Traditional Valuations May Be Outmoded

[pjw]

Ian Cowie writes that house prices are rising and traditional valuations, based on multiples of income, may be outmoded (see link at http://blogs.telegraph.co.uk/finance/ianmcowie/100024542/house-prices-first-time-buyers-surge-by-20pc-despite-predictions-of-doom/):

While current house prices look stretched on traditional valuations, such as income multiples, these benchmarks may have become outmoded while interest rates remain at historic lows – and because few buyers now do so on a single income. Infuriating as it must be for pessimists who have been predicting a property crash for many years now, today’s figures suggest the market may at last be turning – but it is turning up.

Of course, we heard all this before with the "new paradigm" economics of Gordon Brown, when traditional views were outmoded - apparently house prices could continue to soar much more rapidly than incomes - until the 2007/8 crash... Now Cowie claims we have another new paradigm!

Edited May 14, 2013 by pjw

[thecrashingisles]

As a great man once said about leverage, "Give me a place to stand, and I can subvert the entire Western economy."

[zugzwang]

This time it's different? Damn right, Cowie. It's not just the commercial lenders that are bankrupt but the sovereign stood behind them holding them upright.

[blackgoose]

Its only turning because Osborne has sanctioned more money printing to buy houses. That is the new paradigm and it isn't pretty.

Edit, I typed G Ideon not Osborne but the forum doesn't seem to like that.Ha ha ha

Edited May 14, 2013 by blackgoose

[19 year mortgage 8itch]

Henry Pryor (@HenryPryor)

14/05/2013 13:51

When #Help2Buy ends & housing bubble bursts in 3 yrs time remember this article by @iancowie about rise in nº of FTBs *******.com/bm4fkcb

[Executive Sadman]

ZIRP might make mortgages cheaper. It makes every other cost of living more expensive. Sooner or later (IMO its already happened, the politicians just dont care) the latter more than offsets the former. And given theres not much they can do about rising food and fuel prices, a cut in the price of something wholly supported by funny money/cheap credit is inevitable.

Eventually, as inflation rises in a 2007/8 event, rates will rise, but this time they dont even need to get to the dizzy heights of 5% to do it, thanks to the coalitions Brown-on-steroids economic idiocy, 2% will probably do it.

[Executive Sadman]

This time it's different? Damn right, Cowie. It's not just the commercial lenders that are bankrupt but the sovereign stood behind them holding them upright.

Gordon saved the banks (for a few years - by sacrificing the rest of the economy)

[porca misèria]

Ian Cowie writes that house prices are rising and traditional valuations, based on multiples of income, may be outmoded (see link at http://blogs.telegraph.co.uk/finance/ianmcowie/100024542/house-prices-first-time-buyers-surge-by-20pc-despite-predictions-of-doom/):

Of course, we heard all this before with the "new paradigm" economics of Gordon Brown, when traditional views were outmoded - apparently house prices could continue to soar much more rapidly than incomes - until the 2007/8 crash... Now Cowie claims we have another new paradigm!

It's not a new paradigm. It started with the coming of building societies, and the opportunity to borrow money to buy a house. Since then it's been incremental steps.

[South Lorne]

Ian Cowie writes that house prices are rising and traditional valuations, based on multiples of income, may be outmoded (see link at http://blogs.telegraph.co.uk/finance/ianmcowie/100024542/house-prices-first-time-buyers-surge-by-20pc-despite-predictions-of-doom/):

Of course, we heard all this before with the "new paradigm" economics of Gordon Brown, when traditional views were outmoded - apparently house prices could continue to soar much more rapidly than incomes - until the 2007/8 crash... Now Cowie claims we have another new paradigm!

..ha.. ha...this is VI talk ...any declared interests...?...the Banks can't afford to go bust again...as lots of them are still technically bust from the last 'let's loosen the ropes'...this is nonsense...

[Venger]

Cowies across the land. Hyper house price inflation, keenly looking forward to more on top, scouring for ever more implausible reasoning towards that end, and often unable to resist a good old dig at those who believed in markets that weren't underpinned by state intervention before we'd even had the first sniff of real correction on massive over-valuations.

Similar attitudes I've seen in zombie over-extended companies, where forbearance and low interest rates have saved older owners and management. Still there drawing the big incomes, oblivious to the pain and their elevated housing position courtesy of all the supports of QE, 0.5%, FLS. "We're the success and we deserve it." "All the HPI for past 20 years+ is locked in as natural house price inflation."

At least there's some young journalist resistance at City AM. Hope one day the resistance alternative younger journalists will topple the malinformed journalists. Used to think broadsheet journalists were smart when I was young. Anatole Kaletsky and Cowie, and former Telegraph Economics Editor first time buyer just before the crunch hit, Ed Conway (refused credit card first weeks of the crunch but must have welcomed interest rate collapse). Mad world when they go on to keep landing good media jobs, or/and keeping high positions.

[cashinmattress]

Valuate in some other form of trading medium that actually matters to people.

Like how many iphones your house is worth.

How many months of premium Sky tele subscription.

How may trips to piss-up and STI ridden costa club villa's.

Or how many pints of lager.

Edited May 15, 2013 by cashinmattress

[Bloo Loo]

he is talking not about house prices, he is talking about the leverage people can obtain.

He thinks they are going to be obtaining more and more AND spending it on houses.

The value of the house remains, as always, what someone will pay for it.

[R K]

The 'traditional' valuation metrics only obtained for a couple of decades and a very specific post war economy.

The earth has been around for 14 billion years.

I'd say all of it is probably nonsense.

[Bruce Banner]

Ian Cowie writes that house prices are rising and traditional valuations, based on multiples of income, may be outmoded (see link at http://blogs.telegraph.co.uk/finance/ianmcowie/100024542/house-prices-first-time-buyers-surge-by-20pc-despite-predictions-of-doom/):

Of course, we heard all this before with the "new paradigm" economics of Gordon Brown, when traditional views were outmoded - apparently house prices could continue to soar much more rapidly than incomes - until the 2007/8 crash... Now Cowie claims we have another new paradigm!

With yet another link to this website .

[zugzwang]

The 'traditional' valuation metrics only obtained for a couple of decades and a very specific post war economy.

The earth has been around for 14 billion years.

I'd say all of it is probably nonsense.

4 billion years.

[bristolhunter]

The 'traditional' valuation metrics only obtained for a couple of decades and a very specific post war economy.

The earth has been around for 14 billion years.

I'd say all of it is probably nonsense.

That's the universe. Sing along!

Our whole universe was in a hot, dense state/

Then nearly 14 billion years ago, expansion started -wait! /

The earth began to cool, the autotrophs began to drool/

Neanderthals developed tools, we build a wall, we built the pyramids!/

Math, science, history, unravelling the mystery/

It all started with the Big Bang.