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SirGaz

Its not just houses..its not just us..

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This just reinforces the fact that there is plenty of money around but it seems to concentrating into ever smaller groups of people.

I recently went to a retro motorsport event and it was like some sort of zombie movie with the grey haired hordes ambling around.

Anyhow, its not just those of us that frequent this fine forum that can see how prices of things have become detached from  any sort of measure of value.

People are asking £40k+ for these everyday sports cars. Am I alone thinking this is nuts?

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Reports are that the top end of the market (the £500k+ stuff) is already softening markedly. It definitely is a bubble and it'll cascade down from the top end sooner or later. I still kind of wish I'd kept my Mk1 MR2 and Phase 1 106 Rallye, both of which are worth a lot more now than when I got rid of them, but then I wish I'd bought a load of Bitcoins when they were worth pennies. No point worrying about it (and the 106 Rallye still belongs to the guy I sold it to, as far as I know, and he truly adores it).

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The prices of mark 1 and mark 2 Ford Escorts (RS versions) are nuts! Well over £20k for a relatively low tech vehicle.

 

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Classic cars have always been a bit of a special case due to their tax benefits - hence they have always been a desirable investment for certain groups, and many of the top-end marque manufacturers deliberately cater for this market by limiting production to create scarcity.

However, the problem is that the market has been priced up beyond the point at which new money is available to enter it - not to mention, that space in many residences is now so tight that the cost of storage is now becoming prohibitive, even for the well-off segments of the middle class. 

 

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Just another symptom of the over financialised economy, albeit a good deal less harmful than housing speculation. Who cares if people want to bid a 20+ year old motor up to insane levels?

The problem is that the dough for all this has come from HPI. There is no escaping housing costs, one way or another.

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25 minutes ago, MattW said:

The prices of mark 1 and mark 2 Ford Escorts (RS versions) are nuts! Well over £20k for a relatively low tech vehicle.

 

Have you seen the price of an XR3 lately? Bloody horrible, rattly, cheaply made things that they are.

If interest rates rise the market is dead. There's also the issue of environmental laws coming down hard on classic cars. Classic cars are restricted in Germany, they're not allowed in some cities etc. The same will happen here, especially if everything else on the road goes electric.

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10 minutes ago, The Knimbies who say No said:

Just another symptom of the over financialised economy, albeit a good deal less harmful than housing speculation. Who cares if people want to bid a 20+ year old motor up to insane levels?

The problem is that the dough for all this has come from HPI. There is no escaping housing costs, one way or another.

Similarly, who cares if they crash...  They won't be propped up like other assets.  

 

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2 minutes ago, whitevanman said:

Have you seen the price of an XR3 lately? Bloody horrible, rattly, cheaply made things that they are.

If interest rates rise the market is dead. There's also the issue of environmental laws coming down hard on classic cars. Classic cars are restricted in Germany, they're not allowed in some cities etc. The same will happen here, especially if everything else on the road goes electric.

It is amusing how the ratty old cars get to become valuable.  I had an mk4 Escort in the early 90s (not an XR3 mind) and was happy to be rid of it.  But I suppose it is all about the retired generation (with money) buying up stuff they'd lusted after in their youth.

Anyway, IMO they'll allow the older classics into towns -- no point in having a nice old Aston if you can't drive it to the club.  They'll put the cut-off at something mainly unachievable for the masses.  40 years or something.

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Of course the prices will crash. No government props either... I remember 10 years ago in the credit crunch you could get a £55k for £35k (new), they were desperate to give them away.

I disagree with the author's point about lack of desirability though from the younger generations - these cars will always be desirable, maybe even more so, but once the credit/jobs/whatever start to disappear, the asking prices will shrink quickly.

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51 minutes ago, dgul said:

It is amusing how the ratty old cars get to become valuable.  I had an mk4 Escort in the early 90s (not an XR3 mind) and was happy to be rid of it.  But I suppose it is all about the retired generation (with money) buying up stuff they'd lusted after in their youth.

Anyway, IMO they'll allow the older classics into towns -- no point in having a nice old Aston if you can't drive it to the club.  They'll put the cut-off at something mainly unachievable for the masses.  40 years or something.

An early XR3 is 35 years old now, don't forget.

