to change that outcome.

That is all you need to know.

[Devil's Advocate] What about scenario 3, nothing changes? [/Devil's Advocate]

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[Devil's Advocate] What about scenario 3, nothing changes? [/Devil's Advocate]

Like nature, markets abhor a vacuum.

As an example, YoY a lot of HP indices are showing pretty much no change for 2010. That doesn't mean prices haven't fluctuated - it's been a heck of a rollercoaster ride. In late spring some were suggesting up 10% YoY!

Edited by rantnrave

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But surely the ability to acquire a home loan without committing fraud and having the ability to one day pay it off isn't?

I agree but there is a correlation nevertheless.

If average household incomes decline, then so will house prices sure as night followd day.

The proportion 'owned' via credit is massively bigger than that owned outright or by people of independent means.

Plus there will be a magnifier effect when propery investors blink and sell their portfolios short (the pros did this a couple of years ago).

So is having IRs at 300 year lows to prop up the experiment of moving away from 3x salary...

Yes, a size of loan dependent on the income that will repay it? How insane! :lol:

You work out what you can afford (XX of salary) to pay back on a mortgage loan at the normal 10% rate - coz that's what it will soon return to!

So lots of stuff written, but nobody has answered the question. Why should the price of the average house be 3x the average salary, and just as importantly, why 3x, why not 1x or 10x?

It is not a long term average, it is not a gold standard, it is not an immutable number, it is not a fundamental law of physics that cannot be broken.

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  • 285 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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