Monday, February 4, 2008

The property profiteers

The property profiteers

"The frenzy to speculate on the housing market or own multiple homes has a dangerous downside"

Posted by becky @ 12:31 PM (6617 views)
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50 thoughts on “The property profiteers

  • Suddenly it seems everyone saw the crash coming/knew it was a disaster waiting to happen/never approved of the whole thing in the first place. In about a year’s time you’ll be hard pressed to find anyone who will admit to being a anything but a property bear for the last 10 years. ‘I tried to tell everyone, I knew it was coming’ etc. etc.
    Unfortunately for these idiots there is such a thing as the internet now, with news archives available in seconds…..

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  • The readers comments are rather more bullish and defensive of property investment than I would have expected from Guardian readers. Maybe their forum has been invaded by Daily Mail readers who’ve come there to wind up Polly Toynbee!

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  • Agreed shipbuilder. All of a sudden, people like David Smith are saying that they were giving hints long ago that this could happen. They were not – in fact at the time they were dancing all over the issue of runaway house price inflation like summer crickets.

    In many ways the autumnal chill of Northern Rock did them some good.

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  • Brilliant piece. I hope C4 are sued by the “renting is dead money” gullibles that Krusty has lead down the garden path over the last 5 years.

    “Its hard to imagine another business being given a free rein to promote its worldview on television like this. Especially one with such important consequences for individual lives. These programmes are made, and presented, by people with a strong vested interest in a particular business. Most have been estate agents or part of property business – or still are, as several offer private services via websites. Sarah Beeny and Lamb receive regular coverage on property pages flaunting their portfolios.”

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  • BLAME GAME:

    “In recent months, it has become commonplace to blame irresponsible banks and greedy financial institutions for the plight of the sub-primes. But it is not just these institutions that are to blame. Nowhere has the promotion of home ownership and amateur property speculation been more blatant than on television property programmes.

    TV channels categorise these programmes as lifestyle or “factual entertainment”, putting buying and selling houses on a par with sport or cookery….

    …Channel 4’s Property Ladder regularly includes desperate young couples who bemoan their fear of “losing out”. Their unchallenged assumption is that home ownership is the only guarantee of security, and potentially a route to wealth. In Put Your Money Where Your House Is they are egged on to add value to their homes, anything to make a profit”.

    Oh… it must be those terrible TV programmes….us journalists pushing property “bargains” had nothing to do with the house price bubble…..did we…?

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  • Check out David Smith comments on his blog. He s losing the marble now he knows he’s wrong about house prices and interest rates

    http://www.economicsuk.com/mt/mt-comments.cgi?entry_id=643

    “As for Jake Hywell, I know from your previous inane contributuons that you don’t understand these matters at all and probably never will, but two things. One is that “uber-hawk” is an affectionate description for Andrew Sentance, who I’ve known for years and who is proud of his hawkish reputation. Two, if you had the faintest understanding of monetary policy you’d know there is a lag between changes and their effect. Now do go away and leave the debate for people who do understand.
    Posted by David Smith”

    MAU HAH HHAH HAH HA H AHAHAHHAH HAHHA

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  • An Bearin Bui says:

    Look how stupid most of the comments below the article are: all the usual idiotic cliches are trotted out to say that BTL-ers are ‘entrepreneurs’ who are just doing their best to prepare for their retirement. Renting is dead money – isn’t it so much worse to pay rent for 45 years and own nothing at the end than pay a mortgage for 25 years and then own an asset? There is even one idiot in there who says that the growth in the UK economy over the last 10 years has been largely based on property price increases and that this is a good thing(??!) and we should be proud of how strong the housing boom has made the economy(!!?!).

    After shielding myself from reality for so long now on hpc.co.uk, it’s shocking to read idiot sheeple opinions again written down in all their moronic glory in black and white. Truly unbelievable that such morons are even literate enough to write comments to a newspaper.

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  • Perhaps this will turn out to be one of the biggest speculative bubbles in recent times, much bigger than dotcom. This time the losers will be far more widespread and to the tune of more than a few thousand sunk into dodgy shares. We shall see how long the VIs can hold things up with hot air.

