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Why Houses May Not Be As Over-valued As We Think

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Guest wrongmove

Many have been complaining about the lack of reasoned arguments against a crash. But there are occasionally reasoned arguments. It is just that no-one replies and the thread is quickly displaced by ranty threads and endless, random, slightly bearish news articles from anywhere on the planet. I bet this thread has disappeared of the bottom of the board by lunchtime.

So here goes:

If the history of 20th century house prices is considered, there seem to me to be 3 main periods: 1) pre-1970, 2) 1970-1995ish, and 3) 1995ish to now.

1) Pre-1970: IRs were actually low and stable back then, a bit like now (average 4.25%). So why were prices only 3.5x income, not 5x to 6x like they are now? Well, several reasons: credit was tightly controlled - there was a waiting list for mortgages, for example. Tight credit keeps asset prices down. And, there was a large amout of cheap social housing available. And the private rental sector was very small and not attractive to investors because of tenant-friendly legislation. And, perhaps most importantly, in the 1950s and 1960s, many or most households had only one decent wage coming in.

To summarise: low, stable IRs, house prices = 3.5x income = 3.5x household income.

2) 1970-1995ish: Credit was relaxed, which should have boosted house prices, but they stayed at around 3.5x income. Why ? Well, what happened was that inflation was unleashed. This led to high and very volatile interest rates. Would you have borrowed even 3.5x when IRs regularly hit double figures ? Other things happened too. Social housing provision was wound down and changes in the law made property much more attractive to investors, both potentially increasing demand. Also, more household had two decent wages to spend as woman started to get jobs, and not just menial, low paid jobs. This should have pushed up prices (in terms of income multiples) but it didn't, because of the high risk from high IRs.

To summarise: high, volatile IRs suppressed potential house price growth despite many factors putting upward pressure on them.

3) 1995ish-present: We now have easy credit, many two-income households, an active investor base and limited social housing. Then we got low and stable IRs again. The result ? A much delayed hike in house prices.

To summarise: low stable IRs, house prices = 3,5x household income (just like the last time we had low stable IRs), but now household income = say 1.5x personal income, so HPs ~ 5-6x personal income.

I am not all doom and gloom. I am a renter myself and still neutral to slightly bearish on house prices. But only slightly bearish. I believe an economic shock leading to a recession would lower prices, but that is always the case. It is not a special feature of today's market.

In general, optimism is much more profitable than pessimism. For example, a rich pessimist 100 years ago may have put their money into 1 kg of gold. What would they have now, 100 years on ? 1 kg of gold, that's what. If that money had been used to buy property or shares, the pessimists decendants would now be loaded, despite several crashes and depressions along the way.

So please pull my logic apart - I want a crash too ! :)

Edited by wrongmove

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The credit constraints argument is covered in one of Andrew Farlow's papers. I think the answer is that if this was the case then you would expect to see increased spending in other areas - which you don't

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Guest wrongmove

The credit constraints argument is covered in one of Andrew Farlow's papers. I think the answer is that if this was the case then you would expect to see increased spending in other areas - which you don't

Are you saying that everyone spent loads of money on comsumer items in the 50s and 60s ? Many people didn't even have tvs then. Or foreign holidays, two cars, mp3 players, more clothes and shoes than they have storage for etc. I don't think that increased spending has been limited to houses.

Anyway, in my post I didn't suggest that house prices have gone up, relative to household incomes. Household incomes have risen much faster than personal incomes since the 70s. It is just that high IRs in the 70s-90s masked the effect. We now have low IRs again, and the old 3.5x household income is back, IMHO.

Edited by wrongmove

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Many have been complaining about the lack of reasoned arguments against a crash. But there are occasionally reasoned arguments. It is just that no-one replies and the thread is quickly displaced by ranty threads and endless, random, slightly bearish news articles from anywhere on the planet. I bet this thread has disappeared of the bottom of the board by lunchtime.

So here goes:

If the history of 20th century house prices is considered, there seem to me to be 3 main periods: 1) pre-1970, 2) 1970-1995ish, and 3) 1995ish to now.

1) Pre-1970: IRs were actually low and stable back then, a bit like now (average 4.25%). So why were prices only 3.5x income, not 5x to 6x like they are now? Well, several reasons: credit was tightly controlled - there was a waiting list for mortgages, for example. Tight credit keeps asset prices down. And, there was a large amout of cheap social housing available. And the private rental sector was very small and not attractive to investors because of tenant-friendly legislation. And, perhaps most importantly, in the 1950s and 1960s, many or most households had only one decent wage coming in.

