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Fighting a single-handed battle against the massed ranks of optimism on another board. Lots of impressionable ftb's being fed the usual lines by an IFA who's also a BTL landlord. He wants me to answer these questions...

There are a few facts that I'd like you to argue against if you wouldn't mind:

(a) We will have a massive shortage of housing in the UK for years to come.

(B) We have the prospect of at least three years of low interesst rates and low inflation (The BOE MPC tells us so).

© UK wage increases outstrip inflation.

(d) Rental market has increased about 4% per annum and is continuing along similar lines to rises in salaries. This should keep the Buy To Let Investors coming.

So, could you argue against each point please and prove why every expert doesn't see an imminent crash, rather merely see realistic house price increases in line with earnings over the next few years. Could you tell us all, how they're wrong and you're right?

I need to properly nail these in a way that the 'uneducated' would grasp.

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Regarding a), it was on the news this morning that there are 90,000 fewer babies being born each year.

Fighting a single-handed battle against the massed ranks of optimism on another board. Lots of impressionable ftb's being fed the usual lines by an IFA who's also a BTL landlord. He wants me to answer these questions...

There are a few facts that I'd like you to argue against if you wouldn't mind:

(a) We will have a massive shortage of housing in the UK for years to come.

(B) We have the prospect of at least three years of low interesst rates and low inflation (The BOE MPC tells us so).

© UK wage increases outstrip inflation.

(d) Rental market has increased about 4% per annum and is continuing along similar lines to rises in salaries. This should keep the Buy To Let Investors coming.

So, could you argue against each point please and prove why every expert doesn't see an imminent crash, rather merely see realistic house price increases in line with earnings over the next few years. Could you tell us all, how they're wrong and you're right?

I need to properly nail these in a way that the 'uneducated' would grasp.

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Please clear your mind, take a deep breath… exhale. Read on.

The cut price, low rate lending was Greenspan leading the whole world on a merry dance. Stay with me…

America was on its knees after 9/11 people were unsure whether or not it was safe to go out. Remember?

Greenspan gave everyone some cheap cash and sent them down the shops.

Lower rates were set to cheer up the American people, the American people are now less scared/worried so we can return to more economically viable rates of 5-6%.The house price boom was a mere side effect of cheap lending.

Delaying the 9/11 recession was very, very important otherwise the terrorists could have claimed a much larger prize. Grinding the US economy to a halt.

Such a claim by Al Qaeda could have lead to mass Islamic fundamentalism gaining popularity across the Middle East, making oil retrieval a real nightmare.

Welcome back to reality.

So what have we learned??

If at some point in a future economic cycle the US people get scared to go outside, rates will dive, lending will boom, housing will boom, in that order. Once US sentiment returns to normal, rates will hike, lending will cease (well not cease but it will be expensive), housing will dive.

OK I know that’s not a guarantee but I think that was AG’s plan all along and it HAS worked, not sure if he foresaw the housing bubble though? In hindsight he must have.

Well done Alan.

Once again welcome back to reality

Remember 9/11? It was 18 months after the dot com pop, economies were down.

Greenspan’s conscience:

How big a recession would fear of terrorism in the US cause?

Greenspan:

I don’t know there is no historical data. A recession resulting from fear of terrorism may lead to our enemies supporting more terrorism/terrorist gaining support… where does it end?

Greenspan’s conscience:

How big a recession would be caused by delaying a standard/typical recession through debts/lending?

Greenspan:

A very big one, possibly the largest ever. Why would anyone ever do that?... At least it would not be as bad as the recession in the first question. Eureka!

For people to understand the current economic and political position they must be aware of the above.

It is crystal clear where we are when you finally get a grasp of this.

If you make decision on the information released by central bankers then fully expect to be deeply involved in their cycle.

Edited by ?...!

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b ) Everywhere else in the world IRs are going up, don't we have to follow them to some extent?

c ) Not much use unless wage increases are outstipping house price inflation, is it?

d ) Not sure I understand...

Fighting a single-handed battle against the massed ranks of optimism on another board. Lots of impressionable ftb's being fed the usual lines by an IFA who's also a BTL landlord. He wants me to answer these questions...

There are a few facts that I'd like you to argue against if you wouldn't mind:

(a) We will have a massive shortage of housing in the UK for years to come.

(B) We have the prospect of at least three years of low interesst rates and low inflation (The BOE MPC tells us so).

© UK wage increases outstrip inflation.

