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House Prices Have Risen Five Times Faster Than Average Wages Over The Last Five Years

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Research by the Resolution Foundation found that while house prices have risen by 36 per cent since April 2011, average weekly earnings have increased by just 7 per cent over the same period. DailyMail

3448EF2700000578-0-image-a-1_14634818544

3448A0FD00000578-3594573-image-a-14_1463

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Research by the Resolution Foundation found that while house prices have risen by 36 per cent since April 2011, average weekly earnings have increased by just 7 per cent over the same period. DailyMail

3448EF2700000578-0-image-a-1_14634818544

I asked some family if im wasting my time in London. Should have just looked at this graph. No words needed.

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Research by the Resolution Foundation found that while house prices have risen by 36 per cent since April 2011, average weekly earnings have increased by just 7 per cent over the same period. DailyMail

3448EF2700000578-0-image-a-1_14634818544

3448A0FD00000578-3594573-image-a-14_1463

A picture paints a thousand words.....says it all.....HPC alert!...HPC alert! :)

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The problem now is when we do have the inevtibale house price crash it won't be some soft landing, it'll be absolute carnage - perhaps unlike anything else we've ever seen, probably decimating the wider economy.

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The problem now is when we do have the inevtibale house price crash it won't be some soft landing, it'll be absolute carnage - perhaps unlike anything else we've ever seen, probably decimating the wider economy.

It'll be fine.

Two things seem to lead to problems in the housing market f**king up the economy.

Firstly, if you have a recession and lots of people trying to stay out of arrears, it f**ks aggregate demand. They cut back consumption to keep paying the mortgage. However, this time around we have a much larger PRS and a much larger share of the owner-occupier sector owned outright, hence this channel is not such a big deal. Also, thanks to ZIRP staying out of arrears has never been cheaper.

Secondly, you get a problem with people cutting back on consumption as they try to 'save' their way out of negative equity by making additional repayments. Again, ZIRP, the shift in tenures and the number of owner-occupiers who own outright helps; there won't be so many people trying to do this, and it's never been easier for them to do it.

A massive house price crash now could go down with very little collateral damage. Lots of paper wealth lost for older owner-occupiers, but it was only ever paper wealth, and, of course, the leveraged speculators will get absolutely butchered, but there's probably only about 30,000 of them, and everybody hates them, so who gives a f**k?

The banks look good to go for a massive correction. Maybe it's time for people to take their losses. We shall see.

Edited by Ghost Bird

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At the moment I am hanging fire before buying as I believe that there will be a crash. No one agrees with me as there are still houses being snapped up. They are overpriced and I worry that my belief may be wrong and I really won't get my own place again. So these graphs do not mean much to first time buyers who don't realise debt for the next 30years is a piece of concrete round their necks . I think there is an acceptance that 250000 plus is nothing. I went to view some new builds who were desperate to sell . Loads not moving. Any encouragement from serious HPC ers to give me the bottle to be patient.

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At the moment I am hanging fire before buying as I believe that there will be a crash. No one agrees with me as there are still houses being snapped up. They are overpriced and I worry that my belief may be wrong and I really won't get my own place again. So these graphs do not mean much to first time buyers who don't realise debt for the next 30years is a piece of concrete round their necks . I think there is an acceptance that 250000 plus is nothing. I went to view some new builds who were desperate to sell . Loads not moving. Any encouragement from serious HPC ers to give me the bottle to be patient.

If nobody agrees with you, and houses are being snapped up, and you won't get your own place again, and people accept that £250k+ is nothing, you'd be mad to delay. I'd buy immediately before you miss the boat. People posting here have been wrong for ten years - you'd be mad to be influenced by their encouragement. They only talk house prices down because of their jealous spite.

Buy now, buy everything.

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The problem now is when we do have the inevtibale house price crash it won't be some soft landing, it'll be absolute carnage - perhaps unlike anything else we've ever seen, probably decimating the wider economy.

+1

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36% since 2011 eh....try 70% round here on asking prices at least.

Salary increase 2011-2016 i'd agree. 7% is about right. And it involved a silly amount of fighting and grumbling to get that. Executive salary rises in the meantime no doubt 50%. 'I'm sorry there isn't the budget for the plebs'. No worries - my own stealth payrise it is. Nice long lunch and I'm leaving at 4.30.

