Coming 'oil Glut' May Push Global Economy Into Deflation

[Venger]

Not at all, a land price bubble doesn't require a land supply problem (if you mean the supply of land with planning permission then this is an issue, and I would personally advocate scrapping all planning permission for owner occupied selfbuilds, but given relative building to population rates it's highly unlikely to be driving current prices). It's your assertion that bubbles are always linked to supply, an assertion which I do not share. Financial bubbles are linked to the supply of credit, not necessarily the supply of the underlying asset.

One person paying another person for an existing asset is an investment if they are presuming that the value of that asset will increase, as any dictionary will tell you. Far from clearly distinguishing between the two in your earlier post you failed to make any distinction between financial investment and investment in infrastructure and used a perceived lack of the latter to invalidate a premise based on the existence of the former. A financial bubble clearly only requires financial malinvestment.

Yes; good answers Neverwhere.

The land supply for building problem (or investment in land to build at any silly high insane price) in itself is part of the malinvestment problem. Too many landplots held off the market, owners wanting crazy high values. We know land comes to market at lower prices when money/credit is tighter. Tommy Walsh in 2008... Laurejon below. Sellers come to market when it's not hold and forever HPI, malinvestment, credit expansion/bailout QE.

Can link to one small independent developer who tried to go it alone in recent times, against the other favoured main developers.. bankrupt, and 2 properties heading to auction soon, one of them a shell. I reckon they paid too much for the plot of land to build two houses.

Self build numbers are way down because plots are not coming to market, and when they are, hanging on at speculatively high prices mostly. Holders preferring to hold back possible plots, with belief in rising value, or when on market, price up and hold out for silly prices some crazy fool might pay. 'It's not earning anything in the bank' anyway, and the VI hold savings/value of money will be irrelevant in the future, only assets matter, and like to think savers will have all their savings seized. Therefore some other reasons this market is anything but balanced and stable.

20 May 2014 http://www.dailymail.co.uk/news/article-2632941/Grand-Designs-dream-fades-British-families-Coalition-promise-support-self-build-revolution-left-tatters.html

The number of self-build houses built has fallen by 22% since David Cameron became Prime Minister. In 2010 10,588 homes were self built, according to Treasury calculations. By last year this had slumped to just 8,235, according to the figures released in a Parliamentary Answer to Labour's shadow communities secretary Hilary Benn.

I have bought several plots of land over the years for development.

I purchased an old shack with no permission on the south coast for 40K in 1989 and gained permission for a pair of semi-detached chalet bungalows.

15months later having completed that project and sold them on and made a tidy sum I purchased a very similar plot same size but with outline for 115,000 and used the same drawings for th detailed application that was passed immediately using the other sites permission as a precedence.

The recession hit, and the bank revalued the site I had paid 115,000 for at 25,000

During the recession, you could not give a plot of land away, it would cost more to build a house than the house was worth on the open market, and that did not include the land prices.

Therefore land was essentially worthless.

[Venger]

I hope you do.

If I'm wrong then I'm wrong and I'll refine my thinking towards an economic model that better fits the facts, something that I'm quite prepared to do. But there are too many tin ears on this forum that would rather go down in flames than recognise that any of their assumptions may just have been the teensiest bit inaccurate.

For the record here's what I believe we'll see over the next 24 months,

1. Very small interest rate increases, base rate won't exceed 2% and may well not get over 1.5%.

2. Mortgage rates will go up by slightly less than the base rate increases, and we'll see more long term (10 year plus) fixes.

3. Nominal UK house prices within +/- 5% of where they are today.

4. Inflation generally below the 2% target.

5. Owner occupation rates continue to fall.

6. Political moves towards stronger pro-tenant legislation.

7. Gold price lower than today in sterling, ie below £760 per troy ounce.

8. Euro still in existence although we'll see some more big scares and alarms along the way that will translate into a buying opportunity for equities.

9. Equities may have a poor year in 2015, but the longer term trend is up as bonds reach an inflexion point and begin a long term pattern of capital declines.

10. Growng acceptance that we're in a period of secular stagnation.

Mostly agree with all of those, except for item 3, where I expect 'concern' about HPC to weigh in the minds of most low-mid-high prime owners, and their 'loss' in value from peak.

4. See inflation falling further though. Not sure about item 9; would expect some pullback in equities from global tapers. 10, I would replace for acceptance UK has deflation.

The main story will be tighter credit / tougher mortgage credit qualification criteria / lack of borrowing demand (unless some sharp HPC already occurred).

[19 year mortgage 8itch]

Does buying a 2 bed house in June and renting it out in Sept for a 4.8% gross yield count as investment or just more private transactions?

