Home—Blog—Why house prices aren't finished falling yet
Oct 27, 2011, 09:47
Posted byMerryn Somerset Webb
Comments (50)
Bronwen Maddox added to the spat of recent articles in the press about Japanisation/Japonification in the Times this week. She made several good points about why we are not going down quite the same path as the Japanese (I sort of agree – I’ll come back to this another day). But one of her reasons didn’t quite stack up.
We are not the same as Japan, she said, because the asset price rise and fall in the UK “did not come close to that of Japan’s property and stock markets 20 years ago.” The danger here is in the use of the past tense. I would have phrased the sentence differently: "asset price falls in the UK have not come close to that of Japan’s property and stock markets 20 years ago, yet.”
Japanese prices didn’t fall all at once. It was a long horrible drawn out process. Sure residential land prices ended up down, going on 70%. But they didn’t reach that point until 2005, over 20 years after I took my first job in Japan under the sadly mistaken impression that the crisis was all but over. So if it took that long in Japan for the bubble to be utterly purged, why might you think that asset price falls are over here? You can argue that parts of the stock market are cheap, and you can of course argue that, in the UK, the market as defined by the FTSE 100 at least is in no way representative of the UK economy. But we tried that in Japan for years too (its big exporters were always said to move independently of whatever was going on in Japan despite the fact that all that mattered to them was the price of a yen) and it made no difference whatsoever.
And what happens if we get a real deflationary scare in the UK? What if the stock market suddenly accepts that the bond market is right with its seemingly shocking low yields and there is in fact a decade plus of very low or no growth ahead of us? That will hurt. Then what of house prices here? Is it really reasonable to think the falls there are over? Surely not.
Depending on which indices you look at, house prices after an adjustment for inflation (one the Japanese didn’t have to make very often) are down in the region of 25-30%. That’s a lot. But it still isn’t enough. On numbers from Capital Economics, prices still need to fall by another 20% or so to “restore the historical link between prices and average earnings.” When will this next lurch down come? It has been a slowish business so far. Thanks to very low interest rates, a reasonably stable employment market and the consequent dearth of desperate sellers volumes have been very low and the market hasn’t really cleared. It is possible that this is exactly how things will stay as inflation does the job of bringing real prices down.
But with household income unpleasantly squeezed by high inflation and very low wage rises (combined to create a fall in real wages) and as unemployment edges up, I wouldn’t bet on it. That’s particularly given the case now that there are hints that borrowers won’t be living with ultra low mortgage rates forever regardless of what happens to the base rate.
Lloyds, the largest mortgage lender in the UK, has just raised its standard variable rates (SVR) – the rate to which borrowers coming to the end of a deal move on to – from 4.84% to 4.95% for borrowers with The Mortgage Business and the Bank of Scotland (both part of the group). At the same time, some banks have begun to raise SVRs and tracker rates for new customers; something that appears to have taken many by surprise.
One couple quoted in the Telegraph declared themselves “dumbfounded” by the rise. They are in the process of selling their house. I wonder if the higher payments will make them feel like cutting the price to get it away a little faster? Given that transaction volumes are under half their peak levels and that the average house is now selling for around 10% under the asking price, it might not be a bad idea. More on all this in last week’s magazine cover story: How much further will house prices fall?
Published in Blog More articles by Merryn Somerset Webb
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(27 October 2011, 11:53AM) Complain about this comment
The UK's economic woes may be 20 years behind those of Japan, but they are not far behind those of other countries, such as Ireland and the US, which have sustained very considerable HP downgrades.Can anyone account for this?
(27 October 2011, 01:08PM) Complain about this comment
Capital Economics are wrong, especially in alluding to a "historical link between prices and average earnings". Only 70 % of income comes in the form of earnings. Houses are paid for out of income and savings. The relevant ratio for those who are not cash buyers is the total cost of buying a house over say 25 years. That is currently 7.4 times earnings as opposed to an average 7.2 times(29% of pay) since 1981. On that indicator prices merely need to fall 2.6% to hit the long term average.Basically by 2007 house prices were a good bit ahead of trend,but in the 4 or 5 years since have caught up with their realistic level.
(28 October 2011, 09:48AM) Complain about this comment
Boris you're quite right, MW though is still desperate for the house price crash that never was to occur. The fact is that at £160k the average house is not actually very expensive by todays standards because the average couple earns around £50k combined.
