Is It Time To Admit We Are Just Plain Wrong.

[winkie]

[Fully Detached]

I think we've lost the propaganda battle. Talking to most young people now (I said most not all), they have bought into the system wholeheartedly. Property = wealth. They really don't understand much except what they are told. The few that think for themselves are probably regarded as outsiders.

I agree that they understand only what they are told. I think it's always been that way to some extent, because by default the young have spent the vast majority of their lives being told what to think by parents, teachers, university lecturers and the authorities. The current crop are even more susceptible in my opinion because they are utterly ******ing terrified of their own shadows, a direct result of successive governments convincing them that there's a terrorist hiding round every corner just waiting to blow them up. And so they've come to depend on authority and believe every word they're told rather than question it or think for themselves. All entirely deliberate too, IMO.

But their belief that property=wealth will vanish in an instant when the cracks become so obvious that even the most blinkered can't ignore them, and we'll end up with a generation who are revolted by the idea of property as a form of investment. When young people realise they've been lied to, shafted, and left to pick up the tab, they're going to be mightily pissed. And it will happen, I just don't know when.

[Growlers2]

Don't agree. HpC is in general absolutely spot on. What could not (reasonably) have been foreseen was the disgusting and unprecedented intervention by governments worldwide.

The end of the road is coming. The ultimate HpC idea remains correct.

Is the ultimate HPC idea I.e. the credit bubble hypothesis falsifiable? Is it even possible to be wrong?

[Bora Horza]

I've read Consider Phlebas; Bora Horza Gobuchul.

Horza was very focused - but ultimately did not know his enemy. He associated and projected a lot of his own malformed biased views onto them, where it did not exist.

Heh, you're well-read and I think maybe I need to change my username before someone uses it against me again

As for the comment about projection: as a council tenant HPI makes little difference to my standard of living, indeed as the future beneficiary of a house and substantial chunk of a second it's actually in my interest for house prices to rocket.

So when I say I want house prices to fall, I'm supporting something that would damage my own position. I see far too many people around me struggling due to the cost of housing (even when there are alternatives – most of them don't have to stay in London), it's also obvious to me that housing/land costs are acting as a drag on the actual productive sectors of the economy.

Another point on the being wrong.

Had we all bought in 2008 we'd be 100K better in parts of the midlans, 200K in parts of SE and 400K in parts of London.

We woz wrong.

There is no doubt the HPC crowd (myself included) got the timing wrong. No-one can seriously dispute that.

When I first joined the HPC forum I expected a 1990s style HPC. This would have been the best result: a bit of short-term pain, followed by back-to-normal growth. The Government's response since 2008 has destroyed that possibility - Now debt levels are so high that it threatens the economic system.

[dances with sheeple]

Heh, you're well-read and I think maybe I need to change my username before someone uses it against me again

As for the comment about projection: as a council tenant HPI makes little difference to my standard of living, indeed as the future beneficiary of a house and substantial chunk of a second it's actually in my interest for house prices to rocket.

So when I say I want house prices to fall, I'm supporting something that would damage my own position. I see far too many people around me struggling due to the cost of housing (even when there are alternatives – most of them don't have to stay in London), it's also obvious to me that housing/land costs are acting as a drag on the actual productive sectors of the economy.

There is no doubt the HPC crowd (myself included) got the timing wrong. No-one can seriously dispute that.

When I first joined the HPC forum I expected a 1990s style HPC. This would have been the best result: a bit of short-term pain, followed by back-to-normal growth. The Government's response since 2008 has destroyed that possibility - Now debt levels are so high that it threatens the economic system.

It was not going to be a 90`s style meltdown though, we were in un-charted waters, that is why central banks took massive action and just managed to keep things afloat. The question is how long can they keep up the pretence, and are these low rates becoming more damaging than they are helpful? EZ break up would be a spectacular way to get rates moving, there would be money flying in all directions trying to find a home/safe haven.

[nornironsi]

Don't agree. HpC is in general absolutely spot on. What could not (reasonably) have been foreseen was the disgusting and unprecedented intervention by governments worldwide.

