Summary of Arguments for a House Price Crash

[Captain Kirk]

37 minutes ago, jiltedjen said:

but there is very few people who bother to learn ...

Is that you Ali G? ?

But I agree with you that the root cause of HPI, the GFC, huge wealth disparities, populism, Brexit and Trump is unsound money.

[jiltedjen]

i guess the thing with unsound money is that a lot of smart people do understand it, and thus do the natural thing and benefit from it.
It is not in their interest to actually correct a system which they benefit from.

The youngish people like me who understands the systems and dislikes how corrupt it is, probably eventually start to be less bothered about it as time goes on and they themselves benefit from investing in a world of unsound money (this does seem to be the case with me, i used to go to protests, now im more concerned with the allotment)

Those who don't understand it have built up anger which looks for any route to escape to. In the modern world smashing stuff up, holding up roads, or trains, etc gets you no-where, there will always be something else to be angry about while they have terrible lives. 

we wont see true value in houses until the very system of money itself can be fixed, no amount of yellow vests, brexit, trump, populism, riots, etc can fix the issues with our economic system. 

of course we could actually have a HPC if there was political will to actually become even slightly less accommodating for high house prices, even quite minor changes (at least in the average HPC's memers version of minor), could bring the whole thing down, such as some slight interest rate increases, say we banged interest rates up 4% one day, HPC the next. 

I guess we should be proud of our divided nation. That's modern day Britain, its what makes us what we all are today. Proud to be British, should be proud of our parliament, they are our nation in a nut-shell. 

Edited March 30, 2019 by jiltedjen

[Orb]

3 hours ago, jiltedjen said:

i guess the thing with unsound money is that a lot of smart people do understand it, and thus do the natural thing and benefit from it.
It is not in their interest to actually correct a system which they benefit from.

The youngish people like me who understands the systems and dislikes how corrupt it is, probably eventually start to be less bothered about it as time goes on and they themselves benefit from investing in a world of unsound money (this does seem to be the case with me, i used to go to protests, now im more concerned with the allotment)

Those who don't understand it have built up anger which looks for any route to escape to. In the modern world smashing stuff up, holding up roads, or trains, etc gets you no-where, there will always be something else to be angry about while they have terrible lives. 

we wont see true value in houses until the very system of money itself can be fixed, no amount of yellow vests, brexit, trump, populism, riots, etc can fix the issues with our economic system. 

of course we could actually have a HPC if there was political will to actually become even slightly less accommodating for high house prices, even quite minor changes (at least in the average HPC's memers version of minor), could bring the whole thing down, such as some slight interest rate increases, say we banged interest rates up 4% one day, HPC the next. 

I guess we should be proud of our divided nation. That's modern day Britain, its what makes us what we all are today. Proud to be British, should be proud of our parliament, they are our nation in a nut-shell. 

Misunderstanding macro-economics, money, big banks etc is not the sole reason people voted for brexit. Not by a long shot. For many it was the neo-liberal policies and conditions of EU membership. For example, free movement of people. In my industry, in 2004, the demographic of people doing my job was around 95% British. Wages were decent, and it was easy to earn £35k+ if one put the hours in. In 2016, 12 years on, the demographic was 50% eastern european, and wages were almost identical, and in some cases reversing towards minimum wage. Terms and conditions took a serious hit (time and a half after 8 hours became time and a quid after 12 hours etc), no double time on bank holidays, no overtime premium for weekends etc. On top of that, though eastern europeans work harder for longer hours, they take much less pride in their work in my industry, and the quality of their work is definitely poorer. It made for a depressing working life. The cynical finger of blame was naturally pointed at the architects of EU policy, and those who truly benefit from mass unskilled immigration, and a tick in the 'leave' box was a signal to end free movement of people. For anyone claiming this is racist, no, it's pragmatic and rational. 

