Monday, Aug 14, 2006

Nonsense

Guardian: Millionaire Britons to rise to 1.7m

Surprise surprise - some unnamed 'experts' reckon we're all going to be millionaires if we all buy property.

Absolutely no justification or even valid reasons for these 'expectations'. The Guardian is really going downhill.

Posted by inbreda @ 10:10 AM (2949 views)
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23 Comments

1. sebastian said...

I still can't believe they keep coming up with this crap. As I have said before, I often jest about how we will all be millionaires (a blatent way of pointing out how flawed the idea of being rich from houses is), yet some morons are now broadcasting it on the radio and making headlines from it...

Perhaps they should change it to, a rise in millionaire mortgage holders...ffs.

Monday, August 14, 2006 10:56AM Report Comment
 

2. denzil said...

This was widely reported on both BBC television and Radio this morning.

Monday, August 14, 2006 11:04AM Report Comment
 

3. inbreda said...

It must depress the hell out of any FTB wannabe who can't tell that it's complete nonsense.

Monday, August 14, 2006 11:15AM Report Comment
 

4. talking rot said...

Well, I can tell that it is complete rot - but it still depresses me. With such sentiment pouring from the Media, property will continue to be seen as THE investment. Money will continue to pile into property and the legacy of Bliar's Britain, sorry, Gordon's Britain, will be a new class structure. The property owners and the non-property owners. Sort of reminds me of early Victorian Britain.

I've recently been looking at property prices in North Yorkshire. If I wanted to live up a windswept dale, miles from anyone else, distant from a pub and a shop, with sheep as the only entertainment, it would still cost me over 220K. The world has gone crazy.

Still no sign of a House Price Crash either.

Monday, August 14, 2006 12:32PM Report Comment
 

5. Inflation Is Eating My Savings said...

The Victorian effect is precisely what is necessary for European monetary integration.
The new class structure is already here. Aspiring middle class hard working 20/30 somethings are not reproducing. Must work. Must be successful. Only the financially comfortable or state fed are conceiving.

Monday, August 14, 2006 12:49PM Report Comment
 

6. Caledonian-emigre said...

I was a millionaire once
- with Turkish lira
- it bought me a coffee at Heathrow airport
Its all relative.

Monday, August 14, 2006 12:50PM Report Comment
 

7. Mattsta1964 said...

Total hogwash!. If there is a big increase in millionaires in the UK, that money will come out of other people's pockets. There will be mulitude of impoverished people to pay for every new millionaire. Seeing as this country produces nothing and thinks house price inflation will proide for retirement and MEW is used as a source of money for everything from new cars to holidays, it is far more likely that a million pounds wont be worth doodly squat in another 10 years. How do they get away with writing such tosh.

Monday, August 14, 2006 12:54PM Report Comment
 

8. inbreda said...

>How do they get away with writing such tosh.

Perhaps all the intelligent journalists moved into property development, leaving inexperienced idiots behind?

Maybe not

Monday, August 14, 2006 01:05PM Report Comment
 

9. Mrmickey said...

As the currency continues to devalue there will be more millionaires. My house has trebled in value since I bought it in 1999, the house hasn't changed it's still the same one I bought 7 years ago I haven't found an oil well in the back garden or a gold mine under the floor boards so why should it go up in value, the only explanation is that somebody has been devaluing the currency. It's called hyperinflation you get it a lot in badly managed economies.

Monday, August 14, 2006 01:31PM Report Comment
 

10. Retiredbanker said...

talking rot-

My wife's cousin sold a very attractive 4 bedroomed detached house near Selby ( "plantsmans" garden, backing onto a waterway, but never been flooded ) for 250k last year.
She needed to downsize as her husband is much older than her, and is starting to experience some
problems with his health.
They have bought a newly build bungalow for 125k in a village close to Goole, and seem to be very
pleased with this property.
Presumably as N.Yorkshire is more scenic it therefore more expensive, but this example does show
that there are properties still within the reach of first-time buyers.

With regard to the Guardian,it is obvious that inflation makes a nonsense of articles such as this.
A case of a journalist having to write something to fill-up the pages.

Monday, August 14, 2006 01:48PM Report Comment
 

11. Ticktock said...

If such an asertion is true, it based upon the likely continuation of the destruction of our currency by the BOE, and has little to do with the actual value of anything.