The end of the road is coming. The ultimate HpC idea remains correct.

How can you say that? HPC has generally been completely wrong and this has been proven time and time again - you can sit here for another decade waiting for a crash which may or may not happen just to prove you were right or you can deal with the facts and live your life the way you want, with or without home ownership.

[Venger]

How can you say that? HPC has generally been completely wrong and this has been proven time and time again - you can sit here for another decade waiting for a crash which may or may not happen just to prove you were right or you can deal with the facts and live your life the way you want, with or without home ownership.

And those who think us forever wrong... they have the extra sweetness of watching hpcers find excuses for those who see it HPI way (no HPC), and laid claim to homeownership with it. So there are the facts. Innocent buyers who have no responsibility, only wanted a home (no matter the price/repayment... who never know it's IO mortgage etc), believe anything and everything they're told that back forever hpi... and so entirely innocent. Begin the bailouts.

I agree that they understand only what they are told. I think it's always been that way to some extent, because by default the young have spent the vast majority of their lives being told what to think by parents, teachers, university lecturers and the authorities. The current crop are even more susceptible in my opinion because they are utterly ******ing terrified of their own shadows, a direct result of successive governments convincing them that there's a terrorist hiding round every corner just waiting to blow them up. And so they've come to depend on authority and believe every word they're told rather than question it or think for themselves. All entirely deliberate too, IMO.

But their belief that property=wealth will vanish in an instant when the cracks become so obvious that even the most blinkered can't ignore them, and we'll end up with a generation who are revolted by the idea of property as a form of investment. When young people realise they've been lied to, shafted, and left to pick up the tab, they're going to be mightily pissed. And it will happen, I just don't know when.

[rantnrave]

During the rest of this year, the wind down of FLS begins and HTB part II comes to an end. How the govt responds to these will be very telling. If they let them pass, and then the tax changes start hitting existing BTLers from next year, then things could get more interesting than they have for a while.

I've long since believed that only two things are going to kick off another leg down - an external event (and there have been some good candidates recently, most notably a Chinese slump), or, the default, a demographic shift in the electorate which favours lower house prices. The latter really is the end of the line for those who have waited so long for a correction.

[Lavalas]

What happened in the hour between you saying a crash will definitely happen and making this thread?

[GreenDevil]

This.

No debt and having savings means that you're already winning at the game of life.

Savings mean nothing. You get nothing from the bank for saving. 0%. Zippo. They even threaten to take it off you if the bank goes bust.

You get rewarded for piling on 6 figures of debt, with a cash buyer property all paid for in the country on retirement.

It aint a fair system.

Thanks politicians and bankers.

[Bland Unsight]

Is the ultimate HPC idea I.e. the credit bubble hypothesis falsifiable? Is it even possible to be wrong?

That's quite an interesting little line of attack you have going there.

If memory serves, Popper was interested in distinguishing scientific knowledge from modes of enquiry like Freudian psychoanalysis and Marxist historical materialism, and settled on falsifiability. (I trust that you are aware that many later critics of Popper believed this approach to be seriously flawed.)

At present you are popping up here and there offering the argument that many posters believe something that is wrong, and you are potentially more clear-eyed and reasonable, (even if you don't understand credit or know much about the financial crisis).

However, you are now extending the argument by suggesting that the explanation offered by a number of other posters lacks any epistemological merit under a conventional philosophical schema. I think that is what Popper's sometime intellectual adversary Ludwig Wittgenstein tended to call a "dick move". To do it on an obvious troll bait thread is an interesting choice.

[EssKay]

^ Post of the day

[Sour Mash]

No, we weren't wrong. The crash when it happens will involve a total death of the entire financial system involved.

There will have to be global meetings, global reckonings, new forms of money and new underpinnings to world trade. Many of these meetings and discussions are taking place already.

Yes, that's the problem. TPTB keep doubling down on boosting asset prices. We should have had a nice crash in 2008 - had the beginnings of one - but that got nipped in the bud thanks to extraordinary financial measures which by and large are still in place 8 years later keeping asset prices supported.