[iamnumerate]

7 hours ago, Orb said:

Misunderstanding macro-economics, money, big banks etc is not the sole reason people voted for brexit. Not by a long shot. For many it was the neo-liberal policies and conditions of EU membership. For example, free movement of people. In my industry, in 2004, the demographic of people doing my job was around 95% British. Wages were decent, and it was easy to earn £35k+ if one put the hours in. In 2016, 12 years on, the demographic was 50% eastern european, and wages were almost identical, and in some cases reversing towards minimum wage. Terms and conditions took a serious hit (time and a half after 8 hours became time and a quid after 12 hours etc), no double time on bank holidays, no overtime premium for weekends etc. On top of that, though eastern europeans work harder for longer hours, they take much less pride in their work in my industry, and the quality of their work is definitely poorer. It made for a depressing working life. The cynical finger of blame was naturally pointed at the architects of EU policy, and those who truly benefit from mass unskilled immigration, and a tick in the 'leave' box was a signal to end free movement of people. For anyone claiming this is racist, no, it's pragmatic and rational. 

I feel sorry for you, a lot of people who are not harmed by this call people like you racist - I think that they are stupid to do for doing so.

Tony Blair of course was a lawyer a profession sadly not harmed by Eastern European immigration!

[Captain Kirk]

9 hours ago, iamnumerate said:

I feel sorry for you, a lot of people who are not harmed by this call people like you racist - I think that they are stupid to do for doing so.

I don't think you need to feel sorry for the majority. It's not racist to point out economic facts.

I think neoliberalim will be confined to the dustbin of history along with communism. Liberalism is the only doctrine that has worked so far because it puts sovereignty and choice in the hands of the individual, locality and state. Nobody likes being told what to do when what they are doing is of no harm to anyone, and nobody likes having their earnings and savings debased and redistributed to benefit one section of society over another. Protection of individual rights is the job of government, not debasing currencies, inflating house prices, taxing to redistribute, holding back business and innovation through excessive, pointless regulation, etc.

[24gray24]

38 minutes ago, Captain Kirk said:

I don't think you need to feel sorry for the majority. It's not racist to point out economic facts.

I think neoliberalim will be confined to the dustbin of history along with communism. Liberalism is the only doctrine that has worked so far because it puts sovereignty and choice in the hands of the individual, locality and state. Nobody likes being told what to do when what they are doing is of no harm to anyone, and nobody likes having their earnings and savings debased and redistributed to benefit one section of society over another. Protection of individual rights is the job of government, not debasing currencies, inflating house prices, taxing to redistribute, holding back business and innovation through excessive, pointless regulation, etc.

+1. 

Except you can't call it liberal these days because the word liberal has been taken over by socialists and the stab-their-own-voters-in-the-back party. 

[GregBowman]

On ‎29‎/‎03‎/‎2019 at 13:01, LetsBuild said:

For me it will be the bonfire of the BTLers and the demise of the baby boomers that will facilitate the crash.

As the tax changes start to make an impact at the margin for what were once profitable assets we will see the falls start as BTLers try to get out - we may or may not be seeing this right now.

The oldest boomers are what 74 years old this year? There is an often stated statistic on here that I cannot verify that half of the people who are 65 today will be dead in the next 10 years, we also know that 43% of the housing equity in the UK (Savills) is owned by the over 65s - that has huge potential to flatten the market come the mass extinction event of boomers.

I think you will find many of us are transferring wealth within our life time to avoid a fire sale when we are 85, having distorted society to our benefit for 40 years (saves you saying it....?) we are hardly likely to change our modus operandi now are we ?

Of course that will only compound property apartheid 

[APerson]

Until now my stratergy has been:

• Buy Gold with my paycheck.
• Wait for the next 2007/8 style banking collapse.
• Hope that the Gold goes through the roof and that house prices collapse
• Sell Gold to buy a house.

Have I been stupid and nieve to think this would work?

[“Nasty Piece of work”]

6 hours ago, APerson said:

Have I been stupid and nieve to think this would work?

I could beat you to the stupid step.

My concern is I THINK you’re buying gold years too late, and paying top dollar, and a HPC is years in the making - it is a very long way to get out of this rubber room.

[Arpeggio]

11 hours ago, APerson said:

Until now my stratergy has been:

• Buy Gold with my paycheck.
• Wait for the next 2007/8 style banking collapse.
• Hope that the Gold goes through the roof and that house prices collapse
• Sell Gold to buy a house.

Have I been stupid and nieve to think this would work?

I have some precious metals. Certainly not all of my savings. Regarding standard savings with below inflation interest. If what you eventually buy with the money has eventually gone down enough then you're good. In other words if your strategy depends on a future HPC of a 20% fall (preferably more) then low risk standard savings accounts could be a viable safe part of strategy.

