Thursday, April 29, 2010

More rejoicing at the BBC

House price inflation hits 10.5%, says the Nationwide

This is just a stale re-hash of the article posted below this one. Nothing to see, really. Move along.

Posted by mark wadsworth @ 07:40 AM (3170 views)
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30 thoughts on “More rejoicing at the BBC

  • According to Nationwide the average house increased in price by £3,283. Assuming zero living costs the salary required to match that rise would be £58,000. Unless you are earning this sort of money then please leave the casino immediately and try not to soil the carpet on your way out…

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  • righttoleech says:

    where are the men in white coats? Our deficit, Greece on the edge, forthcoming public sector cuts and house prices continue to defy logic. This can’t go on much longer. The correction will leave destruction in it’s wake.

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  • However, the Nationwide predicted that the past year’s surge in prices would tail off later this year, with sellers starting to outnumber buyers.

    Am hoping that the good news will encourage more speculators to put their house on the market :o) Have seen new instructions go up four-fold in N. Herts/S. Beds/S. Cambs area in last 2 months. Some houses shifting, some being ‘sold’ then chains collapsing. Am really keen to up-size but holding back like a trooper!

    Enjoyed this very subtle bit from the article:
    Quote:-
    “There has recently been evidence of a slight shift in the supply-demand balance,” said Martin Gahbauer, the Nationwide’s chief economist.

    “While the recovery in new buyer enquiries at estate agent offices appears to have petered out, the last few months have seen an increase in the level of new instructions from sellers.

    “All else equal, this should lead to a gradual flattening out of the recent upward price momentum,” he said.

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  • mrfibble
    You can generally borow 4-5 times single salary or 4 times joint salary. Assuming a 10% deposit (no-one should buy unless they can save that) and an average price of £ 160k I make that £160k – 10% (deposit) = 144k / 4 = £36k as a joint salary or 144k/5 = 28.8k as a single salary.
    Just interesated to know how you came up with £58k.

    righttoleach
    Assuming the way way out of this huge deficit problem is for governments (European, US and UK) to agree to print more money (they have been already) then you may find that a house purchase with big mortgage (you have to live somewhere), may in fact be the most sensible and secure option.

    Don’t get me wrong I haven’t turned into a housing bull, but sometimes you need to be careful in your calculations and assumtions as to what will happen, otherwise you’ll miss the bottom of the market — again 😉

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  • @3. str 2007…

    Not everyone owns a house. The £3,283 rise in housing this month is the same amount (net) that you would obtain from a £58,000 (gross) salary – i.e. the break even point. So basically unless you are earning in excess of that then the housing market has just kicked your @rse. Worse still, you had to turn up to work to earn that money, the average house just sat there and ‘earned’ it.

    These small percentage monthly rises are not small sums of money since the average house now cost so much. Same people have savings in the bank to cover this but I’ve yet to see a savings account that pays in excess of 1% per month.

    Consider a FTB, the rise this month has just taken out about 3 months wages (based on a £15,000 salary). Since this poor soul is probably paying some BTL’er half his wage then 6 months wages have just gone up in smoke.

    Sustainable? No, it isn’t…

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  • I bought at the bottom of the market last time but I missed my chance to trade up at a reasonable price. Personally, I think we are in the return to normal phase of the infamous bubble chart but my main worry is that inflation will pick up so buying a house now may indeed turn out to be a good investment. Totally insane to take the risk, but it may pay off in the end.

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  • Mr fibble

    Ah, I see where you were coming from, my misunderstanding. Yes quite, it’s easy to sit back and and ignore a small % increase, but you’re quite right it is alot of money.

    I find the whole thing quite frightening, particularly the extent to which the profligate have been bailed out.

    I was with someone yesterday who has a £400k mortgage – it’s costing them £1k per month at the moment, about 10% more than I’m renting a 3 bed end terrace for.

    Broon and Co have been utterly reckless IMO, quite what others will do after the election remains to be seen, but if they follow a similar policy the currency destruction may well continue.

    Big debts may turn out to have been a good investment – time will tell.

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  • mrflibble

    Similar points were made to me this time last year when I was just about to buy. I wish I had listened. My house has indeed earned more than me this year and I’m gutted. I think I’ll go and have a lie down in one of my five bedrooms.

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  • LJ

    Come now, that’s a bit patronising, you’re starting to sound like smugdog.

    I remember discussing with you just over a year ago and certain ones one here were indeed dismissong the small pick up in the number of monthly approvals.

    Quite rightly it did turn out to be the bottom of the market (to date).

    Right at this minute I wish I’d gone with my instinct aswell, however I am still cautious about what’s ahead and there’s one thing worse than renting and that’s loosing a house (and your capital) you once owned.

