Support grows for 70% crash

Percy1983

You will find the average salary drops if you exclude london, but as said all averages have flaws.

HAMISH_MCTAVISH

Graham_Devon wrote: »

You *might* have your house burgled, or you *might* have a fire.

You pay insurance for these.

Pretty sure insurance doesn't cost you three times the price of your house over a lifetime.

Rent does.....

macaque_2

Gorgeous_George wrote: »

So, if i understand this right...

.. people should put their lives on hold just in case macaque is right and prices crash (or fall gradually) by 70% over an indeterminate length of time.
That is really useful advice.
What a clown. Have you ever thought about training to be financial adviser Mr macaque?
GG

You have the wrong end of the stick here Gorgeous.

If you buy a 4x4 vehicle for £50k and sell it four years later for £10k, you can argue that you had £40k's worth of enjoyment. If you buy a 4x4 for £50k and try to tell me it's a good investment, then I'm inclined to move any scissors or sharp objects out of your reach.

It is the same with houses. For many people, the pleasure of owning their own home easily outweighs the pain of capital loss should it occur. Where I start to scratch my head however is when I see people buying new houses whilst hanging onto their old ones. Perhaps this is why Estate Agents no longer keep paper knives on their desks.

If your answer to a contented life is to own your own home, you should buy without hesitation. If however you are heavily leveraged in property for speculative reasons, my advice would be to think again. You can monitor short trends and convince yourself that a 6 month blip is a hold or a buy signal but you are only kidding yourself and fellow travellers. The bottom line is that property in the UK is far more than people will be prepared to pay in 15 years time. We are facing what is likely to be a very long and savage bear market in property (probably worse than Japan).

Graham_Devon

HAMISH_MCTAVISH wrote: »

Pretty sure insurance doesn't cost you three times the price of your house over a lifetime.

Rent does.....

Are you running out of things to say? You must have said the same thing aroudn 15 times today. This time it bares hardly any relation.

Carol was talking about factoring in possibilities based on todays economy.

Julie changed that into being hit by meterorites.

I said to Julie that she most likely covers herself financially for othe rpossibilities, i.e. insurances, but she was trying to dumb down carols point.

You come back with yet another post about rent?!

I'm pretty sure paying insurance if you never claim costs you 100% more than you could have paid. But that don't stop you paying it, does it.

julieq

Yes Graham, and how are insurance premiums calculated?

In case you don't know, it's on the basis of risk tables, which is to say that someone sits down and works out how probable something is and what it costs when it happens. Then they add in a profit margin and sell the insurance for a profit. They are specifically understanding risk and pricing it.

When Macaque blathers on about 70% falls in 10-20 years, he removes any quantification of the level of risk. It's really just raw worry. And it's a meaningless statement anyway unless he baselines the prediction, are the falls from current levels, or from the levels they'll reach at some time in that period?

You can plan on the basis of risk you can quantify. Only a fool (or a lemming) plans on the basis of rhetoric and fear. You can't plan out all risks, but if a risk is conceivable it can be quantified and assessed, on that basis you can figure out if a risk is worth taking (or mitigating in some way).

Understand this, and you have the key to generally doing the right things in life or business - no-one will ever get everything right. And obviously the key to never winning any bets at all is to take none, which is the position you get into if you allow Macaque style rhetoric and worry to rule your actions.

julieq

Graham, I was not dumbing down Carol's point. I was debating it. For the reasons I just explained, saying that something "might" happen is meaningless unless you explain how likely it is and what it costs.

sjaypink

Chris_Hinds wrote: »

Averages conceal all manner of things. Bare that in mind when using statistics.

Indeed.... You forgot to mention the bit about average wages for the age groups buying a first property....

misskool

Actually, calculating risk or making risk assessments is interesting. you get a group who are incredibly risk averse and shoots anything down in flames and then you get a group who believe they are taking risks but run riot at anything and you get the canny ones who don't tell anyone what they're doing.

Oh sorry, I thought I was on the GIOL board

[Deleted User]

carolt wrote: »

Funny that, my parents bought in the 50's too. Not as posh as your parents, of course - my dad was only a manual worker.

But they didn't have to live in a rented room at all - they'd actually bothered saving a deposit before marrying. They got a 2.5 or 3 X times multiple (of the single salary) mortgage that enabled them to buy a 3 bed semi in a very nice north London Zone 3 suburb. Price in 2007 - approx 500K.

Your parents must have been really rubbish with money. Or have seriously annoyed their bank manager.

My parents certainly found it much easier to buy than their children. None of whom, on far, far better paid jobs, could have afforded an equivalent purchase as FTBs.

And that just goes to prove that peoples' experiences varied wildly back then just as they do now. We have some people insisting that you can't buy a FTB flat for less than 90k when all over the country there are dirt cheap properties - some of which can be picked up for as little as 25k. Even 2 bedroom houses at 50 - 60k. Some people insist they can't get mortgages for properties like this - others manage without a problem.

I do think though that you're being a little harsh suggesting that those that don't do as well out of the property market as others are 'rubbish with money'. It's not that black and white. A lot of people that do well get lucky. A lot of people that do badly get unlucky. But I do agree that for the most part we make our own luck.

I'm assuming that you and your kids and grandkids (if you have any) inherited your parents' talents and are amongst those that are doing well out of property?

HAMISH_MCTAVISH

Deleted_User wrote: »

We have some people insisting that you can't buy a FTB flat for less than 90k when all over the country there are dirt cheap properties - some of which can be picked up for as little as 25k. Even 2 bedroom houses at 50 - 60k.
?

Absolutely correct. The only reason prices have risen so far in the few areas where they are out of reach, is because supply has not kept up with demand in those areas.

People can either move to areas where supply is plentiful and prices are cheap, or they can continue to live where prices are expensive and hope that someone builds enough houses there to permanently lower prices, beyond cyclical variations.

There are no other options.