For any who want to stay strong in the face of this my only advice is *forget* about worrying about houses. Ignore them. Go read wishicouldaffordones blog and start a different way of life. Hopefully that way works for you.

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Those London stats are a joke. A very cruel joke. The wealth gap is only getting worse. Even if there isn't a crash, in many areas it may be better to not buy until retirement (if ever) and find a more creative solution to prosperity, rather than taking on lifelong debt of this magnitude.

I'm watching, waiting, not burning my deposit.

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It'll be fine.

Two things seem to lead to problems in the housing market f**king up the economy.

Firstly, if you have a recession and lots of people trying to stay out of arrears, it f**ks aggregate demand. They cut back consumption to keep paying the mortgage. However, this time around we have a much larger PRS and a much larger share of the owner-occupier sector owned outright, hence this channel is not such a big deal. Also, thanks to ZIRP staying out of arrears has never been cheaper.

Secondly, you get a problem with people cutting back on consumption as they try to 'save' their way out of negative equity by making additional repayments. Again, ZIRP, the shift in tenures and the number of owner-occupiers who own outright helps; there won't be so many people trying to do this, and it's never been easier for them to do it.

A massive house price crash now could go down with very little collateral damage. Lots of paper wealth lost for older owner-occupiers, but it was only ever paper wealth, and, of course, the leveraged speculators will get absolutely butchered, but there's probably only about 30,000 of them, and everybody hates them, so who gives a f**k?

The banks look good to go for a massive correction. Maybe it's time for people to take their losses. We shall see.

You forgot the foreign investors who've been buying up large swathes of inner London just to leave empty so that everyone who actually works in central London gets pushed out a zone or two putting strain on the travel infrastructure and making everyone's commute even more horrible. Nobody's going to shed a tear for them either.

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Odd graph, I believed in the Moron Brown period of 'not letting houses prices getting out of control, whilst changing the inflation measure focus' that house prices rose something like 300% and wages 70%.

Doesn't seem to be reflected in that graph.

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Those London stats are a joke. A very cruel joke. The wealth gap is only getting worse. Even if there isn't a crash, in many areas it may be better to not buy until retirement (if ever) and find a more creative solution to prosperity, rather than taking on lifelong debt of this magnitude.

People can't resist property though! My sister gets discounted RAF digs (impossibly cheap) and is building up savings. She was out lining her plan for progression and possible scenarios where she'd be at a base where she'd get a house, again, impossibly cheap rent, yet still wanted to buy! "What else would I do with the money? Can't have it in cash." "How about an investment portfolio & cash?" "A what?" :(

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You forgot the foreign investors who've been buying up large swathes of inner London just to leave empty so that everyone who actually works in central London gets pushed out a zone or two putting strain on the travel infrastructure and making everyone's commute even more horrible. Nobody's going to shed a tear for them either.

Also worth pointing out that the equity cushion for the banks represented by BTL going from 85% LTV to 75% LTV means roughly £10bn worth of additional foam on the runway since 2008, and you can look at BOMAD sticking 20% and 30% deposits into their kids' purchases post-2008, whereas a far greater percentage of pre-2008 purchases were often BOMAD free and 125% LTV.

And of course, share-ownership means you only eat a fraction of the capital loss...

Some of the BTL debt is properly bankruptcy-remote securitised, (for example the over-whelming majority of the debt issued by Paragon since 2012).

I'd imagine the UKAR B&B book is arguably worth more if the LTV clauses have been triggered by an house price crash.

I realise not everyone sees it like this, but I wonder if HMT might welcome a correction?

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The problem now is when we do have the inevtibale house price crash it won't be some soft landing, it'll be absolute carnage - perhaps unlike anything else we've ever seen, probably decimating the wider economy.

Not only will it be fine (after initial pain for those who've put themselves in position to feel it), it will lead to a prosperous future.

Alternatively, perhaps my family can carry more HPI++++ for you, some more rent rises to meet, and never have homeownership... to make it all nice and happy. That good for you. It's not good for my family. We're ready. Bring in on. Take our bank savings we've managed to grind away into build up over the years vs mad HPI - and all the other things the HPI threaten us that HPC will cause. (Even though banks much stronger to handle correction). No fear you see. Will just work harder to rebuild in a fairer market. Just correct these severe imbalances.

