Now this is a Property Bears nightmare

Fella

gorgeyetsun wrote: »

The rate people at which people are saving may have increased, but the return on those savings is not. The value of the savings is therefore eroding against inflation.

In practice this can be quite different. In my part of Essex, houses cost the same now as they did 5 years ago. Anyone who chose decent fixed-income savings products or who invested in index-linked bonds could easily have been making 4-5% net interest over that time. For people in those types of cirucmstances the last few years have been excellent.

It's pensioners or anyone hoping to live off savings who've been hit hardest by the low IRs.

gorgeyetsun

Fella wrote: »

In practice this can be quite different. In my part of Essex, houses cost the same now as they did 5 years ago. Anyone who chose decent fixed-income savings products or who invested in index-linked bonds could easily have been making 4-5% net interest over that time. For people in those types of cirucmstances the last few years have been excellent.

It's pensioners or anyone hoping to live off savings who've been hit hardest by the low IRs.

I can't see too many people being able to invest in index-linked bonds at 4-5% over the last 5 years. I also can't imagine anyone tying up their house deposits in investments longer than that sort of time frame?

mystic_trev

gorgeyetsun wrote: »

I can't see too many people being able to invest in index-linked bonds at 4-5% over the last 5 years.

Well they sold out quickly enough!

gorgeyetsun

mystic_trev wrote: »

Well they sold out quickly enough!

Which ones were these and what return are they making?

Fella

gorgeyetsun wrote: »

I can't see too many people being able to invest in index-linked bonds at 4-5% over the last 5 years. I also can't imagine anyone tying up their house deposits in investments longer than that sort of time frame?

My savings have averaged exactly that over that period through a combination of index-linked bonds & fixed-rate savings. So have other people I know. The bonds for sale around 2007 were extremely attractive and there were 4 tranches on offer allowing savings of up to £60K in that year alone.

I also think you'll find most people need to save for at least 5 years to get a deposit nowadays.

gorgeyetsun

Fella wrote: »

My savings have averaged exactly that over that period through a combination of index-linked bonds & fixed-rate savings. So have other people I know. The bonds for sale around 2007 were extremely attractive and there were 4 tranches on offer allowing savings of up to £60K in that year alone.

I also think you'll find most people need to save for at least 5 years to get a deposit nowadays.

2007 was 5 years ago and therefore anyone saving for 7 years would have started saving in 2005 and would have only been able to put 2 years worth of savings into those attractive bonds. The bulk of their savings would therefore be at the mercy of inflation.

Most bonds are 3 to 5 year investments. I'm assuming your bonds are now maturing - what sort of return are you looking at over the next 3 to 5 years?

mystic_trev

gorgeyetsun wrote: »

Which ones were these and what return are they making?

The last three Issues, I believe.

Anyone who takes time to review their Investments should be doing quite nicely at the moment,anyone who's mainly into 'cash' won't. My Equity returns (last year) were around 20% I believe there are a number of people here who did even better.

homelessskilledworker

armour wrote: »

It is a decision of the Government,” he said of any change in the Bank’s remit.

I don't know why you're always jumping down Hamish's throat HSW. I could see this coming a mile off.
When was the last time the bank hit it's 2% target?
By some measures, HMG has debts & liabilities of 900% of GDP, don't you think it makes sense (to the government) to inflate the debt away?
I believe there is gonna be highish inflation for the next decade or so whoever wins the next election.
Nobody should be holding cash.

"People holding cash"

Or what others might call saving.

No, the bank has not held it's 2% target in recent years, but it has done a brilliant job of keeping it close, and if it kept on doing the same nobody could really complain.

But if we are talking about letting inflation getting close to double digits, then we are playing a dangerous game.

Fella

gorgeyetsun wrote: »

2007 was 5 years ago and therefore anyone saving for 7 years would have started saving in 2005 and would have only been able to put 2 years worth of savings into those attractive bonds. The bulk of their savings would therefore be at the mercy of inflation.

Hm you seem determined to view this period as something that can only have been bad for someone saving for a house. I'm pointing out that's not necessarily true.

gorgeyetsun wrote: »

Most bonds are 3 to 5 year investments. I'm assuming your bonds are now maturing - what sort of return are you looking at over the next 3 to 5 years?

? These are index-linked.

moneyinmypocket

Thrugelmir wrote: »

Is that why house prices are falling once inflation is taken into account?

More than one way to skin a cat.

I am afraid your wrong