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TheCountOfNowhere

House Prices 'risk Becoming Unsustainable'

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http://news.sky.com/story/1195932/house-prices-risk-becoming-unsustainable

"A report warns of the consequences of the growing gulf between homes for sale and demand in some areas of the UK."

"Its report predicts prices will rise by 5% on average in each of the next five years but warns that a lack of properties for sale risks people paying far more than market value to secure a home."

They are wrong, the housing market has been unstable since 2005 and now it's being supported by 0% interest rates, government money printing, media hype and tax payer backed schemes I'd say it is as unstable as you could get,

"A new phase of the Government's Help to Buy scheme offering state-backed mortgages to people with 5% deposits was launched in October."

Oh, how can it fail !!!!

Caveat Emptor.

Edited by TheCountOfNowhere

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Its only a risk though isnt it ? ... clearly house prices are unsustainable at their current levels ....

unsustainably low that is... lack of supply and panic buying is driving prices up rapidly... at least thats what Im seeing round my way...

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Its only a risk though isnt it ? ... clearly house prices are unsustainable at their current levels ....

unsustainably low that is... lack of supply and panic buying is driving prices up rapidly... at least thats what Im seeing round my way...

Let's party like it's 2007. B)

Edited by TheCountOfNowhere

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Nothing rises forever.

although Government would like us to beleive forever rising is sustainable, even possible.

Plenty of new FOR SALE boards up around here this week. Is this people escaping or is it people hoping to move up with HTB2 lifting their borrowing power?

whatever it is, anecdotally, supply just shot up.

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Let's party like it's 2007. B)

It could literally be any year from 2002 through 2008 the stock markets are going ape sh1t all time highs... green across the board its a fricking melt up out there ... but "trade what you see not what you hope" which is to say "when the facts change so will I, what would you do sir ?"

there were similar articles around in 1997... they never came to anything...

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It could literally be any year from 2002 through 2008 the stock markets are going ape sh1t all time highs... green across the board its a fricking melt up out there ... but "trade what you see not what you hope" which is to say "when the facts change so will I, what would you do sir ?"

there were similar articles around in 1997... they never came to anything...

Anyone buying into the stock market in 2000 or 2007 would just be able to get their money back now...less interest of course and fees.

anyone buying in 1985 as a long term investment would have done well, anyone buying post 1997 as a long term investment might as well have put their money in a savings account.

Pretty much like house buying.

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Anyone buying into the stock market in 2000 or 2007 would just be able to get their money back now...less interest of course and fees.

anyone buying in 1985 as a long term investment would have done well, anyone buying post 1997 as a long term investment might as well have put their money in a savings account.

Pretty much like house buying.

And anyone having bought a house post 2004, outside London and the South East, would have had capital tied up for ten years and earned nothing on that capital other than the utility of a house to live in, off set by the usual moneypit liabilities like ''improvements'' which usually end up about the same as the rent theat would have been spent.

Giving me reason to believe the provincial market will now move after ten years of owners getting a good financial spanking.

Edited by crashmonitor

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And anyone having bought a house post 2004, outside London and the South East, would have had capital tied up for up to ten years and earned nothing on that capital other than the utility of a house to live in, off set by the usual moneypit liabilities like ''improvements'' which usually end up about the same as the rent theat would have been spent.

At least, now we have "returned to normal" they will be able to sell at a profit and move up the ladder pyramid :lol::lol::lol::lol::lol:

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http://news.sky.com/story/1195932/house-prices-risk-becoming-unsustainable

"A report warns of the consequences of the growing gulf between homes for sale and demand in some areas of the UK."

"Its report predicts prices will rise by 5% on average in each of the next five years but warns that a lack of properties for sale risks people paying far more than market value to secure a home."

They are wrong, the housing market has been unstable since 2005 and now it's being supported by 0% interest rates, government money printing, media hype and tax payer backed schemes I'd say it is as unstable as you could get,

"A new phase of the Government's Help to Buy scheme offering state-backed mortgages to people with 5% deposits was launched in October."