To summarise: low, stable IRs, house prices = 3.5x income = 3.5x household income.

2) 1970-1995ish: Credit was relaxed, which should have boosted house prices, but they stayed at around 3.5x income. Why ? Well, what happened was that inflation was unleashed. This led to high and very volatile interest rates. Would you have borrowed even 3.5x when IRs regularly hit double figures ? Other things happened too. Social housing provision was wound down and changes in the law made property much more attractive to investors, both potentially increasing demand. Also, more household had two decent wages to spend as woman started to get jobs, and not just menial, low paid jobs. This should have pushed up prices (in terms of income multiples) but it didn't, because of the high risk from high IRs.

To summarise: high, volatile IRs suppressed potential house price growth despite many factors putting upward pressure on them.

3) 1995ish-present: We now have easy credit, many two-income households, an active investor base and limited social housing. Then we got low and stable IRs again. The result ? A much delayed hike in house prices.

To summarise: low stable IRs, house prices = 3,5x household income (just like the last time we had low stable IRs), but now household income = say 1.5x personal income, so HPs ~ 5-6x personal income.

I am not all doom and gloom. I am a renter myself and still neutral to slightly bearish on house prices. But only slightly bearish. I believe an economic shock leading to a recession would lower prices, but that is always the case. It is not a special feature of today's market.

In general, optimism is much more profitable than pessimism. For example, a rich pessimist 100 years ago may have put their money into 1 kg of gold. What would they have now, 100 years on ? 1 kg of gold, that's what. If that money had been used to buy property or shares, the pessimists decendants would now be loaded, despite several crashes and depressions along the way.

So please pull my logic apart - I want a crash too ! :)

I agree with much of your analysis - but it's the 1995-present period that I think is the real key. One might break it down into two separate periods post 1995: approx 1995-2001/2, when prices were rising at a reasonable rate; and the post 2001-2 boom (in which prices have risen at a bubble rate). Had the increases from 1995-1999 continued at the same pace, we'd have reasonably priced, though still relatively expensive, housing.

For me, the key is really is standing back every so often and just revisiting the sheer scale of the bubble increase in the past few years. Charlie, I think, posted a link yesterday from the BBC from 1999, which claimed that the average nationwide house price then was approx. 75k. (link here: http://news.bbc.co.uk/1/hi/business/the_economy/392894.stm).

I recently reread an article from the Guardian from approx 2002, which read something to the effect that there was growing concern that FTBs were becoming priced out as the average house price had reached over 100k. (Don't have link to hand, but you can find it in the Guardian property archive). And here in 2006, the average house price is apparently 200k, and no-one in the general public bats an eyelid!

Just think about it! 1999 - average price 75k. 2006 - average price 200k!!

When you just look at the starkness of those figures, all reasoned arguments against a crash fly out the window. It's so obviously unsustainable!

That we should be experiencing slightly higher house prices/more expensive housing relative to the post-war trend is quite understandable (for all the reasons you've outlined above). But THIS high? No way. Have wages risen correspondingly since 1999 or 2002? In some sectors they may have stagnated or even decreased slightly. There's just no support for the sheer level of HPI since 2002.

Reasoned arguments, too, just don't apply in a bubble economy - as the term 'irrational exuberance' shows - you can't apply rational arguments to an irrational situation. That's where so many of the bullish arguments fall down when justifying HPI in the past few years - they try to justify something that is really based on hype, psychology, and unreason.

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Guest wrongmove

Reasoned arguments, too, just don't apply in a bubble economy - as the term 'irrational exuberance' shows - you can't apply rational arguments to an irrational situation. That's where so many of the bullish arguments fall down when justifying HPI in the past few years - they try to justify something that is really based on hype, psychology, and unreason.

Thanks for your reply Zaranna. I agree with you on some points which is why I am neutral to slightly bearish, not bullish. As an investment, there are undoubtably better, and more fun ways, to make money elsewhere. Even taking on board my own points, I still think that valuations are slightly stretched - i.e. all my points are already priced in. I think there is slightly more risk to the downside now, and prices may slip back a little in the autumn after a bit of a surge this spring. I could very well be wrong though. There is no evidence to back up this view, and if mortgage approvals remain strong after the spring, I will be worried.