[longgone]

13 hours ago, APerson said:

Until now my stratergy has been:

• Buy Gold with my paycheck.
• Wait for the next 2007/8 style banking collapse.
• Hope that the Gold goes through the roof and that house prices collapse
• Sell Gold to buy a house.

Have I been stupid and nieve to think this would work?

Trouble is everything is distorted because of cheap money.  Some may think they are clever loading up on mental and chitcoin, however the wisest thing maybe to do feck all but keep it under the 85k limit.  

[Freki]

On 01/04/2019 at 09:55, APerson said:

Until now my stratergy has been:

• Buy Gold with my paycheck.
• Wait for the next 2007/8 style banking collapse.
• Hope that the Gold goes through the roof and that house prices collapse
• Sell Gold to buy a house.

Have I been stupid and nieve to think this would work?

The issue when buying gold is you are paying a transaction fee on it. Usually close to 5%

Also my own small research is that gold dropped (and not crashed) during the market crash:

[APerson]

46 minutes ago, Freki said:

The issue when buying gold is you are paying a transaction fee on it. Usually close to 5%

Also my own small research is that gold dropped (and not crashed) during the market crash:

When buying gold safely through somwhere like bullion by post you're paying 5% over the spot price and selling at 4% under the spot price. Thus, you need to make 9% to break even.

If you look at gold before and after the crash, it doubles. My gamble is that in another crash it will at least double again.

If you look at the early-to-mid 2000s the bottom is around $400. After the crash had played out (around 2010) Gold found a new bottom of above $1000 and it hasnt dipped below that and if you time it well you can sell for quite a lot more than that.

My hypothesis is that another crash will occur and it will be worse than 2007-2008. Within a year or two after the crash a new bottom will be found. This will be at least $2000 and likely much higher.

The goldbugs have predictions of $10k gold etc and while I certainly hope this is the case I try to plan on worst case scenario so I don't end up dissappointed.

[hotblack42]

5 minutes ago, APerson said:

When buying gold safely through somwhere like bullion by post you're paying 5% over the spot price and selling at 4% under the spot price. Thus, you need to make 9% to break even.

If you look at gold before and after the crash, it doubles. My gamble is that in another crash it will at least double again.

If you look at the early-to-mid 2000s the bottom is around $400. After the crash had played out (around 2010) Gold found a new bottom of above $1000 and it hasnt dipped below that and if you time it well you can sell for quite a lot more than that.

My hypothesis is that another crash will occur and it will be worse than 2007-2008. Within a year or two after the crash a new bottom will be found. This will be at least $2000 and likely much higher.

The goldbugs have predictions of $10k gold etc and while I certainly hope this is the case I try to plan on worst case scenario so I don't end up dissappointed.

There's a pinned gold thread folks ?

Presumably Greg is referring to selling property & transferring the proceeds.  Transferring property ain't much cop if it drops 40% & takes decades to recover in real terms (or never does like Japan, Detroit,  Zimbabwe, parts of Wales, parts of NE UK, numerous ghost towns of USA, Canada & Australia).

Property is not reliable as a store of value.  The last 30 years are a poor indicator.  They just happen to  have coincided with the working lives of most people on here and their families, friends & colleagues.

[Freki]

First and foremost, I am not trying to draw conclusion on your strategy.

About transactions fees: Swiss vault companies can reduce your spread to 5%. A monthly fee will be added. If you don't trust them then sure buy by post.

If you look at my graph, in 2008 the price dropped. 

Now the bet is: will central banks go full madness, put IR at -5% (like Bernanke said he would have done if he could have) or some sense will be put in them and understand the excess need to be purged and not tucked under a rag. So if we get QE squared or cube, sure gold's value can see its value going up many folds.

Also the pound carries a short term risk until brexit resolution, will it be a custom union and rise from 1.3 to 1.4 or a no deal and reach 1.1?

[24gray24]

On 01/04/2019 at 09:55, APerson said:

Until now my stratergy has been:

• Buy Gold with my paycheck.
• Wait for the next 2007/8 style banking collapse.
• Hope that the Gold goes through the roof and that house prices collapse
• Sell Gold to buy a house.

