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Chriso

How Did We Manage To Screw Things Up So Royally

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Just been pondering on something through a discussion with my workmates on the housing boom. This boom has left 90%+ of people up the creek.

My argument was this, regardless wether we are in boom or bust, house prices are relative, so lets say a £100,000 house after 20% growth is worth £120,000 and another nicer house was worth £150,000 is now worth £180,000.

A person, lets call him Bob, buys a house for £100,000 but wants to live and ultimately retire in the £150,000 house. Lets play out two scenarios. The first is a 20% growth over 6 years.

So Bob, buys his £100,000 house 6 years ago, manages to pay off £20,000 on the mortgage, so now when he comes to move into his dream home, he has a £40k deposit (20k morthgage repayment and 20k growth) on his £180,000 property and has £140,000 to pay off until he retires, and newcomers ot the market can afford to get on the 'ladder' with relatively cheap starter homes.

The second scenario is what has happenned to this pighole of a country, 300% growth - Bob, buys his £100,000 house and pays off £20k equity, however in 6 years time, his house is worth £300,000!. Bob is happy! He has 'made' £200,000 plus the £20k he has paid off so he thinks it would be a great time to move into that dream home. Because house prices are always relative, the £150,000 home is now costing £450,000, so he puts his meaty £220,000 deposit on the house, and is left with a £230,000 mortgage till he retires. His kids can't move out because no-one can afford the prices and Bob wonders how he is so skint every month.

The only winners are the sellers uppers and the downsizers, this boom is bad news for nigh on EVERYONE! The muppets at work can't seem to see that though.

Sod this, I'm off to Germany!

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everyone is a winner if salaries/inflation is running at 20% per year, lets say bob earns 28k....

In 6 years :

3% wage inflation bob earns 32,459

20% wage inflation bob earns 69,672

If wage inflation is running side by side with houseprices the property 'ladder' works, if

wage inflation returns the property ladder returns, if wage inflation stops no more

property ladder.

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everyone is a winner if salaries/inflation is running at 20% per year, lets say bob earns 28k....

In 6 years :

3% wage inflation bob earns 32,459

20% wage inflation bob earns 69,672

If wage inflation is running side by side with houseprices the property 'ladder' works, if

wage inflation returns the property ladder returns, if wage inflation stops no more

property ladder.

The market is F@cked for one reason . GREED. Sadly most of us are guilty. It was alway's going to come to this. No FTB's , no market

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everyone is a winner if salaries/inflation is running at 20% per year, lets say bob earns 28k....

In 6 years :

3% wage inflation bob earns 32,459

20% wage inflation bob earns 69,672

If wage inflation is running side by side with houseprices the property 'ladder' works, if

wage inflation returns the property ladder returns, if wage inflation stops no more

property ladder.

When was the last time salaries rose at 20% a year!?

I'm lucky if I get 2%

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When was the last time salaries rose at 20% a year!?

I'm lucky if I get 2%

I'm getting 0% this year. Effectively a pay cut after inflation !!!

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The market is F@cked for one reason . GREED. Sadly most of us are guilty. It was alway's going to come to this. No FTB's , no market

As I've said so many times for years on this site - the "Housing Market" is just a giant Pyramid Selling Scam.

And the absolute key for ever-rising "prices" has been the torrent of easy credit - freely handed over bythe Moneylenders. The ESSENTIAL Factor behind the 3-4 times increase in prices over a mere decade is the fact is that the MONEYLENDERS have deliberately cooked the books - the more they lend the more they make - BOTH in interest terms AND on THEIR OWN "portfolios" of properties - and don't kid yourself that the almagamated VESTED INTERESTS all have a large finger in the pie accross the board - the Moneylenders, the Estate Agents, the "Developers", "Investors", ALL of these parties' friends in "Public Relations" WHO WRITE the newspaper articles, who DETERMINE the TV programmes/"News" items - etc etc. - are basically all playing the same game in tandem/in a co-ordinated way - with the same goal of ramping up "prices" - (when often this is a lie!) - hence the amazing amounts of PR, tv programmes, "articles" in the media bla bla bla - THEY ARE ALL DOING ONE THING: TALKING IT UP.

The Moneylenders [Mortgage Co's, Banks, etc.] have SET THE "MARKET" PRICE of housing, and will continue to do so. THEY LEND THE BUYER THE SUM OF MONEY with "no questions asked". AND THUS THIS BECOMES THE PRICE OF HOUSING!! They have no scruples about lending ever increasing multiples of salaries, SO THAT BUYERS CAN PAY!! - knowing they can't loose: If the buyer defaults they just re-possess and sell!