However, large rises are not always unsustainable. The market in 1999 was very depressed and offered excellent, low-risk returns to anyone who spotted it. Those who filled their boots in the late 90s have done very, very well.

The reason low IRs didn't cause an instant boom is because people and lenders are not as stupid as some here like to think. The key term is "low and stable" IRs. A few years of low IR does not means stability, and buyers and lenders remained cautious, or even over-cautious.. However, we have now had a decade or more of low IRs, and people have started to trust that they will remain pretty low.

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"In general, optimism is much more profitable than pessimism. For example, a rich pessimist 100 years ago may have put their money into 1 kg of gold. What would they have now, 100 years on ? 1 kg of gold, that's what. If that money had been used to buy property or shares, the pessimists decendants would now be loaded, despite several crashes and depressions along the way."

Depends where. There aren't many stockmarkets or property markets that didn't, essentially, go to zero at some point since 1906 (basically only UK, some commonwealth countries and USA)

If your rich optimist had put the money in shares in say, Shanghai or Germany, or property there, they would have been SOL...

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One area that I would look at is your calculation of household income.

One element that the market bulls have been touting for a long time is that there is a shortage of supply, partly caused by the creation of smaller households, people seperating, living alone etc.

While I agree that there are more dual income families than in the 1970's, I think the difference to now is tempered somewhat by the increase in the number of single occupancy properties.

The other area with regard to affordability, which is inextricably linked with IR's, is that IR's are the tap by which inflation in controlled, supposedly. However, while we may have official numbers at 2.1% which doesn't require any IR increases, the 'real' rate of inflation is higher as experienced by the man on the street. The official numbers are massaged with the intention of keeping the reasons for IR raises small, and to reduce the Government spending requirements on those expenses that are inflation related, such as pensions, private sector pay etc.

And since the latest real price boom started the total level of taxation has risen quite dramatically, which also affects the money in the pocket.

My wife works full time and she is worse off in nominal and real terms than 2 years ago. If others are experiencing this then purchasing power overall will be falling.

G-Man

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Are you saying that everyone spent loads of money on comsumer items in the 50s and 60s ? Many people didn't even have tvs then. Or foreign holidays, two cars, mp3 players, more clothes and shoes than they have storage for etc. I don't think that increased spending has been limited to houses.

But people back then had radios and record players. Reel to real tape recorders. And musical instruments were more common in those days. Did those items cost, in real terms, less than mp3 players and the like do now? Did people spend less, as a proportion of income, on clothes then than they do now? Did holidays at Butlins and the like cost less as a proportion of household income than foreign holidays do now?

Billy Shears

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For me the key phase in your post is this.

1970-1995ish: Credit was relaxed, which should have boosted house prices, but they stayed at around 3.5x income. Why ? Well, what happened was that inflation was unleashed.

Now, the big question is: Was the relaxation of credit and inflation linked in anyway?

If so then over the next couple of years the new paradigm is likely to be dispatched by inflation once again.

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Guest wrongmove

For me the key phase in your post is this.

Now, the big question is: Was the relaxation of credit and inflation linked in anyway?

I think it is generally accepted that relaxed credit controls did lead to inflation in the 70s and 80s.

If so then over the next couple of years the new paradigm is likely to be dispatched by inflation once again.

I don't think we are in a new paradigm. I think we are back in the old paradigm that existed pre-1970, i.e. low and stable interest rates, and houses at 3.5x household income. The 70s and 80s were the new paradigm, but like most new paradigms, it didn't stand the test of time.

However, if inflation does take off and IRs rise, then yes, I agree, house prices will fall. This is the gamble we are all taking. If you believe that inflation and IRs will stay low, then buying now (to live in) is probably not a bad idea. Like you, I have my doubts, hence I still rent. I just think it is finely balanced, not a no-brainer, that's all. I used to be 90% certain that the low IRs of 20001-2004 would result in a backlash, leading to high inflation, high IRs and falling prices. But it hasn't happened (yet) and really shows no sign of happening soon. Even if inflation did take off, IRs of just 5-6% would probably snuff it out pretty quick. So I am now only about 55% certain.

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Hi Wongmove

The flaw in you’re reasoning is that however low interest rates go someone borrowing £200,000 has to if they are ever to “own” this home pay off the capital. In the past borrowers stretched themselves knowing that inflation would lessen their mortgage repayments to something more affordable within a few years. There is now such relief on hand for today’s borrowers. If its painful now it will probably be just as bad in ten years time.

