2buyornot2buy Posted January 23, 2012 Share Posted January 23, 2012 Not that often that I agree with BelfastVI, but for the most part, there's nothing that he's said that would leave me speechless (in a drama queen kind of way). His key points were timing and taking the long term view into account for when yer old and wrinkly. Of course he would say that the market has largely corrected and strictly speaking he's probably correct there too in relative terms in the sense that most the falls have happened - but that's not to say prices still won't fall another 10-20%. Ok hyperbole on my part there. Quote Link to comment Share on other sites More sharing options...
Shotoflight Posted January 23, 2012 Share Posted January 23, 2012 Do you wait another five years? Will houses be cheaper in five years than they are now? Will they be more expensive? Either way, you will be five years older when your house is mortgage free. Before everyone starts on me. I am not saying run out and buy a house now. I am saying buying a house to own has to be more expensive than renting. But hopefully you will have 20 years rent-free to enjoy after your mortgage is repaid and able to hand on a tax free asset (if you plan it properly) to the next generation, which if you look after it will (for some reason) hold its relative value to a brand new property. 22-year wait for low earners to buy first home http://www.moneysavingexpert.com/news/mortgages/2012/01/22-year-wait-to-buy-first-home-for-low-earners?utm_source=forum&utm_medium=sidebar&utm_campaign=box Low to middle income earners will not see their disposable income approach pre-recession levels until 2020 at best, a report from think-tank the Resolution Foundation warned today. The Squeezed Britain study said households in this bracket, who typically bring in just over £20,000 in take home pay a year, are also facing a 22-year wait to save up enough cash to buy their first home. The report exposed the "daily struggle" of these families, who account for 5.8 million households and nearly one third of working age homes in Britain. It suggested incomes for this group will decline before flattening out around 2016-17. The study also charted the "disappearing" property ladder for these households, who typically took four years to save for a first-time buyer deposit in 1991. By 2001 this group took eight years to raise a deposit and by 2011 this wait had more than doubled to 22 years, with those aged under 35 facing being stuck in rented accommodation, perhaps forever. Researchers put the sharp rise down to house price rises as well as bigger deposits as a percentage of house prices needing to be raised, while wages remain flat. They based their calculations on a deposit of around 20% currently being needed to purchase a first-time buyer house, typically costing just over £124,500. Low and middle income earners saving around 5% of their annual wages, amounting to just over £1,000-a-year in savings before interest, would take 22 years to raise a deposit of just under £25,000. Quote Link to comment Share on other sites More sharing options...
Belfast Boy Posted January 23, 2012 Share Posted January 23, 2012 There is one massive bubble still to burst. It is where all the 'bad debts' have gone when the banks were bailed out. When this bubble burst then house prices could fall a lot further. Why sign up to a relatively large debt now, for 25 years, if you don't have to? Safer to wait a few more years IMO. http://www.housepricecrash.co.uk/forum/index.php?showtopic=37941&view=findpost&p=3238428 Quote Link to comment Share on other sites More sharing options...
lolacarrascal Posted January 23, 2012 Share Posted January 23, 2012 There is one massive bubble still to burst. It is where all the 'bad debts' have gone when the banks were bailed out. When this bubble burst then house prices could fall a lot further. Why sign up to a relatively large debt now, for 25 years, if you don't have to? Safer to wait a few more years IMO. http://www.housepricecrash.co.uk/forum/index.php?showtopic=37941&view=findpost&p=3238428 As you said in your own post, the easy way for governments is to inflate their way out of trouble if they can/need to. Yes, real house prices could fall a lot further but if that is mostly through inflation, then not having a large mortage, the real value of which is rapidly being inflated away could be a missed opportunity. Taking absolute positions in a time of uncertaintly is not without risks, hedging bets a bit might be more the pragmatic strategy in such circumstances. Quote Link to comment Share on other sites More sharing options...
lolacarrascal Posted January 23, 2012 Share Posted January 23, 2012 Are they not better off renting if their joint income is 20K? At least if they lose one part of the income their rent will be paid for them. Is this not telling us that those at the lowest end of the pay scale can't afford to buy a home - so what's new. Even the Govt think family benefits should be capped at a higher level (another debate here as to whether that's right or wrong). Quote Link to comment Share on other sites More sharing options...
