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5 Years On Hpc - Some Thoughts


Guest_FaFa!_*
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I found HPC in 2006 (started posing in 2009 after finally discovering the forum, I just used to read the blog) by typing house price crash into google, because this is what I wanted to see. Having lived in Asia for the best part of half a decade I could not believe the prices I was seeing. I lived in a 2 bed flat in the East Mids, 600 quid rent a month which the landlord put on the market for 140k. He had bought it for about 125k a year earlier if memory serves. The way I saw it, with wages ultimately underpinning house prices, no-one could seriously afford the flat. I mean who in the name of all that is holy is going to buy it with typical wages around there being the 20k mark. This was a clear FTB property.

The crash came and went, prices moved from ludicrous to merely overpriced. I started as a 50% real peak to falls bear but gradually I became of the opinion that the transfer of wealth from the poor to the rich is permanent. The rent seekers have won. I had the money to buy due to savings and inheritance, but I didn't want to hand over that cash to arseholes. I left for Japan (where the wife is from).

Life out here isn't always a barrel of laughs. Positives: the food, climate, everything just works, excellent customer service, clean and safe streets, low tax, it is easy to save. I don't miss being surrounded by fat tattooed *****ers smoking weed on the bus. Negatives: workaholic culture, no safety net and little sympathy for any personal misfortune. Anything that goes wrong can never be put down to luck, you clearly weren't working hard enough. Got food poisoning on a business trip? Your fault for not looking after yourself. People didn't turn up for a meeting in Bangkok due to floods? You should have had a contingency plan (clearly we should have rowed out to the fecking airport personally). Got the norovirus and missed a meeting? Not acceptable.

There's many on here who praise capitalism red in tooth and claw despite posting frequently during working hours. I wonder how they'd really cope with it. Three 20 hour days back to back anybody? Don't wave your hands in the air all at once.

However I have security of tenure - 2 year contracts, which I can break with 2 months notice, but they cannot. I have never met my landlord. Inspections are unheard of. Problems are rare and get dealt with inside 24 hours typically.

The system may still reset in the UK but I don't think so. If we have learnt anything in the last 5 years it is at the governments are in control. The EU has absorbed 50% youth unemployment and has kept going. Everyone seems happy with HTB. The best thing that can happen at this point will be some sort of rinsing of the amateur BTLs with pension companies stepping in to replace and creating secure tenancies. If I was to give advice to anyone it would be to leave the UK. Certainly no young person has any business being the UK. Your country hates you. Get some sellable skills, a foreign language and go.

The point about exponential growth is that if it goes on for long enough then the situation becomes entrenched. I no longer believe

that there are enough people who are so heavily mortgaged that this will lead to a cash when prices stabilise. Or to put it another way if there is a correction it will be at best to 2008-9 prices.

If you believe Piketty that r > g , then this is just what you'd expect. Property will increasingly be owned by those who inherit wealth.

This a stable trend which implies that there will be no HPC. There will simply be a larger number of people renting from a smaller number of landlords. Some of these landlords will be BTLers who bought property early enough (before 2005) and their descendants. This will continue for a decade or two until the wealth gets really too obviously concentrated. Then there might be some serious political upheaval. In the meantime there will be protest votes for crazy populist parties but no change to the status quo. Sad really.

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The point about exponential growth is that if it goes on for long enough then the situation becomes entrenched. I no longer believe

that there are enough people who are so heavily mortgaged that this will lead to a cash when prices stabilise. Or to put it another way if there is a correction it will be at best to 2008-9 prices.

Math-head, what about what new buyers are willing and able to pay.

Have you given that any thought, vs hyperinflated house prices.

Is there just a constant growing number able to buy houses at these prices as they come to market?

Once the dumb buying money, at very high prices, is all pulled in, I think there's a cliff face of wiling/able buyers.

And always some sellers who need to sell, and will lower their asking prices, accept lower prices, which brings down values of similar houses for all other owners in an area.

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If you believe Piketty that r > g , then this is just what you'd expect. Property will increasingly be owned by those who inherit wealth.

This a stable trend which implies that there will be no HPC. There will simply be a larger number of people renting from a smaller number of landlords. Some of these landlords will be BTLers who bought property early enough (before 2005) and their descendants. This will continue for a decade or two until the wealth gets really too obviously concentrated. Then there might be some serious political upheaval. In the meantime there will be protest votes for crazy populist parties but no change to the status quo. Sad really.

I don't do the maths, so you'll have to help me. How is that stable? I thought complex systems go haywire in ways we can't predict.

edit: this is fafa's thread - one of the best HPC posters - and I reckon his prospect is realistic. I'm not betting on it, but looks like good odds.

Edited by okaycuckoo
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Math-head, what about what new buyers are willing and able to pay.

Have you given that any thought, vs hyperinflated house prices.

Is there just a constant growing number able to buy houses at these prices as they come to market?

Once the dumb buying money, at very high prices, is all pulled in, I think there's a cliff face of wiling/able buyers.

And always some sellers who need to sell, and will lower their asking prices, accept lower prices, which brings down values of similar houses for all other owners in an area.

+1

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I moved in the opposite direction and never regretted it - loved living in both countries though. Transfer of wealth is not permanent - but it is generational. At some point those with the money need to sell and won't be able to do so unless their asset is affordable.