It will hit a brick wall at some time but when it does - KABOOM! I don't see how the general economy is going to survive without massive upheaval.

[long time lurking]

It`s looking good around my way BTL are bailing ,i just have doubts about how low they can go before they converge with the planed NMW increase ,as it stands now with IR`s being what they are a floor will be set for sure, but i`m living in a part of the country that has seen no real HPI above the 2006 top (although the top end of the market looks way over priced in the posher areas ) ,at some point there has to be carnage for this part of the market

It`s only anecdotal but i think something's changing regarding lending two people i know (second steppers ) have had mortgage applications turned down in the last few months (bank's valuation come in 10-15k under) we are talking houses priced @150-160k

[Bland Unsight]

Is the ultimate HPC idea I.e. the credit bubble hypothesis falsifiable? Is it even possible to be wrong?

This is how I remember it being presented to us poor benighted undergraduates. I read a bit of Popper too, back in the day.

To be fair, if you think that the credit bubble idea is an HPC thing, you need to get out more, and your trips ought to involve some library visits

[Fully Detached]

Savings mean nothing. You get nothing from the bank for saving. 0%. Zippo. They even threaten to take it off you if the bank goes bust.

You get rewarded for piling on 6 figures of debt, with a cash buyer property all paid for in the country on retirement.

It aint a fair system.

Thanks politicians and bankers.

Banks are not the only alternative to houses.

[MississippiJohnHurt]

Undeniably , we have been wrong from 2008 to now. The question is whether we were wrong because it really is different this time and there is a reason that something which appears to bw totally unsustainable will sustain.

I think of myself as a pretty open minded bloke and I am happy to admit I am wrong on something, and given the importance of the housing question to day to day life I have spent considerable time trying to find a reasoned view for the status quo continuing. But I haven't been able to find anything credible (and f--- me i have tried).

I have come to the view that in an ultra low interest rate environment, the long term loan to income level is likely to stay higher to reflect lower servicing costs. However I also thought that the market would quite quickly arb this out, as sellers tried to maximise prices, which would cause volatile and unsustainable price rises. Both seem to have happened in the last 5 years.

Looking at sustainability using loan to income seems a pretty useful and objective way to look at things. Its easy to see if you plot the servicing costs of debt at a realistic rate to your income, and then tweak the loan to income to 6, 7, 8 times. By doing that you can see that there is indeed an affordability ceiling when wages are static and prices are rising.

So anyone who views that it will just keep rising absent wage inflation (actually it would have to be unprecedented, huge wage inflation to bring it back in line with the growth of the last few years) is wrong in my view - the maths simply don't work.

I also do not buy the supply argument, as I don't see why rents would not have followed house prices if supply was the overriding issue.

So do I think that prices will return to the long term 3.5 x salary ? No, because i think rates will stay very low for a very long time. But do I think there will be a correction? Yes, because loan to incomes are hugely out of whack. i think the correction will he much more concentrated on the south east and london and is going to be pretty large.

I think the longer term average LTI might end up being say 4, 4.5 x income. But any higher than this ans you are feeling the pinch at any realistic interest rate - just plug your own numbers into excel for 5 minutes and you will see.

All just my views and reflective of a clear south east /london bias to my experience.

Edited June 7, 2016 by MississippiJohnHurt

[frederico]

Just look at the last 30 years, the market has been all over the place and so have interest rates. One thing is absolutely certain, things will not stay the same .

[Venger]

Is the ultimate HPC idea I.e. the credit bubble hypothesis falsifiable? Is it even possible to be wrong?

It's worth questioning, from time to time.

What is all your studying worth, all your learning, all your

knowledge, if it doesn't lead to wisdom? And what's wisdom but knowing

what is right, and what is the right thing to do?