Firstly, I believe yes we have made quite a few preparations (financially speaking) to shelter us from a quite a flood - as have a great many. The fact is that, as history shows those who can see the madness for what it is, and take precautions, tend to survive more than those who do not. Whereas the financial zombies get completely eradicated.

But, as you say, it is indeed well possible that the 'flood' would exceed our expectations and not leave us completely untouched in some form or another (e.g. rising crime rates, etc). But then again are we not already 'touched', harmed and hard done by this ongoing financial madness? I would argue we, and our like, have already (unfairly!) suffered. So IF suffering should come to those who genuinely deserve it? GOOD! It cannot come too soon.

Using the fear tactic that you espouse (i.e. you too will get swept up in the flood) doesn't hold sway with me anymore.

What are you? Man or Mouse?

It has been said, in many different ways, in respect of personal liberty and freedom that it isn't 'free' - it has to, from time to time, be paid for in toil and blood. The same such applies to ensuring restoration of financial sanity to the world. IF I have to suffer some (more than already) to ensure a better world for my children and their children than I gladly do so. What are you prepared to do?!

These personal stories of people, in this day and age, having to resort to living in vans utterly disgusts me with the 'system' and TPTB. Anyone who is not similarly disgusted simply does not grasp the significance.

If it doesn't you then I put it to you that you have started to lose some crucial essence of your decency and humanity.

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Sounds like DEBT is wealth to me.

Just remember that the UK is full of people who like other folk to think they are wealthy due to a PPI funded 'deposit' on a leased German car.

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Not only will it be fine (after initial pain for those who've put themselves in position to feel it), it will lead to a prosperous future.

Alternatively, perhaps my family can carry more HPI++++ for you, some more rent rises to meet, and never have homeownership... to make it all nice and happy. That good for you. It's not good for my family. We're ready. Bring in on. Take our bank savings we've managed to grind away into build up over the years vs mad HPI - and all the other things the HPI threaten us that HPC will cause. (Even though banks much stronger to handle correction). No fear you see. Will just work harder to rebuild in a fairer market. Just correct these severe imbalances.

So how do you account for the role played by credit in generating aggregate demand and aggregate income in the economy? Is Osborne going to step up his borrowing to compensate for a decline in the private sector?

Why do you naively assume the next crisis will be limited to the UK and not global in extent? What exposure does the City of London have to Chinese and European shadow banking?

And who will finance Osborne's insane 7% current account deficit when China and the Gulf States implode? What will be the impact on domestic trade and investment when $15tn falls off the Chinese real estate ponzi?

Unless you can answer these questions definitively you're in no position to declare 'everything will be fine'.

As for the alternative? It really isn't your family carrying more HPI+++ for Osborne and Carney and their criminal associates in the Crooked Mile. The alternative is a hard, enduring economic depression in which output collapses worldwide, millions lose their jobs and then spend the rest of their lives in grinding poverty.

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Why do you naively assume the next crisis will be limited to the UK and not global in extent? What exposure does the City of London have to Chinese and European shadow banking?

I think that you are assuming that which is being contested. You are asserting that a house price crash will be a consequence of a separate crisis or will precipitate a crisis. I simply don't buy it.

Obviously certain kinds of crises would be very damaging for households and might also precipitate a crash in house prices, but are you contending that there will be no crash in house prices absent some exterior economic cataclysm? History doesn't support such a view.

I think house prices could halve and the UK economy chunter on pretty much the same before as as after.

Venger doesn't even mention a crisis - you conjure that out of thin air.

Edited by Ghost Bird

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So how do you account for the role played by credit in generating aggregate demand and aggregate income in the economy? Is Osborne going to step up his borrowing to compensate for a decline in the private sector?

Why do you naively assume the next crisis will be limited to the UK and not global in extent? What exposure does the City of London have to Chinese and European shadow banking?

And who will finance Osborne's insane 7% current account deficit when China and the Gulf States implode? What will be the impact on domestic trade and investment when $15tn falls off the Chinese real estate ponzi?

Unless you can answer these questions definitively you're in no position to declare 'everything will be fine'.