184 moss lane wa15 8az

What the hell, have a link on me

http://www.rightmove.co.uk/house-prices/detailMatching.html?prop=42754249&sale=51382280&country=england&referrer=soldPriceResults

184 Moss Lane

2 bed terraced house

Sold price history:

£237,000 02 Jun 2014 + 15.6%

£205,000 24 Jun 2011 + 20.6%

£170,000 12 Nov 2009 + 3.0%

£165,000 19 Mar 2004

http://www.rightmove.co.uk/property-to-rent/property-48226559.html

Edited September 18, 2014 by 8 year itch

[19 year mortgage 8itch]

Does buying a 2 bed house in June and renting it out in Sept for a 4.8% gross yield count as investment or just more private transactions?

184 moss lane wa15 8az

Or is this an investment?

Sstc

http://m.zoopla.co.uk/for-sale/details/32417886

http://www.rightmove.co.uk/property-for-sale/property-29720073.html

Now To let

http://www.rightmove.co.uk/property-to-rent/property-46211761.html

87 Hermitage Road. Wa15 8bw

[19 year mortgage 8itch]

This global oil deflation is really going to help first time buyers.

[PopGun]

PopGun, keep making excuses for those who chose to buy at ever higher prices, saying reposession solves nothing because only people who benefit are BTLers, and attacking renter-savers... who took the only option in the hope the reckless malinvestment of others would correct. It went to extremes.. and so savers are to blame. Pathetic, your position on that.

I notice how you don't seem too fussed how things turned out with reflation. Remind me, when did you buy the house you wanted to trade up from? 2005-07 would be my bet.

I'd love a 50%+ nominal crash, but frankly reality has extinguished the Hope. Given that the government still owns much of the mortgage book, I'm surprised others still have it.

If disagreeing with the same tripe you've been posting all these years and your blind simplistic faith makes me a troll, then so be it.

[PopGun]

As for excuses, I admit to having concern about those who just wanted somewhere to live but got caught up in the rigged market. IMO it's/was the BTLers/ property hoarders who were/are the bigger problem in bidding prices up.

[Venger]

I'd love a 50%+ nominal crash, but frankly reality has extinguished the Hope. Given that the government still owns much of the mortgage book, I'm surprised others still have it.

If disagreeing with the same tripe you've been posting all these years and your blind simplistic faith makes me a troll, then so be it.

All these years? At least I am honest and my motives and hopes open in my postings. Hpcers have been wrong-footed by the system; rather than allowing immediate hpc as we had hoped, there has been all manner of stimulus. We were positioned for hpc... and denied by system wide reflating, including so much in QE.

Or my tripe being frustrated with all your anti-repo positions? Buyers make their own decisions - how can anyone disagree with that? When did you buy? 2006-2007 is my bet. Discount on a newbuild via your Mum? You here claiming you were hpc because you wanted to upsize but so many posts against outcomes which would have improved your prospects of upsizing at lower prices.

Yet at least banks have used the last few years to recapitialise, whereas others now happily accepting this means it's forver HPI and the Gov won't let it happen.... and casually saying hpcers have got on with their lives, or words to that position... do you know what forum you are posting on? You're surprised others still have hope for a HPC?

I did give you the benefit of doubt thinking you were one of the remaining HPC Bear dinosaurs, who sees everything as black and white. However your hasty cut and paste job has sadly confirmed yourself as the fanatical crazed loon.

..Must posters on here have reluctantly accepted this and adapted their outlooks (or simply moved on/stopped giving a toss). However every pub has that crazed nutter on his own in the corner, warning everyone that the commies are coming. Stubbornous isn't a virtue, especially when reality and basic economics are kicking your backside.

Blind faith...? Property-investor yield chasers paying off debts in the system. US banks sitting on $2.5Tn+ reserves. UK banks much better positioned than when the last crunch occurred. Stress testing and Tier 1 far more important, for Western banks. Tighter lending.

If my blind faith holds on to some logic, that the only move the banks have got is to crash low-mid-high prime housing and write mortgages in volume, then that's my position against these hyper-inflated house prices vs younger professional incomes. Yes I have blind faith that complacent housing VI are imminently heading to a hard landing. Counting their hpi over the decades which is so far stretched away from incomes. They don't care for my position as non-owners/renters. I'm still hpc, even if you are not, and never were.

There is the prospect of £Trillions in future income streams for them doing that, in my opinion. A good chunk of it, post hpc, volume mortgages on crashed low-high prime housing... being solid mortgage books for strong and immediate valuation by the wider markets.