(28 October 2011, 10:08AM) Complain about this comment
Boris,How do you calculate the cost over 25 years? Are you assuming interest rates are maintained at current rates?Obviously with interest rates at a 300 year low these are unlikely to stay unchanged over 25 years
(28 October 2011, 12:43PM) Complain about this comment
'Only 70 % of income comes in the form of earnings. Houses are paid for out of income and savings.'Where is your proof for this. I know few people who earn 30% or more of their income from other means.
(28 October 2011, 04:03PM) Complain about this comment
Dr Ray,Yes, it looks like Boris is assuming interest rates will stay low for the duration of the mortgage. Not really a credible analysis is it?
(28 October 2011, 05:27PM) Complain about this comment
#4 Dr Ray. I do have to assume current interest rates as the cost of buying will fluctuate/change (as will pay/income). One can only make a snapshot at todays or any other date and we don't know what future rates will be. Bare House prices are of little value when considering affordability. We all know there are many cash buyers, but for those with loans it is more crucial if they can fund the debt and pay off the original capital in a reasonable timescale.#5 John Adams. HMRC figures show about 68% of the UK's annual income is in fact "pay" and subject to income tax. The rest is benefits, pensions, investment income, windfalls, inheritances, gambling winnings (even the black economy) and so on. Income comes in many guises and any of it can buy a house!
(28 October 2011, 05:38PM) Complain about this comment
#6 Dodge. It is perfectly credible. When one launches on the commitment to buy a house one looks at what it is liely to cost over 25 years. It is not relevant to look at what it may cost based on the past. The past can however give a clear indication of what tends to happen and since 1980 the cost (over 25 years) of repaying capital, interest at whatever prevailing rate and fees has stayed in the range 6 times income(1996) to 9 times (2006) and typically is 7.2 times. The proportion of income paid out is typically 29.5%
(28 October 2011, 08:18PM) Complain about this comment
As an antidote to Boris' and Alex's VI ramping, I have seen similar "dumbfounded" seller responses in regard to the six houses that I've viewed over the past 3 months. In each case, the house has been a five-six fold multiple over it's original purchase price less than a decade or so ago, and I have offered 60-75% of the asking price for solid reasons of poor material value when gagued against the asking price.Sellers have responded with opprobrium in many cases, in one particular Somerset example because my unwillingness to buy their house at their inflated asking price meant that the bargain they have (had) in their sights in Pembrokeshire will not happen. All six houses have been on the market for 18 months or more, and will likely stay there for another 18.
(28 October 2011, 08:19PM) Complain about this comment
Only fools or people with a vested interest in maintaining the elevated status quo see property in the UK as 'good value'. I can afford to buy but wont (if I don't find a house by next September I shall decamp to the US where house-price falls and mortgage interest rate deduction are both still in-force); many do not have the first option at all, and it is clear who will win in such a stand-off.
(28 October 2011, 09:01PM) Complain about this comment
Dave Page. Ever consider you may have unrealistic expectations? This is just market forces at work,ultimately driving you to the USA where you can afford a house and pulling people to the UK who actually can afford our prices. What has never happened in spite of 4 years of foreboding is the massive house price falls that were predicted. All that can be expected now is a further modest moderation should interest rates rise a bit. Otherwise they are close to the long term average.
(29 October 2011, 12:37PM) Complain about this comment
Everyone seems to be ignoring the obvious which is that house price falls of 25 -30 % are largely arrived at by adjusting for inflation. What really counts to the bulk of prospective buyers are house prices relative to their wages which have shown hardly any rise over the last couple of years irrespective of inflation (or no wage rise at all in my and many other peoples cases). Relative to wages house prices have barely changed whilst inflation has reduced the amount left each month after paying for essentials such as food, clothing petrol etc... the end result is that relative to spending power houses are becoming increasingly expensive. As this trend seems set to continue this can surely only lead to a drop in prices at some point.
(29 October 2011, 03:01PM) Complain about this comment
#11 Boris MacDonutThe ordinary Joe Bloggs doesn't come to the UK because he can afford a house over here. The wage to house price ratio tells you that isn't the case and is why such places like the US are far more attractive.People come to this country because we have a benefit system that pays out to all and sundry.
(29 October 2011, 03:10PM) Complain about this comment
Compare the Nationwide Real House Price index to the Jean Paul Rodrigue's standard bubble chart. The housing market has gone through its 'bull trap' phase and 'return to normal' phase and now appears to be starting its 'fear' stage.