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We have more in common than I thought. How refreshing and depressing in equal measures. ;-)

I have been here since 2005 or 6 too. I lived in Japan for a while and my wife hails from north Tokyo. I sometimes think about going back there. But my Japanese is a little rusty (no, I won't hug your teddy!) and I bought a modest place in zone 3 a couple of years back. Fear of giving up what I've scraped together keeps me in the UK but I can well understand why you live in Japan. While your quality of life declines a little there, your living standards are generally much higher than the UK.

I'm usually in Tokyo in October or November. PM me if you want to meet up for an early evening beer.

I am nowhere near Tokyo, but if I am around in October/November will certainly let you know. No need to hug my teddy ;-p

Mrs. Fafa is a fiesty Kansai lady. If you have any tips concerning learning Japanese I'd be happy to hear it, my Japanese is still weak - I can never find the time to really nail it down and the Japanese are not fond of speaking English as doubtless you know...

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The point about exponential growth is that if it goes on for long enough then the situation becomes entrenched. I no longer believe

that there are enough people who are so heavily mortgaged that this will lead to a cash when prices stabilise. Or to put it another way if there is a correction it will be at best to 2008-9 prices.

If you believe Piketty that r > g , then this is just what you'd expect. Property will increasingly be owned by those who inherit wealth.

This a stable trend which implies that there will be no HPC. There will simply be a larger number of people renting from a smaller number of landlords. Some of these landlords will be BTLers who bought property early enough (before 2005) and their descendants. This will continue for a decade or two until the wealth gets really too obviously concentrated. Then there might be some serious political upheaval. In the meantime there will be protest votes for crazy populist parties but no change to the status quo. Sad really.

I don't know about Piketty, but basically this is what I think

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I hear you on the young leaving the UK but I'm not sure Japan is the place to go. Talking about a society already borrowing against the productivity of their unborn children!! Also most/all of Europe is out the window. I really struggle to see where the land of opportunity is? It's probably somewhere like Cambodia but I don't know enough about it.

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I hear you on the young leaving the UK but I'm not sure Japan is the place to go. Talking about a society already borrowing against the productivity of their unborn children!! Also most/all of Europe is out the window. I really struggle to see where the land of opportunity is? It's probably somewhere like Cambodia but I don't know enough about it.

I wouldn't necessarily recommend Japan either. SE Asia has much opportunity but it'll be a rocky ride
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  • 3 weeks later...

The rentiers haven't won, they are getting poorer yield than ever... they just haven't been allowed to lose, therefore STRers and refuseniks haven't been allowed to win. I see it as a protracted draw / stalemate that the government will do everything possible to drag out until after mid-2015. Increasing prices give the illusion of rentier / boomer victory, but the oft discussed "return to normal" is just that - illusionary.

I'm somewhat surprised the tories have 'allowed' the mortgage market to be throttled for occupiers whilst fizzing on for BTL, as I'd expect the reverse to be more popular with the electorate - and they need votes.

Benefit reform is mainly ideological, not fiscal. If it was a true austerity drive, many aspects of pensioner benefits would be means tested. Taking further public sector debt whilst continuing to subsidize boomer paper millionaires heating bills is a brewing ideological shitstorm IMO.

Edited by disenfranchised
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Guest The Relaxation Suite

Well something happened in 2008 and it wasn't a 90s-style crash. The government is determined to 'lock in' 2007 prices, while keeping wages down. So I think FaFa has a point - so far the winners have managed to hold onto their gains. And it's been about a decade since houses were affordable for ordinary families. On the timescale of jobs and kids and politics, that may as well be forever. We are already living in the neo-feudal future.

As for emigrating, the problem that UK youngsters face is that they are somewhat trapped by the success of English. Many European children are exposed to English from a young age due to Anglophone media and the internet. And unfortunately everywhere that speaks English has followed very similar policies to the UK - Canada and Australia also have massively unaffordable housing. The US is very difficult to emigrate to, lacks decent healthcare and social support systems, and also - despite most areas crashing - has massively unaffordable housing in its London-style 'global cities' where the white-collar jobs are concentrated.

Perhaps Ireland? Or maybe I should take another stab at German - French was completely beyond me.

Australia does have unaffordable housing, but away from Sydney and Perth it's not in the same league as the British prices. You can get a 4 bed house on 750 sqm of land in the less popular states for 250k GBP. In my hometown of Oxford that would be 2 million quid. And I'm talking within easy commute of CBDs. So expensive yes, but far better value than UK. I just cannot believe UK prices.

Language - German is the best bet, in my view. German is the most important language in Europe after English, and Germany is rich and close to the UK. I'm a very keen amateur linguist and have a working knowledge of dozens of languages & conversant in three foreign languages. I'm learning more as well. For me, the cases are a real pain in the ar5e in German. If I could speak fluent German and wanted to return to Europe I would go to Germany or Austria over the UK any day, sorry to say. Much more affordable housing than the UK, stronger economy, more jobs, better pensions, uni grants for young people, more protection of the law, fewer drunks on the streets. No debate at all. Compared with Germany Britain is a total basketcase, and worse than that, as the 21st Century progresses, the different economic models are going to ensure the gulf between the two states will just widen.

Edited by Lord of the Pies
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Guest The Relaxation Suite

I wouldn't necessarily recommend Japan either. SE Asia has much opportunity but it'll be a rocky ride

The more astute observers among us will have noticed how the big bickies are creeping into even Burma now. English-Burmese interpreters are currently those most in demand in the whole world.

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