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Timak

What Are Other People Seeing That We Don't?

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I am struggling to think how to articulate this, which makes starting a topic a strange idea, but what are other people seeing that we don't?

What has bought this to prominence in my mind is the recent house sale by a friend of a friend.

The small terraced house in Mill Road, Cambridge they bought for £130k in the early 2000's has just sold for over £500k with a bidding war and several "name your price" offers.

Who can think that is a good deal? What are their expectations for their earnings? How can a tiny terraced house with no garden or parking be worth £500k? What are these people thinking?

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I am struggling to think how to articulate this, which makes starting a topic a strange idea, but what are other people seeing that we don't?

What has bought this to prominence in my mind is the recent house sale by a friend of a friend.

The small terraced house in Mill Road, Cambridge they bought for £130k in the early 2000's has just sold for over £500k with a bidding war and several "name your price" offers.

Who can think that is a good deal? What are their expectations for their earnings? How can a tiny terraced house with no garden or parking be worth £500k? What are these people thinking?

They are of the view that "property only ever goes up" and that "the government will make sure house prices don't fall".

Frustratingly the last 8 years has supported these views.

Property is the British national obsession.

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The "Great Recession" has been not even a blip on the relentless upwards march of house price inflation in some places. Now the the "recovery" is in full swing, rates are staying low and the UK is the fastest growing western economy - why should they not pile in?

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I am struggling to think how to articulate this, which makes starting a topic a strange idea, but what are other people seeing that we don't?

What has bought this to prominence in my mind is the recent house sale by a friend of a friend.

The small terraced house in Mill Road, Cambridge they bought for £130k in the early 2000's has just sold for over £500k with a bidding war and several "name your price" offers.

Who can think that is a good deal? What are their expectations for their earnings? How can a tiny terraced house with no garden or parking be worth £500k? What are these people thinking?

Money no long has any value,people with cash want hard assets.

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I am struggling to think how to articulate this, which makes starting a topic a strange idea, but what are other people seeing that we don't?

What has bought this to prominence in my mind is the recent house sale by a friend of a friend.

The small terraced house in Mill Road, Cambridge they bought for £130k in the early 2000's has just sold for over £500k with a bidding war and several "name your price" offers.

Who can think that is a good deal? What are their expectations for their earnings? How can a tiny terraced house with no garden or parking be worth £500k? What are these people thinking?

First....where is the friend of a friend moving to or what are they buying if anything?...are they going to be taking on any more debt?.....not that interested by the buyers reasons for buying, they must only be buying because they hope to make as much as the sellers did in a short as time as possible otherwise why would they buy?

£500k is only a figure it has no relevance on productive work or future work.....it is either excess money that requires a home or easy borrowing that came about out of free printed or man-made money. ;)

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The "Great Recession" has been not even a blip on the relentless upwards march of house price inflation in some places. Now the the "recovery" is in full swing, rates are staying low and the UK is the fastest growing western economy - why should they not pile in?

Not happened around my way (well perhaps the top end has slightly increased i put this down to swapping equity in the "SPECIAL" places) perhaps some places are special or some people have more money /appetite for debt than sense ?

Around my way though IMO MMR has stopped the feckless dead in their tracks ,i see this as confirmation that house prices are determined by one factor and thats how much the buyer can borrow..so, as the old saying goes give a man enough rope

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The way it is going only the privileged few will be debt free in a lifetime.....they will either be renting from a landlord, renting from the lender or renting at the care home. ;)

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Money no long has any value,people with cash want hard assets.

Even if things go very badly tits up, the indebted will get bailed out. The more debt you have the better off you are.

I don't think people think this deeply at all, they can get it, they want it, they have it, that's as far as it goes.

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Other forms of making money (eg starting a business) are taxed right from the word go. You will pay business rates, corporation tax, VAT on output prices etc etc. Plus in many cases you will be competing with companies around the world, many of whom can undercut you on wages and materials.

Owning property means the world (currently) works for you. In the right location foreign investors or migrant workers are also interested in the property. Plus the establishment is doing its best to keep the HPI momentum going.

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Now overseas people and overseas students setting the property price for UK people in Cambridge - and elsewhere.

