Myth-Busting. Proving Bears Wrong, again.

HAMISH_MCTAVISH

Thrugelmir wrote: »

If you've a business head and understand finance you'd know the answer to that one. Without asking me.

Yes silly me.

As I'm so ignorant, and lacking a "business head", perhaps you can answer for me.

What was the average rental yield on property in the UK in 1750?

And in 1800?

And in 1850?

And in 1900?

And in 1925?

Because the only indices we have run from 1950-ish onwards.

Remember that 100 to 150 years ago 90% of property was owned by 10% of people and the base interest rate was around 4%. And that most peasants lived 4 to a room or worse.

But go ahead, do please inform us as to why you are so sure yields have NEVER been lower.:rolleyes: Preferably quoting actual yields from different points in history.

And why this means in your opinion property prices are too high, versus rents just being too low.;)

HAMISH_MCTAVISH

Thrugelmir wrote: »

But you fail to explain to us mere mortals how its going to be financed.

Well, rising prices have been financed now for many months.

If volume and supply remains low, prices can rise on far less funding than was previously required.

Thrugelmir

HAMISH_MCTAVISH wrote: »

Well, rising prices have been financed now for many months.

If volume and supply remains low, prices can rise on far less funding than was previously required.

And where does this capital funding originate from ?

You say less. But we've borrowed over £1,200 billion to buy our houses already.

HAMISH_MCTAVISH

Thrugelmir wrote: »

And where does this capital funding originate from ?

You say less. But we've borrowed over £1,200 billion to buy our houses already.

So you're selectively ignoring my previous post.

Oh dear, people have been accused of being trolls for less.:eek:

But to answer you, that money has already been loaned. Whereas new mortgage lending, whilst still low by 2007 standards, is more than sufficient to see prices rising every month for tha last 5 months.;)

Prices rising on lower volume, and lower supply, requires less funding. Simples.,

Thrugelmir

HAMISH_MCTAVISH wrote: »

Yes silly me.

As I'm so ignorant, and lacking a "business head", perhaps you can answer for me.

What was the average rental yield on property in the UK in 1750?

And in 1800?

And in 1850?

And in 1900?

And in 1925?

Because the only indices we have run from 1950-ish onwards.

Remember that 100 to 150 years ago 90% of property was owned by 10% of people and the base interest rate was around 4%. And that most peasants lived 4 to a room or worse.

But go ahead, do please inform us as to why you are so sure yields have NEVER been lower.:rolleyes: Preferably quoting actual yields from different points in history.

And why this means in your opinion property prices are too high, versus rents just being too low.;)

Recent history will suffice. Until Mrs T gave the right to buy. Private rentals didn't make up a huge amount of property post war.

I'm asking you the questions.

You wrote a very knowledgable piece. My views on the current situation are well documented. I want to be convinced as to why I should consider property to be a good investment now. Not in several years time.

I invest in other areas. Happily changing my views if well researched views are presented. Something which was sadly amiss in you OP.

Thrugelmir

HAMISH_MCTAVISH wrote: »

So you're selectively ignoring my previous post.

Oh dear, people have been accused of being trolls for less.:eek:

But to answer you, that money has already been loaned. Whereas new mortgage lending, whilst still low by 2007 standards, is more than sufficient to see prices rising every month for tha last 5 months.;)

Prices rising on lower volume, and lower supply, requires less funding. Simples.,

No I answered back to front. Apologies.

So where is the new money going to come from to fund HPI. The boom was on the back of £630 billion of wholesale funds between 2003 - 2007.
A net £350 million in a month isnt enough to drive prices.

LloydsHBOS alone has a funding shortfall of over £200 billion. So will reduce lending rather than increase in the short to medium terms.

Prices rising. Requires higher funding. Creating another bubble. Prices rising, means more selling. Deflating bubble. But leaving higher debt outstanding.

HAMISH_MCTAVISH

Thrugelmir wrote: »

No I answered back to front. Apologies.

No problem.

So where is the new money going to come from to fund HPI. The boom was on the back of £630 billion of wholesale funds between 2003 - 2007.

Well, if you believe the bear meme about prices only rising on the back of a credit bubble, then yes, sure.

A net £350 million in a month isnt enough to drive prices.
.

And yet it has been. For 5 consecutive months.

Can't argue with results......;)

But seriously, it's all about velocity. There is no reason why prices will not continue to rise based on lower volumes. Requiring less funding. And driven by lower supply for many years.

A rising but lower velocity market. The ultimate destroyer of bear memes.

It;s entirely possible. And it;s the bears worst nightmare.

Because rising asset prices means improved balance sheets for banks, meaning more funds available to lend, which leads to rising prices again, and so on and so on and so on.

The virtuous circle, as another poster put it.

dopester

HAMISH_MCTAVISH wrote: »

It;s entirely possible. And it;s the bears worst nightmare.

Because rising asset prices means improved balance sheets for banks, meaning more funds available to lend, which leads to rising prices again, and so on and so on and so on.

It takes two to lend and borrow. Lots of older private shareholders have suffered in banking shares. The shareholdings having seen massive wealth destruction. Like RBS, HBOS and Lloyds TSB shareholders. You won't get me rushing to buy shares in banks who are lending to poor risks to buy very over-valued property.

Yes, illiquid markets can see significant jumps upwards and downwards in price.

Your 'lower volumes = good. Requiring less funding'.

The wider economy is being strangled in the process. Enjoy what you believe to be a good thing (house prices rising) for now Aberdeen. Let's see how jobs hold in Aberdeen and in many other areas of the UK.

I fear many areas are going to be destroyed as private businesses fail in the attempt to try and prevent house prices from falling (rescue schemes, low interest rates, kissy-no repo policies.) Forget buying a house, buy an Airstream or something you can escape with, to go to areas with jobs, leaving the wastelands behind.

Also there are younger generations coming through who are going to be denied basic standards of living and opportunity if things continue as they are. They will react to it as they should... because too much is going into protecting the special-interest groups of Blair's/Brown's/Labour's debt-is-wealth and bubbletastic house price paradigm.

illiquid: An illiquid market has a low value of transactions and/or a small number of participants. Liquidity is the ability to trade quickly any amount at the market price with no additional cost. An illiquid market, therefore, is characterized by the possibility of a sudden rise/drop of a security’s price with modest trading volume.

digipeep

You trolling again Hamish?

Even you know deep down this is a bull trap funded by a desperate government.

Get ready for AT LEAST another 20% drop in house prices.

dfh

120000 new households from immigration.Hopefully,when the tories come to power next year,they will put a stop to this madness and there will be enough affordable houses for the native population.