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lewissheridan

A Little Office Discussion

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We had one of those office discussions about house prices, me, the MD, sales director and technical director. He is a summary of what was thrown at me:

- in the long term house prices always rise

- irrespective of being at a peak, even if they dip, and you sell low, the next house you buy will be low in price also

- i don't think it's a bubble - we have a strong UK economy and a strong global economy

- my parents said £10k was a lot of money when they first bought, and when i took my mortgage i thought it was a lot of money, but you'll be earning 100k when wage inflation catches up in 20 years

- property is an asset, you can't lose money buying into property

- renting is throwing your money away

I did retort with the amount of debt, consuming borrowing, irresponsible lending, multiple home ownerships etc etc... but they were adament a house is an investment and you can't go wrong.

I disagree, when a mortgage represents 2/3rd of my income there's a problem, with high-cost of living and no sensible leyway for a rise in interest rates how can that be sensible. It feels like the late 80s.. and we all know what happened then. People borrowing more than they can afford...

I'm quite tired with the whole debate now.... but there you have it... people believe this to be the case. The technical director however is buying a shared-ownership property, and he lost everything in the late 80s, he agreed with me in principle about the lapse lending, debt, and that house prices are ludicrously over priced... but yet he is buying ? I told them about the btl brigade, but they went on about demand for housing.... etc etc etc

Sorry hardly an eloquent debate or post... just thought i would share

LS

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My sister bought a shared ownership property early 2004. Her and OH are intending to trade up to another shared ownership (extra room rqd). Valuation in today from independent surveyor - down £15K.

A big surprise to my family :blink:

With IR hikes on the horizon ,IMPO, buying anything now is plain crazy.

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I think if you do have a debate, make sure you have a free hour and access to the internet!

You can then back up everything you say... just like my discussion today.

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My sister bought a shared ownership property early 2004. Her and OH are intending to trade up to another shared ownership (extra room rqd). Valuation in today from independent surveyor - down £15K.

That means the other half is also cheap, see, you can't lose (or win)!

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I had a very similar debate today, it's amazing people what people are conditioned to believe nowadays, I suspect that us bears are in the minority in this country :blink:

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when people start talking about a house as an 'investment' you know the market's done for

I have friends telling me their house is their pension.

I tell them that actually a house is a place to live.

That's how stuffed up the whole situation has become.

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when people start talking about a house as an 'investment' you know the market's done for

I think that's what most people fail to understand, so bloody what if your house is worth 250k, it's not worth a bloody bean if you can't realise the value of it, apart from selling it and going to live in a cardboard box, and if it's worth that much how come you have pay to get you money

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Guest muttley

I have friends telling me their house is their pension.

Ask them who they will sell their house to. In an ageing population, there will be more people needing a pension than buying a house.

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In my experience you are best sticking to facts which are not debatable in these discussions.

"renting is dead money", "you are just renting money from a bank, what's different?"

"there's exposure to upside", "what if there is no upside?"

There's a way to retort to statements like "i think.....banks are irresponsible.....it's a bubble...etc" because they are essentially just opinions.

I don't have many of these discussions, I work in an office with a fair number of homeowners and it probably wouldn't make me very popular if I went around loudly proclaiming that there will be a house price crash. If someone really pushes me on why I'm not yet a member of the homeowner set I will just politely state my case point by point, until they realise that I'm probably better informed than they are on the subject. It usually feels like a hollow victory to see the look on their faces.

I would never deliberately get into a group house price discussion, I'm not actually capable of thinking quick enough in group arguments, and no good would come of it as you would be outnumbered, and people tend to get quite emotional about the subject.

It will be interesting to see how people react when interest rates start going up later this year.

B)

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In my experience you are best sticking to facts which are not debatable in these discussions.

"renting is dead money", "you are just renting money from a bank, what's different?"

"there's exposure to upside", "what if there is no upside?"

There's a way to retort to statements like "i think.....banks are irresponsible.....it's a bubble...etc" because they are essentially just opinions.

I don't have many of these discussions, I work in an office with a fair number of homeowners and it probably wouldn't make me very popular if I went around loudly proclaiming that there will be a house price crash. If someone really pushes me on why I'm not yet a member of the homeowner set I will just politely state my case point by point, until they realise that I'm probably better informed than they are on the subject. It usually feels like a hollow victory to see the look on their faces.

I would never deliberately get into a group house price discussion, I'm not actually capable of thinking quick enough in group arguments, and no good would come of it as you would be outnumbered, and people tend to get quite emotional about the subject.

It will be interesting to see how people react when interest rates start going up later this year.

B)

@Mods - We'll have to keep an eye on this fella - reasoned, self-aware, balanced.....obviously one of the more intelligent posters on here....

Good post.

Edited by needle

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I enjoy such discussions. I always like to be near a white board. I draw the earnings to house price ratio graph from 1950-now and ask them what they expect to happen next.

I sometimes add on the interest repayment graph (e.g. a solid block with a diagonal line from top left to bottom right. Shade in the lower left area and tell them that's the amount of interest they pay over time. the other is the captial). This helps people understand both how complicated mooney can be and how banks make there money.

Oh the fact I'm know to be very good with money also persuade people round to my way of thinking.

You just need to know a few good facts and a couple of good come backs and you'll win. But if by now you don't have an answer to the 'rent is dead money' argument then don't bother.

