Stop Torturing Yourselves

[BoomBoom]

I too used to think a HPC was inevitable, but countless false dawns later and I realise that it just isn't going to happen. The market is rigged to support high prices and continued growth. Nothing is going to stop HPI because everything depends on it. Our economy will be utterly destroyed, quality of life eroded beyond recognition, and we'll end up living in a country that has far too much in commom with North Korea. All this will come to pass, but the HPI express will roll on. Look at what's been happening on the markets recently, and yet house prices not only failed to fall as a result, they continued to rise!

[Zzzzzzzzzzzzzzzzzzzzzzzzzz]

I admit it's amazing that house prices are falling in various parts of the UK and down by as much as 40% in the USA, but a 40% drop in real terms is the equivalent to a 40% rise in real terms, over the life of the mortgage, if you wait and invest for the long term, so I agree that the only way is up and anyway all this talk of falling house prices is bad for the economy anyway, so everyone needs to stop talking house prices down - in the interest of the future of this country.

Edited August 19, 2007 by gruffydd

[Guest Bart of Darkness]

Had a bad night BB?

[LittleBro]

Had a bad night BB?

...or a few to many sherberts?

[pootle]

I too used to think a HPC was inevitable, but countless false dawns later and I realise that it just isn't going to happen. The market is rigged to support high prices and continued growth. Nothing is going to stop HPI because everything depends on it. Our economy will be utterly destroyed, quality of life eroded beyond recognition, and we'll end up living in a country that has far too much in commom with North Korea. All this will come to pass, but the HPI express will roll on. Look at what's been happening on the markets recently, and yet house prices not only failed to fall as a result, they continued to rise!

Does not compute, does not compute, does not compute. 6+2=Banana.

[Bingley Bloke]

I too used to think a HPC was inevitable, but countless false dawns later and I realise that it just isn't going to happen. The market is rigged to support high prices and continued growth. Nothing is going to stop HPI because everything depends on it. Our economy will be utterly destroyed, quality of life eroded beyond recognition, and we'll end up living in a country that has far too much in commom with North Korea. All this will come to pass, but the HPI express will roll on. Look at what's been happening on the markets recently, and yet house prices not only failed to fall as a result, they continued to rise!

All very good... but it isn't me that's torturing myself, it's those responsible for my wage only being one third of what it needs to be to afford a home... and to anyone who replies 'get a better paid job'... okay... show me one and I will.

[BoomBoom]

Had a bad night BB?

Not at all. This post is consistent with my position on a HPC as of the last few months. I'm not turing bull in as much as I happen to think that destroying our economy to prop up the housing market is a bad thing, but the reality of what is going on is plain for all to see. How loing have people on this site been predicting a HPC? Not only has that failed to materialize, but prices haven't even stop rising.

[Zzzzzzzzzzzzzzzzzzzzzzzzzz]

I admit it's amazing that house prices are falling in various parts of the UK and down by as much as 40% in the USA, but a 40% drop in real terms is the equivalent to a 40% rise in real terms, over the life of the mortgage, if you wait and invest for the long term, so I agree that the only way is up and anyway all this talk of falling house prices is bad for the economy anyway, so everyone needs to stop talking house prices down - in the interest of the future of this country.

[BoomBoom]

All very good... but it isn't me that's torturing myself, it's those responsible for my wage only being one third of what it needs to be to afford a home... and to anyone who replies 'get a better paid job'... okay... show me one and I will.

Welcome to modern Britain. The market it and those driving it don't care about you or your ability to afford a home. Their reply would be' rent humble serf, and less of your insolence'

[pootle]

I admit it's amazing that house prices are falling in various parts of the UK and down by as much as 40% in the USA, but a 40% drop in real terms is the equivalent to a 40% rise in real terms, over the life of the mortgage, if you wait and invest for the long term, so I agree that the only way is up and anyway all this talk of falling house prices is bad for the economy anyway, so everyone needs to stop talking house prices down - in the interest of the future of this country.

[DabHand]

I too used to think a HPC was inevitable, but countless false dawns later and I realise that it just isn't going to happen. The market is rigged to support high prices and continued growth. Nothing is going to stop HPI because everything depends on it. Our economy will be utterly destroyed, quality of life eroded beyond recognition, and we'll end up living in a country that has far too much in commom with North Korea. All this will come to pass, but the HPI express will roll on. Look at what's been happening on the markets recently, and yet house prices not only failed to fall as a result, they continued to rise!

So what your saying is there wont be any nominal falls in house prices, even if it means the pound has to become completely worthless. I look forward to the day our new Chinese masters come and visit us on Pov-Safari. We can offer up our worthless scrip for them to scrape their ar5es with whilst thanking them for spitting in our faces thus providing us with the most nutritious meal we've had that week.

