50% house price falls

tr3mor

Generali wrote: »

Reduced electricity supply the network because generating capacity can't cope with demand. Lights go dim, hence brownout.

This would cause huge problems today compared to the 70s. Back then there was barely any complex electronic equipment around. This will be screwed by brownouts.

Also, whilst incasdescent bulbs will dim, I'm not so sure what will happen with all the energy saving bulbs we have.

HugoSP

davilown wrote: »

Where on earth are people getting these payrises from? How is their pay being increased? Look at the public sector pay rises this year. I think you'll find that in reality it is actually a pay cut thats occuring not a rise.

If people don't get paid more, there's no way they'll pay more rent.

I'm renting at the moment and plan to stay for the next 12 months at least until I see what is happening to the market - the fact I only pay £120 a month rent is beside the point.

My point is that earnings in general will increase. I've no doubt that some people will not see an increase over even a 5 year period. I used to work for a company that regularly dished out 2 or 3% annual increases and no more. One year they decided that they could only afford to give the top 20% of its workforce an increase and leave the rest on what they were earning last year. Those 80% received no increase at all, so infact with inflation and interest rate increases etc they actually took a pay cut.

However the reality is that pay is increasing overall. Some may not see an increase for a year or two but people who change jobs, qualify in their chosen fields, get promoted, or are in a growing sector will see increases.

In the long term market pressures will force a correction on sectors that have fallen behind. Even the company I worked for had to award huge pay increases to software engineers before the millenuim just to keep them on the payroll. This trend was repeated with other skills before I left.

pieceoffluff

Generali wrote: »

I'm not saying inflation is a good thing (far from it) but my experience is that when the choice is between inflation and deflation, as it is looking like increasingly, policymakers always seem to chose the former.

FEDs cutting rates aggressively, bank of england possibility of cuts, Greenspans recent comments..guess its a good time to get the savings into an a/c guarenteed to beat inflation?

Generali

pieceoffluff wrote: »

FEDs cutting rates aggressively, bank of england possibility of cuts, Greenspans recent comments..guess its a good time to get the savings into an a/c guarenteed to beat inflation?

Gilts that pay RPI + x% are looking good to me. Then again they always do for the risk averse.

WTF?_2

HugoSP wrote: »

My point is that earnings in general will increase. I've no doubt that some people will not see an increase over even a 5 year period. I used to work for a company that regularly dished out 2 or 3% annual increases and no more. One year they decided that they could only afford to give the top 20% of its workforce an increase and leave the rest on what they were earning last year. Those 80% received no increase at all, so infact with inflation and interest rate increases etc they actually took a pay cut.

However the reality is that pay is increasing overall. Some may not see an increase for a year or two but people who change jobs, qualify in their chosen fields, get promoted, or are in a growing sector will see increases.

The reality for most people in recent times is that the only way to get any sort of pay increase is to change jobs. The only people to get regular increases to compensate for cost of living are government workers and even they are grumbling that it's not enough.

Changing jobs to get a pay rise is all very well if the economy is buoyant and the jobs are out there but if things go into recession then that goes out the window.

Couple that with rising levels of personal debt and very few people will be in the position where they can face off an employer and demand more cash for their job.

Now, if the government loosens inflationary measures (as it seems very likely to do) that is going to have a detrimental effect on all the population. Their salaries become worth less. It also penalises savers whose nest-egg is also eroded in value. Therefore if wages don't rise, we are pretty much all set to become noticeably poorer.

That said, there's still scope for increases in rent irrespective of lack of wage increases. Renting is currently way cheaper than buying so I think renters will quite likely find themselves squeezed. I can see food prices going up too so I'll predict that the proportion of disposable income spent on essentials like food, shelter and energy is going to increase considerably.

HugoSP

!!!!!! - Good post.

There are a few main imcome groups here. I am in one that gives me some flexability with regards to my income, although I am self employed, there are ceilings at to what I can earn. I currently work part time and am taking time out from doing my books to write this. However, even if I go to full time then there is still a very real limit to what I can earn, or I can change my charging rate within market parameters,

Many of those who are employed (probably yourself) are even more restricted. You can ask for more money but you may well not get it. You may be able t work some paid overtime, or get a 2nd job.

However those who are highly paid bankers or in sales etc can literally double or half their income from one month to the next.

Hence for the likes of the normal salaried employees in a rising economy there is less power to their elbow in the short term. Changing jobs, taking advantage of training/development opportunities is as much as they can do. Once a company realises that people are leaving they can then cherrypick the people they want to keep and award them increases.

I can increase my charging rate in line with what my competitors are charging straight away, subject to committments I have made via quotations etc.

Mr Salesman or Mr Banker can increase his earnings the moment his sector picks up.

As a result there are those that will benefit imediately from an overall increase in earnings and those who will have to wait, unless he has the right investments.

Dithering_Dad

keeperbear wrote: »

Ok, your Daily Mail type argument has really scared me. I think I will sell my house, rent and invest my money in a safe major high street bank like Northern Rock. Maybe not.

If the housing market falls by 50% the stock market will also drop like a stone. No type of investment apart from cash will be safe if the economy tanks.

Only shares that are connected with house builders, building societies and banks and other businesses connected with housing will fall. Much like they are doing now in anticipation of a housing crash (I don't just mean the fall out from the Northern Rock debacle, the shares have been going down for months). There is no reason why shares in Oil companies, utilities, etc, etc will go down just because property drops significantly. If anything, share prices in these will go up as people invest their money away from property.

Another safe haven for money is in goverment bonds, though the returns are pretty poor.

shop-to-drop

Dithering_Dad wrote: »

Only shares that are connected with house builders, building societies and banks and other businesses connected with housing will fall. Much like they are doing now in anticipation of a housing crash (I don't just mean the fall out from the Northern Rock debacle, the shares have been going down for months). There is no reason why shares in Oil companies, utilities, etc, etc will go down just because property drops significantly. If anything, share prices in these will go up as people invest their money away from property.

Another safe haven for money is in goverment bonds, though the returns are pretty poor.

Pretty much all shares have dropped like a rock this summer.

Generali

shop-to-drop wrote: »

Pretty much all shares have dropped like a rock this summer.

It depends when summer starts. We're up a little since the start of May, down a little since start of June.

Dithering_Dad

shop-to-drop wrote: »

Pretty much all shares have dropped like a rock this summer.

Then it's a good time to buy some.

Buy low, sell high!