    I gennuinely hope that doesn’t happen to people, but also can’t help thinking the majority are dreaming their way througha totally artificial situation that will indeed prove to be unsustainable.

    The current prices have been reached (peak 2007 in my area at least) on the back of interest only and borrow as much as you like to the 2007 peak and then a mass give away of money wih interest rates at quite ridiculous levels.

    It could be they start printing money again in an attempt to ‘re-set’ things on an international basis in which case debt will have indeed been good policy.

    I can also see prices reaching there previous low of last Feb/March within a year or so as the reality of cuts kicks in after the election.

    Oneway or another this countries population is going to be paying £1000 per head of population within a few years to service the nations debt levels (without paying it down).

    That is going to hurt.

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  • Apologies for all those typos.

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  • Surely the incompetence of a government that can let this happen is more newsworthy than the incompetence of an individual who says something behind someone’s back? Hands up who has been overheard saying something and been embarrassed by it… hands up who has wrecked millions of peoples chances of ever owning the house they live in…

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  • str 2007

    Sorry. Mr Flibble brings out the worst in me.

    It is quite possible that prices will stagnate or decline gently over the next few years. I don’t see any possibility of steep falls unless interest rates rise dramatically but it will take two or three years for that scenario to play out.

    I’m not sure what I would do if I was still renting now. I’d probably buy a house I could add value to or self build if I could find land. I think there are still opportunities for those who want to buy and aren’t obsessed with short term price movements.

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  • @11. luckyjim said…

    Sorry. Mr Flibble brings out the worst in me.

    How come? Just curious 🙂

    I take it you bought in the bottom last year? Probably about the same time I sold. I must admit I’m not sure what to do with the rental I have right now, it’s too costly with the interest rates being the way they are. Probably downgrade to a smaller place if interest rates are staying low as I’ve really no desire to buy back in right now.

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  • cat and canary says:

    6 months ago, many people said on here that house prices are going to rise until after the election.

    talking to potential FTBs in their 20’s and 30’s, who still have their jobs. They want to buy, and are trying to buy now.

    its clear, to me, that the british obsession with house price rises will not falter until we are in trouble

    To my mind, the turning point is coming…. either things turn south very quickly for houses, or gordons economic miracle will persist.

    > we read this week from numerous forecasters of 250,000,. 500,000 or even 750,000 public sector job losses looming.
    > quite how the greek situation will affect british debt interest, and therefore deepen cut backs is yet unknown
    > inflation is rising, with some talking of interest rate rises soon rather than later.

    the moment of truth is fast approaching, IMO. anyone else?

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  • @13

    Agreed

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  • HPC is not really having a good day of it today is it chaps?

    36 responses regarding Mrs Duffy popping out for her sliced.

    7 responses to the BNP’s one way package holiday.

    …and 14 responses here on who has the most bedrooms in their house.

    Much more of this and I will be gone, then you’ll be sorry

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  • I don’t really want to make it personal but, since you ask, you are one of a number of people who maintain a condescending attitude despite having got things spectacularly wrong. For example, you sold at the bottom (doh) and yet in a previous post you said that the people who bought from you “didn’t have a clue”.

    I’ve spoken before about the bitterness and hypocrisy of some posters. Describing those with an alternative view as ‘sheeple’ and trying to invent a new ‘ism’. Ridiculous conspiracy theories and a whining victim culture.

    Smugdog’s wind ups are welcome comic relief.

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  • Open Minded says:

    After four years of convincing myself and others around me that property would crash spectacularly, I caved in at the end of last year and we bought back in. It was a good bargain too – we had substantial savings and bought from sellers who had several potential sales fall through before we came along – and they were willing to lower their expecations because of that.

    I’m glad because there has been nothing of significance in the past six months that has led me to believe we’re going to experience another downward trend anytime soon. I also detect increasing desparation and even acceptance among the HPC faithful.

    Time to re-assess your convictions, people!

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  • C&C Well everything looks toppy to yours truly and has done for some time. However the timing of the tops (i mean most asset markets) has actually been very difficult with a few false dawns along the way. As i said the time to be bullish about being bearish is when we have 2 consecutive monthly falls.

    When will that be? Well contagion is the word that springs to mind. Basically i think we are walking a tightrope. We could stay on and bump around with the monthly numbers diverging slightly from no change, but i cant see what support there is for the market to march on . One slip and its all over….. probably!

    LJ i get the feeling that sometimes you respond to what you perceive as resentment by adding more fuel to the fire. Thats a shame when you dont do that i always feel you have sensible and reasoned views.

    Its really interesting times… still …. watching this all play out.

