Get ready for the storm

chucky

Yoshua wrote: »

Are you saying houses will never be undervalued like they were in the 90`s ever again?

you obviously didn't understand the post...

do you know how cycles work?
and that's not the ones that you ride or use when you put your washing machine on!!

Yoshua

Exactly what Im talking about. So how do you think cycles work? obviously you have a different view to me.

chucky

Yoshua wrote: »

Exactly what Im talking about. So how do you think cycles work? obviously you have a different view to me.

how can you compare cycles? interest rates, inflation, wages, affordability indicators are different, each correction has different aspects to it - neither 'real' or 'nominal' prices give you the complete picture.

MrEnglish

House prices are overvalued at the moment.

How long they remain overvalued depends a lot on how long the base rate stays so low.

Yoshua

chucky wrote: »

how can you compare cycles? interest rates, inflation, wages, affordability indicators are different, each correction has different aspects to it - neither 'real' or 'nominal' prices give you the complete picture.

I never said anything about those things.

All I said about cycles is that house prices were undervalued in the 90`s and now they are overvalued.

There will come a time in the future when they will be undervalued again.

You seem to disagree with this for some reason.

Linton

jonewer wrote: »

Not really.

If a house used to cost £100k and now costs £300k then you need an extra £20k of savings to get a 10% deposit.

This is the reason volumes are so low and without the 'bank of mum and dad' the average age of a FTB is now 37.

Quite clearly, this is a significant indication that affordability is very poor indeed.

In fact, the only reason prices were able to rise to the extent they did was because you could get a mortgage with no deposit whatsoever.

Why disregard the bank of M&D? Surely this has increased the ability of some buyers to pay more and therefore increased the price. Affordability remains the same.

Tough on those who cant get finance from M&D, but lucky for those who previously couldnt buy and now can - swings and roundabouts.

I contend that this is really the same for all external changes (interest rates, mortgage availability etc) on the house market - overall affordabality doesnt change much, FTB houses are barely affordable, all that changes is which people can do the affording.

chucky

Yoshua wrote: »

I never said anything about those things.

All I said about cycles is that house prices were undervalued in the 90`s and now they are overvalued.

There will come a time in the future when they will be undervalued again.

You seem to disagree with this for some reason.

overvalued compared to what?

lol - i know exactly what you and Mr English are going to say

Gold and Silver are cheap!!!!

chucknorris

Yoshua wrote: »

I never said anything about those things.

All I said about cycles is that house prices were undervalued in the 90`s and now they are overvalued.

There will come a time in the future when they will be undervalued again.

You seem to disagree with this for some reason.

Of course he is not disagreeing! How could he be when he is saying it is cyclical which means they will be over and under valued at different parts of the cycle

Linton

Yoshua wrote: »

I never said anything about those things.

All I said about cycles is that house prices were undervalued in the 90`s and now they are overvalued.

There will come a time in the future when they will be undervalued again.

You seem to disagree with this for some reason.

Disagree.

FTB houses may rise or fall in price depending on the broader economy, but the "value" is always appropriate to current and perceived short term future economic conditions.

The situation is simple - we have a large demand as most people without a house in principle would like to buy one and the supply is limited because the number of new builds is small (planning laws and availability of corporate finance) and people with houses dont move readily - it's a hassle.

Under such conditions the price will rise so that only a few of the potential FTBs can actually afford to buy.

Major endogenous (internally generated) cycles would seem to occur only with those commodities bought for the perceived long term investment potential (tech shares, tulips etc) where the demand may temporarily be very high (or low) because the perception is wrong. FTB housing is not like this - prices are high because people want somewhere to live and are prepared to pay a high percentage of their free wealth for it. What that wealth is depends on the wider economy.

Conrad

The fundamental point missed by the official stats and academics is the real earnings are higher than reported earnins. Trust me I witness this daily.