talksalot81 Posted January 23, 2012 Share Posted January 23, 2012 I seriously don’t know where to begin with this pseudo-logical bullspeak. Seriously I am speechless that after one of the biggest (and continuing) housing market crashes in the world EVER that we supposedly educated free thinking people can still come out with this kind of 2007 style thinking. When there’s nothing really valid to say the argument above get dusted off and wheeled out. We are special, we are unique and unlike the rest of the world. Hosing makes you rich and your children rich. Desperation. I fear we are at that time where extreme bearishness may be a similar retreat to that the bulls occupied towards the end of the 'boom'. I don't say that we are about to get better, I don't even presume to say that it won't still get notably worse... but it IS worth engaging the brain again and not just being totally closed minded. As for the further drops... this is all a relative thing. I agree that we will have said drops but relative to what? Asking prices? Sale prices? We more or less expect that you should be pushing for something 10% below most asking prices... will you be able to do the same when we actually hit the bottom? Surely the dynamics of the market dictate that the bottom for selling prices and the bottom for asking prices will be distinct. Who is to say that asking price will ever get as low as selling price? Who is to say that by the time asking price has bottomed out that sentiment has not already turned and that actual sale prices are not above the bottom? What is your more detailed thought on the dynamics of a general situation and our specific one with whatever special scenarios that includes? Which bottom are you trying to pick and how are you going to do it? Quote Link to comment Share on other sites More sharing options...
Shotoflight Posted January 23, 2012 Share Posted January 23, 2012 Are they not better off renting if their joint income is 20K? At least if they lose one part of the income their rent will be paid for them. It all depends on your circumstances and preferences - as ever. UK Grauniad. Families forced to rent whose children pay the price http://www.guardian.co.uk/money/2012/jan/21/families-forced-to-rent It points to figures from the English Housing Survey, which shows that families with children living in the private rental sector are 10 times more likely to move than those who own their own home. In 2009-10, 30% or 310,000 of the 1 million families in the private rental sector moved. In comparison just 3% or 122,000 out of 3.8 million property owning families moved. Those living in the private rental sector were also less settled than those in social housing: 66% of private renters moved in the last three years compared with 23% of social renters. Quote Link to comment Share on other sites More sharing options...
Belfast Boy Posted January 24, 2012 Share Posted January 24, 2012 As you said in your own post, the easy way for governments is to inflate their way out of trouble if they can/need to. Yes, real house prices could fall a lot further but if that is mostly through inflation, then not having a large mortage, the real value of which is rapidly being inflated away could be a missed opportunity. Taking absolute positions in a time of uncertaintly is not without risks, hedging bets a bit might be more the pragmatic strategy in such circumstances. The way I see it there are two options for the UK when the bond bubble bursts. Option 1: increase interest rates to encourage investors to buy bonds and support the pound = servicing debt costs more. Option 2: print money to buy UK bonds so that current spending levels can be maintained, but resulting the pound reducing in value leading to import inflation = living costs more. Either way large debts will become less affordable. Quote Link to comment Share on other sites More sharing options...
2buyornot2buy Posted January 24, 2012 Share Posted January 24, 2012 As you said in your own post, the easy way for governments is to inflate their way out of trouble if they can/need to. Yes, real house prices could fall a lot further but if that is mostly through inflation, then not having a large mortage, the real value of which is rapidly being inflated away could be a missed opportunity. Taking absolute positions in a time of uncertaintly is not without risks, hedging bets a bit might be more the pragmatic strategy in such circumstances. Not seeing any evidence of wage inflation at the moment - I also have a distrust of the inflation measures. Real inflation (i.e. actual spending not LCD TV and stamps but food and clothing) is running at a higher level. I agree that if I was seeing wage inflation it could be a good time to hedge. Quote Link to comment Share on other sites More sharing options...
