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Anecdote Of A Friend

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I have a friend. He was given £90K by his parents to buy a property. He borrowed a further £70k (the max he could get from the Halifax). He bought his property: £160K in East London. Two and a half years later similar houses in teh street are selling at £180-195K. This means that my friend could not buy his own house today. How is this sustainable? I dont know - but it continues!

Only when the lenders stop lending ever increasing sums of money will there be any chance of a correction.

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But that's only about 5% annualised growth rate - seems perfectly reasonable to me. You can get 5% on savings with a bank account so in your example house price growth has been very reasonable and grown along with other assets such as cash. If you factor in inflation at 2% per annum anyway, then his street has seen very little real growth in house prices and I'd say your example shows very little HPI in your friend's area. IMO that's a perfectly sustainable rate. Of course, the starting valuation was probably ridiculous in the first place.

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I have a friend. He was given £90K by his parents to buy a property. He borrowed a further £70k (the max he could get from the Halifax). He bought his property: £160K in East London. Two and a half years later similar houses in teh street are selling at £180-195K. This means that my friend could not buy his own house today. How is this sustainable? I dont know - but it continues!

Only when the lenders stop lending ever increasing sums of money will there be any chance of a correction.

The question is then, when will the lenders stop lending these unsustainable amounts of money ? As i believe the same, once this is resolved, prices will drop. Houses are only worth what someone is willing to pay, or what the bank is prepared to lend. And will this change in sentiment from lenders happen suddenly ?

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Guest Charlie The Tramp

Lenders will tighten up next week as mortgage fraud enquiries get a head of steam up.

First bad debts and now fraud.

Fraud

The Financial Services Authority has contacted the chiefs of the British Bankers' Association and the Building Societies Association to tell them that a suspected fraud that cost Cheshire Building Society about £10m - and which is now being investigated by the Serious Fraud Office - was probably not a one-off. Lenders as big as Nationwide building society now appear to be embroiled.

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But that's only about 5% annualised growth rate - seems perfectly reasonable to me. You can get 5% on savings with a bank account so in your example house price growth has been very reasonable and grown along with other assets such as cash. If you factor in inflation at 2% per annum anyway, then his street has seen very little real growth in house prices and I'd say your example shows very little HPI in your friend's area. IMO that's a perfectly sustainable rate. Of course, the starting valuation was probably ridiculous in the first place.

That's still faster than wage inflation in the intervening time though. Houses are typically sold by mortgaging future earnings, not through people having the purchase price sitting in the bank.

Billy Shears

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But that's only about 5% annualised growth rate - seems perfectly reasonable to me. You can get 5% on savings with a bank account so in your example house price growth has been very reasonable and grown along with other assets such as cash. If you factor in inflation at 2% per annum anyway, then his street has seen very little real growth in house prices and I'd say your example shows very little HPI in your friend's area. IMO that's a perfectly sustainable rate. Of course, the starting valuation was probably ridiculous in the first place.

True.

but this is an investment that requires purchase to achieve value.

Cannot exceed normal inflation.

Not as an investment return.

but as something that needs to be sold.

Please do not be niave enough to believe that any property has any value beyound that in which it is sold for.

too many fool for that..

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I have a friend. He was given £90K by his parents to buy a property. He borrowed a further £70k (the max he could get from the Halifax). He bought his property: £160K in East London. Two and a half years later similar houses in teh street are selling at £180-195K. This means that my friend could not buy his own house today. How is this sustainable? I dont know - but it continues!

Only when the lenders stop lending ever increasing sums of money will there be any chance of a correction.

If he'd placed the money in the stockmarket 2.5 years ago instead of buying in east London, he could now take it out and buy a bigger flat in west London instead.

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fraudulent valuations....................your saying VI's have consorted to defraud lenders and the buyers by way of unrealistic valuations.....pull the other one why don't ya, oh I get it, it's a late April Fools Day joke...you had me going there for a minute :lol::lol::lol:

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similar question to a couple of friends last night:

qu. - could you afford your house now on what you earn?

ans. - no

qu. - well how is someone else going to then and how are you going to move up the ladder 'cos if you couldn't afford this, then you certainly can't afford the next one up

silence during moment of realisation that they aren't quite as well off as they think they are

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  • 302 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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