(d) Rental market has increased about 4% per annum and is continuing along similar lines to rises in salaries. This should keep the Buy To Let Investors coming.

So, could you argue against each point please and prove why every expert doesn't see an imminent crash, rather merely see realistic house price increases in line with earnings over the next few years. Could you tell us all, how they're wrong and you're right?

I need to properly nail these in a way that the 'uneducated' would grasp.

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c ) Not much use unless wage increases are outstipping house price inflation, is it?

More to the point, if wages are inflating, then interest rates will be going up: see the BoE's comments on the subject. Wage inflation is the only kind of inflation that Brown and the BoE will not tolerate.

We will have a massive shortage of housing in the UK for years to come.

In the area where I used to live, the local council said they believed they'd met their new building targets for 2012 already.

There is no shortage of housing whatsoever, there's just a shortage of housing that people want at prices they can afford.

Edited by MarkG

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a) over the last 30 years housing stock as gone up 30% population only 10%, we have more property per head today, and are building at a rate of 1 new property for ever two new people... As prices and rent goes up demand actually drops and people share to cut costs, reducing demand, renters are elastic and can enter...... and leave the country quickly...

(I did the analysis a while back using the national statistics website)

B) the BOE has warned us houseprices are only a matter of opionion and debt is real, the BOE has to keep us competative with the rest of the world.

c) Does it, not by much? Perhaps in the public sector but wage inflation in the private sector is low... the important thing is how it relates to house prices...

d) BTL arrears are up, low yeilds and voids are a headache....

Edited by moosetea

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I need to properly nail these in a way that the 'uneducated' would grasp.

Feel free to forward my post about moving home. Would be good to see what nuggets of wisdom I've missed.

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if wages are going to rise so much, then houses need to rise faster to make housing a worthwhile buy.If not the value of your investment decreases.

its like hearing vi's talking of 1 million pound average homes

whats that matter if were all earning 400k ?

and a pint costs 28.90 and a packet of cigs 120 pounds

its all irrelivent if houses or wages rise what is relevant is affordability, and that at the moment is the problem.if a house is 5x earnings now then if wages rise it will only be 4x or 3x. which is cheaper even though the price tag might be 2 billion pounds for a flat.If hes trying to say the average earning multiples will rise for each house then where will the money come to buy these houses or pay these increasing rents you can magic it outta thin air, even if you can lie to buy you still cant pay 3000 pounds a month rent on 2900 pounds wages.

Edited by homeless

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© UK wage increases outstrip inflation.

Only if you think that the CPI figure of 1.9% gives an accurate picture of inflation. With fuel bills, council tax etc all rising at a far greater rate, true inflation might well be outpacing wage inflation by some margin.

There are plenty of great posts on this board around how the Govt. influences the CPI inflation figure to get the result it wants.

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Only if you think that the CPI figure of 1.9% gives an accurate picture of inflation. With fuel bills, council tax etc all rising at a far greater rate, true inflation might well be outpacing wage inflation by some margin.

There are plenty of great posts on this board around how the Govt. influences the CPI inflation figure to get the result it wants.

Yes, I would point out to them that fuel, council tax, gas and electricity have all gone up by between 5% and 22%, quite a lot more than the government manipulated 1.9%.

Edited by spleeper

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Cheers guys. I'll give it another hour and the collate the answers into a knock-out punch.

The thread started with this guy going crazy about suggestions of a crash. It only came out later that he was an IFA and a BTL landlord (surely he must live on the seventh circle of hell).

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on his second point of housing shortage, it wouldnt matter if there was one house left in the country for sale for 20 million people, if you cant pay for it then its out of reach.

this guy i spouting off the standard bull line, that we have seen a million times.

and it all comes back to affordability and earning multiples to buy, and how can people pay more earning multiples than they allready do?.

so tell him this

No-one can afford higher wage multiples for houses than they already do, and thus the same with rent they can only pay a certain amount of there wages.So if wages rise and houses rise the multiples wont rise hence the value wont rise.

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If you buy an business whose revenue rises with wage inflation and costs that rise with retail price inflation (a gap of around 2%) then surely that business is worth an infinite amount of money! :) even if it's initially cashflow negative, given time it's guaranteed to make money.

Think I'm turning into a bullish BTLer

Edited by no accountant

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IMHO the future is high inflation..official figures be damned, they are a tool to whisper sweet nothings in the ear of the proles whilst they are being vigorously arserammed.

