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Si1

Is it moron month?

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Why are we suddenly getting blinking cretins blithely using nominal terms house price calculations with the arrogance borne of ignorance? Could you be bothered explaining? I couldn't....

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I'm not sure what you are on about, but don't worry I'll Google it ;)

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13 minutes ago, Si1 said:

Why are we suddenly getting blinking cretins blithely using nominal terms house price calculations with the arrogance borne of ignorance? Could you be bothered explaining? I couldn't....

Only one reason I can think of, and it's good news from our perspective :)

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3 minutes ago, Fully Detached said:

Only one reason I can think of, and it's good news from our perspective :)

Well yes. The bargaining stage of the grief cycle.

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26 minutes ago, TheCountOfNowhere said:

It's Moron Millenium

Quite. I was going to say it's moron month every month.  One of my neighbours has just put their house on the market for £50K more than they paid for it 6 years ago. This is 2.5x what we paid for ours in the same terrace 4 years ago - admittedly they've had some work done to it and got a bit more land, but even so. 

This is no humble brag btw. Ours was for sale for months before we bought it and the local market has only flatlined at best since we moved here. 

Edited by StainlessSteelCat

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23 minutes ago, StainlessSteelCat said:

Quite. I was going to say it's moron month every month.  One of my neighbours has just put their house on the market for £50K more than they paid for it 6 years ago. This is 2.5x what we paid for ours in the same terrace 4 years ago - admittedly they've had some work done to it and got a bit more land, but even so. 

This is no humble brag btw. Ours was for sale for months before we bought it and the local market has only flatlined at best since we moved here. 

50k over 5 years , round my way its 50k up from 6 months ago :huh:

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38 minutes ago, Nabby81 said:

50k over 5 years , round my way its 50k up from 6 months ago :huh:

Same in parts of Dorset. 

A house that sold less than two years ago, only work done was a lick of paint, from what I could see and it is now been valued at £125k more.

Having said that it is still a rarity, as it is one of the few around here not to have a SSTC sign on it, and long may it remain that way.  

Edited by otters

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2 hours ago, canbuywontbuy said:

The UK housing market needs FTB morons to survive these days without BTL propping it up.

On 01/12/2016 at 7:57 AM, Si1 said:

Do you understand real vs nominal

There is only 1 price on the house and I'm sure the banks happy to lend me it real or nominal - so that's no."

 

It's the bank wot made me do it guvnor

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A couple of doer upper terraced houses by me, you guessed it, bought up and currently being renovated by several generations of family as family projects. All happy clappy in their amateur enthusiasm for doing up houses. F#cktards.

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On 02/12/2016 at 11:23 AM, Si1 said:

F#cking f#cking f#cking f#cking c#ntish f#cking morons

F#ck f#ck f#ck

That comment about real vs nominal was actually quite eye-catching. Just wading through a massive but excellent biography of Greenspan and it's quite a jolt to remember how inflation and the management of inflation was so pivotal to government and bank conduct. Of course it still is now, but instead of worrying about excessive inflation we're desperate to avoid deflation.

I think that the post-2008 lending is risky in a way that early lending wasn't because of the anaemic rate of inflation. With decent wage inflation the real value of the mortgage payment is gradually reduced. This means that when an economic shock arrives it is easier for households who took out their mortgage five years ago to ride it. For example with wage inflation of 5% a £20k wage becomes £25.5k in five years. If your mortgage payment was, for the sake of argument, £6k then in the absence of a change to the mortgage interest rate your mortgage payment drops from being 30% of your wage to 23%. In ten years it drop to 18%. 

Wage inflation creates headroom to ride out a crisis.

If wage inflation is only 2% then over ten years, assuming constant mortgage rates, then the mortgage payment only drops from 30% of income to 25%.

(If anything ever bounces us off these bonkers low rates - like a sterling crisis, for example - matters are just much, much worse.)

I think this business of people not having a great feel for compounding has massive consequences. Given the role of both house price inflation and wage inflation in coming to an assessment of the point at which house prices are just plain mental, I think that people just give up on analysis and trust to a rule of thumb. In the UK we seem to have arrived at a point where the rule of thumb is that you can never pay too much for a house and that even if you do, the government has your back. Unfortunately I think that rule of thumb has consequences which are easily anticipated: it will create a situation where people pay too much for houses and the government decides that trying to protect them from the consequences of their choices does more harm than good.

