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Xil

Home Is Where The Disaster Is

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Short and sweet article, agrees with a lot of what is said on this forum:

http://www.timesonline.co.uk/article/0,,3284-1884408,00.html

We don’t like it when the price of clothes or cars go up, and we would positively hate it if the cost of an iPod was soaring. Yet when a semi in Croydon goes up 20 per cent we are supposed to leap about with joy.

Another subscriber to the 'Dead Cat Bounce' idea or as I see it, the last maniacs still buying in this market.

Xil.

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Short and sweet article, agrees with a lot of what is said on this forum:

http://www.timesonline.co.uk/article/0,,3284-1884408,00.html

Another subscriber to the 'Dead Cat Bounce' idea or as I see it, the last maniacs still buying in this market.

Xil.

"High house prices are killing the economy. No wonder growth is sluggish when Britons have a collective £3 trillion of wealth tied up in unproductive assets — their homes — which could be better invested in wealth-creating activity. We have gone from being the workshop of the world to being the estate agents’ office of the world,".... "High property prices are also immobilising the labour force, causing skills shortages across the country, and contributing to a plummeting birth rate because no one of child-bearing age can afford a decent home in which to bring up children. "

This guy should be given a Knighthood........

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Short and sweet article, agrees with a lot of what is said on this forum:

http://www.timesonline.co.uk/article/0,,3284-1884408,00.html

Another subscriber to the 'Dead Cat Bounce' idea or as I see it, the last maniacs still buying in this market.

Xil.

Superb article, this sums it up nicely;

We have gone from being the workshop of the world to being the estate agents’ office of the world, seeming to believe that as a nation we can make ourselves rich by selling houses to each other.

He absolutely hits the nail on the head;

Far more people are trying desperately to save up for their first home or are wanting to move from their cramped home to a bigger and better one. For them, the property boom is impoverishing.

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Short and sweet article, agrees with a lot of what is said on this forum:

http://www.timesonline.co.uk/article/0,,3284-1884408,00.html

Another subscriber to the 'Dead Cat Bounce' idea or as I see it, the last maniacs still buying in this market.

Xil.

I've seen articles recently in the paper along the lines of "More good news for home owners as prices rise x% bla bla". I wonder how many of the muppets that read that realise that it is only good news if they have a big expensive house and plan to move to a smaller or cheaper one and take the difference as cash. If they are planning or hoping to move up "the ladder" (that silly phrase that doesn't convey the fact that the rungs are moving further apart at the moment), then the article should be entitled "More bad news for home owners as prices rise x% bla".

Short and sweet article, agrees with a lot of what is said on this forum:

http://www.timesonline.co.uk/article/0,,3284-1884408,00.html

Another subscriber to the 'Dead Cat Bounce' idea or as I see it, the last maniacs still buying in this market.

Xil.

Excellent article too by the way. I am in the writer's category of owning a house but wanting to move to a bigger one. But I'm having a family anyway, even though it is becoming cramped. Hopefully one day I will be able to afford a bigger place, but if not, then so be it. I'm not paying for other people's retirement at the expense of my own. If other people can't do the maths to work out that paying prices now with the background of little inflation to do the heavy lifting for them is going to cripple them financially in 20 years, then that's unfortunate, but I'm not joining them. I'd rather have kids now in a small house than find myself barren in 10 years time if and when property is cheap again.

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"High house prices are killing the economy. No wonder growth is sluggish when Britons have a collective £3 trillion of wealth tied up in unproductive assets — their homes — which could be better invested in wealth-creating activity. We have gone from being the workshop of the world to being the estate agents’ office of the world,".... "High property prices are also immobilising the labour force, causing skills shortages across the country, and contributing to a plummeting birth rate because no one of child-bearing age can afford a decent home in which to bring up children. "

This guy should be given a Knighthood........

Don't mean to be picky, but he's plain wrong. We have around £1 trillion of debt secured on houses, and if the entire housing market we re-mortgaged a debt of £3 trillion could be created. Actual 'assets' in terms of real money invested in housing is probably more like £200-300 billion.