The 'class structure' mentioned above is nothing new. The class 'struggle' has always existed, and such skirmishes are an inevitable concequence of capitalism. However, what is new, is that educated (previously middle class?) people, are being sucked into the working class pool.
Or put another way, as the 'petty bourgeoisie' are sucked down into the ranks of the 'proletarait', society becomes volitile. The revolutionary potential of the proletariat is greatly enhanced by the swelling of their number, particularly as the 'new comers' have often been trained and skilled by the bourgeoisie themselves. In effect, the bourgeoise create the weapons of their own destruction, as the skills and training that once served capital well, become refocussed upon ending their own servitude, and thus upon ending the historical injustice of bourgeoise rule.

Monday, August 14, 2006 01:49PM Report Comment
 

12. gruppenfuhrer said...

Sorry to go all literary but I was recently waiting for a House Price Crash reading JK Huysman's 19th century novel La Bas which I felt contained some relevant lines to this nonsense above.

"The rules were precise and invariable. Money attracted money, accumulating always in the same places, going by preference to the scoundrelly and the mediocre. When, by an inscrutable exception, it heaped up in the coffers of a rich man who was not a miser nor a murderer, it stood idle, incapable of resolving itself into a force for good, however charitable the hands which would administer it. One would say it was angry at having got into the wrong box and avenged itself by going into voluntary paralysis when possessed by one who was neither a sharper nor an ass.

"It acted still more strangely when by some extraordinary chance it strayed into the home of a poor man. Immediately it defiled the clean, debauched the chaste, and, acting simultaneously on the body and the soul, it insinuated into its possessor a base selfishness, an ignoble pride; it suggested
that he spend for himself alone; it made the humble man a boor, the generous man a skinflint. In one second it changed every habit, revolutionized every idea, metamorphosed the most deeply rooted passions.

"It was the instigator and vigilant accomplice of all the important sins. If it permitted one of its detainers to forget himself and bestow a boon it awakened hatred in the recipient, it replaced avarice with ingratitude arid reestablished equilibrium so that the account might balance and not one sin of commission be wanting.

"But it reached its real height of monstrosity when, concealing its identity under an assumed name, it entitled itself capital. Then its action was not limited to individual incitation to theft and murder but extended to the entire human race. With one word capital decided monopolies, erected banks, cornered necessities, and, if it wished, caused thousands of human beings to starve to death.

"And it grew and begot itself while slumbering in a safe, and the Two Worlds adored it on bended knee, dying of desire before it as before a God."


Possibly a bit dramatic, but I have been waiting a long time to buy a house.

Monday, August 14, 2006 02:02PM Report Comment
 

13. Miniftse said...

Fundamentally I reckon it's true. Ok so it increasingly looks like oil is at $80 a barrel. So we have Inflation or IR rises? Take you're pick, my money is on the governments of the world accepting inflation, so if you can get you're hands on enough debt now, you'll be a millionaire in 10 years time. The government can't raise IR because too many people have too much debt, everything would collapse, so they'll let inflation run it's cause and consequently erode the debt. After 9/11 we should have had a massive depression, we didn't because the governments of the world wished to remain in power, the flooded the world with cheap money, this time to handle inflation they can punish savers or those with massive debt, since more people have debt they will punish savers with inflation. The saavy saver will recognise this anyhow and adjust there portfollios to guard against inflation.

Monday, August 14, 2006 03:04PM Report Comment
 

14. Thesqueeze said...

Wow! This time next year we'll all be millionaires Rodney.

Plonkers! What good is it being a millionaire if it's all wrapped up in bricks and morter? If this happens I bet your average home owner certainly won't be living like a millionaire. The headline is basically saying inflation is going to go through the roof!!!!

No doubt some idiots will see this as good news.

Monday, August 14, 2006 04:02PM Report Comment
 

15. Fastcat said...

It's bad enough that the press revel in such rubbish, but what is the point of the study ? All it's basically saying is that due to inflation (which happens to be house price driven) people's nominal (but not real) wealth will increase so more will be millionaires.......duh?

I think the phrase "millionaire" arose in the 1920's to describe fabulously rich socialites........given a 71% increase in house values 1m buys a 585k house in today's money assuming all the individual's wealth was in their property. I guess that just about still buys a reasonable family semi in some London surburbs.......not exactly Paris Hilton lifestyle !

Monday, August 14, 2006 04:46PM Report Comment
 

16. bidin'matime said...

The CEBR has previously reported that everyone will be able to retire early due to the increased value in their homes. They are idiots and it's a disgrace if the BBC has carried this meaningless rubbish.

Still, good to see some new posters, especially after a quite weekend - I got back from hols and thought you'd all abandoned us!

Monday, August 14, 2006 07:56PM Report Comment
 

17. uncle tom said...

