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Telegraph - House prices to stay high forever

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House prices to stay high forever, predicts ex-Bank of England guru 

http://www.telegraph.co.uk/business/2017/06/28/house-prices-stay-high-forever-predicts-ex-bank-england-guru/

A century ago only around 10pc of the UK population owned their own homes, so further falls from today’s levels would not be without precedent.

 

Well there we go, the expert must be right, close the forum and let's find something else to moan about.

 

Edited by Barnsey

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He talks about the situation like it is something organic over which nobody has control and things just happen.

How can someone in such a position be too stupid to realise that a huge majority of the population just voted against the status quo and that population is going to grow larger and isn't going to vote to pay over the odds for his mortgage. 

Perhaps he is an aging boomer just projecting what he wants to happen rather the reality of what all the recent anti-HPI trends seem to suggest.

Edited by fru-gal

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Dumb ar5e economisy - high UK migration = more housing demand = prices go up.

 

Where as the reality is

non-contrib benefits attract most of the world = high public spending = high funding requirement = Brexit vote = drastics vuts + high cost of government debt = cuts for non nations + nationals = lower demand for housing = falling house prices.

 

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Even just 3 years ago in my previous location (NW) it was very much a buyers market... hundreds of houses for sale, very little shifting, very few buyers, even reasonably priced houses were having to knock 10-20% off their asking price to achieve a sale.... then the effects of QE, ZIRP, HTB etc washed through the system and the whole market got turned on it's head, in less than a year it went from being a buyers market to a sellers market with far fewer properties available, hardly any forced sellers, more people suddenly being able to 'afford' to buy, houses with what would have previously been considered kite flying asking prices suddenly getting snapped up in weeks that would previously have sat unsold for years.

 

My point being if it things can change that rapidly and dramatically one way they could just as rapidly change back again.  To predict that things are going to stay this way 'forever' is a very bold prediction, 

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The word "forever" appears in the title but not in the article. So that bit looks like pure Telegraph spin. The professor is actually quoted as saying the next 30 or 40 years and said "it is not implausible" prices will remain high.

Sadly, this sounds highly plausible if you want a home in the South East. Prices are soooo far removed from wages, it's hard to see houses becoming affordable any time soon. 

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2 hours ago, TheCountOfNowhere said:

A proper 2007 pre collapse style article. How desperate,greedy, irresponsible, shellfish, criminal, indebted must some of the msm be?

They oyster know better by know.

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Miles in 2006 while he was Chief Economist at Morgan Stanley bank

Quote

 

Mr Miles says the single biggest factor driving up house prices in the past decade has been the expectation of buyers that prices will keep on rising.

As well as speculative expectations, the main factors pinpointed by Mr Miles are the rise in people's incomes, the rapid growth of the population and the cheap cost of borrowing due to low interest rates.

Of these, he says the expectation that prices will keep on rising by about 10% every year has accounted for between one-third and half of the excessive rise in prices seen in the past 10 years.

"We are likely to have significant falls in real house prices once those expectations come down," he warns

http://news.bbc.co.uk/1/hi/business/6172088.stm

 

Then after leaving MS he joins the MPC 2009 to 2015 where he voted for more QE and lower rates

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14 minutes ago, Democorruptcy said:

Miles in 2006 while he was Chief Economist at Morgan Stanley bank

Then after leaving MS he joins the MPC 2009 to 2015 where he voted for more QE and lower rates

Yes he's just trying to argue that interest rates shouldn't go up

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"A century ago" is a very significant period to have chosen. In 1917, no women had suffrage, and only about one half of the male population over 21 were eligible to vote. The Representation of the People Act (1918), which granted women the right was also introduced to grant democratic rights to the working class men, most of whom had risked their lives on the front, and more particularly, all of whom would have been aware of what "people power" could do to Czarist Russia.

Actual democracy was the legacy to us of that great generation, just as universal health care and the freeing of higher education from the exclusive grip of the upper classes, was the legacy of those who came back from the second war. A population that has overthrown a foreign government is unlikely to take much nonsense from its domestic one, and the powers that be (if they have any sense) realise this, and quake in their collective boots.

The idea that only 10% of the population could have the security of their own homes is, to my mind, not compatible with a democratic state. This "ex-bank-of-england-guru" is an ass.

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In 2004 while Miles was at Morgan Stanley, he was asked to produce a report about mortgages by our then chancellor a Mr Gordon Brown. With a Treasury etc at Brown's disposal asking banks for advice is a nice goverbankment touch.

One recommendation from Miles:

Quote

 

Building societies may run up against legislative limits on the proportion of funding that
must come from members if wholesale funding or securitisation of mortgages emerged as the most
effective means to fund fixed-rate mortgages.

Recommendation 19: that Government consider lowering the minimum funding limit by non members
from the current 50 per cent. 25 or 30 per cent of building societies’ funds coming
from members would still represent a substantial source of funding

Full report: http://news.bbc.co.uk/nol/shared/bsp/hi/pdfs/12_03_04_miles.pdf

 

 

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1 hour ago, Tempus said:

Sadly, this sounds highly plausible if you want a home in the South East. Prices are soooo far removed from wages, it's hard to see houses becoming affordable any time soon. 

It's hard to project from current trends, but non-linear systems can undergo sudden changes out of all keeping with current behaviour.

6 minutes ago, Democorruptcy said:

One recommendation from Miles:

So, he's not only an idiot, but he's also an originator of this mess?

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2 hours ago, Democorruptcy said:

Miles in 2006 while he was Chief Economist at Morgan Stanley bank

Then after leaving MS he joins the MPC 2009 to 2015 where he voted for more QE and lower rates

That deserves an appearance in Private-Eye

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All coming out of the woodwork to argue against interest rates rises now. It was blanchflower last week.