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  • Here is a random response to the article plucked from the Guardian site – “Our economy relies on property investment and property speculation and is the cornerstone of the wealth that has been created over the last 10 years. People have become fabulously rich in real terms and many people enjoy a lifestyle which helps bolster economic confidence within the UK. That is a good thing. At least two thirds of the UK’s economic growth since 1997 has been down to rising house prices. Therefore, property shows tend to reflect the benefits of investing in property – an asset class which has delivered fantastic returns”

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  • ABB, you are right, the comments are fantaxtix!! there must be thousands of EAs sitting in the agencies, doing nothing, earning no money, driving no green mini’s… who have so much free time to surf the web and post their rage on the web that their world is crumbling.

    “Not a good article. Our economy relies on property investment and property speculation and is the cornerstone of the wealth that has been created over the last 10 years. People have become fabulously rich in real terms and many people enjoy a lifestyle which helps bolster economic confidence within the UK. That is a good thing. At least two thirds of the UK’s economic growth since 1997 has been down to rising house prices. Therefore, property shows tend to reflect the benefits of investing in property – an asset class which has delivered fantastic returns. Anyway, only the foolish will get caught out if they INVEST in a property and the market tumbles. Serves them right for not diversifying their cash into other asset classes. For those that have PURCHASED a house to live in, a tumbling market is only a loss if the asset is realised. Otherwise, sit tight and wait until the economic conditions improve.”

    “Surely these programmes are just a way of providing cheap television.”
    Got it in one! Nothing more, nothing less…
    And I must have missed the episode where Kirsy Allsop held a gun to a young mother’s head and snarled at her husband ‘Buy the Spanish apartment or the bitch gets it!’. Hopefully, it’ll be repeated on Sky….”

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  • Cactusketchup says:

    Oh, the episode with Kirsty holding a gun to the young mother was AWESOME!!! so call now and buy a property or two now with a 6x stated income mortage before u’re priced out if you want to reap the benefits of being rich wealthy and make and inflation proof “investment” that can deliver fantaaastic returns (fantastic= fantasy land?)….. yuck!

    I too was appalled by the comments to the article, I agree with confused76, these must be EAs turned into blog-trolls

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  • Confused76,

    problem is people like you contradict yourselves and dont really know what your talking about, i read some of your past messages and to be honest you dont seem that intelligent.

    Your comment below stands true to buy to let investors also which is why that market will not collapse and will continue to rise. I has a number of properties which i held through very turbulent times and kept buying because as you quote a loss is only realised when its sold, so why not buy and rent and continue to do so. Face it if you keep leaving waiting to get on the ladder the more you will lose out, the first time buyer is being replaced by investors and the 90% of the wealth being held by 10% of the population will soon be seen in the property market so get in while you can. we are becoming more like other european countries as we speak where the the ratio of people letting is much greater.

    For those that have PURCHASED a house to live in, a tumbling market is only a loss if the asset is realised. Otherwise, sit tight and wait until the economic conditions improve

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  • Come on doom mongers you must be bright enough to realise this crash will not happen…..surely theres some motive for all this nonsense?

    if your comparing the market to the last crash then you must realise a few facts:-

    Interest rates were at 15% – they are now at 5.5% and falling
    First time buyers are now beeing added to by buy to letters
    Immigration has increased immensly
    the option of interest only has decreased monthly payments by around 20%
    i could go on and on but it seems you all have blinkers on from reality….

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  • nopensionnohouse says:

    I am loving watching the sentiment turn. Most enjoyable!

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  • disillusioned says:

    @ Malcolm:

    LOL!

    Are you serious?!

    Interest rates were at 15% – they are now at 5.5% and falling
    …what does that have to do with the interest rate on your mortgage(s)? They are decoupled from the BoE rate.
    First time buyers are now beeing added to by buy to letters
    Eh? What do you mean by this?
    Immigration has increased immensly
    Wouldn’t this affect rentals as well as purchases? Als, have you actually looked at the long term figures for our population over the last 50 years?
    the option of interest only has decreased monthly payments by around 20%
    CLASSIC!!! So you’re just renting your property then: from the bank instead of another of your fellow BuyToLetters.
    i could go on and on but it seems you all have blinkers on from reality….

    No, please do go on! You’ve put a real smile on my face! 😉

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  • “… that market will not collapse and will continue to rise…”

    “…a tumbling market is only a loss if the asset is realised…”

    Confused as to which it is becoming perhaps?

    Also:

    “…we are becoming more like other european countries as we speak where the the ratio of people letting is much greater…”

    … and the price of a house much cheaper, don’t forget that fact!

