Monday, Nov 06, 2006

Newsworthy? Errr, no.

yahoo: Million pound starter home by 2024

Tripe

Posted by inbreda @ 06:40 PM (395 views)
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24 Comments

1. japanese uncle said...

In 1989, those humbugs in Tokyo were loudly predicting the "the advent of the age of Nikkei 40,000 mark", and none seemd courageous enough to challenge this criminally optimistic statement. Millions of amateur investors including Ill-educated/informed housewives that were participating the share market had their fingers (or hands) badly burned. Now the Nikkei as you know stands at around 16,000. The same holds good in the UK property market in 2006.

Monday, November 6, 2006 07:00PM Report Comment
 

2. japanese uncle said...

Correction

'badly burned' should read 'badly burnt'

Monday, November 6, 2006 07:01PM Report Comment
 

3. Dohousescrashinthewoods said...

I think the true value, if any, of the article is in hinting at the absurdity of the very headline it splashes.

7xsalary seems highly unlikely.

"If it looks like a bubble and smells like a bubble.. then it probably is a bubble."

Monday, November 6, 2006 07:02PM Report Comment
 

4. Dohousescrashinthewoods said...

"The bank of mum and dad" only works for one generation - if the kids don't build up equity, (presumably they will need to pay off their parents' MEW instead of their own house because there are no pensions) then which bank of mum and dad will the grandchildren borrow from in 2026?

If we have a HPC, presumably it won't be just the kids who will hit negative equity, but the MEWed-up parents too?

Monday, November 6, 2006 07:09PM Report Comment
 

5. harold said...

JU, 'burned', 'burnt' - both are correct!

Monday, November 6, 2006 08:26PM Report Comment
 

6. denzil said...

Million pound FTB house by 2024 will probably be matched by average 300K per annum salary.

Agree with your first comment. What a stupid article.

Monday, November 6, 2006 08:50PM Report Comment
 

7. inbreda said...

They say that the average wage will be 146,188.

Do you think Gordon and the BoE know this? Cos that would represent some serious inflation. Best increase rates by 0.50 !!!!

Monday, November 6, 2006 09:12PM Report Comment
 

8. Rimmer said...

What dribble, i have just checked the uk average wage and its 447 per week or 23244 PA, even taking wage inflation at 4% it only takes the average wage of 2024 to 905 er week or 47060 PA.

Complete Dribble !!

Monday, November 6, 2006 11:02PM Report Comment
 

9. paolo88888 said...

Dohousescrashinthewoods,

""The bank of mum and dad" only works for one generation ..." I am worried that this is not the case. Every increase in house prices means the buyers now pay more, but the sellers also get more. Newbuild is a small proportion of the housing stock so the housing market consists mainly of passing the same houses around in a closed community of home owners. Include families in that community and the need for the kids to become FTBs can be amply met by the Bank of Mum and Dad selling Grannies retirement flat. Of couse if the community is to grow in size then you might expect newbuild and new money would be required, but it seems that group mortgages and ant-hill homes have dealt with that problem.

So I am worried that this new phenomenon of Bank of Mum and Dad will really take the brakes off of HPI. Suppose that a complete chain of house buyers, from FTBs at the bottom up to granny flat being sold at the top to provide the FTBs with their deposit, met up in a cafe one day and decided to put a zero on their asking prices to make themsleves all feel good? In principal they wouldn't lose out at all, although in practice they would pay ten times or more stamp duty so this wouldn't be a good idea. In fact are we not dependent on stamp duty and inheritance tax to stop us having million pound starter homes in no time at all?

Monday, November 6, 2006 11:58PM Report Comment
 

10. Rubberneck said...

Le Corbusier said "The house is a machine for living in." I think that somewhere along the way we've lost track of this - what other machine would generate such reckless levels of debt and worry?

Tuesday, November 7, 2006 09:30AM Report Comment
 

11. miniftse said...

"serious inflation" at last the penny drops, thats what happens.

Its not as unlikely an outcome as you seem to thinkk it is. I couldnt find average salary data for the last 20 years (after a quick google), but I have a friend who started work in 1987 as a lecturer at the local uni, he started on 7k a year. Today he would start on 28k thats a 300% increase, in another 20 years, another 300% increase and he'll start on 112k, at 7x his 2027 salary he'll be able to buy an 800k house.

Tuesday, November 7, 2006 09:50AM Report Comment
 

12. monty said...

