Prices will fall by 50% in four years

brit1234

chucky wrote: »

Margin calls haven't become a household phrase in my household, do you use it much in your [STRIKE]house[/STRIKE] sorry property you're renting from a landlord?

Its been interesting with the government pressure and forbearance from the banks. We know that people have been kept in their houses like never before when they should of been repossessed.

You may deny that Margin Calls haven't become a household name but they have happened and only been temporary reduced with the dead cat bounce. However margin calls have been a household phrase in the Wilson household as or countries biggest landlords have lost control of their portfolio to the banks.



I think we will be hearing more mortgage calls as the banks get more militant and house prices continue to fall.

chucky

Thanks for confirming margin calls aren't a household phrase as you thought they would.

Any update on the Wilson's, I hear that no news is good news. What do you think?

brit1234

chucky wrote: »

Thanks for confirming margin calls aren't a household phrase as you thought they would.

Any update on the Wilson's, I hear that no news is good news. What do you think?

Apart from he is in a huge amount of debt and trying to get a job as an elected police commissioner. Also he is no longer on the times rich list.

chucky

brit1234 wrote: »

Apart from he is in a huge amount of debt and trying to get a job as an elected police commissioner. Also he is no longer on the times rich list.

He's probably got huge amounts of assets too, good news he's not bankrupt too and all their tenants are still in their homes. I'm sure both Mr and Mrs Wilson have a very comfortable and luxurious lifestyle.

Despite him not being on the Times Rich List now, he's a still going to be a very rich man.

N1AK

IveSeenTheLight wrote: »

The whole real term house price debate is irrelevant.

Nobody buys a "real" house price. the buy at the nominal value.

It really isn't. Real house prices are ultimately the only important measure. If house prices averaged £200k in 2030 then house prices would have increased noticably in nominal terms but have dropped in value massively.

Are you mistaking the term 'real' with relation to house prices to mean 'what it is really worth' in a subjective sense rather than as a way of measuring the change of value of an asset? I ask because the second sentence I quoted makes no sense with regards to the later. A houses 'real' sale price is the same as its 'nominal' price at the point where it is bought.

I bought a house a year ago. If it was worth £1,000 more now that wouldn't mean buying had made me a £1,000 richer than I would be if I had not. Ignoring all the other factors like mortgage interest, rent etc then you'd have to compare the interest you could have earnt on the capital invested to see whether it was a financially beneficial move. If my house was worth £1,000 more in 20 years I'd be incredibly naive to think it had increased in value (ignoring the possibility of a long recession).

IveSeenTheLight

N1AK wrote: »

It really isn't. Real house prices are ultimately the only important measure. If house prices averaged £200k in 2030 then house prices would have increased noticably in nominal terms but have dropped in value massively.

Are you mistaking the term 'real' with relation to house prices to mean 'what it is really worth' in a subjective sense rather than as a way of measuring the change of value of an asset? I ask because the second sentence I quoted makes no sense with regards to the later. A houses 'real' sale price is the same as its 'nominal' price at the point where it is bought.

I bought a house a year ago. If it was worth £1,000 more now that wouldn't mean buying had made me a £1,000 richer than I would be if I had not. Ignoring all the other factors like mortgage interest, rent etc then you'd have to compare the interest you could have earnt on the capital invested to see whether it was a financially beneficial move. If my house was worth £1,000 more in 20 years I'd be incredibly naive to think it had increased in value (ignoring the possibility of a long recession).

I've bolded the bit I agree with, essentially buyers need to concern themselves with the nominal price as that is what they will pay (after negotiation) at the point that the buy.

The historical value of which they are gauging to assess it's "real" valuation is of no relevance. Especially as it can be dependant upon the period it is assessed against.

The arguments going around are: -
Inflation since 2007 is circa 14%
House prices have dropped on average 20%
therefore house prices in real terms are down circa 34%.

This is neither here nor there as they didn't buy in 2007.

A buyer in 2012, pays the nominal price in 2012, not anything linked to compare against the historical price at peak.

Indeed, many consider that the peak was a bubble that deflated and therefore the "real" term valuation shouldn;t in the first place be considered against the 2inflated peak bubble"

Maybe you could sho me anywhere where someone makes a "real term" purchase.

The only comparison you can make in "real" terms is after you have procured the item and are then compaing it's value with inflation.

Even if you do that, you'll probably find that houses reflect quite well against other assetts i.e. cars, PC's etc

N1AK

IveSeenTheLight wrote: »

The only comparison you can make in "real" terms is after you have procured the item and are then compaing it's value with inflation.

Even if you do that, you'll probably find that houses reflect quite well against other assetts i.e. cars, PC's etc

Given that I bought a year ago I'm clearly not of the opinion that buying property is a stupid decision at the moment. The difference between real and nominal prices is largely abitrary for most people, however should they ever wish to evaluate whether they made a financially optimal decision then they can only do so by using real changes not nominal changes. Obviously most people don't need to do this and it's a moot point.

However anyone claiming that house prices have increased or decreased must either use real change if they want to be remotely credible. You're correct in highlighting that other factors make housing a reasonable investment even if house prices suffer a moderate fall in real term value.

IveSeenTheLight

N1AK wrote: »

Given that I bought a year ago I'm clearly not of the opinion that buying property is a stupid decision at the moment. The difference between real and nominal prices is largely abitrary for most people, however should they ever wish to evaluate whether they made a financially optimal decision then they can only do so by using real changes not nominal changes. Obviously most people don't need to do this and it's a moot point.

However anyone claiming that house prices have increased or decreased must either use real change if they want to be remotely credible. You're correct in highlighting that other factors make housing a reasonable investment even if house prices suffer a moderate fall in real term value.

I'm glad to see you are in agreement then.

"Real" changes are only of value after procurement and have no relevance before owning an assett.

The "real" term falls from peak is only relevant to those that bought at peak and even then they need to assess their own local market data.

Local markets did not all peak at the same time as the UK average, nor have they reacted the same.

I dare say there are even examples of positive "real term" property from peak investments.

coastline

on its way...;)

http://www.craigmurray.org.uk/archives/2011/12/2012-year-of-crash-and-opportunity/

HAMISH_MCTAVISH

More stagnation.



All getting a bit boring now.