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  • disillusion, your a bit dim i think…..

    firstly you doom mongers look at the house price trend and wage multiples you have got to look further, if you have any sort of intelligence you will see from the tren/cycle that interest rates were at 15% when the trend cycled down i.e monthly payments were higher, also the bottom of the market was reliant on first time buyers and wage multiples, the reliance is no longer there as buy to let investors have also added to the bottom of the market and are not reliant on wage multiples as a requirement. Also both FTB’S and landlords can afford monthly payments for a more expensive home as they have the facility of interest only payments, as most people now realise inflation erodes the mortgage balance over the years. and yes you can look at it as renting off the bank but the difference is you profit from capital rises and you have the say how to decorate and how long you stay there…

    so come on guys stop being dim..

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  • disillusioned:-

    you are deluded my friend you really do have to wake up, the fundamentals of this market are sound and totally different from previous cycles.

    my estimate is property will be 40% higher by 2012. and if you carry on waiting you will be in for a huge loss…

    IMHO

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  • Malcom, Begrudged,
    keep coming to the site, you are a lot of fun!
    I am not intelligent (never said I am). But I do not believe the get-rich-quick schemes you guys have fallen into.
    According to people like you, Assetz and David Smith propaganda, by now interest rates should be at 4% and BTLosers should live happily hereafter.
    Well a couple of things are “different this time”:
    a. BoE base rate is still at 5.5%
    b. Despite a 1/4 point reduction in base rate, the mortgage rates have increased by a WHOOOOPPPPING 1.5% since the summer (lucky you!! this means a 25% increase on the average BTL mortgage interest) AHHAH HAHAHAH
    c. Mortgage rates are on the rise and will easily hit the 10% watermark as soon as repossessions increase (despite what you think the BoE should do)
    d. The pound has fallen 12% since February 2007, eroding your hard-earned profits on your second homes
    f. It is false that rentals are going up. The only thing going up for BTLetters are vacancy periods, service charges, EA fees, CGT taxes, interests… see the London housing stock for rent at http://www.primelocation.com/house-price-index/

    I know you are unemployed EAs. My word of advice is find another job that EAs are a thing of the past. at least here in London, you can now see their scheletons in their Mini’s on display at the Natural History Museum.

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  • Malcolm, I have taught this lesson to many inept BTL wideboys who try to test their (il)logic on this site only to be shot down in flames.

    Interest Rates only have value when they are applied to the principle sum invested or borrowed. Any questions? no? OK I’ll move on.

    House prices have roughly tripled in value over the last decade and we are borrowing 3 times as much on our mortages.

    £50,000 @ 15% gives an annual interest of £7,500.
    £150,[email protected] 5.5% gives an annual interest of £8,250.

    Let me know if you need help with the calculations but being a property tycoon, you will definitely know how to work this out wont you. Malcolm you do know how to do simple percentages don’t you? don’t you?

    This example shows how the “but we have historically low interest rates” argument can be dismissed time and time again.

    Also disillusioned’s comment is true. The Libor rate dictates the cost of your mortgage these days not the irrelevant BoE base rate.

    Immigration has fuelled the minimum wage earners from eastern europe who cannot buy @ 28X salary multiples (Even NR would have baulked at this!) when earning 5-6 quid an hour. They are not property buyers Malcolm, all our young, skilled workers are off to Canada and Australia.

    http://news.bbc.co.uk/1/hi/uk/6972076.stm

    Our eastern European freinds often sleep 4 to a room to cut costs in expensive Britain, so for every immigrant that hits british soil, he/she only needs a 1/4 of your BTL property.

    IO mortage, so you are paying more to rent the house of the bank than the landlord and if the boiler starts leaking you have pay for it yourself, oh and the council tax.

    I can’t be bothered going on Malcolm.

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  • Hee-hee – the (sudden) appearance of the likes of Malcom and Begrudged are a sure sign the BTL speculators are scared s…less. Surely you propery millionaires have better things to do (like lying beside your swimming pool) than to post comments on housepricecrash.com!

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  • Begrudged said:

    “I has a number of properties…”

    I *HAS* a number of properties?!

    Maybe you meant “haz” assetz boy. A HAHAHAHHAHAHAHAHHAHAHAHAHAH!

