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pyewackitt

Easy Explanations Of Hpc For The Man In The Street

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Illustration of a Bubble

For this you will need:

1 x HPC'er

1 x 'Man in the street'

1 x 500ml Glass

1 x 330ml Can fizzy drink

Recipe:

The 500ml Glass represents the current market valuation of a property.

The 330ml Can of fizzy drink is the actual correct value of the same property based on affordability.

This must be explained to the 'Man in the street' before continuing.

Directions:

As with the current HPI it is important to mix swiftly - the can of fizzy drink should be opened and poured into the glass at such a rate that once the can is empty the entire 500ml glass is full to the brim.

And thus we have performed MAGIC (If this has been done corrctly) as there will be a specified amount of fizzy drink (330ml) filling up a 500ml glass.

The 'Man in the street' will recognise this sleight of hand and point out that much of it is made of bubbles.

Indeed this can easily be illustrated for within a minute or two the bubble will settle and reveal the glass to in reality be only two thirds full!

Only then may the HPC'er calmly point out 'Its a shame you couldn't see that before!'

Edited by pyewackitt

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Sorry, that's far too technical for the intelligence level of today's chav millionaires. You have to remember that their level of schooling won't enable them to grasp such complex concepts.

If you shift the analogy to Jordan's t*ts or Dwight Yorke's appendage, then you might have a better chance of getting the message across.

John

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+ It is cheaper to rent. Month-by-month, you save cash, and property has to rise maybe 2-3% per annum, just to cover the difference,

+Property at best has provided a boring return. While shares have been good, and gold has been spectatular. As normal, the crowd is keen to play last year's game, and they are missing out on this year's winner. I would rather own the horse that is winning now

(as posted on another thread here)

and if an asset market is made up only of investors and not those who want to own the asset (IR only BTL, at todays prices).. Then the market is made up of those requiring the asset to increase in value.

therefor it is speculative.

Therefor it will go pop.

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I think for Joe and Jane public the penny often drops when a complex situation (such as the housing market which involves difficult concepts like interest rates, seasonally adjusted figures, etc. etc.) is presented to them in a visual form. For this reason I would suggest creating a leaflet with 2 photographs. The first photograph would be of a typical property that could have been bought for 3.5 times the average working adult income in the year 2000. The second photo would be of a typical property that could be bought for 3.5 times the average working adult income in January/February 2006. Underneath the two photos would be the statement/question - Now tell me what's so good about rising house prices?

I think also a graphical representation (possibly bar charts) of rising house prices from 2000 - 2006 along with the increasing amount of earnings that an average earner would have to pay each month for their mortgage (depending on when they purchased their house) along with a bar chart showing the decreasing amount of earnings they would have available to put into their pension, paying bills, spending on improving their day to day quality of life. In addition it might be useful to have a bar chart showing the increasing amount house buyers have been putting into the pockets of Estate Agents, solicitors, surveyors, etc. as house prices have risen. Again, this might be followed by the statement/question - Now tell me what's so good about rising house prices?

The overall effect would be to show how your money buys less and less as house prices rise, that you have less money for your current and future quality of life and that the mortgage lenders, Estate Agents, etc. have got richer and richer as we have become poorer and poorer.

It might also be useful to have visual representations that show the positive effect of falling house prices.

If I had the time I would have a stab at translating these ideas into leaflets. I would be pleased if anyone else had a go at doing that.

Edited by Alfie Moon

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+ It is cheaper to rent. Month-by-month, you save cash, and property has to rise maybe 2-3% per annum, just to cover the difference,

Man in Street: "But renting is DEAD MONEY!!!"

If I had a pound for every time I've heard that....I've realised that it is easier for people to remember soundbytes like this, it saves them from having the crunch the numbers.

+Property at best has provided a boring return. While shares have been good, and gold has been spectatular. As normal, the crowd is keen to play last year's game, and they are missing out on this year's winner. I would rather own the horse that is winning now

Man in Street: "My mate is making millions from property, drives an X5, has a model girlfriend, villa in Spain...Houses are safe, shares are risky. What car do you drive?"

This is what we are up against. We are wasting our time.

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Guest Bart of Darkness
If I had a pound for every time I've heard that....I've realised that it is easier for people to remember soundbytes like this, it saves them from having the crunch the numbers.

Interest on borrowed money is, of course, NOT dead money.

I fear Flash is right, we'd be wasting our time.

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Man in Street: "But renting is DEAD MONEY!!!"

If I had a pound for every time I've heard that....I've realised that it is easier for people to remember soundbytes like this, it saves them from having the crunch the numbers.

Man in Street: "My mate is making millions from property, drives an X5, has a model girlfriend, villa in Spain...Houses are safe, shares are risky. What car do you drive?"

This is what we are up against. We are wasting our time.

Whenever anyone say "renting is dead money" I say "well, so is interest". Needless to say, the vast majority don't grasp the nettle. Remember, nobody ever lost money under-estimating the moronic tendencies of the public.

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Not sure how the table below will come out, but here goes:

Year Average 3.5 x AV Average Photo of Typical Property

Income House Price that 3.5 x AV would buy

(AV)

2000 £21788 £76258 £85,246

2001 £23098 £80843 £93,450

2002 £24159 £84556 £113,128

2003 £24741 £86593 £134,254

2004 £26255 £91892 £161,279

2005 £26884 £94094 £166,450

Average income data taken from: National Average Earnings Index 1963-2003

Aries and Pension Insurance Systems Limited (http://www.ariesps.co.uk/public/stats/tables/nae.htm)

In 2005 average incomes had risen by 23.38% since 2000.

In 2005 the average house price had risen by 95.26% since 2000.

Any ideas as to how I could identify and obtain photos of houses that could be bought for 3.5 times average income for each year? All ideas and suggestions welcomed. Thanks

Edited as the table didn't work. The 1st column = the year. The 2nd column = the average income for the year. The 3rd column = 3.5 times the average income. The 4th column = the average house price for the year (UK 3rd Quarter). The 4th column would contain a photo of a typical property that 3.5 times the average income for that year would be able to purchase. Hope this helps makes some sense of the above.

Edited by Alfie Moon

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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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