It's got silly to the point that any Mk3 or 4 Escort in reasonable condition is worth £800 or more, even a 1.3 Bonus or something equally dire. Mk 1 and 2 Escorts are crazy money, even four doors are going for several thousand. I get why a 2-door shell is worth money (mainly to the ringing crowd it seems, sadly), but a 4 door?

As with every bubble it'll pop at some point and some people will get their fingers burned. I'm kind of hoping that one day I'll be able to pick up a Honda RC30 for a non-ludicrous price, but I suspect the number of owners who will be forced to sell in a recession isn't going to be high. Edit: bikes of course are in a similar bubble. 80s and 90s two strokes and mopeds are particularly ludicrous right now.

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The main difference here is that no-one needs to own a classic car, everyone needs shelter. 

I think I read a fascinating article in the Telegraph recently where someone was making a good business out of buying up wrecks and then doing them up in the far east with cheap labour. Sounded like a real production line. These were cars in the £100K+ category. 

As to the future, I know very little about cars - but I imagine some in the current bubble will become perennial classics and maintain high values, others simply tomorrow's banger or highly niche collectable.  Sadly, for the author of the article - I reckon any Porsche 911 will be in the perennial classic category. It's an iconic looking car. Even someone woefully ignorant as me recognises them. 

But frankly if I had £85K to drop on a car, I'd probably be looking at a Tesla. 

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34 minutes ago, TheBlueCat said:

We've been here before, there was a huge crash in classic car prices at the end of the 80s.

remember when there was a trade for the new mercedes soft top...I think it might have been the 350..people would pre-order, and sell on the pre-order for a tasty profit... course it all collapsed soon after this madness IIRC

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8 years of ZIRP will do that - people have gone mad looking for investments of any kind.  These cars would cost an absolute bomb to insure, so I'm guessing most people won't even be driving them, but simply buying them like bottles of wine that never get drunk - pure investments, parked off-road, untaxed, uninsured.  Yet another example of tulipmania.

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I have a few Lamborghini original framed prints from the 80s - pick em up for a few quid. They'll be worth hundreds if not thousands!

They require next to zero maintenance and storage.

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It's not just the rare, prestige or classic sports cars that are shooting up in value, even quite common non-classic performance cars are going for stupid money now... Subaru Imprezas, Mitsubishi evo's, Focus RS.

 

I sold a mint low mileage example of an 05 Impreza sti Prodrive 5 years ago for £8k, took 5 weeks to sell so I don't think I priced it too cheaply.

 

The same models now in worse condition and with higher mileage than mine had have asking prices of anything from £12k-£15k! 

 

The same with Focus RS's (mk1) as well... 5 years ago you could pick up a good example with low mileage for £8k, now you're looking at £15k+

 

All fuelled by cheap and easy credit of course.

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Nostalgia provides comfort and everything goes in a cycle. We tend to say "they don't make em' like they used to" as we get older.

---

When we have a bit of spare capital, we may want to buy back our first computer or our first car, or the car that we dreamed about but could not at the time. This can include other "collectibles" such toys, music records, comics, art etc.

Stuff from the 2000s is cheap right now. I'll take computers as an example - Pentium 4s, Core2Duos computers, you can pick up for a fiver.

But earlier computers from the 80s, 90s you either can't find OR they are starting to creep up in value. E.g. 286, 386, 486 (£200-£500), and later years Pentium 1, 2, 3 (£100 odd),

Games consoles are same too - NES, SNES are commanding silly prices. But later consoles such as Playstation2 you can't even give away. Games are like 5 for £1 at the car boot, when brand new they were £20-£30 each.

1980s cars are starting to creep up - If I had spare cash, and grey haired with no need for a commuting car I'd buy my first dream car, and that was the BMW E30 series (owned and scrapped in the 1990s). I am sure we get the same warm fuzzy feeling when we see an old dream car on the road....

bmw-e30-3-series-82-94-325i-sport-S27508L-Ford-Escort-RS-Turbo-7.jpg

So the strategy might be to pug some of the 1990s, and 2000 stuff away for 30 years, and then sell it for a mint down the line.

---

In old age care homes, some of the places have a 1950s decor, with 1950s appliances. It provides comfort and familiar surroundings.