Oh, how can it fail !!!!

Caveat Emptor.

Surely if the correct lending criteria by the lenders is used and the valuations are correct when the mortgage is taken out there should be no problem.

The problem is the industry itself, including RICs, thats why property is overpriced.

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At least, now we have "returned to normal" they will be able to sell at a profit and move up the ladder pyramid :lol::lol::lol::lol::lol:

Absolutely up to ten years of zero equity in Stoke, Blackburn, Nottingham, Derby, Newcastle. Blackpool ( well maybe not Blackpool*) may be about to be undone by a bit of HPI. Not only will Northern Rock (the bad bit), RBS etc. be able to clear their bad loans but those trapped will now have the privilege of borrowing a bit more with their equity windfall to move onto rung 2.

* clearly 35k is unsustainable for detached houses in Blackpool boom or no boom.

http://www.rightmove.co.uk/property-for-sale/property-42438910.html

Edited by crashmonitor

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Anyone buying into the stock market in 2000 or 2007 would just be able to get their money back now...less interest of course and fees.

anyone buying in 1985 as a long term investment would have done well, anyone buying post 1997 as a long term investment might as well have put their money in a savings account.

Pretty much like house buying.

******** - show us the working or it never happened.

If you did decide to buy into a broad equity index in 2000 and then again in 2007 well I feel sorry for you. your market timing was lousy. what I'm really not certain about is why you are being charged "interest of course and fees" seriously if you bought some shares in 2000 and your being charged interest on them you need to change your stockbroker... If you actually own any shares you would there is no interest to pay on the contrary the shares if they are any good tend to pay out great dividends as frequently as every quarter.

what a lot of people don't seem to take into account is that Indices like the FTSE are Price indexes and are therefore totally not indicative of the total return and the compounding effect of dividend income which leads to exponential growth.

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Osborne's various market-defying tactics suggest that affordability has been constrained nationally for some time, even with a 0% base rate (London is driven by foreign Ponzi actors and represents an additional risk over and above the quotidian). The prospect of 30yr mortgage terms - in effect the backstairs re-introduction of i/o mortgages - adds further weight to the argument that we're deep into bubble territory yet again.

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It could literally be any year from 2002 through 2008 the stock markets are going ape sh1t all time highs... green across the board its a fricking melt up out there ... but "trade what you see not what you hope" which is to say "when the facts change so will I, what would you do sir ?"

there were similar articles around in 1997... they never came to anything...

You may be right, as ever there's a lot of noise, but NYSE margin debt is clearly saying 2000 or 2007 rather than 2003.

NYSE-margin-debt-SPX-since-1995.gif

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You may be right, as ever there's a lot of noise, but NYSE margin debt is clearly saying 2000 or 2007 rather than 2003.

you should be very wary of dual axis charts.

that Margin debt is highly correlated to share prices shouldn't be a surprise after all these are just the leveraged people...

400 billion sounds a lot like an imminent threat to humanity doesn't it ? but its not that much in the scheme of things... Its less than the market cap of AAPL ($500 bil) which is but one of the 500.

and besides that margin debt is sustainable to infinity as long as stocks make more than the interest on that margin hence making those risktakers a nice little earner...

http://www.bloomberg.com/news/2013-01-21/profits-at-1-trillion-meet-valuations-with-s-p-500-near-record.html

with earnings of 1 trillion and 72% of companies beating estimates I wouldn't go holding my breath for a meltdown anytime soon.

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you should be very wary of dual axis charts.

that Margin debt is highly correlated to share prices shouldn't be a surprise after all these are just the leveraged people...

