House Price "Crash"

dannyboycey

mitchaa wrote: »

Inflation just makes it complicated

The £20 note in my wallet is worth less than it was yesterday, or the day before, let alone this time last year. You can't ignore it. We all know that the government's inflation figure is a crock of crap too - 'real' inflation is probably in double figures now.

Numbers and graphs only show half the story - you only need to the family shop in Tesco and fill up with petrol on the way to realise that!

pickles110564

dannyboycey wrote: »

The £20 note in my wallet is worth less than it was yesterday, or the day before, let alone this time last year. You can't ignore it. We all know that the government's inflation figure is a crock of crap too - 'real' inflation is probably in double figures now.

Numbers and graphs only show half the story - you only need to the family shop in Tesco and fill up with petrol on the way to realise that!

When does BOE release latest IR?

mrstinchcombe

But inflaion is only "2.5%". :rotfl:

Of course this is only true if you don't drive, don't use gas or electricity and have a diet that consists of space raiders and freddie frogs!

mitchaa

dannyboycey wrote: »

The £20 note in my wallet is worth less than it was yesterday, or the day before, let alone this time last year. You can't ignore it. We all know that the government's inflation figure is a crock of crap too - 'real' inflation is probably in double figures now.

Numbers and graphs only show half the story - you only need to the family shop in Tesco and fill up with petrol on the way to realise that!

Yep i know what you mean.

This time last year my wife used to fill up her car for about £37.50, today it costs a smidgen over £50.

But in the terms of houses, like i said before a house may be worth £180k in Oct 07 and £184k in Oct 08 so actually a gain on paper but because it is less than the 3% CPI (£185400) then its actually a fall when inflation is factored in.

I understand that, it just gets complicated when you try to work out true % fall as opposed to direct comparisons MOM/YOY etc

mitchaa

mrstinchcombe wrote: »

But inflaion is only "2.5%". :rotfl:

They lost the battle last month and finally upped that to 3%;)

We all know real inflation is at least double, if not treble this figure.

Generali

pickles110564 wrote: »

When does BOE release latest IR?

Tomorrow. I predict a hold FWIW.

Next CPI comes out on 17th June. My guess is up a fair old bit again, perhaps to 3.3 or 3.4%. If it's much above that then expect to see a rate rise. If it's below 3% then expect a cut. It's very unlikely to be below 3% though.

WTF?_2

mrstinchcombe wrote: »

But inflaion is only "2.5%". :rotfl:

Of course this is only true if you don't drive, don't use gas or electricity and have a diet that consists of space raiders and freddie frogs!

Mmmm. Space Raiders and Freddo frogs are two personal favourites. You may be on to a viable inflation-beating strategy there.

In fact, if I just spend more of my income on flat panel TVs I should be an inflation 'winner'. I'm already hording six litres of veggie oil which has gone up by about 25p/litre since I bought it a couple of months ago so I'm gaining from inflation

(Too bad about my savings though...... but it's my own fault, who has savings these days?)

mitchaa

chucky wrote: »

another classic post



and which business or pricing model did 'everyone' use to calculate this 200% if not 300% mistake/cover-up by the government...

some people do really like to put some gerneral comments on here that are based on zero fact.

Well a 6 pint of milk has went up from £1.88 to £2.28
A loaf of wholemeal hovis has went up from £1.05 to £1.31

And a litre of diesel has went up from 97.9ppl upto around 128.9ppl

So i make that 21.5% rise in the cost of my milk
I make that 25% on the cost of my bread

And i make that a 31.5% increase in the price of my fuel.

All neccessities, but dont worry the price of a sandwich toaster has fallen by a fiver to off set these increases:rolleyes:

Tell you what, you prove to me why real inflation is only at 2.5%-3% because as far as im aware a lot of lifes neccessities have rocketed over the past year far more than the government tells me by only 2.5-3%

mitchaa

chucky wrote: »

maybe he'll give you a job as Chief Economist - you've done a very good job there...

