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Question: Where Is The Money Going To Come From?

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Guest Bart of Darkness

Aliens seems to be the favourite so far (today's prices are out of this world so I guess it makes sense).

Tip: Invest in gold pressed latinum, I have a feeling that much of this new housing money will hail from Ferenginar.

In contrast to more "enlightened" species, greed, deceit, distrust, and opportunism are highly prized values among Ferengi and all are represented within the Rules. The Ferengi belief in conducting all business dealings under the advisory caveat-emptor, or "buyer beware", further reflects the pursuit of profit at all costs.

They should do well in the BTL market.

Sorry guys, looks like the crash has been postponed until the 23rd century at the earliest.

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here you go...

it may be rubbish

might not be..

but hell.. answers please

great poll... answer's obviously "aliens" cos i've spent all evening sewing a patch on my 15 year old sofa and am NOT contributing.

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dilineum crystals

but seriously folks, the VIs bang on about confidence returning to the market, but whilst you can be quietly confident that your job is secure, if you haven't got the money to pay the asking price then it's irrelevant - this poll is relevant 'cos it points out that the money just isn't there

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Do you reckon the Govt will use tax payers money to bail the banks out?

Edited by Mr Blek

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For parts of London, it could be salary increases - rising equity markets mean hiring rather than firing in the City / Canary Wharf at present and the first prospect of pay rises for about 4 years. So the usual areas favoured by high earning bankers should rise (Kensington etc - this is already happening apparently) and perhaps the sort of areas preferred by more junior staff eg Clerkenwell, Islington, Canary Wharf, Greenwich.

The rest of London & the UK as a whole has run out of money - FTBs are very thin on the ground.

This poll showed a real lack of new BTL investors.

Conclusion: the marginal buyer has disappeared! And what happens when there are no marginal buyers.....?

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I’m guessing that the money will come from the same place that it did in 2005 – I thought the money from BTL’ers and FTB’ers stopped at the end of 2004 but houses still were selling at about 10% less sales than the year before (I don’t know actual figures)

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I’m guessing that the money will come from the same place that it did in 2005 – I thought the money from BTL’ers and FTB’ers stopped at the end of 2004 but houses still were selling at about 10% less sales than the year before (I don’t know actual figures)

The Council of Mortgage lenders said that BTL lending started to fall for the first time in the second half of 2004, when it fell 18% year-on-year. At this point the BTL investor was still making up for the shortfall in FTBs.

I'm not sure how the figures have panned out since but maybe now is the point at which new BTL investors become an endangered species. If you haven't got into the market by now, there isn't much point in doing so, if price rises are projected at only 3-4% for the current year.

Press & TV are also now giving widespread coverage of the fact that the housing market rose only 3-4% last year while shares rose 16%.

2006 could be the year that ISAs really take off again and BTL grinds to a halt. An ISA doesn't have the advantage of gearing (only an advantage in rising markets anyway) but it's easy money compared to BTL and tenants from hell.

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You left out the most likely source for the money to enable people to keep buying properties at historically high prices, which is people selling properties at historically high prices. It's pretty much a zero-sum game, and a lot of the extra money being made by people at the other end of the market filters back to buyers by way of inheritance, gifts from parents, etc.

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You left out the most likely source for the money to enable people to keep buying properties at historically high prices, which is people selling properties at historically high prices.

Yes but who will be buying them at historically high prices? And how?

The housing market is not a closed system, it relies like any market on fresh inflows of money to sustain price momentum.

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Aliens seems to be the favourite so far (today's prices are out of this world so I guess it makes sense).

Tip: Invest in gold pressed latinum, I have a feeling that much of this new housing money will hail from Ferenginar.

They should do well in the BTL market.

Sorry guys, looks like the crash has been postponed until the 23rd century at the earliest.

Gold pressed latinum - :D you big geek!

Looking forward to a crash so that the missus and I can "live long and prosper".

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You left out the most likely source for the money to enable people to keep buying properties at historically high prices, which is people selling properties at historically high prices. It's pretty much a zero-sum game, and a lot of the extra money being made by people at the other end of the market filters back to buyers by way of inheritance, gifts from parents, etc.

Spot on. The flaw with the HPC argument that prices must fall due to shortage of FTB's is that FTB's are no longer a major factor. The money invested in the housing market will continue to filter both up and down throughout the market. A whole geberation of baby boomers now have more wealth than any generation in history and they are the ones who keep the market afloat.

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Spot on. The flaw with the HPC argument that prices must fall due to shortage of FTB's is that FTB's are no longer a major factor. The money invested in the housing market will continue to filter both up and down throughout the market. A whole geberation of baby boomers now have more wealth than any generation in history and they are the ones who keep the market afloat.

:blink:

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Yes but who will be buying them at historically high prices? And how?

The housing market is not a closed system, it relies like any market on fresh inflows of money to sustain price momentum.

I haver a house worth £400k. I want £500k for it. I want to downsize and buy 2 houses for £200k each. The sellers ask £250k as prices above them have gone up. I buy the £250k houses and they pay my asking price. Whatever return I get on my £250k BTL is more than I was getting with £250k invested in a house that was too big. Simple.

