Real Vs Nominal - Lets Nail It

DervProf

HAMISH_MCTAVISH wrote: »

Pretty difficult to establish that such a thing exists, given that for most people it would have been cheaper to buy at peak than to rent the same house since.:)

Typical bull response, taking pleasure from other's misfortune. As much as Hamish & co would like to believe that everyone who didn't buy at peak were making a concious decision not to do so, most probably couldn't afford to, or were not ready to. That's the bull mentality, now is always the time to buy, and you deserve everything you (don't)get if you don't.

Pimperne1

DervProf wrote: »

Typical bull response, taking pleasure from other's misfortune. As much as Hamish & co would like to believe that everyone who didn't buy at peak were making a concious decision not to do so, most probably couldn't afford to, or were not ready to. That's the bull mentality, now is always the time to buy, and you deserve everything you (don't)get if you don't.

To be honest I think it was the bears of 2005 who were hoping to take pleasure from others misfortunes. Its only human nature to point out that their glee must now surely have turned to glum (indeed you only need to pop over to see them capitulating to confirm this).

DervProf

Pimperne1 wrote: »

To be honest I think it was the bears of 2005 who were hoping to take pleasure from others misfortunes.

I think there is some truth in what you say. I can't deny that I would have had a slight smile on my face had those who dismissed my crazy suggestions fallen by the wayside. I think, deep down, they know they may well have "got away with it". I keep saying it, but at least a bit of pain may have taught a valuable lesson.

Graham_Devon

StevieJ wrote: »

Stagnation was generally the position of the Bulls, otherwise known as a soft landing, I don't know how you can claim anything but serious falls as a vindication of the bear position.

Yer.

Of course it was Stevie. Of course.

What if house prices fall 30%? Will the position of the bulls always have been that they would have done that too?

StevieJ

Graham_Devon wrote: »

Yer.

Of course it was Stevie. Of course.

What if house prices fall 30%? Will the position of the bulls always have been that they would have done that too?

Why don't you comment on what I have written instead of adding something totally eroneous as usual. I think my point is that neither position was correct in 2005, the market actually fell 20% up to Spring 2009, not zero and certainly not 50-70% as quarters were predicting. I think the Bullish position (on here) generally changed to a position of predicting 20-30% falls when the (one in a number of lifetimes) US derived Credit Crunch set in, I think you should remember that footer you set up

Originally Posted by StevieJ
I said they would fall by 20% and bottom in the spring of 2009, some may say optimistic, not for me to comment, to paraphrase the baddie in a famous poitical series

I said 50%

Well, 45-55% I actually said, but got lambasted as it gave to much margin! So going for the middle.

I never have given a date for the bottom though, I just can't predict it comfortably as I never know what Brown will do next!

Though it's passed your prediction

https://forums.moneysavingexpert.com/discussion/comment/20270621#Comment_20270621

Graham_Devon

StevieJ wrote: »

I think the Bullish position (on here) generally changed to a position of predicting 20-30% falls when the (one in a number of lifetimes) US derived Credit Crunch set in, I think you should remember that footer you set up

Exactly.

You CHANGED your tune when the economy changed.

Yet spend (not you personally) SO much time trying to make out that others were wrong because they said something in 2005.

Whats more, bulls have a pop constantly suggesting others were wrong, but now you say you were wrong too, even when you changed your tune based on what happens.

Makes me wonder really why some wish to have a go at those who predicted before 2005, and then say "well bulls change their position, so were right".

Many bears have changed position too, but no one notices that, only that someone said 70% off, therefore bulls win.

As a sidenote, this whole bull bear things is absolute nonsense. The arguing over who was right and wrong and the constant goalpost moving, which means no one will ever have the chance to be right, is mental. Absolutely none of of have been right long or medium term.

StevieJ

DervProf wrote: »

Well, given that any mention of any sort of -HPI, pre 2007, was often greeted with dismisal/laughter/accusations of being a nutter, then I feel a fair bit of vindication. If I remember correctly, there were all sort of predictions of things like house prices doubling every 7 years, average semi-detached being £250K within a few years. These predictions have been proved as accurate as 70% price falls.

I remember asking a question about the standard investment portfolio back in 2006, why should I invest in property if I don't think it will increase in value? I can't find that post but this one from early 2007 certainly captures my thoughts at the time, of course I can only speak for myself.

StevieJ 20-05-2007, 5:10 PM
I have to agree with Carnet on this one we have to make our own judgements, I for one have no intention of investing in bonds or property for the time being.

https://forums.moneysavingexpert.com/discussion/416337

michaels

I think this is slightly disingenuous - you could equally have chosen a similar deal from a lender without the 2% 'promise' and ended up on a 4-5% svr or done the 'sensible' thing and opted for a 5 year fix at 5.5% - either way you would not have been able to pay off nearly as much equity as in your example.

HAMISH_MCTAVISH wrote: »

It obviously isn't.

"Real terms falls" are a desperate fall-back position for argumentative housing bears when they realise the game is up and they've lost the debate.

Because if the bulk of a correction is through inflation adjustment, you might as well go ahead and buy.

Even putting aside all the low lifetime trackers that were around pre-crash, had you walked into any high street branch of major lenders such as Nationwide or Lloyds TSB you could have had a 100% LTV mortgage at base + 0.5% for 2 years, reverting to base plus 2% for life. And a great many people do.

Assuming a purchase at absolute peak in Q3 2007, the numbers work out roughly as follows:

200K mortgage.

After 4 years 25K of the capital has been repaid, 175K remaining.

After 5 years 32K of the capital has been repaid, 168K remaining.

The mortgage payments in total, capital and interest, would have been equivalent to a rental yield of 5.3%,which is pretty much bang on the national average.

The property value today, based on the Nationwide average, would be 180K.

So for those on a typical variable rate mortgage in 2007, and assuming average falls from peak and average rents, it is now cheaper to have bought at absolute peak, even with a 100% mortgage, than to have rented the same property since.

This is why time is the enemy of housing bears.:cool:

DervProf

Graham_Devon wrote: »

As a sidenote, this whole bull bear things is absolute nonsense. The arguing over who was right and wrong and the constant goalpost moving, which means no one will ever have the chance to be right, is mental. Absolutely none of of have been right long or medium term.

Spot on.

Makes a mockery of anyone who mocks G_D.

StevieJ

Graham_Devon wrote: »

Exactly.

You CHANGED your tune when the economy changed.

Yet spend (not you personally) SO much time trying to make out that others were wrong because they said something in 2005.

I didn't particulary change my mind (I was referring to others) because I didn't have much of a view on it before, only to the extent that I thought house prices had probably topped out in Q3 2004, so I suppose in some circles I might have been classed as a bear but then again I didn't expect a crash either.