Or something?

[BoomBoom]

Does not compute, does not compute, does not compute. 6+2=Banana.

You can take the boy out of Ulster, but not the Ulster out of the boy. HPI is not precluded by a defunct economy, the current boom being evidence of this.

[needle]

I too used to think a HPC was inevitable, but countless false dawns later and I realise that it just isn't going to happen. The market is rigged to support high prices and continued growth. Nothing is going to stop HPI because everything depends on it. Our economy will be utterly destroyed, quality of life eroded beyond recognition, and we'll end up living in a country that has far too much in commom with North Korea. All this will come to pass, but the HPI express will roll on. Look at what's been happening on the markets recently, and yet house prices not only failed to fall as a result, they continued to rise!

1 -

How long do you think a HPC of 30% would take?

Did you expect to wake up one morning and the headlines read 'HPs fall by 30%'?

If that did happen it would take at least 3 years and people wouldnt even realise it for 5 years afterwards.

Indeed many people - pensioners who had paid their mortgage off - wouldnt even notice it had happened.

Your unrealistic expectations were ridiculous to begin with.

2-

Are you seriously suggesting that one month of SM problems would cause a HPC?

Even in the legendary 1929 crash HPs took years to fall and we are nowhere near that type of event.

The 'economy' is made of of several interdependanet things - employmeny, IRs, tax policy, HPs, productivity figures - its not just 'one thing'.

What you are seeing now are a few dominoes falling in very, very slow motion - credit, housing, jobs.

It will be a long, long time before this comes through in HPs (but it will happen).

If the 'crash' comes this year are you prepared to wait another 5 years for the bottom?

If not, then you (and anyone else waiting for an overnight crash) wasted your time on this site.

[BoomBoom]

So what your saying is there wont be any nominal falls in house prices, even if it means the pound has to become completely worthless. I look forward to the day our new Chinese masters come and visit us on Pov-Safari. We can offer up our worthless scrip for them to scrape their ar5es with whilst thanking them for spitting in our faces thus providing us with the most nutritious meal we've had that week.

Or something?

In essence. The East shall have the last laugh, the loudest and the longest.

[BoomBoom]

1 -

How long do you think a HPC of 30% would take?

Did you expect to wake up one morning and the headlines read 'HPs fall by 30%'?

If that did happen it would take at least 3 years and people wouldnt even realise it for 5 years afterwards.

Indeed many people - pensioners who had paid their mortgage off - wouldnt even notice it had happened.

Your unrealistic expectations were ridiculous to begin with.

2-

Are you seriously suggesting that one month of SM problems would cause a HPC?

Even in the legendary 1929 crash HPs took years to fall and we are nowhere near that type of event.

The 'economy' is made of of several interdependanet things - employmeny, IRs, tax policy, HPs, productivity figures - its not just 'one thing'.

What you are seeing now are a few dominoes falling in very, very slow motion - credit, housing, jobs.

It will be a long, long time before this comes through in HPs (but it will happen).

If the 'crash' comes this year are you prepared to wait another 5 years for the bottom?

If not, then you (and anyone else waiting for an overnight crash) wasted your time on this site.

Overnight! This site and those that frequent it have been predicting huge drops in house prices for years.

[Cptkernow]

Look at what's been happening on the markets recently, and yet house prices not only failed to fall as a result, they continued to rise!

Are you kidding me?

The markets have only shown any signs of bearishness in the last week or so. Do you seriously expect that to have manifested in house prices already?

Credit has become more expensive regardless of central bank medaling. This spells the end of HPI.

[Toxic Teds Ghost]

All very good... but it isn't me that's torturing myself, it's those responsible for my wage only being one third of what it needs to be to afford a home... and to anyone who replies 'get a better paid job'... okay... show me one and I will.

I get paid three times what I used to and bought and sold a house within six months making £35k - its all there if you look hard enough perhaps you are better off just being miserable. I am renting at the moment as there are enough marginal idiots to get their fingers burnt to make waiting an option as people panick but there isnt going to be a wipe out and if you think that you will remain miserable for a long time indeed.

[Goldfinger]

BoomBoom -- HPI died a silent death in the early morning hours of 09/08/07, when European banks stopped lending to each other. When banks stop lending to each other, there is not much money for mortgages either. The consequences are dire, the first thing we will see is the spread between the base rate and mortgages widen considerably (already happening, as posted here on HPC). With IRs above 6%, HPI has no future in the UK. From here, we will go downwards, the stats will show it towards the end of the year, I assume. Any overnight expectations must be disappointed, since HP-cycles last 18 years, so, it's 9 years from here to the through, although I'd expect good deals possibly as soon as in 2 years.