Thanks:D

I suggest you take your head out of the sand;)

JamesSE22

As a former Estate Agent, I can only say the following:

people in property/asset management and finance/banking talk up the markets on a continual basis, completely ignoring the reality of the financial imperatives that support the markets in the first place. It's a sort of unrealistic wish fulfillment. And it works.
Ditto when things look bad. They are like a load of celebrity gossip magazine readers who get a bit giddy and talk rubbish.

In my experience of the London market (which is less variable than the wider UK market), there has been steady and dangerously unrealistic growth for the past 5 years.
In my opinion, the market had breached affordability for it's core clientele, those first or second time buyers and those wishing to trade up, way back in Summer 2006.
Summer 2007 was simply a joke and I actually feel very sorry for anyone who bought at that time, overpaying considerably and overstretching themselves financially.
It's one of the main reasons why I am happy I have left the industry.
We have a period of "readjustment" now which will continue until end of 2009.
I think, overall, compared with summer 2007 prices you will see a minimum of a 20% fall in resale values, and that's for London prices.
Wider UK prices are probably reaching somewhere close to that fall in resale around now.
I know that I sold property at 10% under the asking as a matter of course from September 2007 onwards, in central London.
Some of the portfolio which is still unsold is now down 15% from August 2007 prices, and still not selling.

The fact that the mortgage market is actually being made more stable by limiting entry into it for people who are a bad risk is nothing but a good thing.
This is something that should have happened 2 years ago.

The analysts are focusing on the "negative" that people will lose 20% of the value of their homes etc.
OK, but that is 20% of what?
A property's value at the top of the market?
Well that's not actually so bad. It is still resellable, just for less return.
If you've remortgaged, and remortgaged, and removed most of the equity from your property to fund a lifestyle choice which you can't otherwise afford, then more fool you. Sorry if that sounds harsh.

And as to Buy-To-Let, that side of the market lost it's sustainability in 2005 when, after a blip, property prices started to climb sharply again.

ANY investment, be it shares, property, a business venture, whatever, carries a strong element of risk.
Anyone investing needs to do their research, not over-reach themselves financially (ie, don't gamble MORE than you can afford to lose) and have an exit strategy in place should a venture not go to plan.

To gamble on your home is plain daft.
I have seen people do it repeatedly, I have even advised clients of mine not to risk it but been told, by and large, to mind my own business and that the market was only going up so what was I worried about.
I was even reprimanded by managers for suggesting caution.
Those people will soon, if not already, come a cropper.
I feel really sorry for them as its a hard climb back up once you've had a big fall.
All the serious investors I have come across, the ones with a sustainable business plan, will start small and take 10 years to grow a business "organically", allowing themselves to absorb the costs of any mistakes without jeopardizing the actual business.
There's always a cushion fund set aside for such a situation.
And they will diversify their risk element as part of the "exit strategy".
The ones who go bankrupt are the ones operating with too tight a margin.
I can understand the lure of the ever rising market in the last few years having sucked so many people in, but what happens when it does go down, and it will and is now?

If your mortgage on a property, at its lowest borrowing rate, is within 10% of the maximum rent you can charge for a property, then it is financial suicide to think that it's a wise investment.
Personally, it shouldn't be more than 60% of the achievable rental otherwise there is no capital gain for the investor, so why do it?
And that stage of the market went in 2005.
Ditto any equity release from your primary residence.

My former colleagues are now moving in droves to the rental market. But that too will peak this year as people, unable to sell, will simply flood the market with rental property driving rental values down.

I think where the media has been irresponsible in its reporting is in suggesting that property is a free for all and that anyone can succeed without heeding experienced investors. Shows like Sarah Beeny's Property Ladder where the outcome has been that her very sensible advice is always ignored, and people have made gains in spite of refusing to listen, and this is emphasized, probably don't help.

I would recommend anyone who is thinking about buying a property to take a long term view.
Plan to be in it for at least 5 years and treat it as it should be, your home, not as a cash cow.
If your job is secure for 5 years and you can reasonably afford it, with the highest rate mortgage available on the market as it stands, then go for it.
Otherwise rent.

Or work 2 or 3 jobs to save enough so that you aren't at the mercy of a lender or an unstable financial market when you do come to buy.
You may not get what you want now this minute, but its more satisfying to achieve a goal after having earned it. Easy come, easy go.

Anyway good luck.