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13 minutes ago, Democorruptcy said:

One recommendation from Miles:

He would perhaps be wiser to keep his head down, rather than than project his own hopes on a society he's critically injured, just at the point when he has no influence and the currents of feeling are starting to turn.

I suppose he can take some comfort from the fact that, with cuts in street-lighting, it can be quite hard to find lamp-posts in the dark these days.

Edited by Toast
spelling

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2 hours ago, Tempus said:

The word "forever" appears in the title but not in the article. So that bit looks like pure Telegraph spin. The professor is actually quoted as saying the next 30 or 40 years and said "it is not implausible" prices will remain high.

Sadly, this sounds highly plausible if you want a home in the South East. Prices are soooo far removed from wages, it's hard to see houses becoming affordable any time soon. 

Hard to see, perhaps, but the SE is prime for a steep correction which was avoided last time due to foreign investment and huge flexibility to move to record low IRs, allowing BTL empires to thrive.

There's no room to support the market this time, foreign investment pulling out due to capital controls and political uncertainty, serious talk of raising rates, significant Brexit anti-European sentiment, wage stagnation and BTL crackdown which will hit SE landlords the hardest of all due to the appalling yields. Never mind the real risk of an external global recessionary as has historically occurred every 10 years max since WW2.

Hard to see through the HPI forever gloating in the media but London isn't the safe haven it was in 08, it's now a political heaving mess. This is the best chance you've got of buying somewhere in the SE since the 90's crash given the sheer number of negative triggers.

I simply cannot believe what I've seen since 2012, in just 5 years, bog standard 3 bed semis in suburban "white van man, Iceland shopping working class" outlying areas of London have doubled in price, DOUBLED. 5 FRIGGIN YEARS. Wages in real terms have stagnated, if not worsened.

Edited by Barnsey

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2 hours ago, Barnsey said:

I simply cannot believe what I've seen since 2012, in just 5 years, bog standard 3 bed semis in suburban "white van man, Iceland shopping working class" outlying areas of London have doubled in price, DOUBLED. 5 FRIGGIN YEARS. Wages in real terms have stagnated, if not worsened.

Yup, madness. Utter madness. Take a grim place like Erith. It literally cannot support a shop more upmarket than Argos or Matalan. Even the local cash converter shop closed down.

Yet best part of half a million bleeding quid for stuff like this https://www.zoopla.co.uk/for-sale/details/42768093?search_identifier=978876a76ddf808b8be4d8a1dcdb0789#wQdW3TEdmL0VzjXL.97

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It's just as the sage Gordon Brown said.  No house price boom and no house price bust.

It's just as another sage Osborne said - before the 2015 general election - that Britain would be the richest country in the world by 2030.

How it can be the richest country in the world with a continuation of the most expensive, the most tiny and some would now say the most fire prone homes beats me.

Edited by billybong

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52 minutes ago, Tempus said:

Yup, madness. Utter madness. Take a grim place like Erith. It literally cannot support a shop more upmarket than Argos or Matalan. Even the local cash converter shop closed down.

Yet best part of half a million bleeding quid for stuff like this https://www.zoopla.co.uk/for-sale/details/42768093?search_identifier=978876a76ddf808b8be4d8a1dcdb0789#wQdW3TEdmL0VzjXL.97

I can see a queue of locals lining in with offers over asking to buy that (not).

Who seriously are they trying to kid? 

Has Erith gone gentrified? 

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4 hours ago, Toast said:

"A century ago" is a very significant period to have chosen. In 1917, no women had suffrage, and only about one half of the male population over 21 were eligible to vote. The Representation of the People Act (1918), which granted women the right was also introduced to grant democratic rights to the working class men, most of whom had risked their lives on the front, and more particularly, all of whom would have been aware of what "people power" could do to Czarist Russia.

Actual democracy was the legacy to us of that great generation, just as universal health care and the freeing of higher education from the exclusive grip of the upper classes, was the legacy of those who came back from the second war. A population that has overthrown a foreign government is unlikely to take much nonsense from its domestic one, and the powers that be (if they have any sense) realise this, and quake in their collective boots.

The idea that only 10% of the population could have the security of their own homes is, to my mind, not compatible with a democratic state. This "ex-bank-of-england-guru" is an ass.

Why stop there?  Go back another couple of centuries and slavery was not without precedent.  

Also, life expectancy was about 50 hundred years ago compared to 80 now.  No idea what adjusting for that would do to ownership levels but it seems like that would have some impact.

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My logical Brain says that this market is surely tapped out, the bubble has inflated way beyond the madness of 2007 in some areas and wages haven't been keeping up for a decade or more. However... my logical brain was the one who thought there was no chance of the UK leaving the EU and that even the yanks weren't stupid enough to elect Trump!

My dark brain, the one that read the EU ref polls showing a 50:50 split with increasing unease, and the one that awoke to Trump's victory with resignation, has been thinking for a while that this time it might actually be different. 

The UK and England in particular has a long history of being a country with a few landowners and huge majority of tenants. The introduction of BTL - made more attractive by the lack of Council Housing and failure of the public sector to provide any decent social housing - was the catalyst, but the real fuel that keeps the rentier fire burning will be job insecurity. In the "gig economy", in zero hours world, where you don't know how much work you have tommorrow, never mind next week, it's entirely possible that owning your own home will again become the preserve of the upper middle class and the elite in the UK.

The British electorate seemingly like this state of affairs, and as things progress further, it becomes difficult to unravel it in a single term of parliament anyway. 

Before last June young people in Britain at least had an escape plan. Now only those able to secure a visa / job abroad will, the rest might have to rent for their entire lifetimes. Just like their Grandparents did...

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