Friday, July 9, 2010

JD v EA…….

Johnathan Davies (FP) potificates - again

48 mins on - JD comes in after a couple of minutes. to about 1hr 05. JD - as usual impassioned!!! "37. techieman said... by the way TC - this news is no doubt gonna give your mate JD some more coverage..... I doubt if he will milk it though ;-)!!! Thursday, July 8, 2010 02:31PM" 'nuff said!! - great value as usual "its a listeners show as well"....

Posted by techieman @ 09:04 AM (2242 views)
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28 thoughts on “JD v EA…….

  • Excellent stuff. Is it me or does the EA sound suspiciously like Ed Milliband ?

    Shame the BBC decided to put this on at 25 mins to midnight. Wonder why !!

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  • JD does lose his rag easily…..he was on the box this week on the doom and gloom program

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  • Agreed

    JD needs to put forward a less ‘dramatic’ arguement. Pationate is fine, but JD sounds almost hysterical.

    He may (and I hope), be proved right, I just wished he sounded a bit more grounded and came armed with some interesting numbers to make the man in street stop and listen to him.

    But seeing the recaptcha perhaps I shouldn’t critisise

    ”unpin critisism”

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  • It’s an interesting point JD raises that average asking prices on rightmove are 220k but avaerage selling prices with Haliwide are about 170k ish. But he implies that people are asking 220k on average and accepting offers of 170kish which is very clearly very wide of the mark and does his credibility no good.

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  • JD needs to put forward a less ‘dramatic’ arguement. Pationate is fine, but JD sounds almost hysterical.

    I was really surprised by that. It undermines the argument and makes it look like we are loosers for not buying.

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  • “JD does lose his rag easily” – Celtic fervour!!

    Recapt : he explain

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  • I was thinking of starting a “does anyone think JD sounds a bit hysterical” discussion but decided not to. Have to agree though.

    It’s a real shame because he has very reasonable arguments and arguably the housing market has only been saved in the short term with potentially the biggest falls (ever?) still to come. Sadly though he sounds more like someone arguing that aliens will be among us by Christmas than a rational economist.

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  • I agree with Jonathan Davis’ prediction. I think the bottom of the market is 7 years away, I think we will also see a downward trend over the next 40 years as JD pointed out (in another interview) that interest rates can not decrease over the coming decades. I think there will be an upward trend in rates over the coming decades as banks need to get their money back and savers are up in arms. I think people will save more in the future as credit gets more expensive, I also think people will become more careful as the full horror of the Second Great Depression unfolds. No wonder JD gets irritated with vested interests, they do not want to hear the truth.

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  • Loneranger says:

    I totally agree with JD. Ok, so the guy sounded passionate but who can blame him? What was interesting to note was how ‘concerned’ Ian Paine the presenter sounded when JD answered his question on his prediction on how much the fall in house prices would be. When JD stated his prediction of 30% he sounded really shocked and horrified, due to him owning property. Now hang on a minute here, 30% should be of no concern if your it is your primary residence and a home, Ian Paine is not that old so they should recover by the time his mortgage matures. This reaction confirms what most readers of this site have been saying for years, people still regard their houses as cash cows!

    My second point on the programme once again covers affordability, the EA suggested that these were challenging times for FTB’s and that we need to be, in his words ‘creative’ (LOL you have to laugh at the terminology he uses here) in getting on the ladder. In fact, his only ‘creative’ example was shared ownership, well that method is limited in scope as there are a gross shortage of those deals around.

    The EA’s other point was that now presented a real good time for people to save for the deposit required as HP may flatten for a while.

    Ok, here is some simple math for the EA.

    Average HP = 170,000 – 220,000 (dependant on whom you believe)

    Deposit required = 25% = 42k – 55k (based on the above valuations)

    Realist monthly saving requried = £500

    Timeline of saving plan = 60 – 84 months for 42k (5 – 6 years dependent on interest rate awarded, remember % is at record lows)

    = 90 – 110 months for 55k (7 – 10 years etc)

    Hmmmm, it is not good is it?

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  • Loneranger says:

    BTW – in addition to my earlier calculations I forgot to mention that the amount for £500 per month savings needed to be met by the average wage earner (28k) after his/her outgoings which could include private rental of a propery. Well, there is no way anyone on an average wage could afford to save that amount and rent.

