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Debate House Prices
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The bear case
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RenovationMan wrote: »What a lot of time and effort that you guys put into talking about house prices. I've been lurking and occasionally posting in here for a month or so now and the discussion seems to be cyclical, almost completely stuck in a loop.
The only questions I'd ask, and i hope I don't cause offense, is whether you all feel that it's worth it, and what do you achieve by continually discussing the same topic?
owning a house is the biggest (financial) undertaking most of us will commit to in our lives. discussing it (while some of save towards the possibility of having a suitable deposit) even arguing it galvanises us, releases pent up frustration of continually saving and denying yourself life's little pleasures.0 -
PS - more landlords I'm seeing are getting into HMO's.
What are they?'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
RenovationMan wrote: »what do you achieve by continually discussing the same topic?
I just like to argue.
It's like one of those little red executive-stress-relief squishy balls......“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
PS - more landlords I'm seeing are getting into HMO's. I'm thinking of getting one which will cost me £200,000 inc alterations and decorating, but will yield after agents costs some £1500 per month. The agent works out of my office and does not generally have issues collecting in HMO situations - he targets professionals that don't want the cost of full rent.
Yep. BTL was so last decade.
HMO's are the way forward, the yields are far better, and they're the only way we'll be able to house everyone anyway.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
owning a house is the biggest (financial) undertaking most of us will commit to in our lives. discussing it (while some of save towards the possibility of having a suitable deposit) even arguing it galvanises us, releases pent up frustration of continually saving and denying yourself life's little pleasures.
'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
I've been reading, rather than posting lately.
I have picked up some stuff while doing this.
Basically, whichever "side" you are on, it seems data is skewed. Such as the use of compaing todays multiples with multiples from yester-year. We now seem ok with comparing 3.5x one persons wage, with 4x a TWO peoples wages, i.e. a couple. The result is that multiples haven't really changed over the decades. It's still around 3-4x. However, the data used HAS changed, and we seem quite happy to ignore this in laying out the case that prices are still affordable.
From the other point of view, those looking for falls, seem to ignore everything the government has done lately, but also everything the government has done previously, in the boom. I don't think the tap will just get turned off as some seem to be waiting for. The tap has been trickling for years, what with various schemes, loans etc allowing people to afford stupidly high prices. The tap recently was just changed for a fire hydrant and turned up to full flow. That now needs reversing, but will still be left flowing, with various running !!!!!! coming from within it, such as more restrictive shared ownership programmes.
Personally, I feel the key isn't the lack of supply. You can only use that for so long....when people cannot afford something, they cannot afford it. It's as simple as that. We don't all get more money given to us at the end of each month because supply states house prices are increasing.
The key, I feel, is interest rates. Not so much because they will and have to go up, but because we are now USED to these low rates. It's going to be a shock. People have got used to paying a 3rd of their mortgage. They have become accustomed to it. Not people on here, but people out there, who just get a letter through the post to tell them they are paying x amount that month.
The recession never was very painful....the only pain really was for those that lost their jobs, and even those numbers were not very high. We've delayed the inevitable, and thats all we have done. We've spent our way through the difficulties. What we haven't done is invested ourselves OUT of the hole were in. We've just spent money digging a bigger hole to make it a little more comfy.
It's got to end. Regardless of supply, demand, 4x this, 5x that. We don't have the means of digging our hole any bigger to make it any more comfortable anymore. We can't just keep digging to make things look rosy. At some point, we have to get ourselves out of the hole, which means, tightening up.0 -
Graham_Devon wrote: »I've been reading, rather than posting lately.
I have picked up some stuff while doing this.
.
That explains a lot
keep it up, BTW hope the new arrival is not giving you to many sleepless nights. 'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
a decent postGraham_Devon wrote: »It's got to end. Regardless of supply, demand, 4x this, 5x that. We don't have the means of digging our hole any bigger to make it any more comfortable anymore.
this bit is what most of the 'bear' community miss - the house price drops weren't brought on because of lack of affordability but due to to credit drying up.
the real affordability issue is way off and will only be apparent when it becomes cheaper to rent long term than buy. this is years, for now there is enough desire to buy. where there is a will there is a way...0 -
a decent post
this bit is what most of the 'bear' community miss - the house price drops weren't brought on because of lack of affordability but due to to credit drying up.
the real affordability issue is way off in number of years and will only be apparent when it becomes cheaper to rent long term than buy. this is years, for now there is enough desire to buy. where there is a will there is a way...
I agree with the "way" part.
But have we found a way yet?
We had found ways before....just keep extending the amount lent to people. Add on personal loans. Extend the mortgage length.
And then the not quite so targetted stimulus, QE (with "forced" lending agreements if you wanted some), interest rates.
What's the "way" now. What's going to give people the means now? Obviously, going to work, earning an average wage to buy an average house isn't going to work with prices as they are.
So what's the new system? Is there one?0
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