Have I been stupid and nieve to think this would work?

You'd hate to be the last fool that sold your gold just before it all went Pete tong. 

So you may as well stick with it. 

[“Nasty Piece of work”]

What, like that Scottish Moron.

[eric pebble]

On 29/03/2019 at 12:07, Freki said:

Great post:

 

I would add about BTL:

Has a tax advantage (can tax deduct maintenance costs, gets tax relief on interest payment)

BTL buys based on rental value, OO based on salary and expenses

About housing stock:

mis allocation of stock: StampDuty is a tax on transaction, does not create an incentive for downsizing (moving tax really)

NIMBY and planning permission delay house building

BTL - just another scam to keep the Giant Ponzi scam alive....

 

 

[burk]

On 30/03/2019 at 16:11, Orb said:

Misunderstanding macro-economics, money, big banks etc is not the sole reason people voted for brexit. Not by a long shot. For many it was the neo-liberal policies and conditions of EU membership. For example, free movement of people. In my industry, in 2004, the demographic of people doing my job was around 95% British. Wages were decent, and it was easy to earn £35k+ if one put the hours in. In 2016, 12 years on, the demographic was 50% eastern european, and wages were almost identical, and in some cases reversing towards minimum wage. Terms and conditions took a serious hit (time and a half after 8 hours became time and a quid after 12 hours etc), no double time on bank holidays, no overtime premium for weekends etc. On top of that, though eastern europeans work harder for longer hours, they take much less pride in their work in my industry, and the quality of their work is definitely poorer. It made for a depressing working life. The cynical finger of blame was naturally pointed at the architects of EU policy, and those who truly benefit from mass unskilled immigration, and a tick in the 'leave' box was a signal to end free movement of people. For anyone claiming this is racist, no, it's pragmatic and rational. 

Exactly the same in my industry. I agree Brexit is very much a repudiation of all things Neoliberal/EU/establishment hence why parliament is desperately trying to figure out which end of the turd to pick up so as to keep their masters in Brussels happy and not get lynched by the masses here in the UK.

I voted for Brexit and get a kick out of watching these overpaid errand boys & girls (MP's) getting more nervous by the day as to what to do - me - I have nothing, so i'm happy to watch the whole fkn thing burn including the housing market with a bit of luck...........................

*EDIT* Also in my circle its the ones in remarkably safe public sector jobs (who are largely insulated from any economic woes) who rather vociferously keep telling me (the self employed chippy) how its all gonna get worse, its hard to bite me tongue sometimes but i do.

Edited April 4, 2019 by burk

[zugzwang]

27 minutes ago, burk said:

Exactly the same in my industry. I agree Brexit is very much a repudiation of all things Neoliberal/EU/establishment hence why parliament is desperately trying to figure out which end of the turd to pick up so as to keep their masters in Brussels happy and not get lynched by the masses here in the UK.

I voted for Brexit and get a kick out of watching these overpaid errand boys & girls (MP's) getting more nervous by the day as to what to do - me - I have nothing, so i'm happy to watch the whole fkn thing burn including the housing market with a bit of luck...........................

*EDIT* Also in my circle its the ones in remarkably safe public sector jobs (who are largely insulated from any economic woes) who rather vociferously keep telling me (the self employed chippy) how its all gonna get worse, its hard to bite me tongue sometimes but i do.

Except that the most vociferous Leavers in parliament are the virulently Neoliberal gaslighters in the ERG, most of whom have spent the past decade making empty promises about immigration. Boris Johnson, their notional leader, once described himself as the 'only British politician willing to stand up and say he's pro-immigration'. He's famously and repeatedly called for an amnesty for illegals.

[burk]

59 minutes ago, zugzwang said:

Except that the most vociferous Leavers in parliament are the virulently Neoliberal gaslighters in the ERG, most of whom have spent the past decade making empty promises about immigration. Boris Johnson, their notional leader, once described himself as the 'only British politician willing to stand up and say he's pro-immigration'. He's famously and repeatedly called for an amnesty for illegals.

