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pobby

What The Heck Changed?

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Something that has puzzled me for a long while is the apparent change in peoples attitudes.Up to before the great house price inflation imho folks seemed to have a different take on money.People saw money as the thing that was in your pocket/bank account.Now it`s something called equity.

Houses went up steeply in the 80`s.I kind of remember there was something of a realease of equity then but as I recall it was used for home improvements.I witness in my own family crazy borrowings.Mum and Dad do a bit of release and buy a car,holiday and so forth.That`s then followed by the kids taking out ill afforded loans to buy cars{at a very high rate of interest.It`s like it`s not real money.

Friends with IO mortgages,one as high as £300k,with no real means of paying off the debt.Some still thinking that their properties are still rising at an alarming rate.I`m of an age where I am almost mortgage free but I am terrified of what will happen when the crash comes.Homes are imho well overpriced.The average wage they say is £25k per annum.You won`t find many jobs here in the west country paying anywhere near that amount and yet we are the 3rd{I think} most expensive part of the country.This is indeed the economics of the mad house!

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To those expecting a crash this behaviour may seem insane, but what those folks really believe is that house prices will continue to go up! They don't expect that they ever have to repay the debt with their hard earned money. Their houses will pay for it because prices will soon continue to go up and they have new equity. house prices have increased for 25 years, with a small interuption, so why should this change? they already spend the equity that they expect their houses will build in the future.

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I think it is possible that house prices will increase at above the rate of inflation virtually indefinitely. I am not saying that is necessarily what will happen, but it is possible because money to buy houses can be passed from one generation to the next. People spend their lives climbing the property ladder then when their last house(s) is sold and any outstanding mortgage paid off, at least some of the proceeds are typically passed to the next generation who typically use it to help move up the property ladder, the rest of the money going on old age care and/or inheritance taxes. So the total amount of money, in real terms, which is spent on buying houses increases generation after generation, but the number of houses in the country remains fairly constant, so the price of each house must crash - they will rent forever, as will their offspring.

With tongue only slightly in cheek.

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Something that has puzzled me for a long while is the apparent change in peoples attitudes.Up to before the great house price inflation imho folks seemed to have a different take on money.People saw money as the thing that was in your pocket/bank account.Now it`s something called equity.

Houses went up steeply in the 80`s. I kind of remember there was something of a release of equity then but as I recall it was used for home improvements.I witness in my own family crazy borrowings.Mum and Dad do a bit of release and buy a car,holiday and so forth.That`s then followed by the kids taking out ill afforded loans to buy cars at a very high rate of interest.It`s like it`s not real money.

Friends with IO mortgages,one as high as £300k,with no real means of paying off the debt.Some still thinking that their properties are still rising at an alarming rate.I`m of an age where I am almost mortgage free but I am terrified of what will happen when the crash comes.Homes are imho well overpriced.The average wage they say is £25k per annum.You won`t find many jobs here in the west country paying anywhere near that amount and yet we are the 3rd{I think} most expensive part of the country.This is indeed the economics of the mad house!

I think you need to read the article from last Saturday's Times listed elsewhere in this forum.

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Guest Bart of Darkness

i think there is a good chance we will follow Japan with mortgages being passed onto children, etc....unfortunatley :(

Could you be held accountable for a debt taken out before you were born? Seems a bit unfair to me.

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I think you need to read the article from last Saturday's Times listed elsewhere in this forum.

Do you have a link please.In fact I did buy The Times last Saturday but can`t remember much about housing issues.

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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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