400 billion sounds a lot like an imminent threat to humanity doesn't it ? but its not that much in the scheme of things... Its less than the market cap of AAPL ($500 bil) which is but one of the 500.

and besides that margin debt is sustainable to infinity as long as stocks make more than the interest on that margin hence making those risktakers a nice little earner...

http://www.bloomberg.com/news/2013-01-21/profits-at-1-trillion-meet-valuations-with-s-p-500-near-record.html

with earnings of 1 trillion and 72% of companies beating estimates I wouldn't go holding my breath for a meltdown anytime soon.

So what would be a sign that assets are overpriced then?

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******** - show us the working or it never happened.

If you did decide to buy into a broad equity index in 2000 and then again in 2007 well I feel sorry for you. your market timing was lousy. what I'm really not certain about is why you are being charged "interest of course and fees" seriously if you bought some shares in 2000 and your being charged interest on them you need to change your

I think you've missed something there.

if you bought a £1000 FTSE 100 bond in 2000 it would be worth about £1000. You'd be charged management fees on that too. if you put that £1000 in an ISA savings account it would be worth about £1500 ( at least ).

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with earnings of 1 trillion and 72% of companies beating estimates I wouldn't go holding my breath for a meltdown anytime soon.

I think there is a consensus that the market has more legs. It really would be surprising if (excluding the odd setback) it didn't surpass the previous peak of 1999 shortly given good Western growth figures, low inflation and a will by Central Banks to subdue interest rates etc.

I plumped for 7500 for the FTSE 100 by the end of this year on the predictions thread, but that is definitely on the conservative side.

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I think you've missed something there.

if you bought a £1000 FTSE 100 bond in 2000 it would be worth about £1000. You'd be charged management fees on that too. if you put that £1000 in an ISA savings account it would be worth about £1500 ( at least ).

Not sure what your on about here "FTSE 100 bond" the FTSE 100 is an equity price index... anyway Im going to follow your little thought experiment here.

lets say I had theoretically decided to outsource my wallet and and my brain in 2000 and decided not to actually invest in shares and instead invested £1000 in a Newly conceived peice of investment banking voodoo called an ETF... (ISF.L)

http://uk.ishares.co...ISF/performance

well today even after the spivs have been thieving 0.40% every year I would still have £1660!

Imagine how much I would have made if i had actually engaged my brain and bought some decent shares!

You know going down to the the casino/estate agents is much more fun and more profitable than paying some other dude to do it ?

by the way I used to have about £5000 in a cash ISA in a place called Icesave? I lost 100% in a day... that was fun. :)

Edited by jonpo

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well today even after the spivs have been thieving 0.40% every year I would still have £1660!

As I say, what;s the point in risking your cash with the spivs in London.

Bookies betting on the hare and the tortoise, that's all they are.

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As I say, what;s the point in risking your cash with the spivs in London.

Bookies betting on the hare and the tortoise, that's all they are.

There is no point... I don't for one minute advocate purchasing any active fund management products or esoteric investment banking structured anything.

I picked the ISF FTSE100 tracker etf from blackrock as a low cost example of a passive index fund that tracks the FTSE100.. in this case the spivs are not actually gambling with your money you are paying them to hold a portfolio of shares which replicates the weightings of the FTSE 100.

FTSE100 just represents an abstract average market cap weighted selection of fractional ownerships of 100 large profitable businesses... there is no charge to owning a part of a business you can buy the share certificates and put them in a draw for 13 years if you like. Its erroneous to say that £1000 invested in a business in 2000 would have returned you nothing... you would have received 13 years of dividends with which you could have bought a lot more shares over that period especially in 2003 and 2009. sure maybe the original shares are still worth £1000 but your missing the point which is that you get more shares every year and those shares pay more dividends...

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I think there is a consensus that the market has more legs. It really would be surprising if (excluding the odd setback) it didn't surpass the previous peak of 1999 shortly given good Western growth figures, low inflation and a will by Central Banks to subdue interest rates etc.

I plumped for 7500 for the FTSE 100 by the end of this year on the predictions thread, but that is definitely on the conservative side.