(29 October 2011, 03:28PM) Complain about this comment
Arguing these subjects according to technical analysis is surely pretty irrelevant at this point, isn't it? The reality is that household incomes are being squeezed, and look set to fall further, just as unemployment looks likely to rise and (eventually) the cost of a mortgage increase. No matter how many averages you quote, how can anyone expect these combined factors not to have an effect on house prices, the payment for which constitutes the single largest outgoing made by a household on a monthly basis? Further, if house prioces are so fair at current levels, as some commentators on this site seem to think, why is the market exhibiting such low turnovers? Fair pricing leads to market activity, and that isn't what we're getting at the moment. As for the suggestion that prices are reasonable because the average couple earns £50k, why should a market accept that it now takes the income of two people to purchase what used only to require that of one?
(29 October 2011, 05:44PM) Complain about this comment
@11.The previous poster was pretty explicit. He can afford to buy, but simply doesn't see property in the UK as 'good value'. Do the nutty lending practices that created these price increases also get explained away as just healthy market forces at work?
(29 October 2011, 05:51PM) Complain about this comment
#15 Shadowman. The market for houses involves all the houses available to buy and all the money available to buy them. Interestingly, in 1960 there were 23 million in the workforce and under 11 million owner occupied houses a ratio of 210 workers for every 100 homes. By 2010 the figures were 29.3 million and 17 million or 172 for each home. It now takes fewer workers to buy a house.In fact it always did take the work of two people to buy a house it's just that only one was formally paid (usually the husband). Women's lib had the undesirable side effect of driving down relative wages.
(29 October 2011, 10:12PM) Complain about this comment
I accept that houses have crashed as measured in gold. However, until my abysmal wages have risen in response to inflation - as far as I'm concerned - house prices haven't moved a jot.Inflation won't have 'done its work' until we have had massive wage inflation. We need sound money, responsible government and affordable housing for all. Bring on the depression. Lets get it over with.
(30 October 2011, 10:42AM) Complain about this comment
@15"why should a market accept that it now takes the income of two people to purchase what used only to require that of one? "A generation or two ago, most households had just the one income. Hence, house prices tended to be viewed as a multiple of that single income.Now, I would suggest the majority of households have two incomes. Without meaning to, the rise in two income households was partly responsible for the rise in house prices - in absolute terms (the price stated) but possibly not in terms of multiples of the now two-incomes available.@17 describes this "The market for houses involves all the houses available to buy and all the money available to buy them."
(30 October 2011, 11:05AM) Complain about this comment
@ 17. QUOTE:'The market for houses involves all the houses available to buy and all the money available to buy them.'So, Boris, how does this statement correlate with the aproximate 50% rise in average HPs during the approximate period 2003 - 2007; other than largely, if not totally, by unsustainably and ridiculously easily and cheaply available credit?
(30 October 2011, 11:09AM) Complain about this comment
@20 Critic Al RickGood point. Mixture of long term trends (more household income) and short term trends (availability of credit, liar loans, 120% mortgages) ?
(30 October 2011, 03:00PM) Complain about this comment
#29 C A Rick. Not sure what you mean . It correlates perfectly.The housing market involves all the houses available to buy and all the money available to buy them. If more money is made available (as with QE) there is more to do the buying with. Between 2001 and 2007 the US Government and it's drones made more cheap money available to prove a point to an enemy of no consequence. More money meant higher house prices. I didn't do it. I just reported it. But point of fact.......more money is now available.
(30 October 2011, 04:03PM) Complain about this comment
@ 22. BorisI mean (@20.) that more money was made available ... irresponsibly!The very action of propping-up the housing market is irresponsible to the majority in the longer term.If more money is being made available (as you report) to stimulate a further increase in HPs then that is just crass stupidity.Some might say more money is being made available to (stimulate imported inflation?) offset deflationary pressures ... whatever the reason, it's crass stupidity insofar as the longer term interests of the majority is concerned.The Establishment is acting in its own zombified selfish, short-sighted and blinkered interests. The Establishment doesn't consider it lives in the real world; the world of profit & loss.The 'Parasites' are 'killing their host'; don't you see that?
(30 October 2011, 04:04PM) Complain about this comment
@ 21. CliveI'm amazed with the rapidity of your response. Was it merely coincidence or do you have some sort of 'early warning system'?!
