Wednesday, March 30, 2016

Assets and income

House price crash could leave savers without cash to fund retirement, Bank official warns

With a title like that, this simply *has* to be on the blog. Owning the roof over your head is a reasonable and sensible goal for retirement but you need an income as well. High house prices are making life harder for young people and distorting financial planning for pensioners.

Posted by quiet guy @ 10:02 AM (5867 views)
Please complete the required fields.



16 thoughts on “Assets and income

  • Misallocation of capital, the lazy do nothing way in a broken economy.

    A Ponzi, screw-you retirement scheme.

    Reply
    Please complete the required fields.



  • Really? Is it a misallocation of capital for it to flow into housing, where there is a SHORTAGE?!

    Yes, it always goes exponential and then corrects, or crashes, but this exponential house price inflation has been ongoing now since the last World War. At what point do you admit that this is a trend and not an anomaly?

    Reply
    Please complete the required fields.



  • Don’t know, ask the Bank of England.

    Reply
    Please complete the required fields.



  • It wouldn’t be a misallocation of capital if it was going into new-builds !

    Reply
    Please complete the required fields.



  • Libby, I’m calling BS on you. I reckon housing “went exponential” when governments like ours abandoned credit controls in the 1970s. I bet that if you pull out a time series of house prices over time it will show that – stability up until the 1970s. So, pull one out to show me wrong.
    Nick

    Reply
    Please complete the required fields.



  • Also, Libby, yes it is a misallocation of capital, since mostly people are buying houses that already exist at higher and higher prices, doing nothing for the supposed “shortage”. Secondly, even if that were not the case, nobody has produced convincing evidence of a shortage, despite all the hype.
    N

    Reply
    Please complete the required fields.



  • stillthinking says:

    i.e. all the oldies can see the writing on the wall and want to get into subsidised property debt asap. and carney has to start barking because he won’t bite with interest rates.
    so we get to centrally mandated loans, don’t lend this lend that, orders from the boe. you can see this as a loss of confidence in sterling. even with abe puking yen all over the place sterling is still going down.
    oops starting to run out of suckers.

    Reply
    Please complete the required fields.



  • Sorry, nick, house prices soared during the 1930s, soared during the 1950s, soared during the 1960s, soared during the 1970s, soared during the 1980s, soared during the 1990s, soared during the noughties.

    Why? Because house prices are leveraged to wages, with an oscillation around that trend relating to credit and deposit availability. So long as we live in a fiat money system where currencies depreciate, and ours left the gold standard in World War I, not the 1970’s, house prices will rise exponentially, at a pace faster than wages.

    Reply
    Please complete the required fields.



  • Libertas – you appear to have poor knowledge about charts and trends from reading many of your posts over the last year or so. All trends end and we are at the tail end of this one which has run for decades. Impulse trends in a bull market typically run in 5 waves, we have seen the 5th and also seen the 5th of the 5th. London affordability is way past its affordability line in the sand for 1st time buyers and in most parts of the country there is a glut of housing stock, its simply unaffordable to most. Check out the 5 waves that have played out thus far http://www.marketoracle.co.uk/Article54523.html

    Reply
    Please complete the required fields.



  • brickormortis says:

    @Libertas Quoting history is fine but the assumption that what has happened before will happen now and/or in the future is a nonsense. The modern globalised world is nothing like it was in the 1990s let alone anything before and you seem to be overlooking the fact that base interest rates now are basically zero, which they were far from in the 70s, 80s and 90s, for example. The leveraging of house prices to wages is a fair point (Although they are decoupled to an astonishing degree now in many cities), but you are excluding the influence of other factors including base interest rates, availability of credit and inflation. This time and from hereon it is going to be different. I don’t necessarily disagree that rates will end up being reduced before they rise, or that the government have to try to sustain house prices in the near term to project the illusion of wealth (and defend it I am sure they will), but I do challenge your contention the house price patterns of the future are based entirely on past cyclical and established events. Japanese house prices rose for five straight decades with a remarkably consistent gradient and then look what happened. The only scenario now left for UK house prices is a plateau or fall, which I suggest from hereon give or take a month or two.

    Reply
    Please complete the required fields.



  • hi Libby,
    You are merely repeating your unsubstantiated claim. This does not show it to be true. I asked for data, get it? Figures collected by a credible source. Graphs I have seen from Shelter showed static prices until 1970s. Where are your data? I think you just made them up.
    Nick

    Reply
    Please complete the required fields.



  • Here’s a novel idea; put up interest rates to a market level instead of keeping them artifically low. BoE actually assisting deliberately in housing bubble to maintain some semblence that the economy is Ok when in fact it is in the shit.

    Reply
    Please complete the required fields.



  • “the assumption that what has happened before will happen now and/or in the future is a nonsense.”

    The assumption that hundreds of years of history will not repeat is even more absurd. Furthermore, your charts going to the 1970s look static on the low end, because every exponential graph looks like that. Remove the more recent price points and the curve will again look exponential.

    Our house was first purchased in 1932 for about £500. It then sold again in the 1950s for about £5,000, We purchased it for £325k in 2014 and it is now valued at £400k. It will most likely be worth £5m by 2050.

    Reply
    Please complete the required fields.



  • brickormortis says:

    @libertas be wary about extrapolating and exponential growth forecasts, which again you separate from interest rates, a globalised world and the fact that bubbles take the form of exponential graphs in the key pre-bust phases. In terms of house prices, my house has increased in value by about 70% since 2010. I don’t think that is acceptable, normal or without serious dire consequences. Do you think that is sustainable?

    Reply
    Please complete the required fields.



  • Not sure we can compare uk to Japan – if it’s about demand side factors. Population in Japan is falling and the outlook is that the population will keep falling – estimates vary but possibly a third fewer over 50 years – not so in the UK..?

    Reply
    Please complete the required fields.



  • Libby
    perhaps you could try distinguishing betwwen real and nominal price increases. Then take a look at what happened after WW2 until 1975.
    Nick

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>