mynamehere Posted March 19 Share Posted March 19 28 minutes ago, dugsbody said: I don't think I'm the target of this question but higher inflation eventually normalises out (if we think history repeats). Wages rise, stock values go up, and debt is eroded. Higher inflation improves my situation because I have a large mortgage and enjoy seeing it eroded by inflation while my global equities fund does this: https://www.google.com/finance/quote/VWRP:LON?window=5Y Yes inflation helps those who already assets. But it doesn't assist those waiting in the sidelines to acquire assets. Quote Link to comment Share on other sites More sharing options...
Flat Bear Posted March 19 Share Posted March 19 21 hours ago, Frankie Teardrop said: The Plateau continues. BoE will hold this month and May too. This is the crux of the direction of house prices in the shorter term. The markets and many commentators have said and predicted the bank rate will fall, I think we can take this as a fact they say this? Many on this forum believe this will happen and nearly all predict a falling base rate and thus mortgage rate BUT these same posters think house prices will still fall? This is bonkers. If any poster thinks this then they must give @Stewy much more credence as what he predicts is a odds on occurrence. People may not like it but it is the truth. I believe the opposite and I am still convinced this global inflationary cycle is in its infancy. I would suggest the next move, or possibly after a single cut, will be up. We must see the base rate at 8.5% within a year or two as we see inflation suddenly take off again. I think we are in the lull before the storm. Quote Link to comment Share on other sites More sharing options...
LetsBuild Posted March 19 Share Posted March 19 3 months left of bank leniency that Rishi begged the banks for last June on behalf of struggling mortgage borrowers left - hope they can sell for what they need in the ‘bounce’. Tick tock. Quote Link to comment Share on other sites More sharing options...
70PC Posted March 19 Share Posted March 19 34 minutes ago, dugsbody said: I don't think I'm the target of this question but higher inflation eventually normalises out (if we think history repeats). Wages rise, stock values go up, and debt is eroded. Higher inflation improves my situation because I have a large mortgage and enjoy seeing it eroded by inflation while my global equities fund does this: The point about global equities makes sense but I am not clear about "inflation eventually normalises out". Wage inflation without growth per capita makes makes the UK less competitive and poorer. Non-wage inflation and higher tax makes the individual poorer. Big problems are being stored up for the future. A large contingent of the UK population have looked at past house price inflation and decided to put all their eggs in the property basket. For many, saving for a rainy day and pension contributions are a thing of the past. It will work out for them if house price to earnings continue going up but I don't see it can. Quote Link to comment Share on other sites More sharing options...
scottbeard Posted March 19 Share Posted March 19 36 minutes ago, Flat Bear said: This is the crux of the direction of house prices in the shorter term. The markets and many commentators have said and predicted the bank rate will fall, I think we can take this as a fact they say this? Many on this forum believe this will happen and nearly all predict a falling base rate and thus mortgage rate BUT these same posters think house prices will still fall? This is bonkers. If any poster thinks this then they must give @Stewy much more credence as what he predicts is a odds on occurrence. People may not like it but it is the truth. I believe the opposite and I am still convinced this global inflationary cycle is in its infancy. I would suggest the next move, or possibly after a single cut, will be up. We must see the base rate at 8.5% within a year or two as we see inflation suddenly take off again. I think we are in the lull before the storm. If Stewy is right then interest rates will fall and nominal house prices will rise If you are right then inflation will rise but that also implies high wage inflation and again nominal house prices will rise I had expected nominal house prices to fall 20-40% when interest rates normalised to 5% ish, but I now realise that I was wrong. I was wrong because I had not anticipated wage inflation of c25% over that period as well. So what we have ended up with is about a 25% real fall in house prices relative to CPI (30% relative to RPI), but only 5% nominal with the rest real. (i.e. like almost every post on HPC, what I predicted was incorrect. Not much on this website is actually valuable, really, other than as food for thought and discussion). Quote Link to comment Share on other sites More sharing options...
winkie Posted March 19 Share Posted March 19 Work where wages are high, live where inflation is low......people should follow what businesses do. Quote Link to comment Share on other sites More sharing options...