By doing this - ratcheting the actual cost ever upwards - they are effectively pushing the average person further and further into the corner, putting a knife to their throat, and "saying pay up or else". But - who cares!! This just makes THEM richer!! PEOPLE NEED TO HAVE A ROOF over their head: The Moneylenders have FAR too much control over this fundamental factor of life. This is an absolutely APPALLING situation - and I think nothing is going to get better unless and until the Moneylenders are reigned in, rent controls are put back in place, and, as in so many far less important sectors of life - there is REGULATION and a REGULATORY BODY - which stops the obvious wicked exploitation right now. There is no better description of the "Housing Market" now as a Price-Fixed Monopoly. It is the average persons biggest item of expenditure by far - and it is subject to no controls whatsoever. It is pure BLACKMAIL out there - there is no proper regulation and fair balance in the bargaining positions of "buyers" and Borrowers in comparison to sellers and the Moneylenders. This factor lies behind the vast increase in the cost of a roof over your head. Immigration, lack of new building, single housesholds... etc. - These factors contribute hugely of course - don't kid yourselves the VI's are quite happy for immigration to just keep on going - I wouldn't be at all surprised if they pull levers to KEEP it going - and much of this is talked up by the PR guys who rub their hands with glee [alongside their pals the Moneylenders] as they instill fear and greed into the national psychie - so that the hapless buyer is bludgeoned into borrowing so much he/she can't eat properly to "get on the ladder" - like lemmings on the cliff edge. It is all just sick. Really sick.

Edited by eric pebble

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As I've said so many times for years on this site ... it is all just sick. Really sick.

Quality rant eric. Good to see you are more sparing with the exclamation marks these days. Nice use of colour.

To the OP: yes, when you explain the widening gaps between rungs you can see people get very uncomfortable. Two questions most homeowners would answer in the negative:

1. Could you buy your curent home at today's prices?

2. Could you afford to move "up the ladder" to a bigger home?

Edited by JustYield

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When was the last time salaries rose at 20% a year!?

I'm lucky if I get 2%

If you're not getting wage inflation, then you're not going to get a real HPC caused by wage inflation effects. Thing is, can you count on nominal falls?

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Guest barebear

As I've said so many times for years on this site - the "Housing Market" is just a giant Pyramid Selling Scam.

And the absolute key for ever-rising "prices" has been the torrent of easy credit - freely handed over bythe Moneylenders. The ESSENTIAL Factor behind the 3-4 times increase in prices over a mere decade is the fact is that the MONEYLENDERS have deliberately cooked the books - the more they lend the more they make - BOTH in interest terms AND on THEIR OWN "portfolios" of properties - and don't kid yourself that the almagamated VESTED INTERESTS all have a large finger in the pie accross the board - the Moneylenders, the Estate Agents, the "Developers", "Investors", ALL of these parties' friends in "Public Relations" WHO WRITE the newspaper articles, who DETERMINE the TV programmes/"News" items - etc etc. - are basically all playing the same game in tandem/in a co-ordinated way - with the same goal of ramping up "prices" - (when often this is a lie!) - hence the amazing amounts of PR, tv programmes, "articles" in the media bla bla bla - THEY ARE ALL DOING ONE THING: TALKING IT UP.

The Moneylenders [Mortgage Co's, Banks, etc.] have SET THE "MARKET" PRICE of housing, and will continue to do so. THEY LEND THE BUYER THE SUM OF MONEY with "no questions asked". AND THUS THIS BECOMES THE PRICE OF HOUSING!! They have no scruples about lending ever increasing multiples of salaries, SO THAT BUYERS CAN PAY!! - knowing they can't loose: If the buyer defaults they just re-possess and sell!

