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Spoony

Hp Expert From Barclays Says Absolutely No Hp Crash

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This was at around 7.30am on last Thursday on Talksport breakfast. This 'expert' said there is no way house prices will crash because of the following:

1. Ability of consumers to service their mortgages is good at the moment with little forced selling due to historically low unemployment

2. Supply and demand for housing. Supply is low and demand outstrips supply to help keep prices high

The only counter to this from the presenters was how does this relate to the slow down inthe high street? Isn't this at odds? Guy replied something about consumers have paused for breath in the last few quarters but predicts they will return to the shops after christmas and sales of DIY stuff will climb once one. Of course so will house prices!

Aren't these arguements rather tired now? That said, he did very confidently state them to a point that I almost started to beleive them myself for a few minutes.

Analysis please on each arguement?

I will start: Unemployment rising, repossesions up, bankrupcies up, shops still in trouble. I would like to see the response to that

Edited by Spoony

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Guest Alright Jack

I will start: Unemployment rising, repossesions up, bankrupcies up, shops still in trouble. I would like to see the response to that

It would probably go something like this:

Go and check out ODPM and see for yourself how the rates of repossessions and unemployment compare with 1992. They just don't compare at all. The truth is that repossessions are absolutely minute. Uemployment is borderline non-existant (probably literaly down to those who actually do not want to work)

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This was at around 7.30am on last Thursday on Talksport breakfast. This 'expert' said there is no way house prices will crash because of the following:

1. Ability of consumers to service their mortgages is good at the moment with little forced selling due to historically low unemployment

2. Supply and demand for housing. Supply is low and demand outstrips supply to help keep prices high

The only counter to this from the presenters was how does this relate to the slow down inthe high street? Isn't this at odds? Guy replied something about consumers have paused for breath in the last few quarters but predicts they will return to the shops after christmas and sales of DIY stuff will climb once one. Of course so will house prices!

Aren't these arguements rather tired now? That said, he did very confidently state them to a point that I almost started to beleive them myself for a few minutes.

Analysis please on each arguement?

I will start: Unemployment rising, repossesions up, bankrupcies up, shops still in trouble. I would like to see the response to that

TALKSPORT = the audio version of THE SUN.

Nuff said...

;)

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It would probably go something like this:

...

Uemployment is borderline non-existant (probably literaly down to those who actually do not want to work)

And that is because there is very little difference between minimum wage (tesco, M+S, asda) where the jobs are and unemployment.

Real world wages apart from in government have not changed for years.

It would probably go something like this:

...

Uemployment is borderline non-existant (probably literaly down to those who actually do not want to work)

And that is because there is very little difference between minimum wage (tesco, M+S, asda) where the jobs are and unemployment.

Real world wages apart from in government have not changed for years.

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This was at around 7.30am on last Thursday on Talksport breakfast. This 'expert' said there is no way house prices will crash because of the following:

1. Ability of consumers to service their mortgages is good at the moment with little forced selling due to historically low unemployment

2. Supply and demand for housing. Supply is low and demand outstrips supply to help keep prices high

The only counter to this from the presenters was how does this relate to the slow down inthe high street? Isn't this at odds? Guy replied something about consumers have paused for breath in the last few quarters but predicts they will return to the shops after christmas and sales of DIY stuff will climb once one. Of course so will house prices!

Aren't these arguements rather tired now? That said, he did very confidently state them to a point that I almost started to beleive them myself for a few minutes.

Analysis please on each arguement?

I will start: Unemployment rising, repossesions up, bankrupcies up, shops still in trouble. I would like to see the response to that

Gee I see an opportunity to point out that this is a turnaround for Barclays who predicted a 20% fall in times past.

They were so badly burnt in the early 90's that a prediction of a 20% fall was to be expected.

Nice to see that they've woken up now.......

It's about time you lot woke up and noticed the differences to the early 90's yourselves!!!

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One factor that's usually overlooked, as it is here, what about affordability to new market entrants whether they be FTBs or new BTLs. It's OK talking about affordability for existing owners, as this commentator has, but what about the current generation?

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It is worrying when people in banks use the low unemployment or low IRs as a reason why HPs will not crash. These people, IMPO, have litle understanding of the economic cycle and obviously have no understanding of previous crashes and why they happened.

The bottom line is this - inflation is upwards due to the pressures on commodities. The US has come to the end of 30 years of LOWERING IRs. IRs in the US are now on the up. They will keep going up for years. The UK will have no choice but to follow suit.

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Gee I see an opportunity to point out that this is a turnaround for Barclays who predicted a 20% fall in times past.

They were so badly burnt in the early 90's that a prediction of a 20% fall was to be expected.

Nice to see that they've woken up now.......

It's about time you lot woke up and noticed the differences to the early 90's yourselves!!!