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Mr Nodumsunreader,

It may not seem like it to you, but your admission above is effectively the same as throwing in the towel. I am sure TTRTR will be very annoyed with you.

If what you say is true then there will be one almighty thump as prices come crashing to the ground. You are effectively saying that the property market is now a closed system. If so, it is logical that two things will happen to that system.

1) It will leak money, baby boomers and BTLers will sell or MEW and not recycle 100% of the money into the UK housing market. Instead they will use it for pensions, downsizing, emigrating or whatever. Unless money coming into this closed system from outside (FTBs) then the system will shrink and prices will fall.

2) It will slow down. If what you say is true then money will only circulate within the system as each babyboomer realises a transaction. Those 2bed new builds will only sell when a babyboomer MEWs to get the deposit for their child. It will need one transaction in order to power another. The rate of circulation will fall and prices will fall.

1) and 2) are based on your own hypothesis of the market as a closed system in which only boomers participate. You have thrown in the towel, you have a deceased argument, you are an ex parrot.

IMHO the only thing that will save prices is a bout of wage inflation.

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I haver a house worth £400k. I want £500k for it. I want to downsize and buy 2 houses for £200k each. The sellers ask £250k as prices above them have gone up. I buy the £250k houses and they pay my asking price. Whatever return I get on my £250k BTL is more than I was getting with £250k invested in a house that was too big. Simple.

Only works if someone has the money to pay you £500K for your house in the first place. It certainly won;t be the investor as you say the returns are less. In fact the further up the house scale you go the more sense it makes to rent. You are totally reliant on people borrowing more or having more earnings/savings to buy your £500k place. I'd say increasing tax, stamp duty and general running costs make you little scheme increasingly unlikely.

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Mr Nodumsunreader,

It may not seem like it to you, but your admission above is effectively the same as throwing in the towel. I am sure TTRTR will be very annoyed with you.

If what you say is true then there will be one almighty thump as prices come crashing to the ground. You are effectively saying that the property market is now a closed system. If so, it is logical that two things will happen to that system.

1) It will leak money, baby boomers and BTLers will sell or MEW and not recycle 100% of the money into the UK housing market. Instead they will use it for pensions, downsizing, emigrating or whatever. Unless money coming into this closed system from outside (FTBs) then the system will shrink and prices will fall.

2) It will slow down. If what you say is true then money will only circulate within the system as each babyboomer realises a transaction. Those 2bed new builds will only sell when a babyboomer MEWs to get the deposit for their child. It will need one transaction in order to power another. The rate of circulation will fall and prices will fall.

1) and 2) are based on your own hypothesis of the market as a closed system in which only boomers participate. You have thrown in the towel, you have a deceased argument, you are an ex parrot.

IMHO the only thing that will save prices is a bout of wage inflation.

You misunderstand - I do not agree with the scenario, just stating what is happening. As for your argument regarding leakage, you have a point bu fail to recognise that the scenario I paint build in perpetual inflation into the housing market largely offsetting such leakage.

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Only works if someone has the money to pay you £500K for your house in the first place. It certainly won;t be the investor as you say the returns are less. In fact the further up the house scale you go the more sense it makes to rent. You are totally reliant on people borrowing more or having more earnings/savings to buy your £500k place. I'd say increasing tax, stamp duty and general running costs make you little scheme increasingly unlikely.

Only Me, I agree with you on the transaction costs point.

Also if you sell a £500k house (probably a small 2-bed house) where we are, you would only be able to buy two small one-bed flats with the proceeds. It doesn't sound like a natural thing for a downsizer to do - surely they'd be more likely just to sell up and go abroad? Or do nothing - carry on living in the house so that there is somewhere for the children / grandchildren to stay when they visit?

However I've always thought that the further up the scale you go, the more sense it makes to buy rather than rent.

From a financial standpoint, when I have worked through the rent vs buying cash-flow numbers for London, it can work out just about cheaper to buy rather than rent a large house, particularly if you have equity and are a higher rate tax payer. However it always works out cheaper to rent rather than buy a small flat, particularly if you have little equity and are a lower rate tax payer.

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NodumF*ckSunEditor once again reveals that he knows as much about economics as Gordon Brown.

Dunno why u lot are even bothering to reply to the moron. trying to explain to him about closed systems or leakage is probably likely to be about as successful as trying to teach a newt to pilot a light aircraft.

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Spot on. The flaw with the HPC argument that prices must fall due to shortage of FTB's is that FTB's are no longer a major factor. The money invested in the housing market will continue to filter both up and down throughout the market. A whole geberation of baby boomers now have more wealth than any generation in history and they are the ones who keep the market afloat.

Good points.

Also those with equity are investing abroad in property and equities - this is the new shift in investment taking place.

The net result is more wealth for those participating.

I myself am buying in Berlin just as they are comming out of a long recession so I see 400% growth over 5 years, I am not alone.

Brits are buying up Europe.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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