UK house prices face prolonged bear market

Really2

IveSeenTheLight wrote: »

I think Joeskeppi's point is that generally, people purchase UK property with pounds sterling.

To add with a GBP mortgage. So in reality if your mortgage and purchase are both in the same currency their is no effect by currency deflation as the mortgage falls the same also.

How many people have moved to the UK because of the exchange rate?
If they did that would be 20% difference(+ current fall from peak)?
So if our property seems good value to move country you would think further falls below the nominal bottom last year are unlikely.

JonnyBravo

IveSeenTheLight wrote: »

I think Joeskeppi's point is that generally, people purchase UK property with pounds sterling.

On saying that, the reports of the exiles brits wishing to return home should arguably not get a better time to do so.

Really2 wrote: »

To add with a GBP mortgage. So in reality if your mortgage and purchase are both in the same currency their is no effect by currency deflation as the mortgage falls the same also.

So???

The lower valuation of the pound still has an impact. To keep it simple....

If you have less pounds in your pocket as you've spent more than you used to on items which have gone up in price due having been imported it still has an effect.
Now I'm not some mad frother saying everything is going to cost a thrupenny bit but if one can't see it has some effect one is either being deliberately obtuse or one has their head buried in the sand.

Graham_Devon

JonnyBravo wrote: »

So???

The lower valuation of the pound still has an impact. To keep it simple....

If you have less pounds in your pocket as you've spent more than you used to on items which have gone up in price due having been imported it still has an effect.
Now I'm not some mad frother saying everything is going to cost a thrupenny bit but if one can't see it has some effect one is either being deliberately obtuse or one has their head buried in the sand.

Yes. And think of the kids.

IveSeenTheLight

JonnyBravo wrote: »

If you have less pounds in your pocket as you've spent more than you used to on items which have gone up in price due having been imported it still has an effect.

I didn't realise my homes (or the mortgages secured on them) had been imported.
Which currency should they be relevant to then?

Really2

JonnyBravo wrote: »

So???

The lower valuation of the pound still has an impact. To keep it simple....

If you have less pounds in your pocket as you've spent more than you used to on items which have gone up in price due having been imported it still has an effect.
Now I'm not some mad frother saying everything is going to cost a thrupenny bit but if one can't see it has some effect one is either being deliberately obtuse or one has their head buried in the sand.

The exchange rate effects inflation, but the inflation is low and could be deflation if the £ was stronger.
If that inflation actually means my house is worse less in £ is very debatable IMHO.

I get what you are saying but to what extent is has an effect would be very difficult to work out.
If a person now has £30 less in their pocket each month I would have no idea how to prove how much that would push down HPI.

But to go back to the point, yes house prices may be cheaper if you have kept you money in a different currency ($, €) from pre crash.
But for the vast majority of buyers it will have made no major difference, (a lot less than interest rates) as they will be UK residents earning £'s.
But yes they may feel a difference if they were to sell up and move abroad compared to say 2006. But again that would be a small minority of sellers also.

JonnyBravo

IveSeenTheLight wrote: »

I didn't realise my homes (or the mortgages secured on them) had been imported.
Which currency should they be relevant to then?

Don't be a nob.
How about the petrol in your car?

Graham_Devon

IveSeenTheLight wrote: »

I didn't realise my homes (or the mortgages secured on them) had been imported.
Which currency should they be relevant to then?

Oh lord.

Lets say you pay £500 a month towards your mortgage payment.

You earn £1000 per month.

You spend £50 on fuel in the month of April.

You have £450 left over.

May you spend £60 on fuel because the price has gone up (not neccesarily due to exchange rates, but this is being used as an example only of how exchange rates can change prices).

You have used exactly the same amount of fuel, but in May it costs you £10 more.

In may you have £440 left over, £10 less purely because of price fluctuations due to the exchange rate.

JonnyBravo

Really2 wrote: »

The exchange rate effects inflation, but the inflation is low and could be deflation if the £ was stronger.
If that inflation actually means my house is worse less in £ is very debatable IMHO.

I get what you are saying but to what extent is has an effect would be very difficult to work out.
If a person now has £30 less in their pocket each month I would have no idea how to prove how much that would push down HPI.

But to go back to the point, yes house prices may be cheaper if you have kept you money in a different currency ($, €) from pre crash.
But for the vast majority of buyers it will have made no major difference, (a lot less than interest rates) as they will be UK residents earning £'s.
But yes they may feel a difference if they were to sell up and move abroad compared to say 2006. But again that would be a small minority of sellers also.

C'mon really you're not debating with a bin-lid-banging frother here.

Can't you see if you have a devalued currency you are poorer?
Ask them in Zimbabwe for the ultimate example.
I agree of course it makes no major difference to the vast majority but it makes a small difference to them. I also agree interest rates have more of an impact etc. The problem is you're just looking at internal forces and there's more to it than that.

Really2

JonnyBravo wrote: »

C'mon really you're not debating with a bin-lid-banging frother here.

Can't you see if you have a devalued currency you are poorer?
Ask them in Zimbabwe for the ultimate example.
I agree of course it makes no major difference to the vast majority but it makes a small difference to them. I also agree interest rates have more of an impact etc. The problem is you're just looking at internal forces and there's more to it than that.

Yes we are poorer comparatively looking externally. But TBH in terms of housing cost it is hard not looking internally. I have no other currency and although I get your point from a personal viewpoint I have not thought houses in France are worth more. Also if the £ shot up to €1.4 I would not suddenly feel any richer. In reality I would not realize any of that gain or loss until transferring my currency and that would mean liquidating my assets.
Unless you get massive devaluation it is hard to run with the Zimabwe point because the £ can climb again and I would honestly say I would feel no great difference.
I suppose what I am saying is looking at wealth in terms of exchange is also a bit one dimensional.
I presume the average American does not feel 33% richer now than he did in 2006. But if we use exchange rates he is compared to us.
Will he/she ever come to realise that gain, most probably not (EG they cant move here and still have their US job paid in $).

So I do and don't agree with you in a way as internal factors dominate how we perceive our wealth more than external IMHO.

IveSeenTheLight

Graham_Devon wrote: »

Oh lord.

Lets say you pay £500 a month towards your mortgage payment.

You earn £1000 per month.

You spend £50 on fuel in the month of April.

You have £450 left over.

May you spend £60 on fuel because the price has gone up (not neccesarily due to exchange rates, but this is being used as an example only of how exchange rates can change prices).

You have used exactly the same amount of fuel, but in May it costs you £10 more.

In may you have £440 left over, £10 less purely because of price fluctuations due to the exchange rate.

Graeme, extremely p!ss poor anology, what you are talking about is inflationary factors and not about exchange rates.
However, let's stick with it for a moment.

If my mortgage has stayed the same while everything else inflates in cost, what does that say about the value for money I have on my fixed debt mortgage costs?

Getting back to my point. If I earn GBP and I spend GBP on properties, what influence does the exchange rate with the Euro / Dollar / Yen or whatever have to impact on the housing costs.

What you've described is the effect on imported goods on a disposable income, but again to re-iterate, the last time I checked, my properties and their mortgages were not imported products.

Banana's, oranges, pineapples etc have an impact on my disposable income due to the exchange rate and import effect, properties do not

I can agree if you are talking from a foreign investment point of you that the exchange rate matters or if a UK earner is investing abroad, but not a GBP earner, buying a UK property.