Actually, it was the Barclays economist at the time who predicted the 20% fall. Barclays rushed out a comment to the press that it was his opinion only and did not reflect their view. Barclays and the said economist have now parted company - surprise, surprise!

I guess the aforementioned Barclays Stockbroker guy wishes to remain with his employer for the time being. ;)

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One factor that's usually overlooked, as it is here, what about affordability to new market entrants whether they be FTBs or new BTLs. It's OK talking about affordability for existing owners, as this commentator has, but what about the current generation?

If they can afford the rent, they can afford the cost of buying, it is simply a matter of choice.

It is worrying when people in banks use the low unemployment or low IRs as a reason why HPs will not crash. These people, IMPO, have litle understanding of the economic cycle and obviously have no understanding of previous crashes and why they happened.

The bottom line is this - inflation is upwards due to the pressures on commodities. The US has come to the end of 30 years of LOWERING IRs. IRs in the US are now on the up. They will keep going up for years. The UK will have no choice but to follow suit.

For some reason I feel that Barclays would understand it better than we do, since they lost so much money the last time around.

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Guy replied something about consumers have paused for breath in the last few quarters but predicts they will return to the shops after christmas and sales of DIY stuff will climb once one. Of course so will house prices!

What drugs is this guy on? Consumers have paused for a breath before embarking on further spending using their rapidly dwindling equity to buy shiney rubbish to impress people they don't like?

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Gee I see an opportunity to point out that this is a turnaround for Barclays who predicted a 20% fall in times past.

They were so badly burnt in the early 90's that a prediction of a 20% fall was to be expected.

Nice to see that they've woken up now.......

It's about time you lot woke up and noticed the differences to the early 90's yourselves!!!

I have woken up.

In the early 90s we had unaffordability with high interest rates - but at least high inflation eroded your debt.

Now we have unaffordability with low interest rates - and with low inflation - your debt will still be waiting patiently for you at the end of the mortgage.

Now if interest rates went up - even just a weeny bit ...

Hence the observation 'it's different this time'. Very true - it is much, much worse and the effects will be catastrophic.

We already have a flavour - a stagnant/falling housing market and a consumer slow down. Guess what happens next. (And it isn't a happy ever after scenario where things just carry on as they are.)

I never get an answer to this one but here goes again.

If young people are stretching to massive mortgage multiples to buy a cr@ppy flat at 150k - how are they ever going to move up the ladder to a 250k 3 bed semi? Average age of FTB is 34 - already at or near their peak earning power - wife might want not want to work full time when children come along - how will it work? I presume people now will have to bring their families up in 1 bed flats and, eventually, as the older generation die off, all the 3 and 4 bed houses will stand empty as younger people will not be able to afford them.

Or, of course, the market might step in and 'correct' the imbalance. You never know. :rolleyes:

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If they can afford the rent, they can afford the cost of buying, it is simply a matter of choice.

Perhaps not the large number of people who are forced into staying at home or sharing a rented flat with others?

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I have woken up.

In the early 90s we had unaffordability with high interest rates - but at least high inflation eroded your debt.

Now we have unaffordability with low interest rates - and with low inflation - your debt will still be waiting patiently for you at the end of the mortgage.

Now if interest rates went up - even just a weeny bit ...

Hence the observation 'it's different this time'. Very true - it is much, much worse and the effects will be catastrophic.

We already have a flavour - a stagnant/falling housing market and a consumer slow down. Guess what happens next. (And it isn't a happy ever after scenario where things just carry on as they are.)

I never get an answer to this one but here goes again.

If young people are stretching to massive mortgage multiples to buy a cr@ppy flat at 150k - how are they ever going to move up the ladder to a 250k 3 bed semi? Average age of FTB is 34 - already at or near their peak earning power - wife might want not want to work full time when children come along - how will it work? I presume people now will have to bring their families up in 1 bed flats and, eventually, as the older generation die off, all the 3 and 4 bed houses will stand empty as younger people will not be able to afford them.

Or, of course, the market might step in and 'correct' the imbalance. You never know. :rolleyes:

I've got to go out - so last post for today.

I disagree with 34 being peak earning power.

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If they can afford the rent, they can afford the cost of buying, it is simply a matter of choice.

The cost of renting a family home where I live is about half what the mortgage repayments would be. Very few people could afford the mortgage repayments.

If someone does what you say and stretches to buy the 150k flat with whatever deposit they can muster. When they want to move up over the next 10 years to a 250k house - how will they make the leap? They'll need a 250k mortgage then - more if HPI is greater than wage inflation in those years.

Please explain how this will work. It baffles me.

I've got to go out - so last post for today.

I disagree with 34 being peak earning power.

Well you have to getting near it. If you haven't got where you are going by 40 (in the corporate world) - you aren't going there.