As for the alternative? It really isn't your family carrying more HPI+++ for Osborne and Carney and their criminal associates in the Crooked Mile. The alternative is a hard, enduring economic depression in which output collapses worldwide, millions lose their jobs and then spend the rest of their lives in grinding poverty.

It is vs these house prices the long-wave older owners have seen bid up over the decades, and all the BTL activity, vs my family on the renter-saver side.

There are natural self-balancing mechanisms in markets - and banks have spent 6+ years recapitialising and shrinking and have access to market to balance the correction. £Trillions on the owner side (in equity) can crash and new lending for gain of the banks/gov /economy. Banks can lend on lower house prices. The implied gains for bank/gov/economy are just too impossible to ignore. Shake up of VI and core-voter older owners.

BTLers are not powering the economy. Nor specuvestors. Nor core-voter older owners. Time for a shakeup.

I've had it all recently from Sceppy..... completely back to front imo, and why I believe their are many intelligent people - for Sceppy is blindingly intelligent on so many things - who have to be shaken up. Not for the young to carry mad-gainz HPI forever, nor savers to be wiped out to carry the mad-gainz 'power of the owner, core-voters, and their social status'. The wheel must turn. It's not going to be a nightmare. It's wonderous.

...Like it or not housing and land will always fall into the category of useful assets, and further they will be priced highly when growth is low, as long as there is sufficient economic surplus to physically maintain them. Not sure there is anything to be done about that really.

A decent house on any street in the UK well served by amenities will always qualify (and rightly so) as a quality, welfare enhancing asset and we would expect them to serve as a social yardstick for who is asset rich and who is not especially when growth is low and financial assets which carry rights to claim assets created in future are naturally scarce or low quality.

The bad assets are various financial liabilities associated with the tangible housing and land stock as well as various public liabilities (gilts etc) and I don't see that meaningful reform can be had without purging them. Unfortunately, the bad liabilities I am talking about are going to be someones savings. No getting away from that. Although in many cases the holders of the bad assets are not personally to blame for the situation, it doesn't alter the fact that their claims are rotten and are propping up bad rents.

Taxing bad rents does nothing to structurally eliminate them, rather it legitimises them which in my view is the wrong path to take.

:lol::rolleyes:

Try some HPC instead imo.

Followed by fresh lending to restore balances in financial system.

Saver in position vs ponzi high house prices and 'wealth enhancing rightly so-so housing side.

Can't happen without deletion of various savings that are backed by the current excessive price levels.

No HPC without socialisation of the associated losses.

That can either happen via taxpayer bailouts, or by private bail-ins, or more fair process which telegraphs said coming losses via negative rates that bite in small quantities over time and allow each individual the time and choice to decide what the best way for them personally to protect their share of bad financial assets while prices decline to sustainable levels.

So how was that managed during HPC1 in the early 1990s ?

House Prices fell about 21%. What proportion of savings tied to bad financial assets were wiped in that process. Black Wednesday was the most obvious hit on sterling savings and asset valuations fell about against 25% against the DM but was that a result of the HPC or was it simply due to a government policy with Sterling joining the ERM at a false valuation.

Overall debt levels never fell during the 1990s. House prices fell but the savings backed by said houses could move to being backed by a greater level of debt issued against other things, in particular the corporate debt being issued by the entities which ended up building the internet.

Sectoral balances.

I would be the first to agree that if deflation could be avoided by the 'next big thing' coming along which can suck up all the excess savings and capital we have currently then we could have a nice HPI co-incident with nice returns on savings and all live happily ever after.

Just to be clear - I would like to see an HPC despite being a homeowner (only one home, my own). My motivation for my opinions should not be in doubt. I simply do not believe that our society can experience the kind of HPC people here want without a bail-in or negative rates.

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Falling house prices do not cause bank insolvency. If people can pay their mortgages, they do. I am not aware of any connection between negative equity and arrears, but always happy to learn if other know different.

BTL may be big enough to drive prices. We will soon have some suggestive evidence to the truth of that contention, if BTL demand now collapses. However, whilst a recession and a crash in house prices might represent a threat to some of the smaller lenders who have become focussed in that sector, it won't put a scratch on Lloyds or RBS. The banks can take the evisceration of the BTL muppets - depend on it.

Edited by Venger

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