We're Not Turncoats!

[Michael]

People like Marina and me have jumped ship because we know the game is up...Nothing short of an economic catastrophe will get you your crash......or even Laurejon's 10% further increase followed by 30% drops...

Around here everything's selling in a few days after a quiet 2005...and at the end of the last boom in 1988 when a typical semi reached £75k....even 5 ensuing years of economic gloom only knocked about 5% off prices....

At the time incomes were half those of today and IRs went to almost triple what we have now(about double if you allow for the effect of MIRAS)..and houses were hard to sell but prices hardly budged.....

so based on affordability houses should be about 4 times what they were at the end of last boom when in fact they're only 3 times that..............

Since 2002 long term cheap money has been available ....in the 70s, 80s and 90s low irs were a flash-in-the-pan and long term fixed rates on offer were very high reflecting this......and prior to the 70s the supply of mortgage money was rationed...

I hear people saying that the salary multiples available have not increased in proportion...Well expect them to.........I expect mortgage products to be soon available where you can borrow 5 or 6 times joint income provided you lock into 10 and 15 year fixes which are barely above current rates.....

This is perfectly sensible as long as long term rates are low........

Borrowing 6 times joint income (interest only) means interest payments consume about 44% of take home pay which cannot increase because of the fixed rate and will be eroded by inflation as incomes rise..

It's larger than most people are used to but no worse than borrowing 3 times joint at IRs of 11%(net of miras) which people did in the 80s.

Edited March 26, 2006 by Michael

[Guest wrongmove]

Michael, are you full-on bull now, or have you just given up on a crash ?

I too have drifted to "the dark side", but not enough to buy. I would still rather risk a rise by renting, than risk a fall by buying, at the moment, but I believe the odds against a significant correction have dropped a lot in the last year.

[music man]

The 'ol knowledge thing is deceptive.

In philosophy (epistomology) it is called justifiable, true, belief.

O.K. you believe it.

O.K. you can justify it (though many others disagree with you).

But you cannot say it is true.

for i.e. long legs, 2:20 at Cheltenham on Monday will win - I know it.

Well, one has to wait for the result my friend, or one is talking out side the realms of knowledge.

So keep your knowledge and wait for the result.

Nothing short of an economic catastrophe will get you your crash......

I do appologise for my pedantic behaviour this evening so have fun with me here. Isn't a crash an economic disaster.

If so I completely agree that (to paraphrase) you need and economic disaster to have an economic disaster.

Rant over, fun starts.

Edited March 26, 2006 by music man

[Michael]

Given up on the crash!.........Houses are on some counts as much as 20% overvalued ....Such a small overvaluation will be corrected by 5 years stagnation................or hoever long it takes for rents and salaries rise by 25%................

OECD examined about 4 dozen booms in about a dozen countries since 1970 and almost always the post-boom correction has consisted of falls in real prices as prices level off but no falls in nominal prices....

[music man]

That's a very fair point, and I know some on this site will be saddened by that but I'm O.K. with it. A lot is included in nominal falls.

For the Halifax figures my area is 4% down, and I'm saving like there's no tomorrow.

My bag is debt to the banks, I wish to pay of a house and not interest so for every year that passes with these reductions I can get closer to having a mortgage I can cover, and pay some of the debt off, and not be trapped.

I'm looking at having a £50K mortgage and not worrying about an economic disaster.

BTW what's your take on wage increase / the overt threat for I.R.'s causally being raised and the then price of a house.

Same affordability but less debt is something I'm happy for.

If I.R.'s are 20% I'm happy, makes me sweat not.

Edited March 26, 2006 by music man

[apom]

People like Marina and me have jumped ship because we know the game is up...Nothing short of an economic catastrophe will get you your crash......or even Laurejon's 10% further increase followed by 30% drops...

Around here everything's selling in a few days after a quiet 2005...and at the end of the last boom in 1988 when a typical semi reached £75k....even 5 ensuing years of economic gloom only knocked about 5% off prices....

At the time incomes were half those of today and IRs went to almost triple what we have now(about double if you allow for the effect of MIRAS)..and houses were hard to sell but prices hardly budged.....

so based on affordability houses should be about 4 times what they were at the end of last boom when in fact they're only 3 times that..............

Since 2002 long term cheap money has been available ....in the 70s, 80s and 90s low irs were a flash-in-the-pan and long term fixed rates on offer were very high reflecting this......and prior to the 70s the supply of mortgage money was rationed...