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  • Bertie Bunfest says:

    This is great. A real contest with some enraged bulls, even if the fight is ultimately hopeless for you. You are a critically endangered species and have been missed lately, if only for the entertainment value of the bull fighting arena.

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  • nice one geed….

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  • Athankfultenant says:

    Malcolm, welcome to the real (estate) world. We don’t buy the Daily Express here, we try to actually use the brains we were born with rather than be spoon-fed lies about how it’ll all be ok so long as we don’t stop buying ever more expensive houses.

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  • geed,

    you to are deluded, and are unable to see the true picture.

    bye bye poor ones…..

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  • As with any internet site/forum dedicated to a particular subject, an increase in trolls is a sure sign that a raw nerve has been hit….

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  • Mr Capes
    Care to enlighten us at all by expanding upon your somewhat unjustified argument? Actually… my mistake, there was no argument in either post… just the random rantings of a broken bull. Ah bless.

    Oh, go on…. I’m intrigued…… show us that ‘true picture’ to which you refer. It’s Monday. I could use a laugh.

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  • planning4acrash says:

    As anybody who read the Hobbit will know, Trolls turn to stone when if they remain exposed when the sun doth rise, and rise it shall!

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  • Sold My Soul To The Never Never Never says:

    Geed – you forgot to mention something – When we last had 15% interest rates we also had MIRAS – Mortgage Interest Relief At Source 25% tax relief on the first 30k so the figures should have been this.

    £30000 x15% x75% = £3375
    £20000 x 15% =£3000 Non-Miras
    Total £6375

    Looks even better than the £7500 you quoted – and non married couples got a further 30K tax relief and the interest would have been £5625.

    Did everybody see the Panorama show tonight – It was the best laugh I’ve had for a while. Some unbelievably dumb people out there and I must admit you’ve got to hand it (sorry for the pun) to those crooks who sell them these deals for their innovation – one born every minute they say.

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  • BLTers should be spending their time trying to sell their declining ponzi portfolio rather than trolling on this website! 😉

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  • Hmm.
    This is the second day in a row that a bull has charged into this blog. I found this comment by ‘Begrudged’ very interesting:

    “Face it if you keep leaving waiting to get on the ladder the more you will lose out, the first time buyer is being replaced by investors and the 90% of the wealth being held by 10% of the population will soon be seen in the property market so get in while you can.”

    Good old greed and fear: timeless human attributes. I wonder how many have been herded like sheep into the pen this way?
    Read about the ‘fogys’ in this old American story:

    http://www.doctorhousingbubble.com/personal-story-by-a-lawyer-from-a-previous-asset-bubble-can-we-learn-from-the-past-and-how-will-the-housing-decline-impact-you/

    Obviously, the circumstances were different but that’s not my point. Let’s give the bulls a bit of credit: greed and fear are powerful motivators and correctly calling the bottom of a market is hard.

    Call me an fogy, but I’m content to sit back and watch to see how many more months/years house price drops are reported.

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  • crash bandicoot says:

    You guys are going about it the wrong way. Why are you using reasoned argument with these nobbers when any profits they may have made come from “backing their instincts” and “bucking the trend”. If they could work it out for themselves then they would have been here already trying to understand just how it got so crazy in the first place.

    What you need to do is point out that there is just no fun in property anymore. I mean the cleaner in my office is a BTL millionaire, what’s the sense in that, everyone is doing it now. You need to be testing your investment skills in new and more skifull ways. I am currently planning to float my chocolate fireguard company on the AIM market. If this is successful then I am going to spin off a Bandicoot chocolate kettle division. Now who’s with me?

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  • crash bandicoot says:

    Oh yeah I almost forgot. If you bulls are still filling your boots and not your pants then you ought to get on down to Newport. I had it on very good authority only last Friday that Newport is a sure fire success. You can cover your IO mortgage for 10 years with imaginary tennents, and there are some dream properties available at bargain prices (I think that is estate agent speak).

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  • wow.

    just when you feared the site may get boring as the HPC is in full swing, making mainstream news and now pretty much an undisputable fact… unemployed estate agents enter the fray to amuse us with their blogs!

    You only have to peer into the esate agents round where I work in central london to see how bored they are. There’s no one ever in them anymore, they must spent their time looking for jobs!

    Do these twits like Malcolm think that we haven’t heard this before? That we were brought up in a society that doesn’t try to educate you with this propaganda on a daily basis? Has it not occurred to them that we’ve made a decision to put our money where our mouths are as much they have by NOT buying when prices are atificially high?