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  • smugdog

    ‘much more of this and I will be gone, then you’ll be sorry”. LOL

    You just reminded me of a ‘Young Ones’ sketch. When Rick decides to kill himself.

    Rick : Right that’s it I’m going to kill myself, then you’ll be sorry.

    Vivian : No we won’t.

    Rick (as he stuffs handfulls of tablets : and punks and skins and rasters will gather here in sorrow for their fallen leader.

    Neil : Vivian, can you actually kill yourself on laxative tablets ?

    Vivian : I don’t know, but I’m going to hang around and find out.

    Neil : Well I’m going up to my room to finish my astrological starchart.

    Oh, a classic bit of brilliant British comedy. If only I was clever enough to post a you tube clip of that sketch. That’d cheer you up smugdog.

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  • letthemfall says:

    It is fascinating (in a macabre sort of way) how so many believe that the only way for house prices is up – surely a genuine mark of decadence in a society. Here we sit, following the worst banking crisis in history, with house prices, despite having taken a fairly short steep fall, at long term highs and pushing back up again, because interest rates have been chopped and large amounts of govt money have been poured over the problem.

    Now we stand on the edge of a follow-on crisis: sovereign debt. Spain has just been downgraded. What is going to happen to UK debt? Yields continue to fall indefinitely? The opposite would seem very likely. So should one borrow as heavily as possible right now to invest in an asset at near enough record highs in such an environment, hoping that what goes up must go up?

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  • 16. luckyjim…

    How can you be so sure last year was the bottom? Next week we face a General Election with a good possibility of a hung parliament. No party is telling the truth about how big the cuts are going to be and how many public servants will loose their job. Our deficit is eye watering and out of control. The rating agencies are hovering over the downgrade button. We have witnessed many countries not too dissimilar to our own go down, Iceland, Ireland, Greece… Even if we manage to put through it is going to be a very hard slog.

    As for my buyers, I’ll let the reader make up their own mind. My place was sold at 25% off peak. Some FTB’s came along with no deposit of their own, but instead cash via the government Catalyst scheme. They outbid the previous buyers with a price that was 10% off peak and only £5k short of the absolute maximum they could go up to. This was at a time when the base rate was at a 300 year low and unemployment was rising sharply. The house they bought was a 2-bed, limited by the government scheme, prices for 3-bed houses on the same estate were actually lower than the price they paid for a 2-bed.

    To my mind this purchase was desperation, these people were not financially fit and should not have been able to buy given the lack of saved deposit. If the government scheme was not there they would not have been buying at all. Handing someone a deposit to allow them to buy a house is irresponsible. I stand by what I said in that they didn’t have a clue what they were doing.

    You obviously regard these people as savvy buyers using all the tools at their disposal to achieve their aim of house ownership. Maybe you are right, maybe this is the way forward in the UK. I cannot help feel it is all a little desperate though, stoked by the simple fear of missing out. Either way, it is not an environment I want to live in. If we are going to be forced to pay the absolute maximum for everything we need because someone else is prepared to outbid us then it is going to be one hell of a grim existence in the UK.

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  • cat and canary says:

    Hi Techieman,

    yeah, never easy to get the timing. The downside risks are all rising now. Yet if CPI drops again (which is is supposed to according to the BoE) then how much worse do you think the BoE’s case for QE look compared to a week ago?

    As for folks mocking, I seem to recall plenty of mockers coming out the woodwork when the regulars on here were predicting downgrades….Its very easy to mock those who stick their neck out to take a chance at showing foresight.

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  • mrflibble

    Maybe you should help those foolish FTBs by offering to buy back your house – at 10% more than they paid you of course.

    Short personality test – which sentance do you agree with most –

    A) “My view is correct and opposing views are incorrect”
    B) “My view is correct and opposing views are stupid”

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  • I’m back

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  • @24. luckyjim…

    Thanks for the offer but I’ll pass, instead I’ll wait two years and buy your 5-bed place with the Dollars and Gold I bought when I sold my 2-bed place. Not sure why you need a house anyway, I’d have thought the arch under a bridge would have been more your scene. There’s a place for you over at MSE, they think houses only ever go up too. Slide on over, you’ll fit right in.

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  • mr f,

    It’s 6 beds if you include the study. If you google my 2007 posts you’ll see that, unlike you, I only sell at the peak. Two years might be a little soon. I shall let you know nearer the time.

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  • Any advance on 6?

    How big is yours S2R1?

    Astronomical I bet.

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  • vacuouspolitician says:

    “How big is yours S2R1?” …oooh er!
    Like it. Very funny. But then it got no reply Smug. Perhaps they can’t handle voices that don’t agree with their narrow/greedy view of the world…
    Jar Spoon Spoon Jar.

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