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Bingley Bloke

Wahey! We're All Rich!

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Equity in your house is not disposable wealth! As, sadly, many will find out. Repo data on Friday is likely to highlight this.

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right.... that really puts my large deposit into perspective, are the Members of HPC richer than homeowners that have MEWed it all away?

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7% hey Gordon will need that and a bit more to keep things going so up with the taxes but dont tell anyone. Wonder if you could tax people using computers on the lunch break? ...............nah

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Hmmmm. I wonder how much of that £40,000 'average disposable assets' is in home equity, I would guess that it would be a significant amount. Does this make us rich? er no!

The article would have been far clearer if it had put personal savings, home equity and shares as a percentage of that £40,000 and then joe public would realise that he's not as wealthy as he thinks.

HPI, the great wealth illusion.

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Hmmmm. I wonder how much of that £40,000 'average disposable assets' is in home equity, I would guess that it would be a significant amount. Does this make us rich? er no!

The article would have been far clearer if it had put personal savings, home equity and shares as a percentage of that £40,000 and then joe public would realise that he's not as wealthy as he thinks.

HPI, the great wealth illusion.

And includes depreciating stuff like cars, tellies, the infamous Ipods (I have three by the way....) etc.

Most people I know have no cash savings, though the lemmings are piling all their money away from BTL and back into their pensions now - that strikes me as even madder - giving all your money to the government so that they can stop you accessing it till you are 65 (or later the way it's going) - so you have to work till you die but you will have pots of money to surrender to the anuity provider... Great.

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I don't get this by definition if your house price has gone up say £40,000 ignoring the fact the only way you can realise this is by selling - what about the fact that this makes the home buyer £40,000 poorer i.e. all that has happened is a transfer of wealth.

The overall net gain should therefore be 0. I can see that people coming into the country with cash to buy the house may increase this average wealth but the opposite effect would be for people leaving the country.

I can't really see therefore how even if you could realise this wealth causes a net increase in wealth?

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Err... it's all notional until the gain is actually realised, a house is notional, as is the stock market and even gold. There is virtually no wage inflation in this country when taking into account unrigged CPI figures with M4 running at 11% net GDP.

No amount of crap can get past these unfortunate facts, you can generate wealth or borrow your way to success, for a while at least.

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I don't get this by definition if your house price has gone up say £40,000 ignoring the fact the only way you can realise this is by selling - what about the fact that this makes the home buyer £40,000 poorer i.e. all that has happened is a transfer of wealth.

The overall net gain should therefore be 0. I can see that people coming into the country with cash to buy the house may increase this average wealth but the opposite effect would be for people leaving the country.

I can't really see therefore how even if you could realise this wealth causes a net increase in wealth?

You have a point, as people with mortgages have bigger ones. But I'm pretty sure that this calculation is ignoring the debt of having a mortgage as they refer to "equity that they could unlock". The implication is that in talking about "disposable wealth" they were just looking at "how much money could you get your hands on next week" rather than "what are you worth taking the whole balance sheet into account". For a heck of a lot of people the whole balance sheet would be negative...

I could be wrong, but that's the way I read it, in which case it is a pretty worthless piece of research.

I'm worried that the figure is ONLY £40k. If average house prices are 160k and we see a 25% fall, is the country in negative equity?

Oh, and if I'm right , no. Because once there was no "equity that can be unlocked", the mortgage would just be a zero item. Ludicrous, yes...

I saw something recently comparing the net value of the country's property to the net mortgages and I think it was more like £1 billion of mortgages against £2 billion of property, or even £3 billion. So it would take a pretty major fall to put the whole country in negative equity.

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So lets get this straight, we're going bankrupt in record numbers, yet at the same time we're all rich beyond our wildest dreams?

My brain hurts! :blink:

Its called low interest rates.

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You have a point, as people with mortgages have bigger ones. But I'm pretty sure that this calculation is ignoring the debt of having a mortgage as they refer to "equity that they could unlock". The implication is that in talking about "disposable wealth" they were just looking at "how much money could you get your hands on next week"

Quite, in that context we could all apply for numerous credit cards and we would be "worth" an extra £10k quite easily.

Basically we're in a world of "your income can support X margin of borrowing, you're rich!".

I saw something recently comparing the net value of the country's property to the net mortgages and I think it was more like £1 billion of mortgages against £2 billion of property, or even £3 billion. So it would take a pretty major fall to put the whole country in negative equity.

Yes, but it also underlies how much notional wealth is floating about. Prices are set on the margins, £500b could be knocked off those prices very easily, all it would take is few thousand sour transactions in a good spread of areas. The term "you're only as good as your last show" also applies to property.

Edited by BuyingBear

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Quite, in that context we could all apply for numerous credit cards and we would be "worth" an extra £10k quite easily.

Basically we're in a world of "your income can support X margin of borrowing, you're rich!".

Yes, but it also underlies how much notional wealth is floating about. Prices are set on the margins, £500b could be knocked off those prices very easily, all it would take is few thousand sour transactions in a good spread of areas. The term "you're only as good as your last show" also applies to property.

Very true - I was just reassuring the poster that this research is such nonsense it doesn't really imply anything reliable about how close the nation is to negative equity. The story I saw was basically "OK, we're now £1 billion indebted on mortgages, but that's fine because our houses are worth loads and loads more than that..." Seemed a bit shaky to me at the time, a bit too close to BTLs going on about their £1 million portfolios...

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The story I saw was basically "OK, we're now £1 billion indebted on mortgages, but that's fine because our houses are worth loads and loads more than that..." Seemed a bit shaky to me at the time

It simply demonstrates that the vast majority of people haven't bought during this cycle, and nor could they reafford their own homes at market prices; yet the same people expect others to mortgage themselves for 50 years and sacrifice their first born in order to buy.

If the market cap of all properties was matched by mortgage debt then the interest repayments alone, even at low rates, would simply sink the economy. Retail would be on its ar$e... ohh.

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Yep, we are indeed all rich :) Just as the good people of Weimar Germany were all rich; after all, their loaves of bread were worth a fortune <_<

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Guest Bart of Darkness

Yep, we are indeed all rich :) Just as the good people of Weimar Germany were all rich; after all, their loaves of bread were worth a fortune <_<

Time to start investing in wheelbarrows?

Money_wheelbarrow2.jpg

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If, as is the general concensus, there is going to be a swathe of bankruptcies, a house value crash & many repossessions, aren't the BLTs the only ones who stand to gain anything.

All the afflicted must be housed somewhere & ownership will be out of the equation.

Is BLT the way to go then?

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  • 336 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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