    Panarama was great tonight too… who’d have thought it eh!?

    :o)

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  • @sid public

    I was thinking similar things today. The blog and the news have been highly entertaining.

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  • nopensionnohouse says:

    @ geed said… “Malcolm, I have taught this lesson to many inept BTL wideboys who try to test their (il)logic on this site only to be shot down in flames.”
    Hilarious. Nice one. Ha ha ha

    @crash bandicoot said… “Oh yeah I almost forgot….”
    Lol.

    Has anyone else noticed that the bulls always come here all punchy and sign off with some lame & random insult after a few days like:

    “I’m going to France in my Cockster”
    “Good bye losers”
    “Good bye poor people”
    “Bye bye poor ones!”

    Could it be that:

    David2004_0 = Greenday = the landlord association = Dean = Malcolm = Geff Capes??

    Don’t seem to last long here do they?

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  • nopensionnohouse says:

    Oh and before I forget.

    Did any of you David2004_0, Greenday , the landlord association, Dean or Geoff Capes see Panorama tonight?

    Ha. I look forward to your comments.

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  • nopensionnohouse says:

    Oh and before I forget.

    Did any of you David2004_0, Greenday , the landlord association, Dean or Geoff Capes see Panorama tonight?

    Ha. I look forward to your comments.

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  • nopensionnohouse says:

    Oh and before I forget.

    Did any of you David2004_0, Greenday , the landlord association, Dean or Geoff Capes see Panorama tonight?

    Ha. I look forward to your comments.

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  • nopensionnohouse says:

    Oh and before I forget.

    Did any of you David2004_0, Greenday , the landlord association, Dean or Geoff Capes see Panorama tonight?

    Ha. I look forward to your comments.

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  • nopensionnohouse says:

    My internet connection broke tonight sorry about the multiple posts everyone.

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  • Interesting comments from quiet guy re bottom of the market. If the stuff is about to, or may have already, hit the fan then how long will it continue and when will we hear more positive news again.

    Your opinions are welcome……………

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  • @nopensionnohouse

    nah, I remember David2004 and he just sounded like a kid, I remember ‘the landlord association'(ha!) and he was just a wannabe.

    I’d put good money on Malcolm being a bored (and soon to be unemployed) EA.

    “bye bye poor ones”…. what a line! I’ll have to show that to my sister who sold up to rent!

    Who’ll be the poor ones in five years when all you have to show for this will be a liver like a fois gras goose Malcolm?
    (Presuming you are an overweight estate agents of course?!?)

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  • Weathly Vagrant says:

    This site get’s better everyday, as things get worse we’ll definitely be getting more amusement from people like Malcolm and Begrudged. Marvellous.

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  • new user 2007 says:

    Malcolm and begrudged.

    Glad you are seeing fundamentals with a rational outlook and a careful study of the numbers while sitting somewhere along a large ponzi scheme. Here are some numbers…

    Using data from the Office of National Statistics (for popn) and the UK Housing Review (for housing stock)…in 1991 there was one dwelling for every 2.43 persons. In 2005 this was one dwelling for every 2.31 persons. If we take 2006 popn data and the 2005 housing stock data (the latest), there is one dwelling per 2.33 persons (obviously houses were built in 2006 also but lets assume not). Flats building has covered smaller UK families, while the bigger dwellings have absorbed the new popn growth i.e. the last 4 years (new immigrants live many to a room). So what shortage?

    SOME NUMBERS:

    There are some financial numbers for Japan that were worse than the UK, but the trends and levels of the numbers below, I hope, speak for themselves….

    Population:

    Population density (persons per square km) in the UK is around 250 and that of Japan is 339. The population there was still growing in 1990…the year in which house prices started falling for the next 15 years—they added lots of people over their boom period and during the decline. (n.b. Japan has even less workable land because of earthquake zones and mountains.)

    UK UK
    Year Population
    1990 57.27m
    1995 57.96m
    2000 58.87m
    2005 60.24m
    2010 61.52m
    Source: United Nations.

    Japan Japan
    Year Population
    1980 116.81m
    1985 120.84m
    1990 123.54m
    1995 125.47m
    2000 127.03m
    2005 127.90m
    2010 127.76m
    Source: United Nations.