Good growth figures? The UK can't even manage 2% growth yoy while running a permanent 7% deficit!

As for the US? Oh dear, oh dear.

M2+percent+change.png

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There is no point... I don't for one minute advocate purchasing any active fund management products or esoteric investment banking structured anything.

I picked the ISF FTSE100 tracker etf from blackrock as a low cost example of a passive index fund that tracks the FTSE100.. in this case the spivs are not actually gambling with your money you are paying them to hold a portfolio of shares which replicates the weightings of the FTSE 100.

FTSE100 just represents an abstract average market cap weighted selection of fractional ownerships of 100 large profitable businesses... there is no charge to owning a part of a business you can buy the share certificates and put them in a draw for 13 years if you like. Its erroneous to say that £1000 invested in a business in 2000 would have returned you nothing... you would have received 13 years of dividends with which you could have bought a lot more shares over that period especially in 2003 and 2009. sure maybe the original shares are still worth £1000 but your missing the point which is that you get more shares every year and those shares pay more dividends...

I dont disagree with any of that. However, joe-bloggs deals in averages and not all shares pay dividends ( especially over the last 5 years ).

Edited by TheCountOfNowhere

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There is no point... I don't for one minute advocate purchasing any active fund management products or esoteric investment banking structured anything.

I picked the ISF FTSE100 tracker etf from blackrock as a low cost example of a passive index fund that tracks the FTSE100.. in this case the spivs are not actually gambling with your money you are paying them to hold a portfolio of shares which replicates the weightings of the FTSE 100.

FTSE100 just represents an abstract average market cap weighted selection of fractional ownerships of 100 large profitable businesses... there is no charge to owning a part of a business you can buy the share certificates and put them in a draw for 13 years if you like. Its erroneous to say that £1000 invested in a business in 2000 would have returned you nothing... you would have received 13 years of dividends with which you could have bought a lot more shares over that period especially in 2003 and 2009. sure maybe the original shares are still worth £1000 but your missing the point which is that you get more shares every year and those shares pay more dividends...

You can also make money on the short side! Just sayin'...

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As I say, what;s the point in risking your cash with the spivs in London.

Bookies betting on the hare and the tortoise, that's all they are.

3.77% since 2000 looks pretty poor. There is an exaggeration over the performance of equities not least because the lying f**kers compare performance to deposit accounts.

There is nothing short term about an equity investment, it might be instant but so is a fixed rate bond with an early exit penalty. Fixed rate bonds have killed equities since 2000, admittedly a bad time for equities and the outlook from hereonin might be a bit better.

And to suggest that you go out on a limb and don't put your money under a tracker is impractical and extremely risky for the average investor....so management fees go with the territory.

Incidentally my own performance on mainly cash is 4.75% net since 2006. The worst performing asset is property recently. By my reckoning I have made precisely zero since 2006 on my unmortgaged property, some boom.

Equities may have done better since 2006. However, I haven't had to suffer the trails and tribulations, my tax is paid up and I have no capital gains tax computations to worry about.

Meanwhile the industry will continue to lie about their ''superior'' performance by comparison to short term cash investments.

Edited by crashmonitor

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So what would be a sign that assets are overpriced then?

Its all relative .... I like to look at Yields and especially... the Yield curve. at the moment you have:

equitiy divs yielding 3.5%...

5-10 year gilts at what? 3%...

house rental yields at 3% ?

cash savings 1.5%ish if your lucky ?

I'd only really get worried when I see an inverted yield curve...

lets face it if equities are paying 3.5% divs they are actually earning 5-10% so I think the bull market has a long way to go yet... The central bankers will spoil the party eventually... but they are all still so dovish at the moment... the party will stop sometime after the rate rise cycle !

of course the unexpected could happen... but I find it unlikely.

If I see a tree in the road I will avoid it but the road ahead is clear there is no point in taking evasive action until I see the hazard.

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