Belfast Boy Posted January 24, 2012 Share Posted January 24, 2012 As you said in your own post, the easy way for governments is to inflate their way out of trouble if they can/need to. Yes, real house prices could fall a lot further but if that is mostly through inflation, then not having a large mortage, the real value of which is rapidly being inflated away could be a missed opportunity. Taking absolute positions in a time of uncertaintly is not without risks, hedging bets a bit might be more the pragmatic strategy in such circumstances. The way I see it there are two options for the UK when the bond bubble bursts. Option 1: increase interest rates to encourage investors to buy bonds and support the pound = servicing debt costs more. Option 2: print money to buy UK bonds resulting the pound reducing in value leading to import inflation = living costs increase. Note: The printed money will be use to keep interest rates low and maintain spending. It is unlikely to lead to wage inflation. Either way large debts will become less affordable. Quote Link to comment Share on other sites More sharing options...
lolacarrascal Posted January 24, 2012 Share Posted January 24, 2012 The way I see it there are two options for the UK when the bond bubble bursts. Option 1: increase interest rates to encourage investors to buy bonds and support the pound = servicing debt costs more. Option 2: print money to buy UK bonds resulting the pound reducing in value leading to import inflation = living costs increase. Note: The printed money will be use to keep interest rates low and maintain spending. It is unlikely to lead to wage inflation. Either way large debts will become less affordable. Yes quite possibly but the UK has a high proportion of long dated gilts so the risk of needing to do option 1 is perhaps lessened. More QE seems the most likely route to me in which case I don't see any obstacle to wages eventually rising. The other consideration to think about is the fact that currency fluctuations are a zero sum, if the £ falls, it must be falling against other rising currencies. It's not immediately obvious to me which curriencies that could be. Quote Link to comment Share on other sites More sharing options...
lolacarrascal Posted January 24, 2012 Share Posted January 24, 2012 Not seeing any evidence of wage inflation at the moment - I also have a distrust of the inflation measures. Real inflation (i.e. actual spending not LCD TV and stamps but food and clothing) is running at a higher level. I agree that if I was seeing wage inflation it could be a good time to hedge. Provisional figures from 2011 ASHE suggest a 2.6% increase in mean wages in NI compared to 2010 http://www.ons.gov.uk/ons/publications/re-reference-tables.html?edition=tcm%3A77-235202 Quote Link to comment Share on other sites More sharing options...
Shotoflight Posted January 24, 2012 Share Posted January 24, 2012 Provisional figures from 2011 ASHE suggest a 2.6% increase in mean wages in NI compared to 2010 http://www.ons.gov.uk/ons/publications/re-reference-tables.html?edition=tcm%3A77-235202 Farmers grants? Who is getting these rises. not the bloated public sector so, as a mean, someone must be doing above this. Going backwards IRO inflation, all the same. Quote Link to comment Share on other sites More sharing options...
2buyornot2buy Posted January 24, 2012 Share Posted January 24, 2012 Provisional figures from 2011 ASHE suggest a 2.6% increase in mean wages in NI compared to 2010 http://www.ons.gov.uk/ons/publications/re-reference-tables.html?edition=tcm%3A77-235202 so not keeping up with CPI even. Quote Link to comment Share on other sites More sharing options...
lolacarrascal Posted January 24, 2012 Share Posted January 24, 2012 Farmers grants? Who is getting these rises. not the bloated public sector so, as a mean, someone must be doing above this. Going backwards IRO inflation, all the same. Not sure how the public sector wage freeze applies but there's so many different scales and points on them that I'm sure most got a pay rise of sorts on their pay scale without a general increase on top for inflation. Quote Link to comment Share on other sites More sharing options...
2buyornot2buy Posted January 24, 2012 Share Posted January 24, 2012 Not sure how the public sector wage freeze applies but there's so many different scales and points on them that I'm sure most got a pay rise of sorts on their pay scale without a general increase on top for inflation. Too true. There's a recruitment freeze but still internal.recruitment and pay scale hopping. Quote Link to comment Share on other sites More sharing options...