He like most people is making the fatal mistake of counting a debt as an asset and hence hugely over estimating the private wealth of the UK population. Remember the money you get from a bank for a mortgage has not been lent to the bank by a saver, it has been created by the bank from nothing.

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A short and to the point article, I bet even a Sun reader could understand the message........well he might have to give it some t@ts to get them really focused on it. :rolleyes:

Edited by Catch22

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His article is clear, consise, simple and all round common-sense.

After all, it is useful to analyse the numbers, compare valuation metrics and historical averages to justify the HPC argument. But when it comes down to it, such rampant, sustained house price inflation is BAD NEWS for the country. Both from an economic and social perspective.

It's great that the mainstream media is starting to send the message.

Do we want to see our children enslaved to a bank for their entire working lives just so that they can eek out a miserable existence in a shoebox, where they would be loathed to raise a family of their own?

The only way out of this is for prices to come down. There is no other way.

Although, I am sure that by the time my kids are old enough to buy, we will be lamenting about the Great Global Property Boom of the early noughties. It will be consigned to history alongside other tales of manias and crashes: Mississippi Co., South Sea Bubble, Tulipmania, Wall St. 1929 and Dot.Com 2000.

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Don't mean to be picky, but he's plain wrong. We have around £1 trillion of debt secured on houses, and if the entire housing market we re-mortgaged a debt of £3 trillion could be created. Actual 'assets' in terms of real money invested in housing is probably more like £200-300 billion.

He like most people is making the fatal mistake of counting a debt as an asset and hence hugely over estimating the private wealth of the UK population. Remember the money you get from a bank for a mortgage has not been lent to the bank by a saver, it has been created by the bank from nothing.

I believe the author is refering to the capital wasted servicing these debts, rather than actually releasing the equity. If houses were cheaper, we would have more disposable cash to squander on other consumables and keep the economy turning, and actually benefit from low interest rates. Instead, our (collectively) money is tied into unnecessary debt reparations, hence the slow down.

Regards

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Don't mean to be picky, but he's plain wrong. We have around £1 trillion of debt secured on houses, and if the entire housing market we re-mortgaged a debt of £3 trillion could be created. Actual 'assets' in terms of real money invested in housing is probably more like £200-300 billion.

He like most people is making the fatal mistake of counting a debt as an asset and hence hugely over estimating the private wealth of the UK population. Remember the money you get from a bank for a mortgage has not been lent to the bank by a saver, it has been created by the bank from nothing.

Sorry but your last sentence needs explaining. How do the banks create money from nithing?!

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Guest Charlie The Tramp

Sorry but your last sentence needs explaining. How do the banks create money from nithing?!

Just Google Fiat Money

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Sorry but your last sentence needs explaining. How do the banks create money from nithing?!

I deposit £100 in the bank. The bank lends £80 of it to you. I still have my £100 balance (on paper), and you have your £80. There is now £180 in the economy instead of £100. It's called fraction reserve banking.

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Guest Charlie The Tramp

I deposit £100 in the bank. The bank lends £80 of it to you. I still have my £100 balance (on paper), and you have your £80. There is now £180 in the economy instead of £100. It's called fraction reserve banking.

Or for every £8 you deposit ( that then becomes their reserves ) they can lend out £100 so they in effect create new money.

Today the world is awash with it, all eventually having to be paid back. :(

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I deposit £100 in the bank. The bank lends £80 of it to you. I still have my £100 balance (on paper), and you have your £80. There is now £180 in the economy instead of £100. It's called fraction reserve banking.

And here we have a fine example of the grasp of basic accounting principles.

Let me try & help you as it is clearly tooooooo complicated.

the bank still owes you the £100

and the borrower owes the bank £80

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And here we have a fine example of the grasp of basic accounting principles.

