It's The Middle Classes, Doctors And Accountants...

[AvidFan]

Caught this 7 minute segment this morning. Worth watching for the second interview with a debt advice agency representative.

Listen to the interviewer's surprised "!! a month?!?" response at the start and the mortgage reset statistics they're monitoring...

Sounds as though the city is being pushed over the edge - listen to the part about the Bear Stearns fallout and 1m mortgage resets a month.

Conclusion: We've priced our houses out of the market and the economy is going down the tubes.

Remember to salute on the way down, stiff upper lip and all that.

Edited May 18, 2008 by AvidFan

[The Masked Tulip]

Well done - that is the item I was referring to in my Boom or Bust thread that I have just posted.

[The Masked Tulip]

Interesting comment from the Sky Interviewer asking whether people can now afford to live in Britain?

That is a question we have been asking on here for a few years but it is now becoming mainstream. Goes on to ask if we have priced ourselves out of living in modern Britain.

[AvidFan]

This debt advice chap just laid it on the line... a wave of liquidity that meant people could borrow as much as they liked as long as they could afford it and now they can't refinance to something they can afford. Poetic in its simplicity.

Edited to add: We've just had the "Roaring Twenties" all over again.

Edited May 18, 2008 by AvidFan

[The Masked Tulip]

100,000 cases of debt PER MONTH.

Hang on, I need an eric moment

100,000 cases of debt PER MONTH!

At the end the chap says that he expects to see small falls in London prices in 2009. Oops, Chelsea, Knightsbridge, Notting Hill are already falling as are other places in London.

[ziknik]

Why does he think it will take a 1.5 years to see percentage drops in London house prices. We have got them already haven’t we?

Edit to add: According to Nationwide data, we have already had a 2.3% drop in property prices in London (nominal)

Edited May 18, 2008 by ziknik

[The Masked Tulip]

Is it, particularly with property, that we have priced ourselves out of modern living?

Yep, in a nutshell.

[AvidFan]

Interesting comment from the Sky Interviewer asking whether people can now afford to live in Britain?

That is a question we have been asking on here for a few years but it is now becoming mainstream. Goes on to ask if we have priced ourselves out of living in modern Britain.

I think it's a symptom of human competitiveness. That's the reason monetary expansion works - one-upmanship, pride, jealousy and red-mist. If we were all a little bit more like the Japanese, we’d learn to reject aspirational lifestyles.

[blackhole]

Interesting comment from the Sky Interviewer asking whether people can now afford to live in Britain?

You can, its just a case of balance. Do you really need and afford that BMW X5, or can you suffice with something smaller? Can one really afford to buy designer stuff?

What Richard said in the video, was basically people were living on the edge with all their consumption and not thinking 'what if interest rates go up' or 'what if I dont get my bonus?'. Too much denial in their own financial planning (or lack of) it appears.

[Darkman]

It still surprises me how many flash cars you see on the roads. Just seems to be far too many. Anecdotal sure, but I think it's true. I wonder how many are financed by pure debt? Audis, BMWs etc. This country is wealthy apparently, but not *that* wealthy.

http://news.bbc.co.uk/1/hi/uk/7406752.stm

[Prof]

Blimey ! I didn`t know I was being "financially naive", when I didn`t take on lots of debt. Silly me. I just thought that taking on debt might lead to me having to seek debt councelling, should I suffer a change in circumstances. Oh, how I wish I had borrowed lots and had some "fun".

[blackhole]

It still surprises me how many flash cars you see on the roads. Just seems to be far too many. Anecdotal sure, but I think it's true. I wonder how many are financed by pure debt? Audis, BMWs etc. This country is wealthy apparently, but not *that* wealthy.

At work , I'm offered a decent discount on a car of my choice. Even though £200/month is realistically affordable, the thought of being committed to that amount over 3-4 years makes me feel ill!

I dont know how people can do it with even more expensive monthly payments and live with themselves, knowing if they dont have any savings and lose their jobs, what position they'd be in...

As for flashy cars, I too just look at them and think "Liar loans". Updated my details on my barclaycard lately and asked if I needed to prove my income. They replied "nope, we'll just take your word for it". I couldnt believe it...

[AvidFan]

Blimey ! I didn`t know I was being "financially naive", when I didn`t take on lots of debt. Silly me. I just thought that taking on debt might lead to me having to seek debt councelling, should I suffer a change in circumstances. Oh, how I wish I had borrowed lots and had some "fun".

I forget the origins of this, but there was a study that surfaced about 2 years ago that had managed to calculate the precise ratio of debt to income you needed to attain maximum happiness. Don't ask me what the result was, I can't remember. Presumably they were basing it on necessities that allow your life to progress like a basic house where you could raise a family and derive happiness from that, rather than the debt to income ratio required for an "instant cure to instant discontentment" credit-junkie lifestyle...

