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TheCountOfNowhere

This Weeks Housing Market Propaganda...

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your predictions for this weeks relentless housing market propaganda...

Monday...house price bubble to be biggest ever.

Tuesday...Monday's house price increase not as high as expected

Wednesday...buy before your parents write you out of their will in case you use their unearned money to rent.

Thursday...its different this time.

Friday...just ####ing buy a house please.

if you can't beat them...mock them.

Edited by TheCountOfNowhere

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your predictions for this weeks relentless housing market propaganda...

Monday...house price bubble to be biggest ever.

Tuesday...Monday's house price increase not as high as expected

Wednesday...buy before your parents write you out of their will in case you use their unearned money to rent.

Thursday...its different this time.

Friday...just ####ing buy a house please.

if you can't beat them...mock them.

When it blows it will probably happen very quickly, pointless trying to predict the cause but rates, Europe, middle east are all at boiling point and have potential to upset the apple cart? The desperate propaganda is funny, it doesn`t bother me any more, volumes have collapsed and won`t be back until there is a crash. Most will never sell their house for what they think it should be worth. I`m paying £400 p.m rent and have stopped caring, concentrating on learning more about investing and creating income streams.

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November 5th comes early this year as economic bonfire continues apace outside London

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Well, here's an early starter, just posted this evening.

Huw van Steenis and Charles Goodhart of Morgan Stanley argue in a Financial Times puff piece article that Help to Buy should be made a permanent scheme.

Summary:

  1. It's a pity it wasn't introduced earlier.
  2. Should preferably be a private sector scheme. (brokered by MS perhaps?)
  3. It will be good for the economy because many new homes will be built.
  4. Lots of consumer expenditure on furniture and white goods.
  5. Makes the banking system more stable and secure because mortgages are insured.
  6. Mortgage insurance has worked well in Australia and Canada.

What's not to like?

Make Help to Buy a permanent private sector scheme

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that's the spirit...maybe if people can see how predictable their pathetic attempts to talk up a fixed market is something will be done to stop it.

i fully expect another week of the msm drivell on house prices.

it will go on until they realise London has crashed and there's no stopping it.

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Well, here's an early starter, just posted this evening.

Huw van Steenis and Charles Goodhart of Morgan Stanley argue in a Financial Times puff piece article that Help to Buy should be made a permanent scheme.

Summary:

  1. It's a pity it wasn't introduced earlier.

  2. Should preferably be a private sector scheme. (brokered by MS perhaps?)

  3. It will be good for the economy because many new homes will be built.

  4. Lots of consumer expenditure on furniture and white goods.

  5. Makes the banking system more stable and secure because mortgages are insured.

  6. Mortgage insurance has worked well in Australia and Canada.

What's not to like?

Make Help to Buy a permanent private sector scheme

Apparently a piece in the Sunday times (David Smith?) about how incomes were not hurt as much as the stats tell us. Behind pay wall so I've not read it, do you have a view?

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Apparently a piece in the Sunday times (David Smith?) about how incomes were not hurt as much as the stats tell us. Behind pay wall so I've not read it, do you have a view?

his wages maybe. my income is the same as it was ten years ago....in nominal terms not the public sector real world style same.

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Well, here's an early starter, just posted this evening.

Huw van Steenis and Charles Goodhart of Morgan Stanley argue in a Financial Times puff piece article that Help to Buy should be made a permanent scheme.

Summary:

  1. It's a pity it wasn't introduced earlier.
  2. Should preferably be a private sector scheme. (brokered by MS perhaps?)
  3. It will be good for the economy because many new homes will be built.
  4. Lots of consumer expenditure on furniture and white goods.
  5. Makes the banking system more stable and secure because mortgages are insured.
  6. Mortgage insurance has worked well in Australia and Canada.

What's not to like?

Make Help to Buy a permanent private sector scheme

Aus and Canada, a success?? Only if you consider the world's highest household debt to disposable income a success.

In other words, an impending catastrophe.

Household+credit+to+disposable+income.PNG

householddebtpercentagedisposableincome_australia_sep2012.png

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Apparently a piece in the Sunday times (David Smith?) about how incomes were not hurt as much as the stats tell us. Behind pay wall so I've not read it, do you have a view?

He's arguing that although real earnings have fallen in the past few years, real household disposable income hasn't fallen as much due to changes in tax - in particular the raising of the personal tax allowance.

He also says that there's more to income than just wages - households have other sources of income.

He's puzzled by the fact that the ONS has earnings growth at 1.1% when private sector pay settlements are showing rises of 2% to 3%. I suspect on this he doesn't quite appreciate how the ONS Average Weekly Earnings series is compiled – it's an employment weighted series and consequently it's more a reflection of the average wage of workers than average rate of pay growth.

That might not make sense, so I'll try to make it clearer with a simple example:

Suppose in our economy we have 10 road sweepers who earn £300 p/wk and 3 bankers who earn £10,000 p/wk. The average weekly wage is ((10 * 300) + (3 * 10000)) / 13 = £2,538.

A month later the road sweepers and the bankers all get a 10% pay rise, but unfortunately Tarquin the banker is made redundant and gets a job as a road sweeper instead. The average weekly wage is now ((11 * 330) + (2 * 11000)) / 13 = £1,972.

So despite wages rising 10% across the board, the average weekly wage has fallen by 22%.

Back to the main point - it's tough to get unambiguous info on what's happening to household income, so in my case I look at a number of sources – the ONS of course, but also household surveys such as the Asda Income Tracker and Aviva Family Finances report.

Overall my current view is that most households are being slowly squeezed on discretionary income – i.e. income after taxes and essentials such as food, shelter, transport etc. So holidays, pub/restaurant visits, sky subscriptions, recreational stuff are taking a hit, but the squeeze is gradual enough so that households aren't necessarily aware of it happening - it's a boiling frog phenomenon.