The UK might have a reputation as a nation of mortgage slaves – interest rates are often reported as if that's the case – but that's not the reality. The ONS figures reveal 9.2 million UK households had property debt in 2008/10 – that's 37.3% of the total. Many outright owners will be people who took a mortgage out in Britian the 1960s, 70s and 80s and are now reaping huge financial rewards. (Guardian and Daily Mail - 2013.)

Edited September 18, 2014 by Venger

[PopGun]

I used to think like you but I've come down the other way now. People have little choice. They are not as obsessed and knowledgable as people here. They are basically being driven into a corner. Either suffer the travails of amateur landlords and short term tenancies or buy an outpriced home.

For many who want stability for their young families they feel they have no choice.

Now, Buy-to-let landlords are another matter entirely.

The whole sector is driven by asymmetric information and poor motivations/incentives re appropriate behaviours. I would therefore add that for normal mortgage lending the banks should be forced to take the risk of any shortfalls on repossessions. Coupled with making bank staff more financially accountable for their past decisions, these changes would sharpen their minds about lending.

We should cut Venger some slack, what else has he to do in between those X-files box sets?

I thought about going over my own posts and selectively extrapolate counter quotes from the last 8 years. Then I remembered I'm not a saddo.

[Venger]

Regardless of what the VI say.. family, friends, media, news... you only have to look at the asking prices. 25% above 2007 here, and many sold prices the same above 2007 vs incomes and the employment/incomes going forwards. Not difficult for anyone to weigh up whether it's their own decision or not to buy at these prices or not. We do make our own decisions. I want all that, but I choose not to buy. It's a market, not a VI only-homeowners/buyers matter.

The only position I can reluctantly accept with your 'little choice/stability' is when hpcers reposition their hopes and dreams for that stability, buying much smaller houses/cheaper houses, to limit their exposure.

I've heard enough excuses even for those who bought in 2004, as being victims. You only have to look at the asking prices vs value for money, and the knowledge mortgages have to be repaid to fully own. And still the same thing now, for 2014 reflated buyers, as we are months away from going into a massive HPC. We make our own decisions.

Why is it so many hpcers are so focussed on victim excuses for recent buyers (year after year after year), but seldom renters, who wait for the HPC. The renter-savers is where my mind is at, wanting them to get much better housing value, against other market participants.. both younger, and the majority who own outright or are ultra wealthy equity rich via decades of HPI.

[Venger]

We should cut Venger some slack, what else has he to do in between those X-files box sets?

I thought about going over my own posts and selectively extrapolate counter quotes from the last 8 years. Then I remembered I'm not a saddo.

Last 6 years for you, supposed wannabee 'upsizer' in 2008 join.

More box-sets like Dexter. Lots of things, including imagine how the lives of my family and renting friends, and younger generations coming through, will be much improved in the hpc.

It's not my fault you go on about how buyers setting ever higher prices hardly got any blame for the bubble, then let slip your Mum works for newbuild developer where she earns her crust trying to convince market participants to pay ever higher prices. It's a market. We make our own decisions.

[PopGun]

It was you in my bins last night, wasn't it?

[cuddlybear]

Sorry, remind me, do we make our own decisions or not?

[Venger]

Other people's lack of knowledge - even against ridiculously high asking prices - should not give them protection against market forces, at the expense of those who do have more indepth knowledge and understanding.

Buyers paying ever higher prices = victims who only wanted a home.... and all the other pathetic excuses.

What helped to both stoke and validate that demand for example? Media hype, 125% IO 6 x salary mortgages? Property ramping?
What about the mass rush into BTL and property developoment? I wonder how the D&S argument trotted out on Location Location Location every week would have stacked up without any of them factors coming into play?!

Renter/savers = fools who can stay renting for years to come (?)

[19 year mortgage 8itch]

Sorry, remind me, do we make our own decisions or not?

And to paraphrase the old quote, the people get the government they deserve.

[PopGun]

Sorry, remind me, do we make our own decisions or not?

Like depositing savings into banks who recklessly lend? Ah that was a bit of a simplistic reply though, wasn't it?

So much black and white in a world of HD color.

[PopGun]

Other people's lack of knowledge - even against ridiculously high asking prices - should not give them protection against market forces, at the expense of those who do have more indepth knowledge and understanding.

Buyers paying ever higher prices = victims who only wanted a home.... and all the other pathetic excuses.

Renter/savers = fools who can stay renting for years to come (?)

More bat 5hit, you need another hobby.

[PopGun]

Mods, any chance of returning this thread to topic and regining this loon in?

[Venger]

It was the only choice left against 2003 runaway HPI, where you couldn't save against house prices running away. We accepted lower returns than annual HPI, in hope house prices would correct, but No More Boom and Bust VI policies kept the boom going.