From a homebuyers point of view high inflation and high interest rates were a good thing.

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But people back then had radios and record players. Reel to real tape recorders. And musical instruments were more common in those days. Did those items cost, in real terms, less than mp3 players and the like do now? Did people spend less, as a proportion of income, on clothes then than they do now? Did holidays at Butlins and the like cost less as a proportion of household income than foreign holidays do now?

Billy Shears

I don't think they did. It was very common for just one person in a road to have a radio and many people would gather around that radio when important news was broadcast. The same thing happened with TVs and even cars. I have pictures of the car that my Mum and Dad bought in the 1960s and it was the first car in the area.

Remember, the US only began to see enormous growth in 'white goods' in the 1950s and it was not until the mid 1960s that such things began to take off in the UK - look at several of those wonderful 1960 British 'social' films and you will see this plain as daylight for yourself. In fact, I would go so far as to say that sales of goods such as washing machines, tumble dryers en masse in the UK really only happened in the 1980s. Now, of course, we live in a gadget must have society.

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I think it is generally accepted that relaxed credit controls did lead to inflation in the 70s and 80s.

I don't think we are in a new paradigm. I think we are back in the old paradigm that existed pre-1970, i.e. low and stable interest rates, and houses at 3.5x household income. The 70s and 80s were the new paradigm, but like most new paradigms, it didn't stand the test of time.

However, if inflation does take off and IRs rise, then yes, I agree, house prices will fall. This is the gamble we are all taking. If you believe that inflation and IRs will stay low, then buying now (to live in) is probably not a bad idea. Like you, I have my doubts, hence I still rent. I just think it is finely balanced, not a no-brainer, that's all. I used to be 90% certain that the low IRs of 20001-2004 would result in a backlash, leading to high inflation, high IRs and falling prices. But it hasn't happened (yet) and really shows no sign of happening soon. Even if inflation did take off, IRs of just 5-6% would probably snuff it out pretty quick. So I am now only about 55% certain.

My big worry is that inflation rises but without wage inflation.

That's already happened with homes, and is now happening to energy (interestingly at about the same rate as HPI was a couple of years ago).

Question: Can we all live with the same wages but with homes and energy at twice the price?

Answer: We can but we'll all be poorer.

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Guest wrongmove

Hi Wongmove

The flaw in you’re reasoning is that however low interest rates go someone borrowing £200,000 has to if they are ever to “own” this home pay off the capital. In the past borrowers stretched themselves knowing that inflation would lessen their mortgage repayments to something more affordable within a few years. There is now such relief on hand for today’s borrowers. If its painful now it will probably be just as bad in ten years time.

From a homebuyers point of view high inflation and high interest rates were a good thing.

This is true, and I would certainly prefer to buy a cheap house when IRs are high than buy an expensive house when they are low. Unfortunately, we do not currently have this choice. Its high prices or rent. And either way, this means more money spent on housing over the medium to long term.

The problem is that people want decent houses. They will compete for decent houses, just like all creature compete for good territory. If people said, "oh, I won't stretch for that semi in the burbs, I will just buy a cheap ex-LA terrace in the inner city to keep my long term expenditure down", then HPI would be muted and we would all be richer.

But read the posts here. People don't think like that. People hold cheap housing and the people who live in it with comtempt - chavsville and all that. So they will stretch for that semi in the burbs. "We are all middle class now" as someone said, and we all "deserve" that nice semi. Unfortunately, while there is no shortage of property in general, there is a shortage of suburban semis. And until people stop demanding that level of housing, they will compete, and stretch themselves, IMHO.

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i've always thought along the lines of this analysis but immediately after a boom prices are always a bit ''toppy''......and as the OECD document showed by analysing booms and slumps in a dozen different countries over the last 40 years ,real (inflation-adjusted) prices always fall after a boom and except in cases of severe economic shocks there are no nominal falls ......

In the Us for example although there have been nominal falls in local markets the national average house price has never fallen in 70 years..

Barring any economic shocks real prices here will correct themsleves as incomes rise but in an low inflation environment this could take 10 years..........The experience of the South East of England (minus 27%) amd Los Angeles 15 years ago and Japan and in the 90s are the exception rather than the rule.

''Money illusion'' is key to nominal prices staying the same for a long time.......Even sellers who have no/small mortgages often refuse to knock 10% off their selling price now but will quite happily accept today's asking price in 5 years' time when it is infact only 75% of today's price if you adjust for inflation................