In previous yrs didnt it take union action to get wage inflation...if this doesnt happen this time round, how is the man in the street going to get back in the picture??

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Fighting a single-handed battle against the massed ranks of optimism on another board. Lots of impressionable ftb's being fed the usual lines by an IFA who's also a BTL landlord. He wants me to answer these questions...

There are a few facts that I'd like you to argue against if you wouldn't mind:

(a) We will have a massive shortage of housing in the UK for years to come.

(B) We have the prospect of at least three years of low interesst rates and low inflation (The BOE MPC tells us so).

© UK wage increases outstrip inflation.

(d) Rental market has increased about 4% per annum and is continuing along similar lines to rises in salaries. This should keep the Buy To Let Investors coming.

So, could you argue against each point please and prove why every expert doesn't see an imminent crash, rather merely see realistic house price increases in line with earnings over the next few years. Could you tell us all, how they're wrong and you're right?

I need to properly nail these in a way that the 'uneducated' would grasp.

All of these are non-events.

a: There is no shortage. There is a shortgae of affordable houses though. A timely recession with the accompanying unemployment will be enough to increase the supply of affordable housing.

b: This is probably the hardest to predict. By rights, interest rates should be far higher than they are in order to restore some equilibrium. I still believe they are headed up and will be at least 0.5% higher by the end of the year. I stress this IMO.

c: This just isn't gonna happen. See the answer a) above. Recessions really kill wage inflation.

d: Even if that statistic were true, along will come another get rich quick scheme which the muppet sheeple will plough their borrowed wodge into, thereby leaving BTL (probably with losses).

NDL

Edit to get rid of that pesky smiley bug.

Edited by New Darker Law

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(a) We will have a massive shortage of housing in the UK for years to come.

Maybe - but what counts in a market is demand in the economic sense - ie people with the cash who want to buy your product. Demand for houses is currently down - not because people don't need or want houses but because they, especially FTBs, cannot afford them.

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So, could you argue against each point please and prove why every expert doesn't see an imminent crash, rather merely see realistic house price increases in line with earnings over the next few years. Could you tell us all, how they're wrong and you're right?[/i]

I need to properly nail these in a way that the 'uneducated' would grasp.

(a) We will have a massive shortage of housing in the UK for years to come.

What, with the lower population (all those fewer babies the media were reporting at the weekend), and a demographic profile that will mean the UK population is going to start 1. getting older faster 2. going into shared or communal housing or healthcare at greater rates than currently 3. dying off at greater rates by 2030 onwards, with not enough immigration to replace population levels? It would require immigration at annual levels faster than the yearly rate into the US between 1900 and 1920 (when there were few immigration controls, "bring me your tired, your poor" etc.), to replenish UK population levels by 2050 - does that sound like it's going to happen?

(B) We have the prospect of at least three years of low interest rates and low inflation (The BOE MPC tells us so).

What if the Fed raises US rates? How long will it be until the Uk follows? (Have you noticed some stealthy high-interest financial products, like the Barclays 10% interest account, creeping onto the market?) Even with lots of conditions attached to them, the banks must be sure they can make money back on these.

© UK wage increases outstrip inflation.

My pay increase was below inflation this year, as was my partner's. I work in the public sector; my partner works in the private sector. I haven't met anyone who is getting pay increases above inflation even at the moment - and that's without all those extra costs - gas bill rises, transport fare rises - that have only just been announced in the past few weeks.

(d) Rental market has increased about 4% per annum and is continuing along similar lines to rises in salaries. This should keep the Buy To Let Investors coming.

I'm currently renting a flat at a rate that doesn't cover the landlord's mortgage on it, so my landlord is effectively subsidising me to live there. A similar flat three doors down my street rented recently at a monthly rate 100 pounds per week below the amount it was first advertised at, after 6 months on the market. Yields are at levels lower than just sticking your money in a high-interest account, and bank accounts don't require gas and electricity safety checks, maintenance, and so on....

;)

Does this help?

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For people to understand the current economic and political position they must be aware of the above.

Not so. Its no more fact than astrology. Lots of if's and but's. This wont convince anyone one other than a hard bitten HPCer.

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Not so. Its no more fact than astrology. Lots of if's and but's. This wont convince anyone one other than a hard bitten HPCer.

Two if’s and one but, all used to explain a hypothetical future event.

No if's or but's used explaining past events.

Surely you're not suggesting I use the word 'when' when talking about future events?

That would make me pretty arrogant wouldn't it.

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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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