How interest rates affect property values

ukcarper

mwpt wrote: »

We know that the average age of FTBers is increasing. I'm not sure if we have stats for the salaries? It would be very interesting.

Sorry to ask, but since I've had multiple people posting and trying to respond to those, I've lost track of where we showed the long term trend of earnings to mortgage ratio. Could you please post the long term trend stats? (not just a year on year stat). I thought I showed an increasing trend since 2008 (with the usual short term ups and downs).

I never said the age was increasing I said earnings after a bit more research it also seems deposits in London have increased from 20% to 25%.

ukcarper

ukcarper wrote: »

The average was 3.13 in 2005 and 3.3 in 2207. Its the earnings of actual buyers that matter most of the fgures show house prices to median earnings in area.

Surely if low interest rates were the driver prices would be increasing everywhere

Still below 3.4 in 2015 it's higher in London 3.84 according to cml in 2012 gross earnings for FTB was £50k and increased to £56k in 2014 dropping back slightly in first quarter 2015.

wotsthat

mwpt wrote: »

I think many people, even on this forum would point out the flaws in this. Use results as an indicator, sure, but analyse why after that.

There's no point spending too much time analysing when (a) I think chance plays more of a part in life than people would like to admit and (b) there are people with far better insight than me who can do it for me.

mwpt wrote: »

Out of many thousands of traders, all rolling dice as their investment strategy, picking the top 1% of those traders and calling them successful based on results would still be wrong.

I'd call someone who correctly calls heads or tails 10 times in a row a success - albeit a lucky success. Meanwhile, the chap who completes the equally unlikely feat of wrongly calling heads or tails wrong 10 times in a row is a massive tool.

I might be biased in thinking people more successful than me are luckier but, as I've remarked before, I might be the only person on this forum with a bias if not the whole Internet.

mwpt

wotsthat wrote: »

I'd call someone who correctly calls heads or tails 10 times in a row a success - albeit a lucky success. Meanwhile, the chap who completes the equally unlikely feat of wrongly calling heads or tails wrong 10 times in a row is a massive tool.

Sorry, I'm not sure if you're agreeing or disagreeing. We started where I pointed out that outcomes are not necessarily the best way to evaluate decisions. Picking the top 5% of coin toss callers and basing your ideas on their results isn't a good idea.

If you're at all interested in why, there are various books that are easy reads.
Taleb's - Fooled By Randomness or Black Swan are good.

mwpt

wotsthat wrote: »

Knock yourself out - I'm just saying it's a special case.

My suspicion is mortgages are being rationed. I can't provide stats and therefore it couldn't possibly be true but logically..

Sorry, just revisiting this. Trying to understand why mortgages are being rationed in one area but not others.

It's the same question you're asking me, why are low interest rates driving up prices in one area but not others.

wotsthat

mwpt wrote: »

Sorry, I'm not sure if you're agreeing or disagreeing. We started where I pointed out that outcomes are not necessarily the best way to evaluate decisions. Picking the top 5% of coin toss callers and basing your ideas on their results isn't a good idea.

If you're at all interested in why, there are various books that are easy reads.
Taleb's - Fooled By Randomness or Black Swan are good.

I've read both those books and we're mainly agreeing. Outcomes may not be the best way to evaluate decisions but are a good starting point. Success is a different beast and outcome is everything even if that success was related to luck. Anyway, even if people did spend more time analysing decisions I still think they would build in bias - not many people would think to analyse a decision where the result was desirable but the logic was flawed.

I've taken it a step further. I believe outcomes (especially when stock picking) are more random than people like to admit. That being the case then analysing the results will have limited benefit - if something is random then there's little value in analysing it. Rather than analysing I believe people are actually creating a narrative because randomness is scary and a nice story is protective as it provides us with a sense of order and a predictable future.

These days I'm 100% invested 100% of the time because I don't think timing is possible and/ or I don't have the time/ smarts/ headspace to develop a timing strategy. You've incorporated a timing strategy of sorts and I'm more than willing to accept it works because you're smart etc but I suspect it's more to do with chance. Maybe you've just managed to call three coin tosses.

We're trying our best to disagree and we arrived in this little cul-de-sac because we didn't like to agree Bland Unsight is a clever, articulate knob.

wotsthat

mwpt wrote: »

Sorry, just revisiting this. Trying to understand why mortgages are being rationed in one area but not others.

More people are buying with cash in London so aren't using debt at all so interest rates come out of the equation altogether. Also, people buying with mortgages in London tend to have bigger deposits and more likely to be accepted.

cells

mwpt wrote: »

Sorry, just revisiting this. Trying to understand why mortgages are being rationed in one area but not others.

It's the same question you're asking me, why are low interest rates driving up prices in one area but not others.

mortgages are rationed in the whole country, which is why renting is going up everywhere even in cheap parts of the country

low interest rates are not driving prices. supply and demand is. interest rates impact somewhat on demand side but its not 100% of the demand side. So we have had places like London booming because demand is stronger (higher population growth) and because the economy there is booming (more GDP growth over the last 5 years than the other regions). You then have places like the NE where population growth is much more modest and GDP growth has been very weak for five years

mwpt

wotsthat wrote: »

These days I'm 100% invested 100% of the time because I don't think timing is possible and/ or I don't have the time/ smarts/ headspace to develop a timing strategy. You've incorporated a timing strategy of sorts and I'm more than willing to accept it works because you're smart etc but I suspect it's more to do with chance. Maybe you've just managed to call three coin tosses.

I absolutely do not claim to have made stock returns based on being smart. The market is chaotic and no-one can predict it. The gains I have made are based purely on speculative luck, based on accumulating cash in interest paying accounts until I think the market merits buying in a chunk more. 3% interest on cash in nearly good enough to cover dividends while out the market. The most recent purchase was bog standard VUKE when the FTSE100 hit around the 6000 mark start of January. To me, it's as good as a sure bet that it'll reach the previous peaks sometime, and so it was a good time to chuck some of the cash in. I watched it go down, and I'll watch it go up at some point.

My situation at the moment requires a certain amount in cash or I would have put even more in the market at 5600ish (and still missed and even lower low).

I'm not being particularly analytical about this, I don't have a mechanical strategy that most people would recommend, so smart has nothing to do with it. But essentially my investing strategy is similar to yours, except that I'm willing to take a little more risk of a runaway market by waiting to buy dips. I'll download the FTSE 100 data from yahoo and run a simulation based on monthly purchase and a guesstimate dip-buying strategy.

We're trying our best to disagree and we arrived in this little cul-de-sac because we didn't like to agree Bland Unsight is a clever, articulate knob.

He's somewhat of an internet bully because he is articulate. I don't see what I particularly did wrong over there to annoy them but he seemed pleased that one more "contrarian" had been smacked with the ban hammer. Let me know how the broadcast goes.

Thrugelmir

mwpt wrote: »

rying to understand why mortgages are being rationed in one area but not others.

Where's the rationing? Potential borrowers have to meet certain criteria to obtain a mortgage. That's simply rational policy. No different to obtaining a car loan of some kind.