Doom mongers proved wrong

macaque_2

Over the past 50 years inflation has repeatedly come to the rescue of property speculators. Time after time inflationary pay rises have kicked in to erode the ratio of mortgage debt to disposable income.

Today our manufacturing base is too weak to underwrite inflationary pay rises and the ratio of mortgage debt to disposable income is being forced up. At the same time, house prices are falling. This is called deflation and is cyanide for property speculators.

The Office for Budget Responsibility has forecast that average earnings this year will increase by just 2.2 per cent, followed by an increase of 2.4 per cent in 2012, raising the prospect that workers will suffer from effective wage cuts for the next two years.

http://www.telegraph.co.uk/finance/economics/8325943/Mervyn-King-warns-of-inflation-for-next-three-years.html

The doom mongers on this website have been telling us for years that house prices will never come down. Young (and not so young) people have been forced to live in rented accomodation for years whillst house prices soared beyond their reach. I say the doom mongers are wrong. House prices are coming down.

Graham_Devon

House prices may be coming down, but I have to sit on the fence, and make no friends here from either side...not at the rate that inflation is eating into the money we have available for house purchases. I.e., just as inflation is eating away at property investors potential profits, it's also not really helping people get any closer to saving the percentages required for a house purchase.

We haven't reached the end of the tricks that will be pulled out from sleeves to keep prices up yet. After todays summit, I'm a little downbeat about the prospects for housing getting any easier for my generation. And I'm really saddended for my son, who these people are currently doing all they can to make sure he, and his peers, never enjoy a single part of what they have enjoyed....so they can enjoy it just a bit longer, while creating ever worse and more expensive ways for their offspring to provide for their families.

Cleaver

Graham_Devon wrote: »

And I'm really saddended for my son, who these people are currently doing all they can to make sure he, and his peers, never enjoy a single part of what they have enjoyed....

Ahhh, look on the bright side, he might be one of the 99% of people who don't really let house prices bother then one way or another.

smeagold

In The New Statesman Faisal Islam looks at how different generations, as well as different income brackets, have different interests. British baby boomers, he says, have kicked away the ladder for the generation following them -- effectively robbing their own children of the things they had.

"If you are over 50, you will recall a blessed carelessness about money in your twenties and thirties that you probably took for granted at the time. You had free university tuition and, if your parents were sufficiently poor, full university maintenance grants. To that, add free dental care; cheap (relatively) houses with gardens; mutualised building societies; statutory retirement at 65 (probable retirement well before then); and final-salary private pensions."

"Demographics show the root of the problem. On the Office for National Statistics website there is an animation which shows age distribution in Britain. The population pyramids that once showed many young people at the bottom supporting a small number of older people at the top is being flipped on its head."


And there it is again. Trickle up, not trickle down. The young and struggling supporting the old and affluent, when it "should" be the other way around. The poor supporting the rich. Resources going to those who already have them, not those who need them. That gravity-defying inverted pyramid is the shape of our times. There's one consolation: it's completely unsustainable, materially and morally. So it won't be around for long

http://imomus.livejournal.com/283498.html

ChrisEvanson

Cleaver wrote: »

Ahhh, look on the bright side, he might be one of the 99% of people who don't really let house prices bother then one way or another.

What basis of fact is that based on?

House prices are a concern to a lot of people. However I think to those who are moving to larger properties, rising prices are over-rated.

If your house cost £100k with a 50k mortgage and you have your eye on a £200k house. A few years later prices have doubled, wahaaay your house is worth £200k, but the one you want is now £400k. So your new mortgage would be £200k plus whatever was left on the old house. Previously that house would have cost you £150k mortgage.

Think about it. Rising prices, a big con.

Graham_Devon

Cleaver wrote: »

Ahhh, look on the bright side, he might be one of the 99% of people who don't really let house prices bother then one way or another.

Eh?

We are all directly effected by house prices. Just listen to the news, and the worry about interest rates going up and therefore mortgage rates rising.

Look at rents, and the amount of people who can no longer even afford to rent without help, trapped on benefits with no real way out.

I don't particularly want him being a slave to debt all his adult life, which, if these shared equity schemes really got off the ground, you really would be, as even though you own, you'd still be paying rent maybe into your pension years......that's the danger of setting these schemes up en masse to cure todays problems. Just means house prices rise again, and buying even a percentage of a house becomes difficult, leaving people paying mortgages and rent. Shared Ownership already went that way in the boom, with the cost of a percentage of a house and rent, becoming just as out of reach as the full house prices shared ownership was set up to help with.

If we are approaching 40 years old now, as FTBs, just imagine what it may be like for people trying to do the same as us in 25 years time, if all we do now is do the very best we can to protect current mortgage holders and their equity and come up with schemes to simply kick the can a bit further.

Cleaver

ChrisEvanson wrote: »

What basis of fact is that based on?

House prices are a concern to a lot of people. However I think to those who are moving to larger properties, rising prices are over-rated.

Graham_Devon wrote: »

Eh?

We are all directly effected by house prices. Just listen to the news, and the worry about interest rates going up and therefore mortgage rates rising.

Look at rents, and the amount of people who can no longer even afford to rent without help, trapped on benefits with no real way out.

I know that house prices are a concern and an interest to a lot of people. I was more making the point that 99% of people don't join a forum, have thousands of posts dedicated to debating every monthly fall to the nth degree and forming imaginary waring factions to endless defend the views on house prices to the death.

Statistically, Graham's son will be a normal, lovely person who moans about the prices of houses down the pub, then probably forgets about it and gets on with fun stuff like go-karting.

We should always remember that if you do / know any of the following, you're officially weird:

1) The date that Haliwide release figures
2) What 'Haliwide' means
3) What a housing bull is
4) What a housing bear is
5) Spend more than four houses debating with a stranger what seasonally adjusted means
6) Think about Hamish the minute Aberdeen is mentioned on the TV
7) Think about House Price Crash when you see HPC, instead of Health Professionals Council.
8) Know imediately what MOM YOY CPI RPI DGLG RM BOE FTB
9) Know imediately what 'that graph' means as soon as someone says it
10) Use phrases such as 'crash denier'
11) Think about how much your house is worth in silver. This is weird even if you only think about it for two seconds

So all I am saying is that I bet Graham's son doesn't do any of the above, and leads a normal life where he isn't that bothered. Most people do the opposite of their parents anyway. He'll probably be a BTL landlord.

Asheron

Telegraph ? Lol