 

Edited by Bland Unsight

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Didn't we break all that some 10 years ago - doesn't matter how much you pay, and rule of thumb forever HPI population growth core-voters - and for some, 10 years more of rent ago?  

An old friend's house came to market last month with an asking price £520,000.    Bought for near enough £400,000 August 2014 and supposed to be their forever home.  They took a chunk of profit from house they bought 2012 (at a price too bubble-steep for me) and sold for gainz in 2014.

Feeling a bit anxious (is that bad of me) that they may get their price.  They know the general area I want to buy a small semi, and if they get their buyer they could buy one of the much nicer semis, or maybe a small detached, on one of the much nicer roads of the same area. 

Their current place not even if a particularly nice area.  Longer commute and rural side.  Some small pockets of 'exclusive' within that local area, but against more density of lower value housing in the nearby general area.   I can see from recent sales the pockets of exclusive houses there been getting top top prices.  It's a weirdness because these much price (and even 2014) just about matches prices for nice homes in the different more appealing areas (transport networks/ shops/entertainment/schools).  My guess it's from a few buyers/owners who are really connected to the area somehow, and perhaps see it through a far different lens to other people.

This is someone who had parents gift them a £20K+ brand new German car bow-ribboned for their 17th birthday, and then then a higher end car gifted some 3 years later.  Wealthy parents who in fairness did well in business, but also a BTL portfolio in there too.  Apart from some repositioning and surprise in 2008-09, quickly forgotten, past 6 years have been all boom for them. 4-5 holidays a year.

I like to call it a market.   We all have those struggles of understanding things like inflation.  I don't see why those who act on the foreverHPI thinkers who perhaps 'don't have  a great feel' for how gradual adjustments (or tiny spark against certain circumstances) should come above other families who refuse to overstretch, and pay £400K now £520K, for houses that were £150Ks in year 2000.  In this instance they have good incomes, send their young kids to private schools, and perhaps Mummy & Daddy can bail them out if house prices fell, against expectations of permanently high HPI (core voters not enough homes), or foreverHPI.   Maybe parents can bring their large detached to market rather than no-care-in-the-world market view of today about its current value being £1m.  

In this area no break from foreverHPI (and at the moment new top asking prices - with some getting it this year looking at sold prices) so I'm not awarding any innocence, or making up excuses for how other people think against a market - they are highly intelligent people (and certainly never done without.... a shopping trip involved bags of designer gear and social media full of party nights and exotic holidays) -  until I see some HPC (and not even then of course).   Read too much about how other buyers paying ever higher prices don't know what they're doing all the way back from when prices were 50% lower than today, into the ever new peak surges which leaves 2006-07 looking like great value.  Has to be proven that the authorities won't come to the HPI chasing side yet again, and tbh, when people in their mid 30s are buying £400K houses, they are adults and can see the prices as well as any of us.  We can't have a market where you have to prove you're all-knowing about everything to be responsible for your own decisions - and in many instances other money to tap on.  Take on debt, pay it back - even today there are messages that you don't get given the house if you miss debt repayments - not rocket science or brain surgery.

Edited by Venger

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Jeez, when you guys post back to back I feel like I'm reading too much :P

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You can always choose easy option from millions of others about forever HPI, population growth, core-voters, too few houses, supply and demand, and can't have HPC because of victims/ruin.

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4 minutes ago, Venger said:

You can always choose easy option from millions of others about forever HPI, population growth, core-voters, too few houses, supply and demand, and can't have HPC because of victims/ruin.

You see, that post was short and to the point. Thanks.

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1 minute ago, Bland Unsight said:

Sell now, sell everything.

OK, I'll check with the housing association first. They might not be too happy though.

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1 hour ago, Reebo said:

OK, I'll check with the housing association first. They might not be too happy though.

Just pass the advice on to the housing association's Financial Director.

My advice to you is to go long cardboard boxes (I assume you are on an AST).

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