NoHPCinTheUK Posted March 19 Share Posted March 19 8 minutes ago, winkie said: Work where wages are high, live where inflation is low......people should follow what businesses do. Spain? Quote Link to comment Share on other sites More sharing options...
winkie Posted March 19 Share Posted March 19 6 minutes ago, NoHPCinTheUK said: Spain? Spain is good, but there are other places to choose from.....not every place suits all people, not all people will want to move or can move....the time has to be right for everything. Quote Link to comment Share on other sites More sharing options...
danlee74 Posted March 19 Share Posted March 19 1 hour ago, 70PC said: Big problems are being stored up for the future. Who cares? Certainly not politicians nor central bankers. Just don't be at the wheel when the car inevitably smashes into the brick wall. Quote Link to comment Share on other sites More sharing options...
70PC Posted March 19 Share Posted March 19 1 hour ago, Flat Bear said: I believe the opposite and I am still convinced this global inflationary cycle is in its infancy. I would suggest the next move, or possibly after a single cut, will be up. We must see the base rate at 8.5% within a year or two as we see inflation suddenly take off again. I think we are in the lull before the storm. Yes. Infections are cured by prompt treament with antibiotics in right dose for the full course. If not, the infection gets much harder to treat. The MPC goes for half strength antibiotics late in the day and some want to stop prematurely. That is why we have 5.25% base rates today and why this could go to 8.5%. Quote Link to comment Share on other sites More sharing options...
Stewy Posted March 19 Author Share Posted March 19 16 minutes ago, 70PC said: Yes. Infections are cured by prompt treament with antibiotics in right dose for the full course. If not, the infection gets much harder to treat. The MPC goes for half strength antibiotics late in the day and some want to stop prematurely. That is why we have 5.25% base rates today and why this could go to 8.5%. The patient is cured and the unnecessary medication keeps on being pushed... Quote Link to comment Share on other sites More sharing options...
70PC Posted March 19 Share Posted March 19 22 minutes ago, Stewy said: The patient is cured and the unnecessary medication keeps on being pushed... Maybe you're right but I am far from convinced. Wage inflation is 4% above target and significantly higher than base rates. "ONS: UK wage growth slows, but still outpaces inflation" https://moneyweek.com/economy/uk-wage-growth-slows-but-outpaces-inflation Quote Link to comment Share on other sites More sharing options...
cdd Posted March 19 Share Posted March 19 Minimum wage is about to rise by 10%. That's not exactly deflationary. Quote Link to comment Share on other sites More sharing options...
Housepricecrash91 Posted March 19 Share Posted March 19 6 hours ago, winkie said: Agents want the business......what happens when offers are not the 'right' offer and price has to be reduced by £20k......new £20k offers off the reduced price? Yep, some properties have been vastly overpriced and need multiple reductions. However, you only need one person to want to buy your home... If you're willing to wait it out, you may just get something close to asking... Some people are willing to overpay to get on the ladder... especially if they are not planning to move again in the foreseeable future Quote Link to comment Share on other sites More sharing options...
Lagarde's Drift Posted March 19 Share Posted March 19 9 hours ago, 70PC said: The point about global equities makes sense but I am not clear about "inflation eventually normalises out". Wage inflation without growth per capita makes makes the UK less competitive and poorer. Non-wage inflation and higher tax makes the individual poorer. Big problems are being stored up for the future. A large contingent of the UK population have looked at past house price inflation and decided to put all their eggs in the property basket. For many, saving for a rainy day and pension contributions are a thing of the past. It will work out for them if house price to earnings continue going up but I don't see it can. Technology, cheap energy and globalisation helped the West increase productivity therefore wages whilst keeping lid on inflation through tech deflation and exporting inflation elsewhere. So taking huge debt on houses was the correct thing to do as long as your wage outpaced interest rates and you didn't lose your job during recessions. Quote Link to comment Share on other sites More sharing options...
winkie Posted March 19 Share Posted March 19 4 hours ago, Housepricecrash91 said: Yep, some properties have been vastly overpriced and need multiple reductions. However, you only need one person to want to buy your home... If you're willing to wait it out, you may just get something close to asking... Some people are willing to overpay to get on the ladder... especially if they are not planning to move again in the foreseeable future The prices I am talking about are three bed nothing fancy houses asking iro £600k to £700k comical to say the least.....that were £300k to £400k only a few years ago.......the properties that are now no longer 1st time buyer homes, though once they were. Quote Link to comment Share on other sites More sharing options...
mynamehere Posted March 19 Share Posted March 19 (edited) Quote was wrong because I had not anticipated wage inflation of c25% over that period as well. (i.e. like almost every post I've ever posted on HPC, what I predicted was incorrect. Not much I post on this website is actually valuable, because I would fail a primary school economics class, other than as food for thought and discussion though Fixed. Total nonsense from perhaps the most toxic ("I own a nice house and everyone on here is an idiot") troll on the forum, there were multiple threads on here discussing the role of wage inflation, and plenty of posters (10x more genuine than this troll) on both sides of the aisle acknowledged this element of upward pressure as very significant. Edited March 19 by mynamehere Quote Link to comment Share on other sites More sharing options...