-Use of Weapons

When some forever HPIer buys in 2008 (or more recently) and thinks house risen 40% or more in value. And then finds buyer (Bath) to pay that much extra. And all around the politics, where you can't get past a view that all buyers are innocents (never knew they had IO mortgages / believe everything they're told) no matter what new bubble price they set. Gypsy magic mad price buyers - and all the politics involved, who see prices 50% up again, and have the homeownership they wanted (despite others saying they're innocent) -----> or indepth research/financial understanding hpcers ever more priced out. Have a S21 and landlords telling you to brace for tenant tax.

I won't buy at these prices, but it's true that even the most intelligent hpcers have seen market move hard against them again, in many/most areas. What use is being right when you're hard wrong, for years and years vs HPI++++++++. Extend and pretend and innocence, and all BTLers wanted it for a pension and didn't consider they were outbidding anyone, or denying FTB a chance at homeownership. Just following what they thought was right, and didn't consider impact.

[Fully Detached]

And those who think us forever wrong... they have the extra sweetness of watching hpcers find excuses for those who see it HPI way (no HPC), and laid claim to homeownership with it. So there are the facts. Innocent buyers who have no responsibility, only wanted a home (no matter the price/repayment... who never know it's IO mortgage etc), believe anything and everything they're told that back forever hpi... and so entirely innocent. Begin the bailouts.

Are you quoting me there because you think I'm saying people are innocent if they believe everything they are told? Or have I misunderstood you?

[nome]

Savings mean nothing. You get nothing from the bank for saving. 0%. Zippo. They even threaten to take it off you if the bank goes bust.

You get rewarded for piling on 6 figures of debt, with a cash buyer property all paid for in the country on retirement.

It aint a fair system.

Thanks politicians and bankers.

Exactly, I was only thinking the other day I can remember a time when adverts for banks and building societies were all about being a customer (saver) with them and having a financially secure future... now adverts for banks are all about ''bank with us and you can borrow, borrow, borrow, spend, spend, spend''.

The whole system has changed, at one time the banks wanted Joe Public to deposit their money with them which they could then lend to the commercial world, now the banks have realised there is easier profit to be made out of having Joe Public as debt slaves.

[Venger]

Are you quoting me there because you think I'm saying people are innocent if they believe everything they are told? Or have I misunderstood you?

Well if people believe everything they are told, there's a strong suggestion of innocence. One premise follows from the other.

I think it's a good excuse for those who decide to back the HPI side of things, in the open market, where no one is dragging anyone to viewings/apply for mortgages.

I think we've lost the propaganda battle. Talking to most young people now (I said most not all), they have bought into the system wholeheartedly. Property = wealth. They really don't understand much except what they are told. The few that think for themselves are probably regarded as outsiders.

I agree that they understand only what they are told. I think it's always been that way to some extent, because by default the young have spent the vast majority of their lives being told what to think by parents, teachers, university lecturers and the authorities. The current crop are even more susceptible in my opinion because they are utterly ******ing terrified of their own shadows, a direct result of successive governments convincing them that there's a terrorist hiding round every corner just waiting to blow them up. And so they've come to depend on authority and believe every word they're told rather than question it or think for themselves. All entirely deliberate too, IMO.

But their belief that property=wealth will vanish in an instant when the cracks become so obvious that even the most blinkered can't ignore them, and we'll end up with a generation who are revolted by the idea of property as a form of investment. When young people realise they've been lied to, shafted, and left to pick up the tab, they're going to be mightily pissed. And it will happen, I just don't know when.

They made their own choices. Many paying extreme prices may have lied to themselves in quest to be homeowners - above someone else in market not willing to pay such a high prices. If it's HPC ahead, rather than anger, for the very few who have gone in so deep, perhaps take the consequences. Including Inheritance boy today, and his must buy house.

If anyone should be pissed off, it's renter savers vs such thinking, imo.

Yet some young people not willing to pay the prices. Even with BTL 100 property parents, they refuse 'help'. Where do they fit into the 'believe everything they were told' and seeing others outbid them in Cambridge?

26-08-2014

AB

RE: Is Generation Rent here to stay... and is that a bad thing?

I am very interested in this question, especially since my 25 year old daughter xxxxxxxx and her partner expressed their thoughts on the subject when they came to stay for a few days over the bank holiday...

