Friday, August 1, 2008

Some straight talking from the fool

I Want A House Price Crash!

Everybody talks as if falling house prices are a bad thing, nay, a national disaster. Rising house prices, the logic runs, are therefore a good thing. But the reverse is true.

Posted by webmaster @ 10:38 PM (1107 views)
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11 thoughts on “Some straight talking from the fool

  • gardeniadotnet says:

    From the article…
    >If house prices can behave so irrationally, how rational is the rest of our financial system?

    Exactly.

    If “The Fool” is starting to recognise this, then The (financial) End Really Is Nigh.

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  • waiting for the crash says:

    a ‘desperate’ seller due to old age house has been on the market for a year down the road from me and the asking price has fallen:

    Aug 07 – 250,000
    Jan 08 – 220,000
    Jul 08 – 199,000

    50k drop in 11 months, if people are desperate to sell then asking prices are falling – is this a crash?

    I want to mortgage for a family house that I can repay in 10 years and not live on baked beans for that time. IMO High house prices take to much of peoples income and prevents families having money to spend on other goods and services. A descent standard of living is not only acheived via high house prices.

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  • This government has a lot to answer for and that is an under statement. I know there have been other housing booms, but this one really has taken the biscuit. We have just witnessed or been victims to the mother of all housing booms. Where there’s a boom, there’s a bust, contrary to labours mantra in whipping up this time bomb for their own political and financial ambitions and greed. Shortsighted, ignorant and currupt. Good riddance to them in 2010 and I hope the fall out that is about to occur remains etched in the minds of voters for years to come.

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  • here, here spot on no 5

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  • Phdinbubbles says:

    Spot on about the government but not about the reality of the opposition parties (with the exception of Vince Cable). They’re equally, if not more, vacuous and narcissistic entities.

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  • Eastleighfan says:

    Why is this site called “the fool” , when this artical is pure common sense ?
    Excellent artical , says what most of us have been saying for ages

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  • we wonder why our young people behave as they do whilst financially marginalising them,I don’t know many homeowners who carry knives or join gangs.

    I think we have a lot to answer for…in one cornish town,the average houseprice is £500,000 and the average wage £14,000 and we wonder why they get drunk and behave antisocially.

    All will come out in this crash

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  • “IMO High house prices take to much of peoples income and prevents families having money to spend on other goods and services.”@waiting for the crash…

    ….spot on, no one ever mentioned that the real cost to the economy was the reduction in spending power due to high outgoings, but then extremely low interest rates allowed everyone to borrow and spend. Hopefuly, with credit more expensive, we will all look less to borrowing and more to saving, unless ofcourse GB makes it so uneconomical to do so, by allowing inflation to destroy the prudent. If realistic costs for mortgages/house prices (3.5Xsalary) return, in the long term the UK will be based on a culture of spending based on have and not have not, but can borrow, thus building a stronger economy on rock foundations, not the smoke and mirrors of the last ten years. Ofcourse this doesn’t suit the short termism view of VI’s from EA’s to the government. I think that if GB set out his stall and explained the changes necessary for a stronger country – five years from now, he might have a chance of re-ellection, but I fear he will do the same as he and tony did in 2005 and do anything to keep the feel good party going, which will leave an even bigger headache around the corner.

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  • It all started many years ago, similar to today where over lending has occurred. House buying should be based on 1 wage packet like it used to be. That’s where prices lifted off in the first place. House prices are controlled by money supply, not supply & demand. Maybe over a period of time or when housing market bottoms out, lending restrictions could be set, and get the lending multiples down to 2.5-3 x salary at maximum.

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  • the average house price is/was around £200k add on interest payments £100K (my maths is not great but you get the picture) =£300k over 25 years of your morgage
    when house prices are back to 3x salary eg £25K = £75K house price
    £300-75=225
    who wants to give themselves £225K cash for waiting a year or 2 for the crash to sort out house prices.
    bring on the sensble house prices.

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  • It’s not just the rise in housing costs that has this impact, it’s also increased personal taxation.

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