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I enjoy such discussions. I always like to be near a white board. I draw the earnings to house price ratio graph from 1950-now and ask them what they expect to happen next.

I sometimes add on the interest repayment graph (e.g. a solid block with a diagonal line from top left to bottom right. Shade in the lower left area and tell them that's the amount of interest they pay over time. the other is the captial). This helps people understand both how complicated mooney can be and how banks make there money.

Oh the fact I'm know to be very good with money also persuade people round to my way of thinking.

You just need to know a few good facts and a couple of good come backs and you'll win. But if by now you don't have an answer to the 'rent is dead money' argument then don't bother.

Wouldnt mind seeing your graph.

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Well, technically that is correct.

Almost, technically our currency is always reinflated and always devalues. Gold or houses don't rise in value, sterling drops in value.

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Almost, technically our currency is always reinflated and always devalues. Gold or houses don't rise in value, sterling drops in value.

That seems like quite a wrongheaded way of looking at things since if sterling has fallen then prices of everything would have 'risen' at the same pace. This clearly hasn't happened so it's more accurate to say that the price of houses has risen.

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That seems like quite a wrongheaded way of looking at things since if sterling has fallen then prices of everything would have 'risen' at the same pace. This clearly hasn't happened so it's more accurate to say that the price of houses has risen.

Yes, inflation is just 2% ;) However, you do have a valid point, this mass injection of liquidity has been remarkably contained so far, the money has been primarily pumped into the housing market, more money (or borrowing potential) is chasing essentially the same stock of properties, hence hyper-inflation of property. However, creating almost one trillion pounds worth of mortgage debt out of thin air is the essense of inflation and devaluation!

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We had one of those office discussions about house prices, me, the MD, sales director and technical director. He is a summary of what was thrown at me:

- in the long term house prices always rise

- irrespective of being at a peak, even if they dip, and you sell low, the next house you buy will be low in price also

- i don't think it's a bubble - we have a strong UK economy and a strong global economy

- my parents said £10k was a lot of money when they first bought, and when i took my mortgage i thought it was a lot of money, but you'll be earning 100k when wage inflation catches up in 20 years

- property is an asset, you can't lose money buying into property

- renting is throwing your money away

I did retort with the amount of debt, consuming borrowing, irresponsible lending, multiple home ownerships etc etc... but they were adament a house is an investment and you can't go wrong.

I disagree, when a mortgage represents 2/3rd of my income there's a problem, with high-cost of living and no sensible leyway for a rise in interest rates how can that be sensible. It feels like the late 80s.. and we all know what happened then. People borrowing more than they can afford...

I'm quite tired with the whole debate now.... but there you have it... people believe this to be the case. The technical director however is buying a shared-ownership property, and he lost everything in the late 80s, he agreed with me in principle about the lapse lending, debt, and that house prices are ludicrously over priced... but yet he is buying ? I told them about the btl brigade, but they went on about demand for housing.... etc etc etc

Sorry hardly an eloquent debate or post... just thought i would share

LS

All of those statements have been true in the past 20 years and more. If I had not believed those sentiments a few years ago and acted upon that belief, I would today be struggling to buy.

The real debate is which if any of those statements are true now, and in the next 5-10 years, or to what extent.

From my own viewpoint, would I do now what I did a few years ago (ie throw all my savings into my first home?). Probably, but with caution!

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Stop whinging and moaning about high house prices and go ahead and buy a house. High houses prices is something you will have to live with and there is no point in wishing for lower house prices because house prices will remain high for the foreseeeable future and there is nothing you can do about it so stop complaining about it you whinger and loser.

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Guest Winners and Losers

I always get 'low inflation' and 'shortage of land' responses. Maybe we are in a new ball park? High house prices here to stay and instead of prices falling, more creative ways will be invented to facilitate buying? Just a thought, no need to shoot me down in flames ffs. :rolleyes:

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Stop whinging and moaning about high house prices and go ahead and buy a house. High houses prices is something you will have to live with and there is no point in wishing for lower house prices because house prices will remain high for the foreseeeable future and there is nothing you can do about it so stop complaining about it you whinger and loser.

what about those who cant afford too buy one you thick ****

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Guest Winners and Losers

what about those who cant afford too buy one you thick ****

Ignore him, everyone else does. ;)

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We had one of those office discussions about house prices, me, the MD, sales director and technical director.

The problem with people who's job title ends in 'director' is that they really haven't a clue what it's like to survive on ordinary wages. I shell out approximately 5.3% of my take-home pay just on gas bills, for example. So a 30% rise is a big blow to me. Add electricity rises, water rises and council tax rises and there's a big problem. But to a company director a 30% rise in their gas bill is such a minute proportion of their wage that they don't even notice. What Company directors have to recognise is that most people aren't company directors so while they can't see that property prices are unsustainably high there are hundreds of people, for each one who can't, who can.

The HR director where I work thinks I should be greatful for my 'inflation busting' 3% pay increase, yet the cost of living erodes my take-home pay more and more every year. For him a 3% pay rise represents a massive amount of money, so how can he understand the issues that 'normal' people face?

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Guest Winners and Losers

The Deputy CEO where I work said, when I suggested that there might be a HPC, 'don't you read the papers'. I said 'what, and believe all the VI spin', he said 'not if you read a good paper, like the Guardian'. :lol:

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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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