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TheCountOfNowhere

Average House Prices To Hit £1M In 20 Years

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Know a guy who really believes this. Upsized to a £400K house 18 months back, convinced it'll be worth £1m+ in next 20 years at a minimum. Growing population, not enough houses being built, ect ect.

Yet at HPC these people are to be carried by those who totally disagree with their views and their decisions to load up on mega debt, for they are victims <puke>. I want to put their mouths on the kerb and....

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Know a guy who really believes this. Upsized to a £400K house 18 months back, convinced it'll be worth £1m+ in next 20 years at a minimum. Growing population, not enough houses being built, ect ect.

Yet at HPC these people are to be carried by those who totally disagree with their views and their decisions to load up on mega debt, for they are victims <puke>. I want to put their mouths on the kerb and....

Growing population through immigration...pushing down wages

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We really are living through 2007 again. The big question is...will the whole thing collapse of it's own accord when the london bubble goes or will we see some catastrophic event to re-ignite the falls ?

The thing that warms me is that at some point the low point wil be so much lower than it would be if they'd just let it fall in 2007.

Sit back and watch this baby collapse....

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Growing population through immigration...pushing down wages

0% interest IO Loans backed by Government make ANY price possible

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Ha ha ha, do they know what 'average' means? Or do they really believe that prices in London are going to be £250m+ each or something to make up for the rest of the country?

Hahahahahahahaha, this is going to have me laughing all day.

Just off to apply for a job at McDonald's. I assume wages there be £250k per year in 20 years.

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Patience everyone. A correction to, at least, the mean will happen. I barely hear all this bullish news now, it feels so much like 2006/2007 with everyone telling me that I'm going to miss the boat forever, etc, etc.

Edited by renting til I die

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0% savings rates makes any government un-electable.

Unless your savings are denominated in houses.......which is the case for 60% of the population.

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If you extrapolate from the past, the conclusion is reasonable. I guess the question we have to answer is "what is different?"

I can think of a few things:

Ageing population

Student debt

Globalisation

Loss of bargaining power of the average worker

Record national debts in large economies

I don't know how you go about modelling all these factors, so I guess "analysts" just go for extrapolation, and choose the comparator carefully.......how about 1970-1990?

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Patience everyone. A correction to, at least, the mean will happen. I barely hear all this bullish news now, it feels so much like 2006/2007 with everyone telling me that I'm going to miss the boat forever, etc, etc.

Its Thursday.

Its Soylent Green today.

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Interesting - endless house price ramping whilst programmes like Fivelive this morning are doing phone-ins on food banks and millions of Brits unable to afford food.

Yes, superficially it's a repeat of 2007. On closer inspection there's no resemblance.

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http://www.independent.co.uk/news/uk/politics/half-of-young-adults-will-live-with-their-parents-within-a-generation-from-now-9308306.html

Independent's article on this.

More faux concern for the delectation of readers who pulled up the ladder and like to read about the misery it has caused.

Edited by crashmonitor

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If you extrapolate from the past, the conclusion is reasonable. I guess the question we have to answer is "what is different?"

I can think of a few things:

Ageing population

Student debt

Globalisation

Loss of bargaining power of the average worker

Record national debts in large economies

I don't know how you go about modelling all these factors, so I guess "analysts" just go for extrapolation, and choose the comparator carefully.......how about 1970-1990?

The extrapolation is entirely reasonable. What is different? The only thing that matters is the rate of inflation. Whatever the date or time - irrespective of "demand", poulation growth or whatever you like to choose, a house is worth exactly - one house. The only thing that changes is the value of the fiat currency by which the uninformed measure the "value". If - a house - is "worth" ten cars today, will it be "worth" ten cars in 20 years' time? If it is and it is priced at £1M then cars will be £100,000 each and you will earn £150,000 a year and still be waiting for the crash :D

Nothing matters at all other than the correction of real estate prices to corresponding wages when both are measured in the same variable, money is the most convenient. If it takes 7 years (gross wages) to buy a house now and 3 years to buy a house in 20 years time you have "lost" 4 years' (gross) income. That is why people who bought at 3 years wages and now sit on 7-11 years income equivalent have done very well. Convert the property back to fiat and you are able to live on the proceeds for whatever the time difference is (after tax adjustments at whatever the tax regime is on the day) subject to the continued "value" of the fiat for the duration of that time. As things stand you are freee of CGT so the actual difference in years income equivalent is much higher since the resulting gain is net of tax.

This is why people are convinced property is a one-way bet. Headlines like this reinforce this (silly) idea. They (headlines) are designed to make you fell good, feel wealthy and vote in a particular manner and spend - ideally by MEW on consumer goods. It is pure propaganda and it is, IMHO, very easy to see through it.

House prices will correct downwards at some point. However by 20 years they might be back into boom again. If you look at the age demographics of the UK in 20 years time you want to get into old folk's homes, care homes and retirement appartments if you want a real return. That assumes of course the workforce are stupid enough to keep funding the oldies. Or that we are not all dead from war/famine/climate change.

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