    Hong Kong has a population density of 6,407 and Singapore 6,369 (Singapore in particular has traditionally had large numbers of foreign workers entering). They both saw a decade of price falls, although unlike Japan this was more related to the Asian financial crisis of 1997-98 (but population density did not provide a guaranteed rise in house prices as many would suggest is the case in the UK). The so-called British love affair with housing is not unique in anyway.

    Interest rates:

    Unemployment in Japan in 1990 was around 3% (lower than ours), while short term interest rates (higher than policy rates) were at close to current money market rates in the UK. The increased payments, in Japan, owing to higher interest rates, were of a similar magnitude in Japan, as they are in the UK now.

    Japanese money market rates

    1987 4.2
    1988 4.5
    1989 5.4
    1990 7.7
    1991 7.4
    1992 4.5
    1993 3.0

    UK inter-bank lending rate

    Jun-03 3.57
    Sep-03 3.5
    Dec-03 3.86
    Mar-04 4.11
    Jun-04 4.51
    Sep-04 4.85
    Dec-04 4.82
    Mar-05 4.85
    Jun-05 4.83
    Sep-05 4.55
    Dec-05 4.56
    Mar-06 4.53
    Jun-06 4.64
    Sep-06 4.85
    Dec-06 5.17
    Mar-07 5.49
    Jun-07 5.72
    Sep-07 6.29

    UK and US, last quarter of 2007 numbers:

    Current US and UK data:

    US official rates: 4.50%
    UK official rates: 5.75%

    US unemployment rate: 4.7%
    UK unemployment rate: 5.4%

    In comparing the UK versus itself in 1990, the main difference being harped relates to lower interest rates….payments at 6.5% on 300,000 (new mortgages in London) are around the same as 15% on 100,000 (mortgages in 1990). In terms of unemployment, I assume that we will in no way be affected by the US downturn (even though we so clearly benefited from its upturn). We have been creating low paid jobs for people who cannot afford to buy anyway. Repossessions are occurring despite low unemployment…it was just a year ago when I read so many times that repossessions require a rise in unemployment…repossessions are up with no sign (yet) of higher unemployment.

    A prolonged period of stagnation is the fear and a very real scenario. Inflation helped to reduce the real value of debt in the past. If high inflation is gone then debt remains difficult to cut. So if we have low inflation forever, we are in trouble for the long run in terms of debt payments taking much of the take home pay of everyone who has entered the housing market since 2004 and far into the future. The credit problem and here have just started according to virtually every bank in the Western world. Not to mention that people here on cheap fixed rate deals will still be coming off them until the end of next year. This to me means we will have problems well into end 2009.

    We saw over 1mn BTL properties added between 2000 and 2007, while the population grew by less than 2mn. Much of that was new immigrants, so not sure why they are not important. As for any demographic support…the baby boomers will be dying together, whether in 2020 or 2035. This will see a sharp rise in housing over a ten year period (regardless of when it starts). There is also an assumption that other growth areas will not attract people….Asia, for example. Moreover, divorce rates and people leaving home earlier coincided with increased incomes and general economic freedom. As in Japan’s case (any variable you think supports the market here and they had it in spades, but they saw prices fall for 15 years once their own liquidity bubble burst in 1990), when the bubble burst people started to stay at home longer.

    The only X factor in the model here is whether the current rush of immigrants is permanent or economic (I think it is the latter). The Britons who have gone abroad, on the other hand, are less likely to come home as they have greater purchasing power overseas than here, and have largely left permanently. Change the assumption to one that newcomers are economic and we have an entirely different picture of what the population size will be i.e. if our economy goes under, not only will additional people stop coming here, the ones already here for work will go back. At the same time, the outward trend of Britons to cheaper locations abroad I just mentioned will continue. According to those saying our population will by over 70m by 2030. In 1972 they said it would be 70m by now.

    The Nominal growth over the last 8 years is average when looked at since 1952. That is because during much of that inflation and salaries were also very high. Look at growth in Real terms since 1952 and over 8 years (the last 8 years being relatively low inflation and low wage growth) and prices are severely over priced.

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  • Landofconfusion says:

    > 7. An Bearin Bui said…
    >
    > it’s shocking to read idiot sheeple opinions again written down in all their moronic glory in black and white. Truly unbelievable that such morons are even literate enough to write
    > comments to a newspaper.