By doing this - ratcheting the actual cost ever upwards - they are effectively pushing the average person further and further into the corner, putting a knife to their throat, and "saying pay up or else". But - who cares!! This just makes THEM richer!! PEOPLE NEED TO HAVE A ROOF over their head: The Moneylenders have FAR too much control over this fundamental factor of life. This is an absolutely APPALLING situation - and I think nothing is going to get better unless and until the Moneylenders are reigned in, rent controls are put back in place, and, as in so many far less important sectors of life - there is REGULATION and a REGULATORY BODY - which stops the obvious wicked exploitation right now. There is no better description of the "Housing Market" now as a Price-Fixed Monopoly. It is the average persons biggest item of expenditure by far - and it is subject to no controls whatsoever. It is pure BLACKMAIL out there - there is no proper regulation and fair balance in the bargaining positions of "buyers" and Borrowers in comparison to sellers and the Moneylenders. This factor lies behind the vast increase in the cost of a roof over your head. Immigration, lack of new building, single housesholds... etc. - These factors contribute hugely of course - don't kid yourselves the VI's are quite happy for immigration to just keep on going - I wouldn't be at all surprised if they pull levers to KEEP it going - and much of this is talked up by the PR guys who rub their hands with glee [alongside their pals the Moneylenders] as they instill fear and greed into the national psychie - so that the hapless buyer is bludgeoned into borrowing so much he/she can't eat properly to "get on the ladder" - like lemmings on the cliff edge. It is all just sick. Really sick.

Not surprisingly I agree with this 200%.The sad thing as mentioned on another post is the young have no incentive to work its all way beyond their grasp even if they are successfull.Sooner or later enough will be enough.How far do we have to go until normal sensible hard working people down tools and refuse to pay the majority of their earnings into their rent and rates.

Rent £600 P/m

council tax £120 P/m

sick pay £ 300 P/m

Total £1020 this is the amount of benefit that can be claimed for a single person where I live.

Equivalent to around £15000 per anum wages.

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If you're not getting wage inflation, then you're not going to get a real HPC caused by wage inflation effects. Thing is, can you count on nominal falls?

Can't you have high general inflation without high wage inflation?

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If you're not getting wage inflation, then you're not going to get a real HPC caused by wage inflation effects. Thing is, can you count on nominal falls?

it's one or 'tother.

so to answer you, if 1 is not on, then yes, the other.

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When was the last time salaries rose at 20% a year!?

I'm lucky if I get 2%

Unlucky, somehow I'm getting 20% over the next 2 years. Dunno how that was agreed but I'm not complaining. The unions finally did some good :D

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Unlucky, somehow I'm getting 20% over the next 2 years. Dunno how that was agreed but I'm not complaining. The unions finally did some good :D

Oh, let me guess, you obviously work in the public sector. <_<

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Can't you have high general inflation without high wage inflation?

It's called 'stagflation', and it's precisely where we're heading right now.

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Unlucky, somehow I'm getting 20% over the next 2 years. Dunno how that was agreed but I'm not complaining. The unions finally did some good :D

public sector parasite?

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Guest Shedfish

yeh, wage inflation... i worked 'in IT' for about 5 years. starting salary 19k. finishing salary 5 years later 20k

at the end it was costing me money to turn up at all.

went self employed, been a very different story.. but that's mainly because i've given up everything, and done 6 or 7 day weeks for as long as i can remember

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yeh, wage inflation... i worked 'in IT' for about 5 years. starting salary 19k. finishing salary 5 years later 20k

Yeah, me too: I started in IT on £22K I think, with assignment allowance took it up to £35K equivalent. That was in 1994. Then I left the following year for a better paying job.

Wages don't appear to have kept up.

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Quality rant eric. Good to see you are more sparing with the exclamation marks these days. Nice use of colour.

To the OP: yes, when you explain the widening gaps between rungs you can see people get very uncomfortable. Two questions most homeowners would answer in the negative:

1. Could you buy your curent home at today's prices?

2. Could you afford to move "up the ladder" to a bigger home?

People at work were saying no to both those questions in 2001.

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Stop your moaning about public sector works.

I think anybody who pays taxes, and thus pays the wages of public sector workers, should be able to moan about them however much the hell they want.

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Stop your moaning about public sector works.

Why? Those of us doing real jobs that earn something for the country via taxes pay for the legions of non-job, public sector spongers. I hate them and our country would run fine-or better-if many of them fell under a very large bus.

S.

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Oh, let me guess, you obviously work in the public sector. <_<

LOL, probably. I work in a Uni so thats kinda half funded by foreign students.

Edited by sm9ai

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Guest Shedfish

Yeah, me too: I started in IT on £22K I think, with assignment allowance took it up to £35K equivalent. That was in 1994. Then I left the following year for a better paying job.

Wages don't appear to have kept up.

in 1994! i'd a sold my soul for that in 94... that is if i hadn't been living in a tent, swimming in the sea every day, night fishing and drinking lots of Tuborg :D

a quick sum on time zones suggests you're having circadian rhythym irregularities?

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  • 315 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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