HPI Warnings Everywhere!!!!!

HAMISH_MCTAVISH

"A bust to come"
http://news.bbc.co.uk/1/hi/business/your_money/372697.stm

"Boom out of control"
http://news.bbc.co.uk/1/hi/business/the_economy/410393.stm

"Interest Rise Worries"
http://news.bbc.co.uk/1/hi/business/the_economy/504785.stm

I think the media have definitely changed their tune, there simply weren't any of these sorts of worrying articles back in 1999.

michaels

Loving the interest rate chart with an axis showing 4.75% to 7.5%

Glad I didn't buy in 99 is all I can say

wotsthat

michaels wrote: »

Loving the interest rate chart with an axis showing 4.75% to 7.5%

Glad I didn't buy in 99 is all I can say

Yes I didn't heed the warnings either and bought in '99:(

If only I'd listened and waited for the crash I could've paid rent for 10 years and purchased my present house for c2.5 more than I did a decade earlier. Don't get me started on interest rates - average 4.3% since then:mad:

Why didn't I listen to the doom mongers?

AndyGuil

As identified in the articles. Demand massively out strips supply. Nothing new but nothing has changed.

92203

wotsthat wrote: »

I could've paid rent for 10 years and purchased my present house for c2.5 more than I did a decade earlier.

Indeed, and this is the crux of the problem.

Those of us who hadn't entered the world of work and established careers at this point will have to borrow more, earn more and ultimately achieve much more to afford the same house at 2.5x the price.

It also places a floor at the bottom of the housing market which means that even with established careers and reasonable jobs, if you have any intention of starting a family (and allowing for reduced earnings and/or child care) you end up living in a rough area. I have no expectation to own a 3/4 bed semi with a driveway and garage, a 2 bed terrace would be fine. All I want is to live in an area where people show each other respect and consideration, bring their children up properly, and ultimately have a good work ethic.

Jason74

92203 wrote: »

Indeed, and this is the crux of the problem.

Those of us who hadn't entered the world of work and established careers at this point will have to borrow more, earn more and ultimately achieve much more to afford the same house at 2.5x the price.

It also places a floor at the bottom of the housing market which means that even with established careers and reasonable jobs, if you have any intention of starting a family (and allowing for reduced earnings and/or child care) you end up living in a rough area. I have no expectation to own a 3/4 bed semi with a driveway and garage, a 2 bed terrace would be fine. All I want is to live in an area where people show each other respect and consideration, bring their children up properly, and ultimately have a good work ethic.

This is all both true and reasonable. Despite what one or two posters on here might try and say, There can be little doubt that people starting their careers now till have less favourable outcomes than those who started their careers 30 years ealier, simply because they are born 30 years later.

The only comment I would make, is on the issue of "rough areas". Being a Londoner, I perhaps have a very "region specific" take on this, but the area issue is (here in the capital at least) perhaps more nuanced than you mention. What tends to happen here, is that as more relatively affluent people are "forced" by high house prices into "less desirable" areas, those areas change. The make up of people moves up the economic scale, local businesses spring up to cater for them, and the area becomes less "rough". Not ideal while you (in the general sense rather than you personally) wait for the area that you bought in because it was all that you could afford to improve I grant you, but London is full of places that were once considered no go areas, but are now highly desirable.

wotsthat

92203 wrote: »

Those of us who hadn't entered the world of work and established careers at this point will have to borrow more, earn more and ultimately achieve much more to afford the same house at 2.5x the price.

That's true but misses a point. Prices weren't 'normal' in 1999 - they were cheap - and just look at the doom mongering headlines that went with them.

Prices are cyclical. I'd spent the previous decade in negative equity and could easily have made the same argument that you make above. The chances are that anyone buying in 2009 will, on average, turn out to be wealthier than someone 10 years older. At worse if things go really badly maybe we'll have the richest generation followed by the second richest generation - still a result.

the_flying_pig

HAMISH_MCTAVISH wrote: »

"A bust to come"
http://news.bbc.co.uk/1/hi/business/your_money/372697.stm

"Boom out of control"
http://news.bbc.co.uk/1/hi/business/the_economy/410393.stm

"Interest Rise Worries"
http://news.bbc.co.uk/1/hi/business/the_economy/504785.stm

I think the media have definitely changed their tune, there simply weren't any of these sorts of worrying articles back in 1999.

the risk that prices will go down after going up is pretty much a second order issue for most people other than estate agents.

the real downside is just the social and economic damage wreaked by the price rises themselves.

or am i missing something?

presumably you're saying that the early & mid noughties warnings about HPI were all a nonsense, & that there was nothing bad about that at all?

i know it's easy to say with hindsight but house prices weren't high compared to rents or incomes at the time these articles were written and, in particular, total household debt wasn't very high. spot the difference with now.

HAMISH_MCTAVISH

wotsthat wrote: »

That's true but misses a point. Prices weren't 'normal' in 1999 - they were cheap - and just look at the doom mongering headlines that went with them..

A very good point.

Prices in most of the 90's were the cheapest multiple of income in recorded history... And even in 1999, at the very start of the last upswing, were incredibly cheap by historical standards.

And yet the media then trotted out exactly the same fear-mongering "bubble" scare stories that they are today!!!

It's obvious the media pay absolutely no attention to the fundamentals of supply and demand, and just scream "bubble" the moment prices rise.

And equally obvious that they have a long history of doing exactly that.....

Now the recovery has just started and we're at the very earliest stages of the next upswing, the media will no doubt be proved wrong just as they have many times before.

The recovery is not even complete yet, and then there's the next boom to come after that.

This is only just getting started.:D

HAMISH_MCTAVISH

the_flying_pig wrote: »

am i missing something?.

Yes.

As always....

HAMISH_MCTAVISH

92203 wrote: »

Indeed, and this is the crux of the problem.

The crux of the problem is we are short a million houses.

And the shortage is worsening by 150K houses a year.

Everything else is just noise, and a BS distraction from the fundamental cause of high prices in the UK.

If you want cheaper houses, build another 3 million in the next decade.

If that doesn't happen, expect HPI to continue at a monumental pace.:cool:

As for me, I don't think this country has a snowballs chance in hell of building enough houses, thanks mainly to the mistakes of rationing credit for the last 7 years and worsening the housing shortage to now epic proportions.

So I've positioned myself accordingly.

And when prices boom to new record high levels, you can blame the idiots who thought it was a good idea to restrict credit and cause the lowest build rate in a century.