Bank warns of 'deep recession'

Wookster

Really2 wrote: »

In my opinion their will be no instant appreciating assets in the next 3 years+

But if you are looking long term around that time buying a house may be worthwile. With the BOE perdicting inflation to be around 0.5% in two years time you will certainly get a reaonable mortgage rate.

But in the end it depends on the reason you buy for if it is short term gain other assets would I dare say perform better (especialy after costs)

I reckon I'll be happy with capital preservation.

House buying depends on if you're a bear or not. I am a bear and I don't believe that house prices will recover to peak 2007 levels for >10 years. Furthermore I believe that house prices will continue to drop for the foreseeable future and will not rise until the economy has rebalanced.

Really2

mbga9pgf wrote: »

Well, I hope to be sufficiently savvy financially to make a killing when the time comes!

Really, you forget the power of the depositors though.

Want to see what can happen when we all pull our savings unless savings rates outpace inflation by 2%?

Gordon is arrogant but not stupid. Debtors are screwed. They took the cash. Gordon knows depositors have him by the balls if he tries to inflate this one away.

No I understand their power.

But unfortunatly a lot like the idea of secutiy over interest (pensioners etc). In the end that is what banks originaly supplied years ago.
Interest 2%+ over inflations is a phenonomon which was hand in hand with HPI.
Along with HPI it is long gone I think savers need to come out of denail on that just like people need to on their house prices.

There are always riskier investments that can give greater reward but if you want investemnt you have to accept risk.;)

mbga9pgf

Well, my attitude is, you cant make a good profit all the time, and although there has been a few scary moments, cash definitely is the safest asset to hold IMO at the mo.


I would prefer to be making 5.1% with tesco than -20% in housing and - something in shares!

Really2

Wookster wrote: »

I reckon I'll be happy with capital preservation.

House buying depends on if you're a bear or not. I am a bear and I don't believe that house prices will recover to peak 2007 levels for >10 years. Furthermore I believe that house prices will continue to drop for the foreseeable future and will not rise until the economy has rebalanced.

But you also belive in strong inflation.
That would mean houses sky rocket with little warning

It's not about being a bear or a bull if you belive what you are saying you should be looking at housing very soon before hyper inflation gets hold.
Your above post does not fit in with strong inflation.

Really2

mbga9pgf wrote: »

Well, my attitude is, you cant make a good profit all the time, and although there has been a few scary moments, cash definitely is the safest asset to hold IMO at the mo.


I would prefer to be making 5.1% with tesco than -20% in housing and - something in shares!

I agree. You sould always be comftable with your decissions. I hate having large somes of cash in the bank (that is why I offset because at least if my bank goes then at lesat my savings get offset)

Really2

lostinrates wrote: »

I'm not finding cash so darn comfortable either ATM.

How come? and where have you been?

lostinrates

mbga9pgf wrote: »

Well, my attitude is, you cant make a good profit all the time, and although there has been a few scary moments, cash definitely is the safest asset to hold IMO at the mo.


I would prefer to be making 5.1% with tesco than -20% in housing and - something in shares!

I sort of agree, well I must, we are holding cash.

Wookster, again, I sort if agree, again, I must do, we have not so far bought, but regardless of whether our bullish or bearish opinions lie DH and I hope to buy in the near future, not for investment purposes but for somewhere to live: I agree with you to do so in the hope of short term gain/ value holding would be very unwise.

Wookster

Really2 wrote: »

But you also belive in strong inflation.
That would mean houses sky rocket with little warning

It's not about being a bear or a bull if you belive what you are saying you should be looking at housing very soon before hyper inflation gets hold.
You above post does not fit in with strong inflation.

It is entirely possible to have falling asset prices and inflation of essentials.

In order to inflate away debts to manageable levels, the UK would need at ~20% inflation for 2-3 years. That would be incredibly damaging to the economy in itself.

WTF?_2

mbga9pgf wrote: »

Buying for long term home. Which means maximising my net worth vs price of a home. With prices faling over the cliff in the not too distant future, I am on track for that. What I do with cash between now and then is very difficult to say. Everything bar cash is so damn volatile at the moment.

One argument repeatedly used by the bulls was that there would be no house price crash until we had unemployment.

Well, leaving aside the inconvenient (for them) fact that prices must be at least 20% off peak already it will be interesting to see where house prices go from here on in as the curse of mass unemployment starts to bite home.

I think the government wants to inflate out of this mess - but with a lot of people unemployed that simply won't do any good. They need to start thinking in terms of paying off debt and getting finances on a sound basis - not borrowing yet more and then printing the stuff when no-one will lend it.

Short term pain for long term gain - not some sort of short term sticking plaster that causes more problems than it solves further down the line.

mbga9pgf

Really, to be fair to wookster, Inflation and HPI dont go hand in hand. You can have 14% inflation and 0% HPI quite easily, simply because people cant afford to bid up house prices when they are struggling with the cost of groceries.

Until wage inflation catches up mind... Which its not going to for a long, long time.