Today's Bear food

Crashy_Time

cells wrote: »

Why do you want or expect mass redundancie and pay cuts?

Just to put things into perspective there are about 2.5 million more jobs and workers in the UK than five years ago. Let's hope there is an additional 2.5 million jobs created in the next 5 years.

I didn`t say I wanted or expected anything, I was replying to someone else. People forget that a massive amount of ordinary people now have BTL when they say "Oh, any downturn will mean it is harder to get loans to buy property", it will also be harder to hang on to property that you don`t live in, especially now that BTL is a tax target.

ukcarper

What do you mean massive amount of ordinary people own BTL and what do you mean by ordinary.

p1212

AFF8879 wrote: »

Why would you hope for a house price crash? Do you think it would suddenly mean all lower income people will suddenly be able to buy a home?

An economic shock severe enough to cause a house price crash in the UK will almost inevitably cause mass redundancies, pay cuts, and rises in rent....so not much chance of HPC = being able to get on the property ladder.

Yes, falling asset prices means exactly this, the wealthy ones loses the privilege of ownership on those assets and cannot milk others for using these assets anymore. And then more poeple will be able to buy those assets due to lower prices. Not everyone, but more.

What you say is not true, in 2008 unemployment went up a whole 3% while house prices were in free fall. So 97% of the households were totally unaffected and it was highly unlikely both earners got into this 3 percent.

Actually stopping money flow into housing would mean money has to flow into REAL businesses creating jobs. The problem was not unemployment, the problem was wealthy ones losing money on falling asset prices.

p1212

AFF8879 wrote: »

Why would you hope for a house price crash? Do you think it would suddenly mean all lower income people will suddenly be able to buy a home?

An economic shock severe enough to cause a house price crash in the UK will almost inevitably cause mass redundancies, pay cuts, and rises in rent....so not much chance of HPC = being able to get on the property ladder.

Who told you there is a ladder? The ones who could buy their London houses for 3x the average wage 20 years ago and now sitting on millions?

There is no ladder, it is just the ones who enjoyed decades of debt fueled HPI telling you, please get on the "ladder", please continue the bubble, please take on a huge mortgage for a studio bed flat to maintain THEIR wealth.

cells

p1212 wrote: »

Yes, falling asset prices means exactly this, the wealthy ones loses the privilege of ownership on those assets and cannot milk others for using these assets anymore. And then more poeple will be able to buy those assets due to lower prices. Not everyone, but more.

What you say is not true, in 2008 unemployment went up a whole 3% while house prices were in free fall. So 97% of the households were totally unaffected and it was highly unlikely both earners got into this 3 percent.

Actually stopping money flow into housing would mean money has to flow into REAL businesses creating jobs. The problem was not unemployment, the problem was wealthy ones losing money on falling asset prices.

Lots of nonsense. Firstly the crash of 2008-2010 was just a small correction with national prices down about 10% which just about reversed one years gains.

Secondly it was a credit crunch which meant the credit system stopped working properly so many more than 3% of households could no longer bid. Instead of 'more people able to buy' it resulted in less people able to buy. The proof is in the irrefutable fact that 2016 has millions more renters than 2006. Instead of a crash allowing renters to buy it did the opposite a credit crunch allowed those with lots of savings to buy and caused renting to double!

Also the idea that lending to a BTL reduces credit to 'the real economy' is nonsense. Credit can expand almost infinitely and business have no trouble borrowing now that the credit crunch is over and they have access to the cheapest ever loans. Plus nothing can replace lending for housing as its the biggest stock of wealth in this and most countries.

cells

p1212 wrote: »

Who told you there is a ladder? The ones who could buy their London houses for 3x the average wage 20 years ago and now sitting on millions?

There is no ladder, it is just the ones who enjoyed decades of debt fueled HPI telling you, please get on the "ladder", please continue the bubble, please take on a huge mortgage for a studio bed flat to maintain THEIR wealth.