Edited by Michael

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In fact, I would go so far as to say that sales of goods such as washing machines, tumble dryers en masse in the UK really only happened in the 1980s. Now, of course, we live in a gadget must have society.

The problem is that this is all mixed up with high house prices too, and it's very difficult to separate the chicken from the egg, IYSWIM. If you need 2 earners to support a household, and both partners are working, you also need a dishwasher, washing machine, tumble drier, microwave, freezer (because you have to do one big supermarket shop rather than a daily one), two cars (because you both have to commute to work/take the kids to school), ready meals because there's no time to cook from scratch, disposable nappies rather than cloth ones, etc etc., just in order to maintain two working lifestyles.

Thrift takes time, and if one person is at home, they have the time to wash clothes by hand/cook meals from scratch/wash dishes in the sink. In the 60s/70s, most households had one (almost always female) homemaker. From the 1980s onwards, as the cost of living rose, time-saving gadgets became not just luxuries but necessities in order to support two workers. Let me ask - do you have a dishwasher? If so, would you want to do without it if it meant coming in around 6-7pm, cooking a meal, serving it, then spending half an hour or an hour doing dishes by hand before bed? You'd be exhausted, right? And you might need that time to do soemthing else, such as look after your kids, or put the washing on, or do some work you'd brought home (unpaid overtime) or tidy the house, and so on. A dishwasher and all those gadgets really are necessary now for many people just in order to keep their lives running - they're not always buying them just because they're a must-have status symbol.

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My big worry is that inflation rises but without wage inflation.

That's already happened with homes, and is now happening to energy (interestingly at about the same rate as HPI was a couple of years ago).

Question: Can we all live with the same wages but with homes and energy at twice the price?

Answer: We can but we'll all be poorer.

And hence the economy will suffer, with little spare disposable income to spend in the shops.

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Guest wrongmove

Well thanks for all the replies. It looks like my prediction that this thread would be off the bottom by lunchtime was wrong. Lets hope my other predictions are wrong too! :)

But the thread is drifting away from my central point: History seems to tell us that when IRs are low and stable (i.e. now, and before 1970), house prices tend to sit at about 3.5x household incomes (which is now about 5x - 6x personal income).

Why should it be "different this time" ?

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Just think about it! 1999 - average price 75k. 2006 - average price 200k!!

I've been starting to think along similar lines to Wrongmove, that conditions are a bit different due to different economic conditions, especially the huge increase in investment in property, but I agree with you that the last bit of HPI shows a bubble mentality.

But an alternative way of thinking about these figures is that at 75K housing may still have been some way under the "new equilibirum level" whereas now (170K average on sale prices? 200K is Rightmove asking isn't it?) it has probably overshot because of a bubble. This would mean that some, though not all of the last few years of HPI was inevitable - but how much?

There's two questions - firstly, if conditions have changed how far are we really now over the equilibrium point - do we need to fall 10-20%? Or would an extended period of stagnation (which would probably mean a mixed pattern of small rises and falls) allow steady inflation to narrow the gap? (In the 70s crash, property actually kept rising, but at a slower rate than inflation - now that we have slower inflation could stagnation achieve the same drop in real prices?)

Secondly, if falls are required to get back to equilibrium, will that create a momentum that means we overshoot again on the way down, or will the falls be slow enough that we stop sooner this time?

(Incidentally, if anyone worries that Wrongmove's argument is too much like saying "it's different this time" - isn't part of the problem that it's different every time?)

The problem is that this is all mixed up with high house prices too, and it's very difficult to separate the chicken from the egg, IYSWIM. If you need 2 earners to support a household, and both partners are working, you also need a dishwasher, washing machine, tumble drier, microwave, freezer...

so, would you want to do without it if it meant coming in around 6-7pm, cooking a meal, serving it, then spending half an hour or an hour doing dishes by hand before bed?

Up to a point this is true, but isn't this partly about how people's expectations have changed. Of the items above I don't have a dishwasher, tumble drier, or freezer, and we only got a microwave when the baby was born to sterilise bottles etc (but we never cook in it). My wife works most days, and as a general rule I come home from work on the train, cook the meal, wash the dishes by hand (are people really too feeble to do this?), give the kid her bath, read to her, and yes sometimes I also do some work in the evenings. (My wife does all the washing, cleaning etc so there is a fair share going on). I don't see that as being especially difficult, and I don't see that a freezer or tumble drier would make much difference to me either. Modern life is pretty hectic, fair enough, but I was doing all this before I bought a house, so I don't see it as being a result of high house prices.