Despite the fact we recently gave xxxxxxx her pay-out from a Trust we set up (being not an insubstantial sum) her and her partner work and live in central Cambridge. She earns a modest amount (but has a 1st class honours degree in Chemistry) and he's a PhD student, so they would still struggle to buy and would have to tighten their belts and continue saving first. (We have offered more money but she refuses it!)

Their thoughts go something like this:

"Why should we bother to scrimp and save and make financial sacrifices to try and buy somewhere, when prices are ridiculously high already and we have read some things saying they could crash again...

"Besides, most of our friends who are our age can't afford to buy, so we figure that the government is going to have to 'do something about it' when our whole generation gets old and has no property assets to pay for our care home if we need it... They'll have to do something!"

"Also, we don't know where we want to settle... Once H has finished his PhD, we don't know where he'll end up working, so it's not worth the expense of buying when we might have to move in a few years anyway."

"Besides, we like travelling and want to enjoy life, not become slaves to buying property!"

They also pointed out that they would probably pay as much for a mortgage as the rent they're paying (because it'd have to be capital plus interest repayment) and if the interest rate goes up they'd be "stuffed!"

I was quite taken aback... I can't believe this was my daughter speaking, when property investing has been her parents' life and good fortune!!

This really made it strike me how differently Generation Rent think!

JC

I am assuming your daughter grew up during the same period that her parents built their 'property empire'. I would expect some things rubbed off and she might be one of the more balanced members of her generation when it comes to renting vs. buying.

Sort of interesting how your daughter's views are grounded in opinion rather than science or even simple math. Given her university studies I would expect a semblance or scientific rigour rather than mob logic.

I do expect the student's belief that the government is responsible as that is the history of university education. Big brother sorts it and you just focus on your studies between pints.

Anyway, not to make this all that personal,...

I am hoping that Adam and I can have a wide ranging debate where some real issues are highlighted. I do not expect solutions from one webinar. It would be nice if we can agree on some of the main issues that can be researched or tackled later.

http://www.propertyt...ng-t-12139.html

Her daughter and son-in-law now tell the 'mob-logic' claimers... (to pure maths and science workers)....

[mrhappy]

It will happen, just not whilst 2 year fix is hovering just above 1%. This is the problem for alot of us, to quote Tyler Durden "On a long enough time line, the survival rate for everyone drops to zero" Out of me and 5 friends who graduated in 2001 (12 people with partners) we've produced 1 kid between us and the remainder are all now skipping the family home stage of our lives and looking at early retirement options around the world.

[simon49]

It could collapse within a few weeks without interest rates even rising if you got a period of sustained food inflation. Everyone has to eat, but people have got very complacent that cheap food will always be available 24/7. If people had to pay more to eat then high rents and mortgage repayments would be impossible to meet. If you look at the price of food at the moment, it is the 1 thing that you can be sure will go up in price and bring everything else down with it.

[hp72]

None of the big building companies will build without it.....builders subsidy.

Why are the government not supporting self-build, they seem to protect big business only.....the rest are there to be consumers and debt slaves only.

They are pushing more of a self build agenda now - I have spent the weekend (some 15 hours) working out a build cost vs "sale price" spreadsheet and it's mad how much it costs (the individual self builder) to build. In the S.E. you're lucky if you can build for <£2000 a sq m and that's before land purchase. Which can easily be £250k for 1/4 an acre. Sold prices tend to steer towards £3300/sqm.

[edit to add eco house bit and reference to major builders]

A major builder will not get in "Mr Bricky" for £250-£350 a day, he will pay a gang £11-£14 an hour each.

Also, the surveys / regulatory hoops are eye-wateringly expensive and then there is planning. Don't start me on planning. FORGETTABOUTIT. . .

If you want to build an eco-house (Passive-House) then the build is upwards of 20% more depending on options (UFH / Solar / Rain recycling etc).

I always felt that if something had the word "Wedding" attached to it (think flowers / cake / venue) it was always much more.

Think the same for self-builders and especially more so "Eco House".

Edited June 7, 2016 by hp72