    I know a guy at work who last year told me that he thought house prices were solid and never going to come down. He also held similar views about the stock market as his stocks & shares ISA was doing so well.

    Perhaps I should also mention that he reads the Daily Mail.

    > There is even one idiot in there who says that the growth in the UK economy over the last 10 years has been largely based on property price increases and that this is a good
    > thing(??!)

    I’ve encountered this sentiment. It’s the “We can afford expensive holiday/product X – just look at how much the house is worth!”. Recession here we come.

    > 8. Letthemfall said…
    >
    > Perhaps this will turn out to be one of the biggest speculative bubbles in recent times

    I think it is. My main concern however is that the BoE bail them out though uncontrolled/masked inflation.

    > 12. Begrudged said…
    >
    > we are becoming more like other european countries

    Not too sure about that. Renting in other Euorpean countries is *very* cheap as are their house prices. What seems to have happened is that competition from the various landlords has brought rental prices down by such a large amount that it’s cheaper to rent than buy. This in turn has had the effect of bringing down house prices. Add to that the fact that tenants are legally entitled to do a lot more to the properties that they rent than they are here and you can see why so many rent.

    If, in the unlikely event that we become “more like other european countries” it’s likely that we will see the same laws enacted here with the same effects on our housing market.

    > Face it if you keep leaving waiting to get on the ladder the more you will lose out

    History does not seem to support that theory. We shall see.

    > For those that have PURCHASED a house to live in, a tumbling market is only a loss if the asset is realised. Otherwise, sit tight and wait until the economic conditions improve

    Now this I agree with. A tumbling market is only a problem if you are an investor and were too late in making your investment. In a falling market you are unlikely to realise a profit and may face other economic pressures as the economy takes a hit. What cascades up can also cascade down.

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  • Landofconfusion says:

    > 14. Malcolm said…
    >
    > Interest rates were at 15% – they are now at 5.5% and falling

    Interest rates REACHED 15% and although the BoE is cutting rates now many banks have not followed though. In the end it’s the rates that the borrowers pay and not what the BoE sets which makes the difference.

    > First time buyers are now beeing added to by buy to letters

    BTL’ers appear to be stretching themselves in order to make ends meet. While this might be ok in a rising market and with good overall economic conditions, this is not currently the case.

    > Immigration has increased immensly

    Another factor which relies on good general economic conditions. If things go sour they could leave and while FTB’ers who can’t buy will no doubt fill the gap for a while, rent will still fall and ‘distressed’ investments will still go to auction.

    > the option of interest only has decreased monthly payments by around 20%

    See my above comment. In the event that bank interest rates go up and the housing market goes down what do you think will happen? All good things eventually come to an end.

    > i could go on and on but it seems you all have blinkers on from reality….

    Everything you have said so far relies on continuously good economic conditions. If at some point in the future that stops happening where will we be? Where will you be?

    Over the past few years interest rates have been forced down in order to ensure that economic growth targets have been maintained. This has happened even if the underlying economic system needed to slow for a while to remove ‘dead wood’ such as when the dot-com bubble ‘burst’.

    I think in the case of many property investors, greed has overtaken economic sense.

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  • Landofconfusion says:

    > 19. Malcolm said…
    >
    > firstly you doom mongers look at the house price trend and wage multiples

    Personal affordability is directly related to how much you earn. Not everyone inherited a lot of money from auntie Dorris.

    > lso the bottom of the market was reliant on first time buyers and wage multiples, the reliance is no longer there as buy to let investors have also added to the bottom of the market and
    > are not reliant on wage multiples as a requirement.

    No, they are reliant on a growing market. Ultimately all growth is organic and while you can deffer and grow your portfolio’s value based upon market sentiment alone, this *cannot* continue indefinitely. You must ether sell and solidify your profit at someone else’s expense or you must take the hit yourself.

    Knowing when the top of a market is near is for the experts in that particular market to know (or guess). History has told us that in that event they (the experts) will sell to people who have little or no knowledge and who only see a market which ‘cannot possibly come down’. Those are the ones who take the hit of inorganic inflation.

    If people who know the market are running away then you should be too. Only fools rush in.

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  • crash bandicoot says:

    @nopensionnohouse

    I am expecting the return of David_2004 the next time there is a 0.25% rate cut. He will be saying things like “I so want a crash but there will never be one now” and “With this cut the market is bound to recover”.

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