If house prices fall rents will rise. Why don't crashtrolls get this?

Zxcv_Bnm

LydiaJ wrote: »

Some people who live in London (a minority, but some) don't really believe in the existence of life outside London. I mean, they would give intellectual assent to the theoretical idea that some people live outside London, but their gut feeling is that outside the M25 is a strange and lonely place, sparsely populated by weird and probably sub-human creatures who haven't the intelligence to realise that London is the centre of the universe, and therefore have no opportunity to get a job, instead subsisting on benefits paid for by "normal people" (ie Londoners), and almost completely uncharted - just a white space on a map with "Here be dragons" written in gothic characters.

London and the south east are the only regions of the country that make a net tax contribution. Everywhere else takes out.

So yes, broadly the UK economy = London.

danothy

Crashy_Time wrote: »

My rent is the same as it was 15 years ago, and I don`t think it will be rising any time soon, it might even be falling.

If your rent was £400/month in 2000 then you were effectively overpaying back then by about 50% in terms of purchasing power if what you are paying now is realistic and fair.

robmatic

danothy wrote: »

If your rent was £400/month in 2000 then you were effectively overpaying back then by about 50% in terms of purchasing power if what you are paying now is realistic and fair.

That's for a room in an HMO, isn't it? I was paying somewhere around £200pm for a room in a flat in central Edinburgh in 2000.

danothy

robmatic wrote: »

That's for a room in an HMO, isn't it? I was paying somewhere around £200pm for a room in a flat in central Edinburgh in 2000.

No idea. I do know though that £400 in 2000 is equal to about £600 now though in purchasing power. Which means that if it was fair and realistic in 2000 for whatever it does get it's unrealistically and unrepresentatively low now, and if it's fair and realistic now it was a mugs rent in 2000.

allthingsmustpass

westernpromise wrote: »

Oh, but rents are already as high as the market will stand, goes the reply. Well, no. what the market will stand isn't static. In my example above, the market will stand £10k a year rent when prices are flat but it will stand up to £20k when they're falling. If you haven't got £20k, you downsize to somewhere the landlord will take £10k for. Your old flat gets let to somebody downsizing from a £30k rent flat. And so on.

I find that interesting, and I haven't experienced a crash so haven't seen this happen. But you do make sense.

But you miss something. What does it matter if rents do rise, providing it is still cheaper to rent than buy in a falling market, and so take that loss on the house value?

It is still better to rent in that situation. That is what 'crash trolls' advocate, renting not buying.

In this situation they are still right. What point are you making? You agree it is better to rent.

Thrugelmir

Zxcv_Bnm wrote: »

London and the south east are the only regions of the country that make a net tax contribution. Everywhere else takes out.

So yes, broadly the UK economy = [STRIKE]London.[/STRIKE] City of London

Corrected for you.

LydiaJ

Zxcv_Bnm wrote: »

London and the south east are the only regions of the country that make a net tax contribution. Everywhere else takes out.

So yes, broadly the UK economy = London.

That is not relevant to the point to which I was responding, which was not about the economy as a whole, or about the distribution of tax burden, but about whether there is an oversupply of houses outside London (which there isn't in general, even if it may be so in some specific areas) and whether "nobody wants to live outside London" (which loads of us do).

CLAPTON

LydiaJ wrote: »

Some people who live in London (a minority, but some) don't really believe in the existence of life outside London. I mean, they would give intellectual assent to the theoretical idea that some people live outside London, but their gut feeling is that outside the M25 is a strange and lonely place, sparsely populated by weird and probably sub-human creatures who haven't the intelligence to realise that London is the centre of the universe, and therefore have no opportunity to get a job, instead subsisting on benefits paid for by "normal people" (ie Londoners), and almost completely uncharted - just a white space on a map with "Here be dragons" written in gothic characters.

well, most people who live in London are people not born there.

maybe they have short memories of where they came from or maybe people living outside know little of life.

LydiaJ

CLAPTON wrote: »

well, most people who live in London are people not born there.

maybe they have short memories of where they came from or maybe people living outside know little of life.

If you define "life" as "London life" then maybe us "outsiders" do know little of it. But there are other kinds of life too - why should they be considered any less worth knowing?

IRL I know lots of lovely people who live in London and understand very well that it is not the be all and end all of life. Why is it only on this forum that I come across people who are arrogant enough to think that a life that's different from theirs doesn't count as "life"?

(Not that I am accusing you of being one such - I'll go with your "short memories" idea. )

westernpromise

allthingsmustpass wrote: »

I find that interesting, and I haven't experienced a crash so haven't seen this happen. But you do make sense.

But you miss something. What does it matter if rents do rise, providing it is still cheaper to rent than buy in a falling market, and so take that loss on the house value?

It is still better to rent in that situation. That is what 'crash trolls' advocate, renting not buying.

In this situation they are still right. What point are you making? You agree it is better to rent.

What crash trolls do not get is that renters are screwed worse by price falls than owners.

Over the last 20 years prices have mainly gone up and rents have gine up by nowhere near as much. This is because buying is a good alternative to renting.

If buying looks worse renting will rocket in cost which puts paid to any attempt to amass a deposit. For owners, in contrast, once any crash is over, the residual equity in your property makes you a good lending bet and in 1996 gave rise to the BTL boom.

Your typical crash troll seems to imagine that by renting he'll avoid all risks and his housing cost will stay the same. Not true.