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  • I think you have to take a step back into some objective shoes here and ask the question who has anything to gain.

    Clearly the EA from Chester wants the status quo of inflated asking prices to remain in place so he can grab his
    commission.

    I can understand why JD became infuriated when both the presenter and the EA started acting like the class dunces
    to try and discredit his fact based advice.

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  • I can understand why JD became infuriated when both the presenter and the EA started acting like the class dunces
    to try and discredit his fact based advice.

    Yes, there was an element of the EA being in total judgement of what JD said – rather than just a 2 way discussion.

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  • Estate Agent - Midlands says:

    While I have a vested interest in house sales continuing, I would consider myself to be middle of the road on this subject as many who know me on this site.
    The number of sales rose this year and as JD states, to about half the number they were at the peak, but over the last 8-weeks, things have backed off again and buyers are thin on the ground again. Many of my competetors are talking up prices again and are then stuck with these properties unable to sell them. When the vendors call us again months later because they have had no interest, we can get the properties onto the market at a more sensible price and then are able to sell them!
    JD has always predicted a 35% crash in prices and when they didn’t drop that far, his argument is that we haven’t seen the bottom yet! He could be right about this, as the signs are there that prices could start tailing off again, but I wouldn’t write off a stabilisation in prices just yet.
    The reason I think this is because while the public sector may be about to face huge redundancies, the private sector has stopped shedding staff in large numbers and in some parts of the UK (South East) unemployment is starting to fall, so many of these people could find jobs again. Also while the public sector jobs could be going, it is likely that it will be a phased redundancy program, which will have a lessening impact.
    Finally, while first time buyers have been unable to get onto the housing ladder over the last few years because they require a large deposit, their parents have recently been helping them out with surplus spending money, because their own mortgages have got easier with lower interest rates.
    In essence, if this economy goes down the pan, then it is inevitable that house prices wish crash much further, but if it remains constant or grows slightly, the housing market will be just fine.

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  • why are transactions 50% lower? why am i selling 15 houses a month? Why are you talking about your company? What about London?.

    Was that a answer a question with a question competition? [blimey its contagious]

    in my experience the ladies are best at that! oh and politicians…. and the very best lady politicians!!

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  • in any case what difference does it make. I mean no economist or EA is going to move the market anyway. The market moves where it wants to go based on its own internal dynamic. [and of course sometimes with some external influences – as we have seen].

    So relax HPCs, pull up a chair and treat these spats as entertainment, since essentially that’s what they are.

    By the way the worst time for a bear to argue is at the beginning of a down-trend, as opposed to near the end of it!! I can share that frustration actually.

    And why is it the worst time? For the very reasons illustrated by the EAs implicit argument – i.e. the prices have gone from overvalued (everyone knew that – yes thats why buyers bought there!) to undervalued (because of the banking crisis) to now stabilising.

    That provides ZERO insight, a bit like Mickey Clarke telling you BP went down 25p today… Fair enough Mickey, but whats it gonna do tomorrow???

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  • mark wadsworth says:

    Lon Ranger, your calculations are pobably way off piste. For the past ten or fifteen years, there would have been no point saving £500 a month as house prices were going up by rather more than that.

    Back in 1997-98 I lived in a flat I owned outright and had £10,000 spare cash as a deposit and we wanted to buy a house.

    I thought before I bought a house with a mortgage, I would just practice paying £800 a month into a savings account, just in case mortgage lenders asked me whether I had any proof I could afford it. So I did, so after a year, I had another £10,000 saved up and a £20,000 deposit. more fool me of course, because in those twelve months, house prices went up by about £10,000. Things got a lot madder since.

    So, while saving is always good (unless you are worried about ending up on means tested benefits, in which case there is no point) how much an FTB has to save depends on what he thinks will happen to house prices – if he thinks they are going to go up, he should “jump on the ladder” ASAP, if he thinks they are going to drift down for a decade, he might as well stay renting.

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  • The reason I think this is because while the public sector may be about to face huge redundancies, the private sector has stopped shedding staff in large numbers and in some parts of the UK (South East) unemployment is starting to fall,

    Okay, but in a lot of places the private sector is very dependant on the public sector, for example I know of many IT companies who depend upon government contracts….some of which are looking like they are going to be cut.

    Don’t under estimate the effects of public sector cuts.