Let me try & help you as it is clearly tooooooo complicated.

the bank still owes you the £100

and the borrower owes the bank £80

Actually if you deposit £100 in the bank they can lend out over £800 on the back of that reserve, say that £800 is then spent on a new widget and the shop then deposits £800 in their account then bank can now loan £8K backed by that deposit, and so on. This is why banks can generate money supply for all those BTL mugs, money that wasn't previously existence in the economy, this is why we see M3 growth >13%.

People somehow think a ton of money has fallen out of the sky or has come from some other part of the economy like City bonuses, in reality FRB means you create loans with notional backing and hopefully offload the debt onto the bond markets.

Edited by BuyingBear

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And here we have a fine example of the grasp of basic accounting principles.

Let me try & help you as it is clearly tooooooo complicated.

the bank still owes you the £100

and the borrower owes the bank £80

I never said the bank didn't owe me £100, or the borrower owe the bank £80!

But there are still £180 in the economy where before there were £100.

Perhaps that is tooooooooooooo complicated for you to understand?

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And here we have a fine example of the grasp of basic accounting principles.

Let me try & help you as it is clearly tooooooo complicated.

the bank still owes you the £100

and the borrower owes the bank £80

Read the following for enlightenment. Its nothing to do with basic accounting principles but the creation of money from nothing for nothing. http://en.wikipedia.org/wiki/Fractional-reserve_banking

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"High house prices are killing the economy. No wonder growth is sluggish when Britons have a collective £3 trillion of wealth tied up in unproductive assets — their homes — which could be better invested in wealth-creating activity. We have gone from being the workshop of the world to being the estate agents’ office of the world,".... "High property prices are also immobilising the labour force, causing skills shortages across the country, and contributing to a plummeting birth rate because no one of child-bearing age can afford a decent home in which to bring up children. "

This guy should be given a Knighthood........

I'll second that!

Here is a tip:

Do not try and explain basic economics to BTL landlords

And I'll second that tooooooooooo! :lol::lol::lol::P

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And here we have a fine example of the grasp of basic accounting principles.

Let me try & help you as it is clearly tooooooo complicated.

the bank still owes you the £100

and the borrower owes the bank £80

Let me try to help you see how simple it is:

http://www.cfoss.com/grip.html - remember this was published some time ago, hence the out of date debt figures. I recommend this book it's astonishing.

and

http://www.cfoss.com/earth.html

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Don't mean to be picky, but he's plain wrong. We have around £1 trillion of debt secured on houses, and if the entire housing market we re-mortgaged a debt of £3 trillion could be created. Actual 'assets' in terms of real money invested in housing is probably more like £200-300 billion.

He like most people is making the fatal mistake of counting a debt as an asset and hence hugely over estimating the private wealth of the UK population. Remember the money you get from a bank for a mortgage has not been lent to the bank by a saver, it has been created by the bank from nothing.

Fair point TM - but at least the rest of it hits the nail on the head...

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I'm really enjoying this thread, thanks. It's this lunatic pyramid-selling aspect that intrigues me - the money conjured from nowhere, and the people spending it madly as if they realise they need to exchange it quickly for "real" goods before there's no more rabbits in the hat.

It's interesting to compare the impending collapse with the dotcon >pop<. In that instance, I would think most of the cash that was lost was REAL cash invested in ISAs etc (I should know, a good dollop of it was mine!). Perhaps someone with more facts at their disposal than me could tell us what proportion of dotcon investing was done with real money and what was done with loans-to-buy-the-shares. Also it was only felt by a very small part of the population (ignore pension funds, they're out of people's short-term sight out of people's short-term minds). So, a small bunch of yuppies lost a lump of their hard-earned. This time, EVERYBODY'S caught up, and a massive proportion of it is borrowed. The snowball is going to be much bigger ths time.

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Don't mean to be picky, but he's plain wrong. We have around £1 trillion of debt secured on houses, and if the entire housing market we re-mortgaged a debt of £3 trillion could be created. Actual 'assets' in terms of real money invested in housing is probably more like £200-300 billion.

He like most people is making the fatal mistake of counting a debt as an asset and hence hugely over estimating the private wealth of the UK population. Remember the money you get from a bank for a mortgage has not been lent to the bank by a saver, it has been created by the bank from nothing.