Lots of people face redundance and re-training in their 40s.

The fact you disagree with 34 being peak earning power - does that mean you agree with the rest?

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If young people are stretching to massive mortgage multiples to buy a cr@ppy flat at 150k - how are they ever going to move up the ladder to a 250k 3 bed semi? Average age of FTB is 34 - already at or near their peak earning power - wife might want not want to work full time when children come along - how will it work? I presume people now will have to bring their families up in 1 bed flats and, eventually, as the older generation die off, all the 3 and 4 bed houses will stand empty as younger people will not be able to afford them.

It's funny how black and white to you I and appears in a whole range of colours to the likes of TTRTR.

Edited by munimula

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Although this guy says this - it would be interesting to see whether Barclays have tightened up on their lending with mortgages considering the future is so "rosey". My husband spoke to a financial adviser at Lloyds Tsb yesterday. He said it was a refreshing change to find someone who was investing in shares, and not BTL. He said it was definately not a good investment - and that the market was due for a correction. They apparently have tightened up on their lending as it's not seen as a good investment anymore - so the banks are contradicting themselves.

When you look at the guests Talksport have on the radio (Derek Ackorah, Some alien cult, etc) shows the quality they invite.. hmmmm wacky loonies - that doesn't say much for your Barclays man does it!

:rolleyes:

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So back to my original point - why do commentators talk about affordability not being a problem?

Affordability is a non - argument for the bears, as Ive maintained since joining this forum.

Whatever the likes of Dr Bubb say about LLs subsidising tenants, I never come accross this and moreover, even if rent is slightly less than a mortgage, the huge emmotional benefits of owning more than compensate for MOST people.

Interest only mortgages, rightly or wrongly are here to stay and most people can afford to buy using this method. A 95% mortgage on a property of £150000 costs £18.00 per day on a typical 5 year fixed rate, which most sane people would consider a price worth paying for all the benefits owning confers. Who gives a feck about saving a potential £2.00 per day by renting?

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Who gives a feck about saving a potential £2.00 per day by renting?

£2 a day compounded over 25-40 years is a hell of a lot of money as you well know. The presentation of your argument is disingenuous.

I will admit that I was raised in Yorkshire, but I don't think I am being unreasonable by saying that £2 a day is a lot more than you are trying to imply.

as for renting being cheaper than a mortgage? Absolutely, and even interest-only ones. Virtually everywhere I know in the country is like that now. You really are stretching if you want to argue otherwise.

And that's not even mentioning the 25-40yr punt one is taking on IRs remaining at or below current levels. The words "historically unprecedented" understate the chances of this paying off somewhat.

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Affordability is a non - argument for the bears, as Ive maintained since joining this forum.

Whatever the likes of Dr Bubb say about LLs subsidising tenants, I never come accross this and moreover, even if rent is slightly less than a mortgage, the huge emmotional benefits of owning more than compensate for MOST people.

Interest only mortgages, rightly or wrongly are here to stay and most people can afford to buy using this method. A 95% mortgage on a property of £150000 costs £18.00 per day on a typical 5 year fixed rate, which most sane people would consider a price worth paying for all the benefits owning confers. Who gives a feck about saving a potential £2.00 per day by renting?

And what do you imagine is available in London for that price? My husband and I live in a nice rented 3 bedroom house in Bromley. 150K would maybe buy us a crappy flat that wouldn't take all our furniture and without a garden.

IO mortgages? Been there, done that. I had an endowment mortgage on a flat I owned when I lived in Newcastle. It only had to raise 20K in 25 years to pay off the mortgage but performed so badly I'd have been better off sticking the money under the mattress. No thankyou.

I have no great love affair with renting, I'd like to buy. But pragmatism wins out over emotionalism every time.

Ursa Minor

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Affordability is a non - argument for the bears, as Ive maintained since joining this forum.

Whatever the likes of Dr Bubb say about LLs subsidising tenants, I never come accross this and moreover, even if rent is slightly less than a mortgage, the huge emmotional benefits of owning more than compensate for MOST people.

Interest only mortgages, rightly or wrongly are here to stay and most people can afford to buy using this method. A 95% mortgage on a property of £150000 costs £18.00 per day on a typical 5 year fixed rate, which most sane people would consider a price worth paying for all the benefits owning confers. Who gives a feck about saving a potential £2.00 per day by renting?

One word, Dogbox - risk. If you own (and it hardly seems worth pointing out that IO isn't exactly "ownership"), you're in debt up to the eyeballs (which having to go IO implies) and prices go down, you're well and truly in a difficult place.

I wonder how the "emotional benefits" of living on a financial knife-edge worrying about any increases in IRs/unemployment etc compensate for this mythical "ownership" you talk of?

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  • 338 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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