[Fairies Wear Boots]

Sticky downwards. I hate that term. I wanna buy a house now!

[yellerkat]

Sticky downwards.

But they are, that's the problem. When the glue finally parts though...

[ebob]

BoomBoom -- HPI died a silent death in the early morning hours of 09/08/07, when European banks stopped lending to each other. When banks stop lending to each other, there is not much money for mortgages either. The consequences are dire, the first thing we will see is the spread between the base rate and mortgages widen considerably (already happening, as posted here on HPC). With IRs above 6%, HPI has no future in the UK. From here, we will go downwards, the stats will show it towards the end of the year, I assume. Any overnight expectations must be disappointed, since HP-cycles last 18 years, so, it's 9 years from here to the through, although I'd expect good deals possibly as soon as in 2 years.

Goldfinger, I hope you are right, but suspect the authorities will find a way to continue the scam. I think BoomBoom is trying to say, that the much prophesised crash simply hasn't happened and given the market interference, is unlikely to.

I entertain such thoughts these days after being a bear for many years.

Ebob

[lets get it right]

so everyone needs to stop talking house prices down - in the interest of the future of this country.

On the contrary, this country has no future UNLESS house prices come down.

I have often posed a question on this forum but no-one has managed to answer it. Perhaps you can.

A 3 bed semi in any of the moderately pleasant Outer London suburbs costs about 350k.

An average youngster is leaving school this summer aged 18.

How will that average youngster ever be able to afford a 3 bed semi?

For me that question is the crucial issue in the whole house price debate. Sure the market has risen higher and for longer than I expected. I have been surprised at just how stupid and desperate people must be - taking on massive mortgages to get on, and climb up, the ladder.

But we all know what has happened so far. Interest rates dropped to a 50 year low and because of the universal desire to own property - or own a nicer property - people started borrowing more and more. Then FTBs got priced out but BTL investors took their place. But while house prices have gone up rents have not and yields are now truly pathetic. Only thing keeping BTL going is the fact that there are still a million sharks out there enticing more mugs into the water with a promise of eternally rising prices - and, of course, the media and banks working overtime to keep the market afloat.

So here is the question.

How will anyone who is not currently a property owner ever own a 3 bed semi? Or put another way - How will the generation leaving school today ever afford their parents houses.? I look forward to your answer.

Please provide a worked example of how an 18 year old now might, for example, buy his first flat at 25 and work his way up the ladder to own a 3 bed semi by the time he is 35. Please show his deposit, his first mortgage, the mortgage needed to take the next step up etc - You can assume further property inflation or not - it's up to you.

Simple fact is - a youngster of 18 now will need a 350k mortgage to buy a 350k 3 bed semi. He starts with no equity (apart from a deposit which will be eaten by stamp duty and moving costs as he moves up the ladder) so will need, eventually, to borrow the full price of whatever property he eventually 'owns'.

Here are some figures to start you off - assuming 0% house price inflation.

Average lad buys first flat - priced £180k when he is 25. He puts in 10% deposit and on an average wage of 25k can only manage it with a 6.5 times interest only mortgage.

Sells flat when he is 30 - flat hasn't gone up in value - buys 2 bed terrace for £270k. Only way he can go up the ladder is to borrow more so he adds 100k to his £162k mortgage - 90k to cover the gap between 180k and 270k and 10k for the estate agent, solicitor, HIP and Stamp Duty.

5 years later he decides to move up and has to add another 85k to his £262k mortgage to end up at £347k mortgage. Assuming 2% wage inflation blah, blah, he is going to need to be earning way above the average wage to service that mortgage.

If you were to factor 10% per annum HPI into the equation, I can't be bothered to work out the exact numbers but the 350k semi would be worth 907k after 10 years and making the step up in two leaps would, I guess, require a mortgage of at least half a million.

And all the while we're competing in global markets. How could we allow wages to rise to service those mortgages? We wouldn't have an economy left.

That's why, despite HPI lasting longer than most people thought possible, it CANNOT go on forever.

Edited August 19, 2007 by Lets' get it right

[yellerkat]

Ladies and Gentlemen, I give you Roger Bootle in the FT.

Edited August 19, 2007 by yellerKat

[cells]

It is quite possible that the BOE will drop rates by a percent or so, this will just about save the housing market and cause stagnation for a long time.

If that happens we will get a crash, but not in real terms. Everything will get more expensive except house prices.

[Converted Lurker]

Overnight! This site and those that frequent it have been predicting huge drops in house prices for years.

Has 'it' have 'they'?