Correct. And they're not millionaire/billionaire cash buyers either, as Ed Conway has pointed out on his blog.

http://www.edmundconway.com/2014/04/londons-foreign-cash-property-buyers-may-be-less-cash-rich-than-you-think/

The credit situation in London is also extremely tight, at least from a Singaporean perspective. Let me give you a concrete example. In the UK market, banks usually lend 2.5X to 3X of the applicant’s annual salary as the maximum amount of loan. In Singapore, this figure is easily 10X. Yes, almost all our London purchases are now financed through Singaporean banks as the credit is so much harder to get from a UK bank.

The reality is that a chunk of demand for London housing is reliant on finance from Asian and other overseas markets. There are two upshots: first, these buyers may be far more sensitive to a slight downturn in London housing prospects than the UK statistics might imply. Second, this element of London housing demand could be extremely vulnerable to a foreign financial crisis. Given how much concern there is about a possible blow-up in the Chinese shadow banking sector, this is something Londoners would do well to be aware of.

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I don't think people think this deeply at all, they can get it, they want it, they have it, that's as far as it goes.

I think you are right the majority of people don't think like this. They have been indoctrinated into not thinking this way so they are prepared to take on more and more debt.

Those in charge however know how the system is rigged because they rigged it. To quote someone else "If you owe the bank thousands, then you have a problem. If you owe the bank millions, then the bank has a problem."

There should be a limit, it used to be by currency being linked to gold/silver, now it is linked to how much debt people can service.

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They are of the view that "property only ever goes up" and that "the government will make sure house prices don't fall".

Frustratingly the last 8 years has supported these views.

Property is the British national obsession.

not entirely.

they have been subjected to nearly 20 years of brainwashing to artificially create that obsession,all we really need to do is educate them in REAL history-like how nazi germany and soviet russia operated...very soon the little people will cotton on-hey hold on a minute....that's what's happening here,now

( and fwiw i think some of the immigrant poles will be the most outspoken warning us, because they've been under the yoke of both fascism and communism before, they KNOW the warning signs, and presently they are flashing amber, but will soon turn bright red...so do pay attention)

when the sheeple wake up and realise just how badly they have been manipulated/screwed over they will be angry, really angry.

just like endless celebrity gossip(which will in turn be used to forment "loose lips" to snoop and inform on everybody else in your couterie..INCLUDING family members), and pointless talent shows to distract people from what those holding the levers of power are really up to.

read hitler's "big lie" technique.

constant repetition to make even the false appear to be true, and ridicule and demonise those that see through the magic act.

this is NOT a joke,our politicians are treading on VERY dangerous ground indeed.

this country has a choice to make now,and it won't be easy

especially because the opposition are so utterly convinced of their own "rightness" anyone who even attempts to dissent will be treated like a "heretic" in pre-reformation catholic terms(and that is precisely the mentality of the people we have to deal with)

Edited by oracle

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I think it all comes down to rent seeking assets. In some of the south east prices are too high. But in a lot of the rest of the country I think the figures still add up.

If I had £200,000 in savings I could go for a 5 year bond paying 3% (2.6% after tax ) or I could buy a house and not pay rent. Which is the best choice?

Some people will still choose buying over renting or renting over buying even if the maths doesn't work out. Life style choice. or maybe they think savings rates may go down or up in the future.

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Well, to me it`s a Ponzi scheme, either people know it`s a Ponzi and are trying to time the market or they just can`t handle the maths!

On the other hand I will get away with paying around 50K before I retire at 66....

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The small terraced house in Mill Road, Cambridge they bought for £130k in the early 2000's has just sold for over £500k with a bidding war and several "name your price" offers.

What are these people thinking?

What would it rent for?

What makes you think people are thinking?

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Good question. Its amazing the amount of people I know that just jump on the ladder without thinking about the capital price of a house.

The main considerations seem to be. Monthly repayments and Deposit needed.

To be fair, these are the only real barriers to "owning" and home. I mean if prices shot up 1000% overnight and the banks were still willing to lend you the money at 0.0001% mortgage rate then why not. Maybe in a years time prices will be 2000% up??

There is now talk of the first negative rate interest rate, all bets are off as to what happens next.

But where does it end, surely we must be close to saturation point on prices with these low rates. Wages ain't going up for the masses.

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.....as interest is now such a small proportion of a loan, it will be capital that will be making the major part of the repayments....a debt divided into term of loan.

say £500k divided into monthly repayments to retirement. ;)

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I am struggling to think how to articulate this, which makes starting a topic a strange idea, but what are other people seeing that we don't?