(30 October 2011, 04:25PM) Complain about this comment
Capital Economics have being forecasting a drop in house prices by "40% in the next 18 months" since at least 2004. Maybe one day they will be right but how much do these people earn and still get it so dreadfully wrong! If they dropped 40% tomorrow they still wouldn't be at 2004 values. One thing this latest adjustment has taught me is that economists aren't even wise after an event much less before it.
(30 October 2011, 07:20PM) Complain about this comment
#23 Yes Rick you are correct.#25 No Gwyn. If houses fell 40% they'd be at 2001 prices.
(30 October 2011, 09:00PM) Complain about this comment
@ 26.So, Boris, you agree that money for house purchasing was irresponsibly made available from at least 2003 to 2007.Irresponsible salaries/bonuses continue to contribute towards increasing HPs in affluent London. Elsewhere, irresponsibly low BoE is contributing towards propping-up irresponsible HPs.Only where house sellers have been desperate has the housing market seen significant falls. Only have insignificant falls materialised when buyers have been naive and/or desperate.Otherwise there is a standoff between stuborn sellers and prudent cash buyers/FTBs. That standoff will continue until either sensible affordability has been regained via significantly increased house purchasing capability of potential mortgagees, or significant numbers of sellers have reached desperation.You can't rationally dispute that volume of house sales will remain low whilever the HP:Wage ratio is way out of kilter, can you?
(31 October 2011, 12:00PM) Complain about this comment
BorisCapital Economics are wrong, especially in alluding to a "historical link between prices and average earnings". Only 70 % of income comes in the form of earnings. Houses are paid for out of income and savings.------------Cap Economics are using historical trends that have laways shown correlation convergence on prices/incomes.Your point - if correct - would mean that people today save, but did not in yesteryear. The evidence is quite the contrary. Until the past two years, people have been saving NOTHING. The savings ration went negative by the start of the crash.The actual truth is that people were bidding prices up by a variety of debt means: higher LTVs from the banks - that has ended; and the dodgy, marketing: "we'll pay your deposit, and pretend you bought the house for 10% more than you really did.
(31 October 2011, 12:09PM) Complain about this comment
And the idea that the average Brit has savings adding up to 30% of average house (avg price is approx £160k, so typical Brit has about £50K in savings has he? and will spend the lot on a flat or house?). What world do you live on? You must have a wealthy circle of friends, and actually believe they are representative of Britain. Like the rioters in August, perhaps?Many say a house is worth what someone is willing to pay. This is a poor grasp of economics. Reality is a house is worth what some is willing AND ABLE to pay. We can probably accept that Brits are willing to pay any amount. So that leaves us with able. And that means bank loans. Higher LTV mortgages mean higher prices. We now have lower LTVs, so prices fall. Look at the only parts of UK where prices are rising. Prime central London. The only place where people do not seek a mortgage as the already have the money. Join the dots!
(31 October 2011, 12:20PM) Complain about this comment
Between 2001 and 2007 the US Government and it's drones made more cheap money available to prove a point to an enemy of no consequence. More money meant higher house prices.-----------------Yes, so it created a bubble. And less money will now mean lower prices. We have a debt induced second recession in three years coming up. The worst financial crisis ever - even more than the 30 sa (governor of the Bank of England). But you still believe that all this was "normal"? That the rises of the past decade prove prices will do so again? You don't see that there was something exceptional in the largest build up debt in human history may have something to do with higher house prices, and that payback time is imminent?This is one problem with fiscal stimulus. People refuse to learn from mistakes as they are bailed out. And I am someone who partly - and reluctantly - approves of fiscal stimulus. I don't approve of QE, though.
(31 October 2011, 02:06PM) Complain about this comment
Robert.28,29&30. I said that prices from 2001 to 2007 wers above trend and due a moderation (not collapse).Not sure why you think the other 30% of income is savings. We have GDP of £1,550 billion and earned income per HMRC of £1,050 billion (68%). Income comes in many forms ,not least CG and Dividends to the rich and company profits reinvested.Interestingly the UK has £1,130 billion of savings, or £23,000 per adult. Average income is £33,000.