There will be a lot more millionaires if my inflation projections come anywhere near the mark...

Monday, August 14, 2006 08:12PM Report Comment
 

18. Ticktock said...

Miniftse,

I think that summerises the contemporary situation very well indeed.

However,sadly, it also perhaps explains never wavering confidence in the property market too?

Monday, August 14, 2006 09:27PM Report Comment
 

19. bidin'matime said...

But inflation will not prevent HPC, unless it really is runaway inflation, which I can't see the government being able to justify on any grounds.

If the ratio of house prices to earnings is to be restored to its long term average, a very long period of minimal house price increases and significant wage rises will be required. If prices struggle along on the flat then two important factors come into play first the 'buy now or miss the boat' element disappears, which must undermine demand, which will further depress the market. Then the 'wait and see' effect steps in and you have a crash in the making.

Acceptable levels of inflation can't prevent this. House prices are currently about 6 times average wages. If wages continue to rise at 4%, then it will take 14 years to restore the ratio to 3 :1. People will not continue to believe the hype for that long.

If we assume that the public can be duped for say 5 years, it would need 11% wage inflation and zero HPI for this period to restore the ratio. Does anyone really think that the BOE / government would tolerate this level of inflation without significant rises in interest rates?

Monday, August 14, 2006 10:18PM Report Comment
 

20. indiablue19 said...

If the average citizen produced a balance sheet -- assets/liabilities/net worth -- it might be halfway credible to think of property owners as "millionaires" and believe that we could track their existence. [I for one had always thought of a millionaire as someone with a cool mill languishing in the bank.] However it is a bit facetious to claim millionaire status for those who have maxed-out on interest only mortgages, credit cards, and BTL debt pyramids and now hold title to a 900,000 liability. And do we especially care about this tally of millionaires? Is this some demonstration of general economic health or just a measure of growing insanity in balance with concurrent claims of historic debt and loan defaults?

Seems to be just another of those confused, assinine media smoke-screens for the pervasive economic uncertainties. And in this case a sad commentary as well on The Guardian for whom I had had more respect until now.

Monday, August 14, 2006 10:25PM Report Comment
 

21. Me said...

A point about the press. They are VI'd because they want to sell their product, just like any business. Their customers want to read how the property market is safe. When the masses believe that there's a posibility of a crash (and I think that may just be starting to happen) then they'll report that that there could be a crash.

Tuesday, August 15, 2006 12:53AM Report Comment
 

22. Miniftse said...

bidin'matime, I reckon it will be run away inflation, which the government will be very easily able to justify, the alternative would be to raise IR or taxes, and when the country is saddled in debt neither option would be preferable. For me, what I spend my money on, inflation is running at about 15% this last 12 months, I got a 10% pay rise but now have to look for another job because I reckon I need about another 5-10k a year to stay ahead of the game, that's inflation. I've said before, the graph on the main page is often interpereted incorrectly, its prices are ajusted for inflation, if you look at the raw data that doesn't adjust for inflation, you will see inflation has previously masked house price crashes. For example, the graph suggests their was a crash in 79/80 but if you look at the raw data you will see inflation masked it. You also make the assumption that debt should be 3.5:1, but there is little reason to assume this should be the case, a period of history maybe just 60 years in length on which to base your assumption.

I have my fingers crossed for the HPC, but I would bet my house on it (if I had one), no doubt it would benefit everyone.

Tuesday, August 15, 2006 08:28AM Report Comment
 

23. paul said...

Miniftse and bidin,

Prolonged rises in inflation and nominally falling house prices will depress the economy far more than a short sharp drop in house prices - I've said before that if the MPC hadn't stepped in this time last year to prevent house prices crashing, the market would likely have bottomed out about now. What we'll witness now is a far more damaging scenario created by the MPC for the economy where even though consumers reign in spending, inflation keeps rising, unemployment continues to rise and house prices continue to fall.

If they raise rates, the economy plunges further into recession. If the keep rates low, inflation starts hitting dangerously new levels (hyperinflation becomes a very real worry if inflation edges towards 8-9%). The MPC have made their beds, and the markets will expect the government to tackle inflation - remember inflationary pressure has an effect on capital which the HSBCs and Barclays in the UK will not tolerate.

PS. as a side note, look (for example on the BBC website) at the number of public sector pay-related strikes being organized at the moment. That's the sound of millions of workers deciding that the official inflation figures are a meaningless fiddle, demanding higher-than-inflation payrises, the governemtn refusing and the workers striking.

The government won't be able to get away with that for long.

Tuesday, August 15, 2006 01:28PM Report Comment
 

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