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3 hours ago, canbuywontbuy said:

8 years of ZIRP will do that - people have gone mad looking for investments of any kind.  These cars would cost an absolute bomb to insure, so I'm guessing most people won't even be driving them, but simply buying them like bottles of wine that never get drunk - pure investments, parked off-road, untaxed, uninsured.  Yet another example of tulipmania.

Spot on.

I am an occasional reader of classic car magazines and amongst the genuine enthusiasts are the newcomers who will always make some financial speculation comment ("I'd advise everybody to buy now before prices rise further") that shows them up for the rampers and speculators that they are.

These price rises, like house prices, are a product of ZIRP as you correctly identify.

Interest rates are going up, there will be another US rate rise this evening, and where America leads we follow, albeit slowly and unwillingly with Carney at the controls.

Then the person who has paid £30k for a rusty forty year old car is going to feel rather an idiot.

The music is stopping.

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7 hours ago, 200p said:

I have a few Lamborghini original framed prints from the 80s - pick em up for a few quid. They'll be worth hundreds if not thousands!

They require next to zero maintenance and storage.

Those little dangly rubber strips that people used to hang off the back of souped up tin heaps in the 80s must be worth a fortune by now!

And as for furry dice - the sky's the limit!

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7 hours ago, 200p said:

Nostalgia provides comfort and everything goes in a cycle. We tend to say "they don't make em' like they used to" as we get older.

---

When we have a bit of spare capital, we may want to buy back our first computer or our first car, or the car that we dreamed about but could not at the time. This can include other "collectibles" such toys, music records, comics, art etc.

Stuff from the 2000s is cheap right now. I'll take computers as an example - Pentium 4s, Core2Duos computers, you can pick up for a fiver.

But earlier computers from the 80s, 90s you either can't find OR they are starting to creep up in value. E.g. 286, 386, 486 (£200-£500), and later years Pentium 1, 2, 3 (£100 odd),

Games consoles are same too - NES, SNES are commanding silly prices. But later consoles such as Playstation2 you can't even give away. Games are like 5 for £1 at the car boot, when brand new they were £20-£30 each.

1980s cars are starting to creep up - If I had spare cash, and grey haired with no need for a commuting car I'd buy my first dream car, and that was the BMW E30 series (owned and scrapped in the 1990s). I am sure we get the same warm fuzzy feeling when we see an old dream car on the road....

bmw-e30-3-series-82-94-325i-sport-S27508L-Ford-Escort-RS-Turbo-7.jpg

So the strategy might be to pug some of the 1990s, and 2000 stuff away for 30 years, and then sell it for a mint down the line.

---

In old age care homes, some of the places have a 1950s decor, with 1950s appliances. It provides comfort and familiar surroundings.

Is it just me, or does anyone else not think of those cars above as 'old'? I'm 45 and to me an 'old' car is one made before the mid 1960s or so. So a Mark IV Cortina is not 'old' to me. A Mark III is getting there, and a Mark II or I is definitely old. 

When I first went to Malta in 1997 I remember being fascinated by all the old cars from the 60s and 70s, so about 25-30 years old. When I returned last year I thought 'where have all the old cars gone' and realised that they were all now cars from the late 80s and early 90s, they just didn't look old to me. 

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27 minutes ago, Austin Allegro said:

Is it just me, or does anyone else not think of those cars above as 'old'? I'm 45 and to me an 'old' car is one made before the mid 1960s or so. So a Mark IV Cortina is not 'old' to me. A Mark III is getting there, and a Mark II or I is definitely old. 

When I first went to Malta in 1997 I remember being fascinated by all the old cars from the 60s and 70s, so about 25-30 years old. When I returned last year I thought 'where have all the old cars gone' and realised that they were all now cars from the late 80s and early 90s, they just didn't look old to me. 

Im about your age.  I have kids aged 9 and younger. Whats really scarey is working out how many years before my kids were born and the equivalent many years before I was born.

  ie. 15 years before my eldest was born was 1992. I think I was at my peak then and the car to have was a rs turbo or xr3i. Which like you I still see as fairly new(although Id love to drive one to see how sh1te they really are).  

15 years before I was born were austin sevens mk2 jags and MGAs. Which I would have viewed as mega old fashioned when I was nine.

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