2004...My Ar*e....Make Your Predictions...

stephen163

mitchaa wrote: »

Great, let's put a different spin on the argument now, weak, very weak argument.

If i took a £50k mortgage out in the year 2000 on IO, it would still be worth £50k today:rolleyes:

What *is* weak is ignoring the time value of money. The value of money changes over time and you must account for this when calculating where house prices are now relative to the past. Anything else is just plain silly.

You'll have to explain that £50k thing tomorrow as I have no idea what you mean by it.

Dithering_Dad

mitchaa wrote: »

I do not get your point here DD, you do not know of my income, savings/investments info, so surely impossible to question

Banks of course would lend the majorities, the issue here would be if i could get 3-4BTL mortgages with deposits

Paul N's post that preceeded yours pretty much sums it up - if house prices fall to those levels it's not because there is no demand for housing (we can see on this site how much pent up demand there is to buy houses - even with so many HPC bears), rather it's because there is no money available to buy. If house prices fall to (say) 1998 levels it is because relative wealth has also fallen to 1998 levels.

If house prices are currently at 2006 levels, then we can be quite secure in saying that relative wealth has fallen to 2006 levels (or below). With the crashes in the stock market, reductions in house equity wealth and reduced income from savings can many argue that they're better off financially today than they were back in 2006? (net worth rather than net income).

Cat695

Dithering_Dad wrote: »

Paul N's post that preceeded yours pretty much sums it up - if house prices fall to those levels it's not because there is no demand for housing (we can see on this site how much pent up demand there is to buy houses - even with so many HPC bears), rather it's because there is no money available to buy. If house prices fall to (say) 1998 levels it is because relative wealth has also fallen to 1998 levels.

If house prices are currently at 2006 levels, then we can be quite secure in saying that relative wealth has fallen to 2006 levels (or below). With the crashes in the stock market, reductions in house equity wealth and reduced income from savings can many argue that they're better off financially today than they were back in 2006? (net worth rather than net income).

I agree with pretty much what you have said there DD however the last bit only works if people keep their jobs...then just how finacially better off are they?

ad9898_3

Your dreamon' mitchaa, proper price increases were in order between 1996 and 2001 Q1, all the increases since then have been pure BTL/bubble/speculation, this will undoubtedly be unwound, I voted 2001, but I didn't take into account any undershoot when I voted, so probably 2000.

To be honest, I'm not really bothered so much as to where we go back to, I'm just happy that 2007 prices have gone for a decade or more. As we ween ourselves off the 'bubble', it's likely to impact a lot of people, houses/employment/currency. But once we are done, the economy will be much better off in the long run.

Ask anyone what would they prefer, high house prices and massive mortgages to repay ?, or lower prices and affordable mortgages, with money to spend on the nicer things in life ?, of which crippling mortgage debt isn't one of them.

Dithering_Dad

Cat695 wrote: »

I agree with pretty much what you have said there DD however the last bit only works if people keep their jobs...then just how finacially better off are they?

Depends on how long they're jobless for. This is why I put the "Net Worth rather than Net Income" caveat in. If I lost my job tomorrow, my net income would fall to zero, but my net worth would stay the same for a while, then be eroded as my emergency savings were used up and severely eroded if I was forced to sell my house at a loss.

Even if people are jobless for a very long period, they can still retain a significant amount of net wealth. For example, my wife and I could lose all our savings/investments and our home and be declared bankrupt, but we would still have a net worth of over £100,000, which is held in our pension plans and untouchable.

mbga9pgf

I take it you have never heard of this deflation thing they have been talking about on the news?

Bet you haven't heard that up to 15% might get written off GDP as a result of the
depression?

Or that money is being systematically destroyed by the credit crunch?

You better start believing it, because we are about to see 10 years wiped off the UK economy as a whole. No more tat-filled shops. No more rediculous credit card limits. Minimum 20% deposits and 3.5X salary maximum. And I cant bloody wait.

beingjdc

mitchaa wrote: »

Do you see a past downward trend in that upward red line?

It's been all over the shop, that red line. It used to say the trend was 2.4% per year growth, but started in the mid-70s. It now says the trend is 2.9% per year growth, but starts in the late 70s.

Make of that what you will.

drbeat

mitchaa wrote: »

Unemployment at 3m, we are not even at 2m Unemplyment has risen from it's usual long term 1.65m upto 1.82m, an increase of only 170k, nationwide this is a minescule amount.

The method of counting those classed as 'unemployed' is different to what it was in the 80s. This Labour govt uses a different method that gives them - or did - a prefered unemployment count. The change was introduced in 2002 I believe. So the real rate of unemployment is most likely higher then 2 million.

beingjdc

drbeat wrote: »

The method of counting those classed as 'unemployed' is different to what it was in the 80s. This Labour govt uses a different method that gives them - or did - a prefered unemployment count. The change was introduced in 2002 I believe. So the real rate of unemployment is most likely higher then 2 million.

Some of the criticism of the Government is fair on here, some is unfair. This is unfair. Between 1979 and 1997 the way unemployment was counted was change roughly 27 times.

Since then, the Government has published both the old claimant count numbers, and the International Labour Organisation numbers. The former are very similar to the figures used under the Tories, and the latter are an international standard with which the Government cannot tamper, and which show a higher number.

drbeat

Here's a link to a Times article that discusses what the real unemployment rate might be:

http://www.timesonline.co.uk/tol/news/politics/article5361869.ece