I hear people saying that the salary multiples available have not increased in proportion...Well expect them to.........I expect mortgage products to be soon available where you can borrow 5 or 6 times joint income provided you lock into 10 and 15 year fixes which are barely above current rates.....

This is perfectly sensible as long as long term rates are low........

Borrowing 6 times joint income (interest only) means interest payments consume about 44% of take home pay which cannot increase because of the fixed rate and will be eroded by inflation as incomes rise..

It's larger than most people are used to but no worse than borrowing 3 times joint at IRs of 11%(net of miras) which people did in the 80s.

Dropping through the floor here

Given up on the crash!.........Houses are on some counts as much as 20% overvalued ....Such a small overvaluation will be corrected by 5 years stagnation................or hoever long it takes for rents and salaries rise by 25%................

OECD examined about 4 dozen booms in about a dozen countries since 1970 and almost always the post-boom correction has consisted of falls in real prices as prices level off but no falls in nominal prices....

yes but..

Mervin Ling has said..

Wage push inflation.. will not happen.. he has sworn this so many times

so very many times.. how many...?????/?

SO MANY TIMES.....

So....

sob,.. sob...

many times.,

Pay attention to the details.

Edited March 26, 2006 by apom

[BillyShears]

People like Marina and me have jumped ship because we know the game is up...Nothing short of an economic catastrophe will get you your crash......or even Laurejon's 10% further increase followed by 30% drops...

Around here everything's selling in a few days after a quiet 2005...and at the end of the last boom in 1988 when a typical semi reached £75k....even 5 ensuing years of economic gloom only knocked about 5% off prices....

What is so different from 2005 when prices were dropping and houses were taking a long time to sell. Why couldn't those same conditions and effects reoccur in the near future? Why is it that prices dropped considerably in some parts of the country without an economic catastrophe to make that happen?

Billy Shears

[RichM]

Michael you're right. People can "afford" to borrow skip loads of cash. They'll never be able to have children (unless they have family nearby, they are very well paid, etc etc) but they will own a one- or two-bed flat. Their debt will take many years to be eroded by inflation. People getting on the bottom of the ladder will therefore be stuck there. It will be extremely difficult to buy a family-sized home.

Oh, and they've got to find someway of injecting shed loads of consumer spending into the economy, to keep it all going and give everyone jobs. I guess we'll have to borrow that money somehow. Until we can't anymore.

But it'll be OK because the export-led recovery will come to the rescue. I can hear it coming now in fact. All that money invested in high-spec industries, the UK soaring productivity, our top-class R&D etc etc.

Had better go and buy that house.

[last ninja]

This plateau is strange, it's like an eerie truce between the forces of boom and bust. I think we're in the eye of a huge economic storm and people are taking the quiet as a sign that it's okay to start picking themselves up and start building for the future. I've seen a number of people who've been unable or unwilling to buy until now look at long term mortgages and get ready to buy. Many people have been waiting a long, long time now and this calm period has signalled a change they've been waiting for, even if it's not the kind of change we would have expected or hoped for. Ultimately though I don't think the calm will last long.

[dunroamin]

Michael, did you take a back hander to "turn" and liven up the site??

[BillyShears]

This plateau is strange, it's like an eerie truce between the forces of boom and bust. I think we're in the eye of a huge economic storm and people are taking the quiet as a sign that it's okay to start picking themselves up and start building for the future. I've seen a number of people who've been unable or unwilling to buy until now look at long term mortgages and get ready to buy. Many people have been waiting a long, long time now and this calm period has signalled a change they've been waiting for, even if it's not the kind of change we would have expected or hoped for. Ultimately though I don't think the calm will last long.

All those BTL properties with inadequate yields are going to start looking like a really bad investment if there aren't capital gains to go along with them.

Billy Shears

[music man]

What is so different from 2005 when prices were dropping and houses were taking a long time to sell. Why couldn't those same conditions and effects reoccur in the near future? Why is it that prices dropped considerably in some parts of the country without an economic catastrophe to make that happen?

Billy Shears

Not a lot from where I am located.

EDP as I have previously mentioned has for 4 weeks had the biggest prop mag ever, except this week it's one leaf short.

They 'aint selling here, but lots are going up.

Joy

Edited March 26, 2006 by music man

[a j]

Given up on the crash!.........Houses are on some counts as much as 20% overvalued ....Such a small overvaluation will be corrected by 5 years stagnation................or hoever long it takes for rents and salaries rise by 25%................

OECD examined about 4 dozen booms in about a dozen countries since 1970 and almost always the post-boom correction has consisted of falls in real prices as prices level off but no falls in nominal prices....