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  • Finally, while first time buyers have been unable to get onto the housing ladder over the last few years because they require a large deposit, their parents have recently been helping them out with surplus spending money, because their own mortgages have got easier with lower interest rates.

    I only hope people will see the lunacy of this and stop doing it. Moreover, I don’t think anyone has ”surplus spending money” in this day & age.

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  • Loneranger says:

    MW @ 17.

    Yes, I agree with your comments to a certain extent but remember my calculations are for the benefit of the EA on the programme who believes house prices may go down a little bit or will be flat at most (I am trying to be creative as he put it ha ha). As it stands in today’s highly leveraged world, unless the prospective first time buyer has a 25% deposit he/she will not be able to ‘jump on the ladder’, whether prices go up or down is irrelevant without the down payment. Things are a lot different now, banks are no longer able to throw money about at those who want to ‘jump on board’ …

    Then there is the issue of when interest rates will rise, forget all this talk about govt wanting to protect house prices, we live in a global market and the UK will have to keep up with the rest of the world eventually …

    It’s a proper checkmate scenario at best for the EA’s in my opinion, a proper economic mess which leaves little doubt in my mind (and that of JD) that this is going to all end in tears.

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  • HPW – ‘I know of many IT companies who depend upon government contracts….some of which are looking like they are going to be cut’.

    ‘As part of the deficit reduction programme, the Minister for the Cabinet Office, Francis Maude, has today met with the CEOs of the nineteen biggest Government suppliers to ask them what they can do to help cut the cost of the services they provide to government.’

    Full list of suppliers at – http://www.cabinetoffice.gov.uk/newsroom/news_releases/2010/100708-supplier.aspx

    RC – move beefed !!!

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  • @Estate Agent – Midlands

    First post? Welcome!

    “While I have a vested interest in house sales continuing

    Interesting choice of words. A large volume sales at 1.5% is obviously better than meagre pickings at 2% (I’m just making the % up but you get the idea.)

    I was also struck by Jonathon’s prediction of a crash within 2 to 4 years. I suspect the truth will be a long, slow, slump over a decade or more. A really rapid crash would threaten the foundations of our banking system – not worth the pain.

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  • TC – how do you do a hands up sign on a blog?

    “Who cares what is going on in London?” – well actually i do :-). The point is though there are regional variations all over the place. I thiink Blue Beach the other day said that North Wales is back near previous peak and yet you have done the business at a big discount.

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  • (o)
    0
    /
    That’s the best I can do techieman

    I think we all forget though JD especially, that most people with mortgages (and the bigger the better) are now paying between 0.5 – 2% above base. They may not like the house they’re in, it maybe a bit small.

    But you’re not going to get any forced sales going on when living where they are is costing about 1/4-1/2 what it would to rent a similar property.

    And IMO this is the point missed by alot hee. No-one needs to sell while their housing costs are so low.

    Unfortunately the best deal any of us are likely to get (now the banks have wized up to previous ridiculous resets id 3% above base.

    So having sold and paid someone elses mortgage in an attempt to do the right thing and not get over indebted we have been truly shafted.

    And as an ongoing punishment our future housing costs on whatever we borrow will be several times that of the profligate on the interest element of our borrowings. ;-(

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  • That last one came out crooked once posted.

    (0)
    O
    /

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  • give up

    recaptcha : lanced awaeness

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  • Hey str2007… thanks for trying! “No-one needs to sell while their housing costs are so low.”

    Well i think its more accurate to say “not many people need to sell while their housing costs are so low.” however it doesnt actually take many to sell to see prices fall. People will always have to sell for various reasons, and the prices are determined at the margins, so that all prices (subject to area etc) get adjusted downwards.

    If the IRs being so low continues to support prices then how can they have had 3 months of falls?

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  • str 2007 -http://www.housepricecrash.co.uk/forum/index.php?showtopic=25980

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  • TC………….. you talk of land where the sheep remain attractive and very much pursued………… I talk of the land they affectionately call ‘little Cheshire’……….. Rossett, Gresford, Marford, Holt and the like.. very much geographically in Wales but the mind set so very much tuned towards the Cheshire Life……..prices are astronomical……the Tech is right….pockets within pockets………..desirable areas will always hold up…. don’t think I am knocking you but if your sheep look more attractive than you women, then deepest Wales is for you my man…….. Deep wellies on old boy……….

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