Shotoflight Posted January 24, 2012 Share Posted January 24, 2012 Too true. There's a recruitment freeze but still internal.recruitment and pay scale hopping. The extra 3.5% (or whatever) deduction for pensions may ameliorate any scale hopping and any high taxpayers with sprogs will lose child benefit next yr. Surprisingly few public sector job losses so far - I think someone quoted 4,000. I also recall seeing some ads in the paper for civil service jobs - can't remember what they were exactly. I don't know if the whole public sector ever stopped recruiting - nurses, docs, binmen, police etc. I see prison officers and teachers getting offers so maybe that's how the numbers go down? Seriously though I don't know of too many in general getting close to 3% rises and I have broad contacts - retail, private health, construction, engineering, accountancy etc, etc. Suppose Asda, tesco and many others may have bonus or share schemes. Not sure about banks. Perhaps some commission based are getting something. Did use a plumber and spark last yr though - they both knew how to charge! Spoke to car dealer recently however- worst conditions in 20 yrs. New car margins wafer thin - £380 per car. Quote Link to comment Share on other sites More sharing options...
lolacarrascal Posted January 24, 2012 Share Posted January 24, 2012 The extra 3.5% (or whatever) deduction for pensions may ameliorate any scale hopping and any high taxpayers with sprogs will lose child benefit next yr. Surprisingly few public sector job losses so far - I think someone quoted 4,000. I also recall seeing some ads in the paper for civil service jobs - can't remember what they were exactly. I don't know if the whole public sector ever stopped recruiting - nurses, docs, binmen, police etc. I see prison officers and teachers getting offers so maybe that's how the numbers go down? Seriously though I don't know of too many in general getting close to 3% rises and I have broad contacts - retail, private health, construction, engineering, accountancy etc, etc. Suppose Asda, tesco and many others may have bonus or share schemes. Not sure about banks. Perhaps some commission based are getting something. Did use a plumber and spark last yr though - they both knew how to charge! Spoke to car dealer recently however- worst conditions in 20 yrs. New car margins wafer thin - £380 per car. Damn govt telling us fecking lies again then! Quote Link to comment Share on other sites More sharing options...
Shotoflight Posted January 24, 2012 Share Posted January 24, 2012 (edited) Damn govt telling us fecking lies again then! Treat govt 'facts' with caution! For what is the Official Secrets Act for. 30 yrs of deceit or longer A google of Govt. lies is informative - everything from the dodgy dossier to real quack stuff. but maybe house price stats are ok Think my meds are wearing off now................ Edited January 24, 2012 by Shotoflight Quote Link to comment Share on other sites More sharing options...
Belfast Boy Posted January 25, 2012 Share Posted January 25, 2012 Yes quite possibly but the UK has a high proportion of long dated gilts so the risk of needing to do option 1 is perhaps lessened. More QE seems the most likely route to me in which case I don't see any obstacle to wages eventually rising. The other consideration to think about is the fact that currency fluctuations are a zero sum, if the £ falls, it must be falling against other rising currencies. It's not immediately obvious to me which curriencies that could be. Read somewhere that a lot of the UK bonds/debt is due in 2016/17. Is that when we all turn Greek? Quote Link to comment Share on other sites More sharing options...
Shotoflight Posted January 25, 2012 Share Posted January 25, 2012 (edited) Treat govt 'facts' with caution! For what is the Official Secrets Act for. 30 yrs of deceit or longer A google of Govt. lies is informative - everything from the dodgy dossier to real quack stuff. but maybe house price stats are ok Think my meds are wearing off now................ Britain facing boom in dishonesty New study reveals dramatic decline in private integrity; Public trust in politicians and business leaders hits fresh low http://www.independent.co.uk/news/uk/home-news/britain-facing-boom-in-dishonesty-6294132.html A separate "trust barometer", published by the PR company Edelman, shows that two out of three people do not trust politicians to tell the truth. Trust levels in MPs from all parties slumped by 36 points to 4 per cent after last summer's riots. People also lost confidence in the young and the police. Only 29 per cent of people believe the Government is doing the right thing, while 38 per cent trust businesses and a surprisingly low 42 per cent trust non-governmental organisations. "There is a chasm between the public's expectations of government and what they think is actually being delivered," said Ed Williams, boss of Edelman. "The vast majority [68 per cent] think the country is on the wrong track." According to the Essex study, women have slightly more integrity than men (obviously this should be treated with extreme caution ) Government is caught misleading voters over bonuses http://www.independent.co.uk/news/uk/politics/government-is-caught-misleading-voters-over-bonuses-6294100.html Edited January 25, 2012 by Shotoflight Quote Link to comment Share on other sites More sharing options...
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