Michael

The issue of real vs nominal falls is a very good point. I feel this is an important and overlooked element in the rent vs buy decision, and may separate the younger/ FTB members of the board from the older cash or asset rich.

[keepwatching]

Only 20% ??? on £160000............. Small 50K mortgages ????? Great if you are financially prepared for recession/no job etc....

An economic disaster (5 years is a long time to pray we dont get it) would make those figures look absoloutly terrifying to somebody who is not........

Also, 10% further increases are not going to happen nationally (I dont count parts of London, it is a different planet when it comes to wages)....... And if they do, there will be an even bigger problem....

Simple analysis.... Buy now-Pay later.

[music man]

Michael

The issue of real vs nominal falls is a very good point. I feel this is an important and overlooked element in the rent vs buy decision, and may separate the younger/ FTB members of the board from the older cash or asset rich.

I hope your not calling me old A.J.

I'm just saving like mad to not get trapped in a permanent state of Limbo.

And a FTB house is certainly not £160 in Norfolk. I know I can get one for under £100K now, and the EA's are trying to hook me.

Edited March 26, 2006 by music man

[Realty Cheque]

I got a 5.3% pay rise last year and expect a 5.1% rise this year, which isn't bad.

Sad thing is in relation to property prices my salary would have to double before I could afford to take the plunge.

I wonder how many other people feel the same way?

It's going to be an interesting year once the international wholesale money markets start to tighten and the Dollar weakens! Arr to be sure, to be sure!

[spline]

A strangely ominous, electrifying, and potentially worrisome prophesy has appeared on the C4 forum

http://community.channel4.com/groupee/foru...7234#6950007234

[BuyingBear]

I'm not sure, recorded prices from the land registry are showing real falls in Q4 2005, how things will trend from here, and how quickly, is anyone's guess.

However, we need to consider whether it's worth buying in this country at all, in the longterm the margin of tax will only be higher and global leveling will mean wage growth will not match the sort of (real) rises we've experienced in the post-war period. The only thing my generation will receive in return is a bankrupt health service and a dysfunctional education system that will be highly religious, the rest of the cash will be used to fund the commitments promised to other people.

Maybe I'm being unduly pessimistic, but I see very little around me that points to the contrary. Time to plan our escape?

[needle]

People like Marina and me have jumped ship because we know the game is up...Nothing short of an economic catastrophe will get you your crash......or even Laurejon's 10% further increase followed by 30% drops...

Around here everything's selling in a few days after a quiet 2005...and at the end of the last boom in 1988 when a typical semi reached £75k....even 5 ensuing years of economic gloom only knocked about 5% off prices....

At the time incomes were half those of today and IRs went to almost triple what we have now(about double if you allow for the effect of MIRAS)..and houses were hard to sell but prices hardly budged.....

so based on affordability houses should be about 4 times what they were at the end of last boom when in fact they're only 3 times that..............

Since 2002 long term cheap money has been available ....in the 70s, 80s and 90s low irs were a flash-in-the-pan and long term fixed rates on offer were very high reflecting this......and prior to the 70s the supply of mortgage money was rationed...

I hear people saying that the salary multiples available have not increased in proportion...Well expect them to.........I expect mortgage products to be soon available where you can borrow 5 or 6 times joint income provided you lock into 10 and 15 year fixes which are barely above current rates.....

This is perfectly sensible as long as long term rates are low........

Borrowing 6 times joint income (interest only) means interest payments consume about 44% of take home pay which cannot increase because of the fixed rate and will be eroded by inflation as incomes rise..

It's larger than most people are used to but no worse than borrowing 3 times joint at IRs of 11%(net of miras) which people did in the 80s.

I dont agree or disagree but if youre not a turncoat, youre stupid.

What the hell took you so long to realise all of this?

Dont you think that being a "bear" for so long and suddenly switching to "bull" makes you look stupid?

Stupid in the sense that your judgement is all over the place.

And if thats the case, what is it about this volte face that displays good judgement?

Again I am highly suspicious of the miraculous conversions on here lately.

Somethings afoot.

[BuyingBear]

I dont agree or disagree but if youre not a turncoat, youre stupid.

What the hell took you so long to realise all of this?

Dont you think that being a "bear" for so long and suddenly switching to "bull" makes you look stupid?

Stupid in the sense that your judgement is all over the place.