A few more years of this though (which is quite possible) and I think the drop in living standards will become far more apparent. Also those who have taken mortgage fixes may well come off them and find themselves facing much higher interest payments. The shock will be severe if rates are (say) 2% higher in five years' time.

This is how Smith's piece finishes:

"The result, and this is a statistic that will surprise many, is that on OECD (Organisation for Economic Co-operation and Development) figures, Britain’s average take-home pay last year [was] the third highest among advanced economies.

"Only Switzerland and South Korea ranked higher, while Britain outstripped America, Germany, Sweden, Japan, France and 26 other countries. The comparison with America is particularly striking. Since the mid-1960s Britain’s real earnings index has doubled while America’s has not risen at all. Maybe Britain will now become more like other countries.

"The good news from all this is that the squeeze on real incomes has not been as intense as it appears, hence the fact that spending is rising modestly. The bad news is that the squeeze may not go away even as the recovery gathers strength. Whether that means the recovery lacks legs remains to be seen. At the very least, it cannot rely too heavily on the consumer."

Edit: changed 'pay' to 'income'.

Edited by FreeTrader

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On Declan Curry's radio programme this evening they were discussing the economy and inflation.

On inflation a female said something like "it's looking like prices, the rate at which prices rise is going to slip a bit".

"Going to slip" - it seemed a strange way to put it. Then Declan going all lip service about "...a tremendously hard squeeze on family budgets...".

Playing both ends.

About 13.55 minutes in.

http://

www.bbc.co.uk/programmes/b039wrjz

Expect more of the same sort of mindset on the house price bubble but without the "...a tremendously hard squeeze on family budgets...".

Edited by billybong

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From the rightmove link.

Shipside adds:

“Sellers have yet to respond en masse to increased buyer demand, with the summer heatwave distracting homeowners from the recovering market and increased chances of finding a buyer and moving home. It shows that potential sellers are still cautious and a return to a volume market remains elusive. Those that think the housing market is nearly back on its feet are missing the fact that the confidence and ability to take on extra debt have a considerable time-lag, and many potential sellers require green stalks of recovery rather than just green shoots”.

and the UK hasn't even had the green shoots bit yet never mind green stalks.

It's gone straight from bust to attempted boom in one bound.

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He's arguing that although real earnings have fallen in the past few years, real household disposable income hasn't fallen as much due to changes in tax - in particular the raising of the personal tax allowance.

He also says that there's more to income than just wages - households have other sources of income.

Did he mention the curtailing of benefits and tax credits? Income tax changes not doing much to help many compared to that.

Overall my current view is that most households are being slowly squeezed on discretionary income – i.e. income after taxes and essentials such as food, shelter, transport etc. So holidays, pub/restaurant visits, sky subscriptions, recreational stuff are taking a hit, but the squeeze is gradual enough so that households aren't necessarily aware of it happening - it's a boiling frog phenomenon.

A few more years of this though (which is quite possible) and I think the drop in living standards will become far more apparent. Also those who have taken mortgage fixes may well come off them and find themselves facing much higher interest payments. The shock will be severe if rates are (say) 2% higher in five years' time.

My experience too, school dinners gone up 8% this year...

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Did he mention the curtailing of benefits and tax credits? Income tax changes not doing much to help many compared to that.

His only mention of tax credits is that low pay is being topped up by them.

BTW, the article is on his blog:

http://www.economicsuk.com/blog/001927.html

One other point I'd add – those 'other sources of income' he talks about includes interest on savings, and over the past five years households haven't done so badly on that. Rates on fixed rate bonds were actually pretty good and although after-tax returns didn't generally match inflation, they weren't far behind.

Going forward however those who rely on savings income are going to find it much harder now FLS is in place, particularly if rates stay at the level that the MPC's forward guidance implies. Therefore unless inflation backs off considerably or earnings growth picks up, the squeeze could well be even more severe over the coming five years.

Still, maybe it'll be a problem shared – the savers get shafted for a few more years and then the borrowers get a good kicking when rates finally go up.

As Dave is fond of telling us, we're all in this together.

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His only mention of tax credits is that low pay is being topped up by them.

BTW, the article is on his blog:

http://www.economicsuk.com/blog/001927.html

One other point I'd add – those 'other sources of income' he talks about includes interest on savings, and over the past five years households haven't done so badly on that. Rates on fixed rate bonds were actually pretty good and although after-tax returns didn't generally match inflation, they weren't far behind.

Going forward however those who rely on savings income are going to find it much harder now FLS is in place, particularly if rates stay at the level that the MPC's forward guidance implies. Therefore unless inflation backs off considerably or earnings growth picks up, the squeeze could well be even more severe over the coming five years.

Still, maybe it'll be a problem shared – the savers get shafted for a few more years and then the borrowers get a good kicking when rates finally go up.

As Dave is fond of telling us, we're all in this together.

Thanks I'll have a look later. Along with the income stats that were recently on here.

See if he cites the crashing of mortgage rates as the saviour of disposable income, not wages.

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London +9.7%

South East +2.6%

East Midlands +2.4%

South West +2.1%

West Midlands +2.0%

Northern Ireland +1.8%

Eastern England +1.4%

Yorks and Humber +0.5%

North West -0.7%

Wales -0.7%

North East -1.3%

Scotland -2.0%

ONS price rise July 2

I think what they mean is "london bubble about to pop"...everywhere else dropping in real terms.

:rolleyes:

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Property price bubble is a MYTH, say economists as latest figures reveal only a modest 3.1% increase

Warnings of a new boom in house prices discredited by new data

Official figures show house prices increasing by 3.1 per cent in July

Figure was just 1.3 per cent when London is excluded

And the Mail currently running this.

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