Bulls, watch this video and try and counter the argument...

StevieJ

bubblesmoney wrote: »

the price quoted in the video and the chart i posted is 'an inflation adjusted price for 2006 dollars'. so a 100 years ago the price in actual terms would have been a lot lesser than now.

If that is true (I am sure it is) why couldn't many people afford to buy a house 100 years ago

bubblesmoney

StevieJ wrote: »

If that is true (I am sure it is) why couldn't many people afford to buy a house 100 years ago

probably because they rented for a while because of lack of credit and bought houses for cash as house prices would have been lesser due to lack of credit.

have seen similar effects in india up until very recently. most people before the recent credit boom there used to live in rented accomodation and buy for cash a house after saving enough. but now with the credit boom prices sky rocket 30-40 times and people HAVE to buy only on credit as very few people can buy for cash now. so one buys a house by paying a lot more plus pays the interest on the mortgage as well.

i know what i would prefer, stay in rented while saving and buy for cash without mortgage if at all possible. most ordinary people did manage to do this before the credit boom. credit is needed for businesses where higher stock costs will be there. but i am not certain that credit needs to be cheap for housing as that just inflates house prices and then one needs more middlemen to buy a house. middlemen (mortgage providers etc) just add to the cost of the asset purchase as ultimately one has to pay for their services apart from the asset price even though this might be hidden in the mortgage payments.

macaque_2

bubblesmoney wrote: »

it is precisely because of 'is' dependent that we will face the effects of the credit crunch and banking crises more and it will filter into after effects for others as well.

Good grief. Are you suggesting that our august banks and financial sector are not a great British success story?

bubblesmoney

macaque wrote: »

Good grief. Are you suggesting that our august banks and financial sector are not a great British success story?

come again where are northern rock, bradford and bingley, RBS, Lloyds, HBOS etc etc success stories i guess probably why they all need bailouts now. we should consider the bailouts as performance bonuses for their 'success' stories. anyway the bankers seem to think so as large bits of the bonuses still go down as their bonuses rather than saving the business! no wonder fred goodwin got his pension doubled and got the full pension even though he retired early. wonder why he didnt get fired for incompetence without a pension.

just as their leverage was a success story during the boom (northern rock remember), the same leverage these banks have will be their tombstone around the necks when they jump into the deep sea of the bust. but they will drag the rest of us along with them with the bailouts. privatise the profits and socialise the losses.

Conrad

The analysis on that vid is flawed and biased against socialism.

He claims the 'socialist' style interventions that came in the mid thirties did no good as the depression deepened.
What he fails to understand is those interventions came way too late and too little just as we saw with Japans lost decade.

Conrad

As an example of intervention that came very late but did make a difference, consider the electrification of US farms. Prior to 1935 less than 20% of farms had electricity, which meant those farmers familieis and thier workers had no use of consumer goods such as washing machines, radios and so on.

If electrification had been undertaken in 1929, along with many other early interventions, I suspect the depression would have been shorter and shallower

macaque_2

Conrad wrote: »

The analysis on that vid is flawed and biased against socialism.

I hate to say it but I agree with you. It is ignorant and biased anti socialist propaganda.

I like anti socialist arguements to be fair, honest and reasonable. It doesn't take any more effort to do it properly.

mewbie_2

macaque wrote: »

Good grief. Are you suggesting that our august banks and financial sector are not a great British success story?

Yeah, but the September ones are not so good.

leveller2911

My point is too many people over here have treated buying a house as PROFIT making exercise and not homebuying.
When I had people coming up to me saying "i,ve made £100k profit from selling my house, did they offer me any money? no of coarse not, Now those same people are "expecting" us the tax payer to "bail" them out ...

Its nothing short of greed ..........perverse in fact.

We didn't do it in the 80,s (members of my family had negative equity then, but they worked and got through it) so why now ???

kt63_2

inflation factors in all the things that you mention above

The thing is that inflation doesn't happen equally across all assets / commodities etc... I agree that house prices are going to continue to fall. What I question is the notion that the average house should always have a value of $100,000 (in real terms) or some other set value. I would argue that the price that people are willing to pay for a house should have risen over the last 100 years due to lower interest rates, longer life expectency, higher levels of wealth etc... A nicer house is always high on people's list of "wants" so it is unsurprising that as a population gets wealthier people want to spend that weath on property. As their is a limited supply of property, prices will rise.

I think that the rise in property prices over the last 10 years has been crazy and obviously fuelled by too much credit. I expect property prices to continue to fall substantially in the short to medium term. What I am arguing is that the base line to which they will fall might be a slowly rising line, rather than a flat line.