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right_freds_dead

Stagflation. In It For The Long Term

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i think the current house market has enough bloated inflation to see out another 20+ years of wage inflation to catch up to the 3.5x salary average. thats provided a correction doesnt happen. in other words. a new BTL today would take 10-15+ years to make the first clear returns off the investment. compared to other investment options thats pretty poor.

1986 a good homeowner NW wage was around 8k

1996 a good homeowner NW wage was around 16k

2006 a good homeowner NW wage was around 26k

for a house to be 3.5x salary without a crash and only relying on wage inflation.

average NW home £160k wage needs to be £45k

2016 a good homeowner NW wage could be around 36k ?

2026 a good homeowner NW wage could be around 45k ? (3.5x salary)

this is speculative of course. but backed up by previous performance.

so perhaps if we dont get a crash we would need 20+ years of stagnation to allow wages to catch up.

so if you thought your snappy BTL would double in 3 years. think about what people REALLY will earn.

BTL guaranteed safe as houses ?

BTL would work if you either bought pre boom, or are prepared to lose liquidity and /or manage a tenant for 20 years. by the end of that you would have an asset worth the same as it was the day it was purchased - minus 30% deflation. though the sweetner is that a tenant paid for it so in a way it was free. it only cost the investor the deflation. in my view BTL probably still works in the long term with a payback in 10-15yrs, but property development/flipping is dead and buired for a whole generation.

bear in mind BTL would only work provided there is NO IMPENDING CRASH.

if theres a crash they are of course, toast. if you think low lending rates will help, they wont as the public spent half of that low lending on consumer debt. therefore removing it from available mortgage payments. they have to payback barclays not give it to you for your new high prices.

got you there didnt i ?

Edited by right_freds_dead

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You also need demographics on your side, what happends in a few years when boomers want to downscale yet the generation below them is smaller in number? (over supply, that's what).

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But what's the point in waiting any amount of time for wage inflation to erode the VALUE of your property "investment"?

Just because somebody eventually pays a bigger number for it doesn't mean the seller wins, when a Mars Bar will cost £2.00 (or something) in 2026. This is effectively what happened in the 1970s but over a protracted timescale.

Not getting at you, fred, just at the people who are prepared to "wait for the price". What's the point?

G.C.S.E. Economics.

:unsure:

PS. My next door neighbour is having an "Open Day" on their house. Wanna come and view, Fred? Better than that farm, anyway. Nice very large 4 bed detached (Bramhall)? Posh, like.

:lol:

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In 1998, i was on my university placement as a programmer earning 16k..... Today software developers on my team earn 17k->21k, all are university graduates.

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Moosetea: Totally agreed.

I was assuming an optimistic scenario for salary increases. Of course, your point just makes it worse for the home-sellers, since the "value" of property is crucially dependent upon the next man's ability to buy it. In turn, that is given by a combination of salary and available lending.

Think I'll sit this one out.

:P

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In 1998, i was on my university placement as a programmer earning 16k..... Today software developers on my team earn 17k->21k, all are university graduates.

Last time any of the software developers on the same team as me earned as low as 21K was 1999. Sounds low to me.

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Stagflation, naaaaa.

Globalisation and expansion... yea.

As E Europe, S America, China, India et - al expand we will massively benefit. This will feed into inflation.

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Last time any of the software developers on the same team as me earned as low as 21K was 1999. Sounds low to me.

These developers work for me, but a quick search of the jobsites seems to confirm its about average for a junior dotnet developer, with everything you should expect. I was doing vb6 in 1998 as a student for 16k...

(Junior) .net developer - GBP 16,000.00 to GBP 20,000.00 per year

http://jobsearch.monster.co.uk/getjob.asp?...rv&vw=d&lid=808

Edited by moosetea

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RIGHT FREDS DEAD

Change that AVATAR!!! Its giving me Nightmares.

Makes Marti Feldman Look attractive!!

Edited by teddyboy

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Not getting at you, fred, just at the people who are prepared to "wait for the price". What's the point?

G.C.S.E. Economics.

The point for me is I can pay of my current mortgage and save up enough to buy outright rather than buy now and end up giving the banks many tens of thousands of pounds in interest.

G.C.S.E. Economics.

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So you pay the mortgage off quick and save interest? So what? Then what do you do? Sit for twenty years waiting for inflation to devalue your property back to 3.5 times salary because no-one else can afford it?

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These developers work for me, but a quick search of the jobsites seems to confirm its about average for a junior dotnet developer, with everything you should expect. I was doing vb6 in 1998 as a student for 16k...

(Junior) .net developer - GBP 16,000.00 to GBP 20,000.00 per year

http://jobsearch.monster.co.uk/getjob.asp?...rv&vw=d&lid=808

Yea, guess the dotnet thing has muddied the waters a bit. It sort of blurs the distinction between the quick and dirty Visual Basic type stuff that most people with a bit of intelligence could sit down and bash out, and the higher end specialist stuff that demands years of experience to be able to do. Personally I don't really think that the term "dotnet developer" really means much, because it could cover such a big range of stuff.

As a matter of interest, how do you think the rates on those job websites tie in to reality? In my experience, I sometimes wonder if the jobs with higher salaries don't ever appear on those sort of websites, but instead draw candidates through word of mouth, or through top end recruitment firms. I wonder if those job websites are a sort of "clearing house" for the stuff that's left?

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  • 338 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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