What has bought this to prominence in my mind is the recent house sale by a friend of a friend.

The small terraced house in Mill Road, Cambridge they bought for £130k in the early 2000's has just sold for over £500k with a bidding war and several "name your price" offers.

Who can think that is a good deal? What are their expectations for their earnings? How can a tiny terraced house with no garden or parking be worth £500k? What are these people thinking?

I thought exactly the same re my old street in E17.

It's terrifying.

I just hope i, and others on here, manage to dodge the rocks when it all crashes down.

Because those rocks will have gained some speed coming from that height.

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I think the psychology of the average citizen causes them to not see things that we do, rather than to see things that we don't. Here on HPC we spend a huge amount of time looking down one (the sensible) end of the kaleidoscope, in terms of govt props, construction, easy credit etc. The average buyer looks down the other end altogether.

The average person in the UK is so accustomed to being told what to do and when to do it, and what's good for them and what isn't, that they just don't think any further than what the bank is prepared to lend them. If the banks says "We'll lend you 6x earnings so you can buy this crap little 2 bed terrace", they assume that to mean that it's safe to do so. Those that use a broker will lie if the broker tells them that "everybody does it", because in their own minds, that means that it's not just OK to do so, but that it's somehow safe for them to do so.

You only need to spend a little time on MSE to see this mentality. People will get into huge amounts of debt, and only at the point where they realise they can't repay it does it even enter their heads that they might have overdone it. At which point it's the fault of the bank, the credit card company, the broker, etc.

Putting it simply, the average person has been trained not to think for themselves. So they don't. End of story.

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Good question. Its amazing the amount of people I know that just jump on the ladder without thinking about the capital price of a house.

The main considerations seem to be. Monthly repayments and Deposit needed.

To be fair, these are the only real barriers to "owning" and home. I mean if prices shot up 1000% overnight and the banks were still willing to lend you the money at 0.0001% mortgage rate then why not. Maybe in a years time prices will be 2000% up??

There is now talk of the first negative rate interest rate, all bets are off as to what happens next.

But where does it end, surely we must be close to saturation point on prices with these low rates. Wages ain't going up for the masses.

They dont think about the capital price, or the cost of the interest over the life of the loan.

If you then factor in expectations for later life, and the fact that the minute theyve paid off the loan (if ever) they will then be starting to thumb through the life company brochure to sell the place back, for the right to stay there til they croak, its even more bewildering really.

Osborne et al must be pissing themselves at the nations debt rats on wheels.

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I think the psychology of the average citizen causes them to not see things that we do, rather than to see things that we don't. Here on HPC we spend a huge amount of time looking down one (the sensible) end of the kaleidoscope, in terms of govt props, construction, easy credit etc. The average buyer looks down the other end altogether.

The average person in the UK is so accustomed to being told what to do and when to do it, and what's good for them and what isn't, that they just don't think any further than what the bank is prepared to lend them. If the banks says "We'll lend you 6x earnings so you can buy this crap little 2 bed terrace", they assume that to mean that it's safe to do so. Those that use a broker will lie if the broker tells them that "everybody does it", because in their own minds, that means that it's not just OK to do so, but that it's somehow safe for them to do so.

You only need to spend a little time on MSE to see this mentality. People will get into huge amounts of debt, and only at the point where they realise they can't repay it does it even enter their heads that they might have overdone it. At which point it's the fault of the bank, the credit card company, the broker, etc.

Putting it simply, the average person has been trained not to think for themselves. So they don't. End of story.

Nicely put.

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Even if things go very badly tits up, the indebted will get bailed out. The more debt you have the better off you are.

disagree.

when this whole house of cards comes tumbling down the creditors will want collateral.

I put forward the families of the people who were DELIBERATELY trying to get us into debt as collateral.

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I think you are right the majority of people don't think like this. They have been indoctrinated into not thinking this way so they are prepared to take on more and more debt.

Those in charge however know how the system is rigged because they rigged it. To quote someone else "If you owe the bank thousands, then you have a problem. If you owe the bank millions, then the bank has a problem."

There should be a limit, it used to be by currency being linked to gold/silver, now it is linked to how much debt people can service.

and if the banks owe other banks billions, then the bailiffs come and take the assets of the bank that owes it.

if hard assets are not available, working capital will do.( ie jamie dimon on the production line at foxconn for the chinese at 18 hrs/day and a bowl of gruel)

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