We also had deposit protection which by itself, in a crash and banks going under, should have placed us better against crashed out house prices... and other market participants would likely have stepped in to enforce the debts/back savers. Look at how much creditors of Bear Stearns have gotten back, and that's not retail savings. Nick Leeson.. his bank was bought for £1 and foreign bank protected all savers, so they had all the asset/debt positions to call in.

It's only assuming that didn't happen that QE has 'saved' savers. For the most part, other than some parts of North, QE hasn't saved savers vs how much more expensive house prices are today.

Now banks better recapitalised and savers 'saved' - you victims, many who have homes at new peak 25%+ values, can endure the biggest HPC in history, and I will love it.

[Venger]

Mods, any chance of returning this thread to topic and regining this loon in?

The Queen reigns.

It's the VI anti-HPC trolls who need reining in.

[cuddlybear]

Hi, I'm studying for a PhD in Modern Victimhood and am looking for examples of people being identified as victims (rightly or wrongly) on the internet and the comments subsequently made about their behaviour.

If anyone has any such examples then I would be grateful if you could post full details.

Thanks in advance

[PopGun]

Hi, I'm studying for a PhD in Modern Victimhood and am looking for examples of people being identified as victims (rightly or wrongly) on the internet and the comments subsequently made about their behaviour.

If anyone has any such examples then I would be grateful if you could post full details.

Thanks in advance

Be careful what you wish for...

[Venger]

Hi, I'm studying for a PhD in Modern Victimhood and am looking for examples of people being identified as victims (rightly or wrongly) on the internet and the comments subsequently made about their behaviour.

If anyone has any such examples then I would be grateful if you could post full details.

Thanks in advance

Go worship that HPI Guru of yours, and his forever HPI, and lunar-planet market theory. You're only here to be anti-hpc from the posts I've read.

The market is riddled with VI. From home-owners counting how much their homes are worth, always knowing latest value, to excuses for the buyers who are buying with expectation their £500,000 apartment will go up x2 in 10 years time, to help them afford a house.

How can it be misselling when we have frantic buyers who want to buy, want as much debt they can get to meet asking price, with that thinking?

In absence of the dreamworld fairest system in the world, hotairmail, where the businesses doesn't make a good a margin as they can, where every decision a buyer takes is protected and they can never lose out... then we have this market. And it can crash as well as forever boom. All the VI owners below are not wanting your system.... renters are paying dead money, and they are smart as anything.

Not my fault both outright owners, and new buyers, suck up VI crap like average houses going to be £780,000. They choose to believe that, they make their own decisions... not my renting family and friends carrying them all, both older VI and more recent buyers, on my back. Older VI of low-to-high prime, mostly no mortgages, heading for biggest HPC ever.

Daily Mail

Average UK house price to hit £780,000 by 2040, says leading think tank

Kilo Charlie, My World, 9 hours ago

We purchased a property in 1983 for £72,000.........today it's worth £650,000 plus. It's certainly possible and quite likely.

Sam, Bucks, 3 hours ago

Bought house in ,74 for 16k added extention about £8k now valued at £480k you do the maths?

[cuddlybear]

Thanks, that's really helpful.

Just one final request - I seem to have a problem with my computer so I can't revisit pages I have already been on.

Would you be able to keep on posting the same comments on various different threads? That way I'll always be able to access your comments for my research

Thanks in advance

[Venger]

Did you buy... is that why you're so tetchy, 2011, 136 posts. Asking us about the bull's case with that guy on the video, to balance things out.

You admit you've been putting offers in at these prices.... SE your area isn't it.

I'm hpc. I want lower house prices.

Although you've said things about end of MIRAS times, which hint (but do not prove) you were around at those times as a market-participant, so I can't work out your age-group.

Nah don't worry made an offer on a house yesterday (they went with someone else)

I'm out of time in respect of my personal life, gf wants a house

Unless the wheels come off very very very soon....

Will it happen before the girlfriend wears me down and insists we buy somewhere? I'm not so confident unfortunately

This thread is an excellent hope for me, if we get to 1st January and the reality hits that we're not all saved (you know like the countdown to New Year's Eve and it's always totally anti-climactic, really there's absolutely no change in anything when the countdown gets to zero) then the first few months of declines in 2014 might be enough to save my bacon and delay things for another couple of years

In fact I suppose it reminds me of the MIRAS deadline in 1987, there was just no reason to hurry after that deadline. Hopefully here we have the same thing - "get in now before HTB2 starts" suddently overnight just becomes "erm this is a bit overpriced really, isn't it?"