Parliament is overwhelmingly pro-remain hence the 'turd' comment i made above - whats your point? That politicians lie? Promise things they can't deliver? What? Lets just sit back and watch it all burn, i may get a cheap house outta this yet..................................been a long time coming.

https://www.youtube.com/watch?v=Adgx9wt63NY

[zugzwang]

1 hour ago, burk said:

Parliament is overwhelmingly pro-remain hence the 'turd' comment i made above - whats your point? That politicians lie? Promise things they can't deliver? What? Lets just sit back and watch it all burn, i may get a cheap house outta this yet..................................been a long time coming.

https://www.youtube.com/watch?v=Adgx9wt63NY

You claim that Brexit is very much a repudiation of all things Neoliberal/Establishment. How can this be true when the principal voices on the Leave side are themselves free market/free movement Neoliberals pushing a deregulatory globalist agenda? Smoggy, Bozzie and Govey don't want a new trading relationship with the EU, they want the same free trade arrangement but with all the employment and environmental legislation set on fire.

[burk]

38 minutes ago, zugzwang said:

You claim that Brexit is very much a repudiation of all things Neoliberal/Establishment. How can this be true when the principal voices on the Leave side are themselves free market/free movement Neoliberals pushing a deregulatory globalist agenda? Smoggy, Bozzie and Govey don't want a new trading relationship with the EU, they want the same free trade arrangement but with all the employment and environmental legislation set on fire.

Its not about that, this is where you're side of the argument get it so wrong - none of that matters to the person doing three jobs to make ends meet, it was the people, not the politicians who decided Brexit. FWIW i couldn't give a fuq about who was fronting the campaign, Brexit's the result of forty years empty rhetoric from politicians on all sides and Cameron was dumb enough to put it to the public.

And unfortunately for him that included many who've been continuously shat on from a great height by the likes of Thatcher, Blair & The (Austerity) coalition . So when a 40 hour week isn't enough to provide the most basic essentials in life, i.e. a decent (free) education, a secure job & affordable housing what did you think was gonna happen?

Fun fact: 40% of London voted for Brexit............................

Edited April 4, 2019 by burk

[dugsbody]

On 29/03/2019 at 11:02, APerson said:

The home owning boomers will begin to pass away and the market will be flooded with probate properties at some point - surpressing prices.

One point here. I am speculating that we have entered a permanent low interest rate era.

Interest rates are primary a mechanism used to counter inflation. Inflation can be caused by two things. Consumer demand outstripping supply (the good kind) or lack of confidence in your currency causing a failing currency (the bad kind).

Addressing the second point initially, the bad kind. This is still possible in the UK as we have seen recently, but fairly unlikely to be a real run on the currency, and the central bank is not that likely to react strongly. If they do it will only be temporary rather than structural. It also isn't very good for anyone except the already wealthy who have assets that may be denominated in international money. There is also another point I will come to. 

Now the primary structural driver of interest rates is demand outstripping supply. But, we are gaining efficiency in production and global distribution every day. Demand is now easily and more than able to meet supply and in fact increasing efficiency and global competition are driving prices down rather than up. For anything where supply is elastic of course, which are generally the largest contributors to inflation (or in this case deflation). 

This is not going to change and in fact will only become more pronounced.

What would we expect as a result of this over several decades of increasing efficiency and global distribution? We'd expect a trend down in inflation rates and therefore a trend down in interest rates. And that is exactly what we've seen.

Unfortunately for new comers, it also means those things that are limited in supply but also in demand will become more expensive. It becomes particularly pronounced when one of those things also happens to be purchased using the ever more available and cheaper mechanism of credit. Land. Or houses on that land.

In short, there has been a global property boom for the last several decades on the back of a global downtrend of interest rates. 

Edited April 4, 2019 by dugsbody

[EnglishinWales]

Some myths in this thread.

Banks do not lend money. They create debt. Lending you other people's money so they could profit would actually be illegal. 

Corbyn is not pro-EU and mass immigration. The current Labour party are focused on improving tenant's rights and exploring replacing benefits with a basic income. Young people mostly don't care about owning houses. What's the point if they coyld have security of tenure with lifetime tenancies? Young people are right to vote Labour in my opinion.

Women in the workforce has not led to the need for 2 salaries to get a mortgage. Blaming women for how the banks have deprecated the economy through their usury and fiat currency combo scam is horribly misogynistic. A mortgage on 2 salaries is as a result of increasing house prices not the cause if it.