I don't quite follow his logic, I'd quite happily pay a 11% interest rate if that meant inflation was eroding my debt to the tune of 8% per annum. By saying high interest rates are automatically bad you're falling into the "lowest mortgage rates in 40 years" trap, high inflation and rates are actually very good news if you're shouldering lots of debt. Holding a burden of debt that doesn't erode in a 'low inflation environment' is the real kicker, however it's akin to boiling a frog so you may not realise.

[dalek]

People like Marina and me have jumped ship because we know the game is up...Nothing short of an economic catastrophe will get you your crash

I posted the following on the thread 'it ain't happening' and I though it needed posting, with a few changes, here:

1. The kind of posts we're getting from newbies (I don't mean Marina or Michael etc who are just going through a bad patch) sneering at our belief in an HPC never used to happen until now. Yes, we've had our trolls, but this is different, this is an onslaught. They're not even disguising the fact. So why is it happening now? Think about it. The VI's (and of course this one is an estate agent!) are getting desperate. They know we are starting to get publicity and that the reason we're starting to get publicity is because the press are finally beginning to acknowledge all is not well.

2. Remember the expose of Tony Bliar's recent property misery? The Daily Mail reported on its front page that his grand £3.4million house in Mayfair is now valued at £200,000 LESS than he paid for it and his two Bristol flats have gone down about £30,000 each too. That bit of news must have made many people think something is up with the market. Even the PM is being affected.

3. Consumers have stopped spending. Look at the daily tally of job losses, firms going under. And it isn't going to stop.

From now on we MUST ignore these new VI t*rds. The crash has started (for those who still need convincing, read the expats website), and once sellers realise that their fabulous Right Move prices have no basis in reality - which will take a few months, as they're all still heavily in terrified denial - the whole pyramid scam will collapse very quickly. Courage, my friends! You too, Marina and Michael. Get a grip and don't despair. The trouble is that for you and many others it seems to have taken so very long - but that's because you saw the signs of a bubble long before anyone else did. It's only now more and more people are beginning to realise what's up as it becomes glaringly obvious.

[okonu]

Given up on the crash!.........Houses are on some counts as much as 20% overvalued ....Such a small overvaluation will be corrected by 5 years stagnation................or hoever long it takes for rents and salaries rise by 25%................

OECD examined about 4 dozen booms in about a dozen countries since 1970 and almost always the post-boom correction has consisted of falls in real prices as prices level off but no falls in nominal prices....

"almost always"??? Well, apart from Japan, Hong Kong, Thailand, Singapore, UK. North America consists of regional markets, and I think some did fall (Boston/ California/ Toronto/ Vancouver)

So the debate has now moved (from the bulls) from "buy now, because prices are going to go up" to "OK to buy now, because nominal prices aren't going to fall" is already a huge weakening in sentiment.

Surprising no-one stickied the Times yesterday

- 30% new mortgages IO. Of these only 1/3 have repayment plan

- Many are now hoping for inheritance (either on death, or gifts before death) for repayments.

PS - 20% small over valuation? If you believe that asking price average is 200,000, that is 40,000 pounds. Which is a fair chunk of change. Make it pre tax, and you are looking at 65,000 pounds earnings.

65,000 pounds isn't small to most...

[Guest Winners and Losers]

"almost always"??? Well, apart from Japan, Hong Kong, Thailand, Singapore, UK. North America consists of regional markets, and I think some did fall (Boston/ California/ Toronto/ Vancouver)

and Australia. For me it is an issue of buying something now that I could have bought in 1 year (or whatever) for less - it is enough to make you sick, even if you can afford it. Its all about the principle.

Edited March 27, 2006 by Winners and Losers

[theChuz]

for me... nothing has changed, if anything things look worse economically. We shall see

[Badlad1967]

Dalek:

You've made some very good points... Brilliant thought process considering the time you posted them

I couldn't agree more - media coverage is getting better and the truth about Gordon's miracle economy is getting reported.

For me it's no longer a question of is there'll be a HPC: it's when it will gather momentum and how severe it's going to be.

I do find it very sad that some people feel they have to post about "how we've all got it wrong". Previously, I would never have dreamt of gloating over someone's financial misfortune. If I made a decision that now was right for the time to buy a house I would say a polite goodbye to posters on here and withdraw, quietly. The sheer fact that the "nouveau bulls" have to resort to playground level insults just goes to show what nervous, little sheeple they are. Like lambs to the slaughter.

Still, I guess it's the rest of us will help them out by buying their houses back from them when they can no longer keep up the payments. Hopefully that will take care of about 50% of their negative equity