Off topic I know...

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Guest wrongmove

(Incidentally, if anyone worries that Wrongmove's argument is too much like saying "it's different this time" - isn't part of the problem that it's different every time?)

Hi Magpie - I think my view is broadly similar to yours. I certainly would say there are significant downside risks in today's housing market, just that they are generally overstated on HPC.

But I am not even trying to say "it is different this time" (see post above yours). I think the 70s and 80s were different, due to unusually high and volatile IRs (that's what happens when you let politicians dabble in macroeconomics :) ). Now we are just back to normal (or rather, slightly above normal, but only slightly). And a big economic shock would move prices to "cheaper than normal" and give good buying opportunity for those with cash and good credit.

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Pre-1970: IRs were actually low and stable back then, a bit like now (average 4.25%).

Hint: 1971 was the year that Nixon stopped redeeming dollars for gold. Prior to that point we couldn't have the huge credit bubbles that have occured since, because America would rapidly have run out of gold if they printed trillions of new dollars... instead we had credit controls, either directly through government, or indirectly through banks being careful about who they lent to.

Suggesting you can have low interest rates for years when that means a 10% growth in new money every year is absurd. Rates are going up because all those trillions of dollars of 'free money' that have been spewed out of the banking system in the last few years have to be swallowed up somewhere, and they either go into repaying debts or high inflation.

Fiat currency on a global scale has only been around for just over thirty years. I doubt it will last another thirty.

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Well thanks for all the replies. It looks like my prediction that this thread would be off the bottom by lunchtime was wrong. Lets hope my other predictions are wrong too! :)

But the thread is drifting away from my central point: History seems to tell us that when IRs are low and stable (i.e. now, and before 1970), house prices tend to sit at about 3.5x household incomes (which is now about 5x - 6x personal income).

Why should it be "different this time" ?

First of all, because house prices in my area (SE) are much more than 3.5 x houshold income - if we're working on the basis of 2 people each earning the national average wage, then house prices in my area are more like 4.5 times household income (and that's with a decent deposit of 40-50k, which most people don't have) - so with no deposit, they'd be around 5 times household income.

Also, secondly, the problem is that many people can expect a significant drop in household income at some point *even if their individual salaries rise*. 3.5x (single) household income in the 1970s still meant someone could stay at home to have a family, and as long as one person was working the house was safe. Today, the household income measure only works if you base it on two working people, both earning a decent wage, who will remain childless for the entire term of the mortgage. That's not reasonable (or, for most people, possible). Most people will end up having children, in which case one person will need to take a significant drop in income or leave work altogether (or use up their salary paying for childcare - which once you have 2 or more children can mean an entire salary goes on childcare - no room for mortgage payments). Using joint income as a model is always inherently riskier (since it's likely that at least one person will change or lose their job, or that one will earn significantly less than the other). That's why historically mortgage lending on joint income worked at 2.5 times joint rather than 3.5 times joint household income.

Is it reasonable to expect that mortgages, and house prices, should be sustained on the assumption that they will be kept up by two childfree people, with no breaks in employment or periods raising children?

Edited by Zaranna

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For me the biggest worry is that the governments and central banks around the world are inflating the money supply.

Much of the bullish arguements for the continued rise of stock indicies are that all the extra money is "looking for somewhere to go".

The British and US governments would be more than happy if they could engineer inflation for the next 5-10 years, without showing it up in the stats and hence having to raise IR's. This basically just steals the savings of the prudent and gives it to the borrowers in the form of devalueing the loan.

We think that more loosening of money cant happen, but I bet it can....they just have to work out how to spin it.

Remember that all paper currencies are now competing not to gain value against the others, led by the USD. As one inflates the others follow.

It really does make a case for holding very little assets in cash/bonds.

For me its gold, silver and renewable energy conpanies mainly.

JP.

Edited by jpidding

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Is it reasonable to expect that mortgages, and house prices, should be sustained on the assumption that they will be kept up by two childfree people, with no breaks in employment or periods raising children?

Yes. No more boom and bust, perpetually high employment, and no more need to have kids because we can just import twenty-somethings from Eastern Europe. Brown has got it all worked out, you see.

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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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