Mortgage debt makes up over £800,000,000,000

and if the market was to survive then the current "percieved" value of housing would require debts of the size mentioned.

Obviously this can't work whilst we fight inflation..

So obviously prices can't be maintained.

If the debt burden was bad, and prices are maintained it is obvious the debt burden gets worse..

Average new mortgage is £140,000

how many of those bad boys can we survive..?

Bless all the bulls...

You may be right.. it might be christmas and maybe you can keep your house prices..

but I can't see how...

For all of my arguments about why house prices will drop.. the most convincing is that I have no argument about how they can stay where they are..

Edited by apom

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"We have gone from being the workshop of the world to being the estate agents’ office of the world"

here's AN OLD WARNING

(from about 2 years ago, but not heeded by the BoE etc, so things got worse):

GOLDEN NAILS for Housing

The Property market is a Dracula-like creature:

sucking cash and debt capacity from the healthier parts.

And so the UK manufacturing sector has been hollowed out,

leaving a dry and empty shell of housing structures, banks, retailers,

and winebars. And now this whole ugly edifice is about to collapse.

The first Golden nail is going into Dracula's coffin:

1. The disappearance of the tenant.

Housing speculators who buy new homes and flats, and gear up their

old housing, intending to rent to "tenants" have helped push the

UK housing market to new peaks. How have they done it? Those "old"

flats are no longer available to people seeking their own accomodation.

Instead, they are given to decorators for "tarting up" and then to

rental agents who are asked to find tenants. But tenants are getting

more ellusive. The hollowed out economy is not recovering and layoffs

are accelerating, leaving fewer tame tenants to move into the increasing

supply of BTL flats. The average time that flats are empty in my old

area of Kensington has risen from 4 to 6 weeks over the past 12 months.

Now watch this problem spread to other "safer" areas.

And the second nail is just waiting for the hammer:

2. A rise in interest rates, or disappearing credit.

Those who say not to worry, rates won't rise soon and even then, by

only 0.5 or 1.0% have no appreciation of history. The problem is more

systemic than they have realised. There is simply too much debt. Lower

rates are no longer working their magic on the economy, spending goes

into the wrong places (like a housing bubble) and the US Fed and the

UK BoE are beginning to realise that new factors are at work. The

hollowed out economy is inhabited by hollowed out people, without much

discipline. They spend for today; thinking tomorrow will take care of

itself. But there is a brand new nastier world waiting for those who

have lived complacently building up debt.

Our global economy will not show a healthy cyclical recovery until

overall debt is reduced. According to Peter Warburton, respected

former economist at Robert Fleming, global debt has now reached 300%

of global GNP, same as at the top of the bubble in 1929. And that

debt will not disappear without pain. We are coming into a time

when a shock (it could be a war, a rise in oil prices, or a sudden

drop in equity markets) will force people to realise that they cannot

go on piling up debt.

Whatever this shock may be, it is likely to raise rates (if it brings

an increase in commodity prices) or to sharply restrict credit. If

later happens, we may see modest increases in rates, but credit will

be harder to come by. The banking system, facing writeoffs and

workouts, and problems in raising its own money, will likely become

much more severe in its lending criteria, particularly to an overpriced

housing sector, starved of tenants.

3. The Liquidation

In such an environment, assets will be sold to retire onerous debt.

This time around, banks will have less patience. In prior cyclical

downturns, banks worked with their customers, and lived through

years of negative equity, content to accept interest and a reduced

amount of principal. This time, they may be more severe, especially

for Buy-To-Let flats. If there is no tenant, and hence no cash

coming in, they will force sale BEFORE the equity in the flat melts

away.

My view is not a concensus view, but the facts and the factors are

there to allow it to happen. The question you should ask, is what

can stop it?

Well, Dr Bubb, it appears that most things on the list above are now in place, or shaping up to be in place within the next few months.

Now must not be the time to be buying a property, which you will be paying "dead money" on in the form of interest to a bank for 25 to 30 years.

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  • 301 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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