[payback period]

It still surprises me how many flash cars you see on the roads. Just seems to be far too many. Anecdotal sure, but I think it's true. I wonder how many are financed by pure debt? Audis, BMWs etc. This country is wealthy apparently, but not *that* wealthy.

http://news.bbc.co.uk/1/hi/uk/7406752.stm

Agree. According to a BMW salesman in Kent that one of my relatives spoke to last year, they rarely sell a car for cash these days and the majority are leased.

[thirdwave]

It still surprises me how many flash cars you see on the roads. Just seems to be far too many. Anecdotal sure, but I think it's true. I wonder how many are financed by pure debt? Audis, BMWs etc. This country is wealthy apparently, but not *that* wealthy.

http://news.bbc.co.uk/1/hi/uk/7406752.stm

Perhaps a sign of the times but I have noticed very few '08' reg cars on the roads in my corner of the south east..

[Brightwell]

I think it's a symptom of human competitiveness. That's the reason monetary expansion works - one-upmanship, pride, jealousy and red-mist. If we were all a little bit more like the Japanese, we’d learn to reject aspirational lifestyles.

Spot on.

To quote the interviewee: 'Consumers are inpatient these days, they see something they want and they buy it, they become dissatisified with their lifestyles and they almost feel that if they are not having credit they are being financially naive'.

So many people I know are exactly like this and are going to get found out.

Think I'll just keep on renting my nice little place in the country, driving a crap old car and swelling the coffers every month - quietly content in my naivety.

[Guest Skint Academic]

At work , I'm offered a decent discount on a car of my choice. Even though £200/month is realistically affordable, the thought of being committed to that amount over 3-4 years makes me feel ill!

I think businesses want to tie their employees into working for them. I got shafted after three years in university when I moved from Scotland to the south coast of England for a job. The company paid the moving expenses and I very soon realised after starting that they had lied about the kind of job I was going to be doing. I couldn't leave though as I had to pay back those moving expenses. Even after a year I still had to pay back 75% of it but I had had enough. It was the worst mistake I ever made.

[crouch]

Agree. According to a BMW salesman in Kent that one of my relatives spoke to last year, they rarely sell a car for cash these days and the majority are leased.

If you took all the company owned cars off the road you'd have very quiet roads.

[blackhole]

I think businesses want to tie their employees into working for them. I got shafted after three years in university when I moved from Scotland to the south coast of England for a job. The company paid the moving expenses and I very soon realised after starting that they had lied about the kind of job I was going to be doing. I couldn't leave though as I had to pay back those moving expenses. Even after a year I still had to pay back 75% of it but I had had enough. It was the worst mistake I ever made.

Realised myself.

When I was on placement, I remember hearing how the technical staff asked for an MS SQL DBA, yet HR felt the need to seek Oracle DBAs. Learned back then that HR simply havent got a clue, so I need to make sure myself.

I'm just out of uni too and was very very thorough with my current employer based on the above experience, so I'm being very careful taking any training courses or perks that tie me into the place till I'm sure this is the place for me.

[chichi]

Is it, particularly with property, that we have priced ourselves out of modern living?

Yep, in a nutshell.

So how cheap would houses have to be to compete with China?

[TeddyBear]

How odd that at the end he should say."prices won't fall in London, not yet, maybe 1 or 2%".....what's his vi in saying that? Perhaps worried that his IVA clients will have sales forced on them if the creditors think that their main asset is going to be shrinking fast? Interesting because he was talking so much sense up until then.

[AvidFan]

So how cheap would houses have to be to compete with China?

Look at the GDP in PPP (purchasing power parity) tables on Wikipedia. We're already poorer than a lot of other developed and developing economies, including China. That includes the cost of goods and services (houses and rents) in the economy versus our ability to pay for them.

I often wonder whether there's a game-plan somewhere that involves the UK having a currency that skims along above the "over-valued / under-valued" line requiring us to sell more and more of our businesses and infrastructure while also having overpriced goods and services that mean our overall standard of living is lower than many other countries.

[AvidFan]

Perhaps it's a way of integrating the UK with the rest of the world. A kind of reclaiming of the empire by stealth. Who knows?

[cells]

So how cheap would houses have to be to compete with China?

if planning laws where lax, a house would cost just above materials & labour.

that would be something like £50k for a 3bed house in most parts of the country.

or.... got for a lovely timber home. and for £50k you will have a massive 5 bed detached for £50k

[Fudge]

People living middle class lifestyles on working class income.

Maybe they are working class then.

I read in one of the articles a woman who described herself as middle class had her house repossessed said her father worked down the pit. They are all Hyacinth Bucket people from Keeping up Appearances.

Oh no I cant be working class, if I cant be middle class I will have to kill myself.