The prices of 20 years ago, especially in London, were unsustainable cheap. If that is your benchmark of normal you will probably not see it again in this lifetime

cells

ukcarper wrote: »

What do you mean massive amount of ordinary people own BTL and what do you mean by ordinary.

In the UK residential housing has become a broad based investment class. I think its two million who own a second (or more) homes. Add their partners/spouses and that is 4 million people. If you look at indirect beneficiarys these 4 million (probably older) people also have 4 million children (probably adults themselves) who have 4 million spouses who have 8 million children. So we get to about 20 million of the UK directly or indirectly invested in rentals or about 1/3rd of the population.


You may think its silly thinking of it like that but that's the way it is. I know someone who has about 30 homes. He has 3 children who are all married and 9 grandchildren. So that's 17 people (at least) who do/will benefit from residential property. Its also shows why not taking into account the £8.8 trillion that is inheritences and gifts heading the way of the younger generations gives a totally distorted picture

p1212

cells wrote: »

Lots of nonsense. Firstly the crash of 2008-2010 was just a small correction with national prices down about 10% which just about reversed one years gains.

Secondly it was a credit crunch which meant the credit system stopped working properly so many more than 3% of households could no longer bid. Instead of 'more people able to buy' it resulted in less people able to buy. The proof is in the irrefutable fact that 2016 has millions more renters than 2006. Instead of a crash allowing renters to buy it did the opposite a credit crunch allowed those with lots of savings to buy and caused renting to double!

Also the idea that lending to a BTL reduces credit to 'the real economy' is nonsense. Credit can expand almost infinitely and business have no trouble borrowing now that the credit crunch is over and they have access to the cheapest ever loans. Plus nothing can replace lending for housing as its the biggest stock of wealth in this and most countries.

Prices down 10% in 6-12 months will be good enough as a start, thank you.

I know some people like to forget, but someone actually needs to repay all that debt. When you take on debt you exchange someones future income for today's money. That money will be missing from tomorrows economy and that will result in a recession, unless you can devalue money and inflate away the debt.

Now this has worked for a while, but recently people took on so obscene amount of debt just to be able to live somewhere, that their repayments are now too big part of their income, there is nothing left, so they are not able to spend.

While there is an overflow of cheap money in housing market, there is a money shortage in real economy. People have to live somewhere, while iPhones are not important, so they HAVE TO spend their money on your high house prices in shadow economy rather than spending their money in real economy - consuming.

Also ironically your debt inflated house prices brought up a generation of extreme frugal people, who learned how to save every penny, and even if they will have their houses paid off later and they could spend, they actually WON'T spend. Their income will be missing from the economy.

No one cares about bank rates and QE anymore, people just cannot and DON'T WANT to spend. The more QE you making, the lower the bank rates are, the more BTL-ers you've, higher the house prices will be and more and more of the next generations income will be missing from economy.

That's why we have deflation today, a lot of income is already missing from real economy today, due to people buying on too high prices yesterday - especially the young ones - and now paying half of their salaries on mortgage and they are not able to spend. The money supply went into house prices, so real economy has a money shortage, you pay the high mortgage, not the new car...

You can even put bank rates down to -5% these people still won't be able to spend as they still have hundreds and thousands of mortgage on top of their head and they will repay that one first.

Everyone knows this won't go on forever and asset price/wage ratio will reset at some point, but central bankers and leaders want to extend this, until its clear the game is more or less over, so they can have their share from the wealth until that time. And all this will leave to us is a huge mess.

chucknorris

p1212 wrote: »

No one cares about bank rates and QE anymore

Anyone with tracker mortgages will care about the base rate, we have already saved almost £300k in mortgage interest (and still counting) since the base rate was reduced in 2008/9.

p1212

chucknorris wrote: »

Anyone with tracker mortgages will care about the base rate, we have already saved almost £300k in mortgage interest (and still counting) since the base rate was reduced in 2008/9.

You sure about that? 300K saved interest per 7 years is 42K per year, 3500 per month. So you could pay monthly 3500 just for interest before 2008?

How much was the monthly instalment with capital repayments, monthly 7-8 grand or what?

What kind of job you have?