UK house prices face prolonged bear market

Wookster

We have experienced a 30% devaluation over the last 1-2 years. We all know that Britain imports more than it exports so a devaluation has the net effect of taking money out of the UK economy.

The effect on each of us will be different according to what we buy.

An example of how it is affecting me is I am trying to book a holiday (before I start work again after a 14 month hiatus). 3 years ago, a week kitesurfing holiday (in Egypt) was £450. Gone are those days. Today's prices are nearly double that now.

It feels like there is an enormous squeeze on wealth/ disposable cash at the moment and I'd be very surprised if house prices rose significantly over the next 2-3 years.

I just can't see where the cash will come from.

Really2

Wookster wrote: »

(before I start work again after a 14 month hiatus).

Congrats.
14 Month's........... I must leave this place, help.:)

I just can't see where the cash will come from.

1 point on the flip if it does continue the UK does become a better place for businesses to move too so perhaps not that a bad thing.
They just move away again when the currency gets stronger. (I am sure we have been here before:))

Wookster

Really2 wrote: »

Congrats.
14 Month's........... I must leave this place, help.:)

Thanks. Big weight off the shoulders.

(I won't be rushing out to buy a house though!)

Harry_Powell

Good luck with the new job, Wookster!

ukcarper

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.

All of what you say is true to but to qoute Doctor Gloom’s original post “ The government has certainly fooled quite a few gullible people into believing their property hasn't fallen in value when in reality it most certainly has ” is that true.

JonnyBravo

ukcarper wrote: »

All of what you say is true to but to qoute Doctor Gloom’s original post “ The government has certainly fooled quite a few gullible people into believing their property hasn't fallen in value when in reality it most certainly has ” is that true.

Is it true?

Yes and no.

In £ sterling clearly it hasn't, it's actually gone up in the last few months. And sterling clearly is the most appropriate currency to measure it in. It's what it was probably bought in and what it'll probably be sold in. But that's not an absolute measure of worth. (Again as an extreme example ask a Zimbabwean about that).



Care to value it in another currency though? Not so clear then is it?

Harry_Powell

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.

If you earned £1k per month, or £12k per year you would be eligible for a mortgage of £48k (at 4x salary multiple). Assuming a 25 year repayment mortgage, in order to be paying £500 per month, you'd have to be on a mortgage rate of 11.7%. Surely no one is on such a punative mortgage rate at the moment, especially given that BoE rates are at 0.5%?

Graham_Devon

Harry_Powell wrote: »

If you earned £1k per month, or £12k per year you would be eligible for a mortgage of £48k (at 4x salary multiple). Assuming a 25 year repayment mortgage, in order to be paying £500 per month, you'd have to be on a mortgage rate of 11.7%. Surely no one is on such a punative mortgage rate at the moment, especially given that BoE rates are at 0.5%?

That's a rather spectacular effort.

I'll mark that one 7/10.

ukcarper

JonnyBravo wrote: »

Is it true?

Yes and no.

In £ sterling clearly it hasn't, it's actually gone up in the last few months. And sterling clearly is the most appropriate currency to measure it in. It's what it was probably bought in and what it'll probably be sold in. But that's not an absolute measure of worth. (Again as an extreme example ask a Zimbabwean about that).



Care to value it in another currency though? Not so clear then is it?

But as you say it's the most appropriate currency

JonnyBravo

ukcarper wrote: »

But as you say it's the most appropriate currency

Quite.

What's your point?
As it's the most appropriate currency that it absolutely hasn't lost value?