1m starter homes may well be a possibility in 20 years but they're not going to get there without inflation. The same sort of inflation that meant granny's house only cost 5k back in 1970. Speculation like this is a bit daft, especially when they don't mention all the figures (such as inflation) they used in their derivation.

Looking at HPI since 1996 is intellectually dishonest - the graph is exponential (until late 2004.) It's about as useful as looking at the numbers from 1989 to 1994 and predicting that we're all doomed because house prices just keep going down.

Tuesday, November 7, 2006 10:16AM Report Comment
 

13. george monsoon said...

It could happen, but lets hope not.

Only an idiot would believe the government released figures for inflation. The figures published are fudged enough to look acceptable, but not enough to rumble the perpetrators. I am not to sure how the system works, but I would imagine that if inflation was cut too much, then economic growth would stop. Is this correct?

Tuesday, November 7, 2006 10:50AM Report Comment
 

14. inbreda said...

Miniftse - your friends wage inflation covers a period of 15% interest rates. The report may well be right, but the population has never been in so much debt before. If we have to go through 15% interest rates again, then the pain is going to be unbearable. We are not talking 'short recession' we are talking 'major depression'. And house prices? Don't even go there!

Tuesday, November 7, 2006 11:39AM Report Comment
 

15. george monsoon said...

It used to be a forum for people who were "priced out" but it seems more and more that we are discussing the possibility of a complete economic meltdown in the uk.

I would love to understand more about the basic principles of economics. How inflation ties in with interest rates, unemployment etc. and for those of us who aren't from a financial background, what is a Bull and what is a Bear?

If anyone has any useful links on these subjects that would be great.

Tuesday, November 7, 2006 12:48PM Report Comment
 

16. monty said...

These worked for me.

http://en.wikipedia.org/wiki/Inflation
http://en.wikipedia.org/wiki/Interest#Output_and_unemployment
http://en.wikipedia.org/wiki/Bull_market

Tuesday, November 7, 2006 01:30PM Report Comment
 

17. Cyril said...

george monsoon - there's some quite good info on wikipedia that explains the basic economic terms. There are millions of books on the subject of course. Try 'the affluent society' by JK Galbraith, which is quite easy going.

The thing to remember about economics is that it is not a pure science, so there is no absolute relationship between economic indicators. Economics is just a collection of different theories which go in and out of fashion as times change.

By the way, a bull market = rising and bear = falling but I've no idea why.

Tuesday, November 7, 2006 01:51PM Report Comment
 

18. Sparksukm2004 said...

I used to be like you guys, moaning about house prices and waiting for the crash.
Wake up it's not going to happen.
If you can't buy in this county then buy in eastern europe, make some money so you can buy in the UK in a few years.
End of story

Tuesday, November 7, 2006 02:18PM Report Comment
 

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20. Hyrax said...

"economic meltdown in the UK" Hope not... but the UK is a House of Cards. Where is the UK wealth creation in all this. Emerging markets will develop their own capital markets and the city will likely go away.
Just as we squandered North Sea oil and UK manufacturing base is GB to survive on estate agents, banks and government services industry - including internet gambling amongst them?
Not really an export industry amongst them (Look at the US indebtedness to China and the pain that will eventually cause)?
Hardly world class..thats why even Blair recently wants more scientists and engineers. The penny has finally dropped...technology and manufacturing?
The UK doesn't even have enough physics graduates to fill the schools as teachers AND build a nuclear power station.
We will now slide down international tables for virtually every statistic in economic performance, we squandered what natural and technological resources we had for quite ephemeral activities (like the DTI).
Our collective future is probably in a united europe and we cannot even get that right.
historians will see this as our peacock economy..looks great but doesn't secure the nations future.. too busy navel gazing our house prices and MEWs to see the rotting economic foundations.
Should have built a technological infrastructure and damp course, and an energy efficient solar powered roof on UK plc. Should have, could have, but didnt.

Tuesday, November 7, 2006 07:13PM Report Comment
 

21. inbreda said...

there seem to be alot of new bloggers tonight !!!

Must be good.

Cyril - good way to remember is that a bull uses it's horns to hurt you in an upward motion, whereas a bear uses its claws to hurt you in a downward motion - although to be honest, if I was being hurt by either, I'm not sure I'd give a flying Fugg whether the motion was upwards or downwards.


Sparksukm2004 - if you're so convinced go out and buy - you're a braver man than me.

Tuesday, November 7, 2006 11:07PM Report Comment
 

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