Sackboii Posted March 19 Share Posted March 19 10 minutes ago, mynamehere said: Fixed. Total nonsense from perhaps the most toxic ("I own a nice house and everyone on here is an idiot") troll on the forum, there were multiple threads on here discussing the role of wage inflation, and plenty of posters (10x more genuine than this troll) on both sides of the aisle acknowledged this element of upward pressure as very significant. Which “troll” ? Quote Link to comment Share on other sites More sharing options...
wighty Posted March 19 Share Posted March 19 11 hours ago, scottbeard said: If Stewy is right then interest rates will fall and nominal house prices will rise If you are right then inflation will rise but that also implies high wage inflation and again nominal house prices will rise I had expected nominal house prices to fall 20-40% when interest rates normalised to 5% ish, but I now realise that I was wrong. I was wrong because I had not anticipated wage inflation of c25% over that period as well. So what we have ended up with is about a 25% real fall in house prices relative to CPI (30% relative to RPI), but only 5% nominal with the rest real. (i.e. like almost every post on HPC, what I predicted was incorrect. Not much on this website is actually valuable, really, other than as food for thought and discussion). High inflation, higher wages. But then higher unemployment. House prices fall. Quote Link to comment Share on other sites More sharing options...
dugsbody Posted March 20 Share Posted March 20 On 19/03/2024 at 10:49, 70PC said: The point about global equities makes sense but I am not clear about "inflation eventually normalises out". Wage inflation without growth per capita makes makes the UK less competitive and poorer. Non-wage inflation and higher tax makes the individual poorer. Big problems are being stored up for the future. A large contingent of the UK population have looked at past house price inflation and decided to put all their eggs in the property basket. For many, saving for a rainy day and pension contributions are a thing of the past. It will work out for them if house price to earnings continue going up but I don't see it can. It isn't really a complex situation. 1. I live in the UK and will continue to do so for a number of years yet. 2. I need a dwelling to live in. 3. I used a mortgage to acquire a place to live in. 4. Inflation has so far meant that increasing wages and just generally the value of fiat makes my mortgage debt look cheaper every year. That is really all there is to it. Real growth per capita doesn't matter as much to me as it does to someone without a mortgage, because any nominal growth in wages or GDP still makes my fixed nominal mortgage debt cheaper. Could some disaster be around the corner for me and others with mortgage debt? Yup. It'll be a roll of the dice. But I think the dice are loaded, so I'm playing the game on the rigged side. Quote Link to comment Share on other sites More sharing options...
scottbeard Posted March 20 Share Posted March 20 19 hours ago, Sackboii said: Which “troll” ? He thinks - after 17 years and 14,000 posts on here - that I am a troll. He's entitled to his opinion, but I blocked him ages ago. Yet, it seems, he hasn't blocked me and is still harping on about it. Make of that what you like. (Oh, and he is an estate agent....) Quote Link to comment Share on other sites More sharing options...
Sackboii Posted March 20 Share Posted March 20 2 minutes ago, scottbeard said: Oh, and he is an estate agent....) Say no more. Quote Link to comment Share on other sites More sharing options...
dugsbody Posted March 20 Share Posted March 20 (edited) On 19/03/2024 at 11:12, scottbeard said: So what we have ended up with is about a 25% real fall in house prices relative to CPI (30% relative to RPI), but only 5% nominal with the rest real. (i.e. like almost every post on HPC, what I predicted was incorrect. Not much on this website is actually valuable, really, other than as food for thought and discussion). Edited March 20 by dugsbody Quote Link to comment Share on other sites More sharing options...
mynamehere Posted March 20 Share Posted March 20 Actually I'm a mortgage advisor Quote Link to comment Share on other sites More sharing options...
scottbeard Posted March 20 Share Posted March 20 37 minutes ago, dugsbody said: So what I was predicting is that there would be 20-40% nominal falls with that being 30-50% real falls over a 2 year period Actually what’s happened is that falls have been lower but inflation higher than I expected, so we had about a 25% real fall but only 5% of it was nominal Quote Link to comment Share on other sites More sharing options...
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