(31 October 2011, 06:23PM) Complain about this comment
On my road a 3 bed semi sold peak price 437,000. Now far less.437,000 -70% approx 131,000 if you are all lucky this is whereprices may settle. even 40,000 per bedroom seems too high.Rationalize all you like, using all the numbers you can find. the trendis down, trend is your friend. base rates will never be going up,but unless you are on a base rate tracker mortgage expect your mortgage costs to rise.
(31 October 2011, 06:24PM) Complain about this comment
Quote; Boris MacDonut"The market for houses involves all the houses available to buy and all the money available to buy them. Interestingly, in 1960 there were 23 million in the workforce and under 11 million owner occupied houses a ratio of 210 workers for every 100 homes. By 2010 the figures were 29.3 million and 17 million or 172 for each home. "Yes, 29.3 million workers, over 50% of which work in the public sector and do NOT PRODUCE WEALTH, just consume it. Either this NEEDS TO BE CUT DRAMATICALLY or we print to pay them, causing big inflation in everything except house prices. When petrol goes to £1.80 a litre, who will pay more for a house than they are now, they will pay less!Alternatively we can just cut the public payroll, which way will that send house prices?Time to go back to school Boris.
(01 November 2011, 01:17PM) Complain about this comment
@15 "As for the suggestion that prices are reasonable because the average couple earns £50k, why should a market accept that it now takes the income of two people to purchase what used only to require that of one?"Because women are now equally ( if not better ) educated than men, they actually want to work/have a career as well as have children. Which is why the market has adjusted to a level based on two incomes. If you wander down to a mortgage broker today and tell them you have a 10% deposit and you and your partner both earn £25k you WILL be offered a mortgage of £150k. It doesn' t matter what any of the posters on here say about affordability, that is a fact. You will then suffer the immense burden of paying @£300 a month as a mortgage each out of your £2080 a month take home pay.....or about 15% of your income.
(01 November 2011, 02:31PM) Complain about this comment
#34 Tell me where this mysterious mythical place exists?135k mortgage for £300 per month?Oh it is an interest only deal, at 3%? So I'll have to pay £300 per month for 25 years, and still owe £135k. Not really £300 per month then is it?And tell me also, where do you get a 3% deal with a 10% deposit?
(01 November 2011, 05:09PM) Complain about this comment
My Mother has been trying to sell her house since 2007 at £300,000. I told her over the last four years to seriously reduce the price so that her house stands out as comparatively good value but she wouldn't listen as she is of the deluded generation that believes you cant go wrong with bricks and mortar. She is down to £250,000 now and was hoping on her return from holiday there would be a number of viewings, but instead she had a message from the agent saying if you reduce the price we will make more of an effort to sell it. Based on the relative price to earnings ratios since 1977, its worth £120,000 by my calculations.
(01 November 2011, 06:20PM) Complain about this comment
Anybody who thinks house prices are going to rise any time soon are deluded. Its the complete opposite. I now know 4 people who have been forced to put their homes up for sale because they have recently been made unemployed. They were shocked when their properties were valued. The BoE is causing masssive inflation, rates are going to rise at some point. I have been saving for nearly 10 years and there is absolutely NO WAY on earth that I will buy now, the area we have been interested in prices dropped by 7% in 1 year - thats official Estate Agents figure - but we saw almost identical properties in the same area for sale for 165k 3 years ago which are now listed for 100k. Thats a huge drop and that was when things were supposedly okay with the economy. First Time Buyers need to be warned about the dangers of negative equity and not encouraged to go jump off a cliff because of these financial professional experts who are in fact TOTALLY CLUELESS.
(01 November 2011, 08:05PM) Complain about this comment
#33 Andy. There are 6 million public sector workers or 20% of the workforce.....not 50%. Back to school indeed.#34Alex . Take home pay on £25k is £1635. So for two would be £3270. Mortgage at the prevailing 4.75% on £150k is £925 repayment (28%) or £600 IO (19%).#36 Azazel. Price earnings ratio since 1977 is 5.3 to 1 so it should be £175,000.
(01 November 2011, 10:21PM) Complain about this comment
# Boris. House cost £11,500 in 1977. Dad earned £2500 a year as a factory chef. Factory chef would be lucky to earn £25,000 a year today so the house would be x10 which is £115,000. Easy maths so the BS inflation figures don't fool me, thanks.
(02 November 2011, 01:06AM) Complain about this comment
#38. Boris MacDonut #33 Andy. There are 6 million public sector workers or 20% of the workforce.....not 50%. Back to school indeed.You are right about the number, you've just underestimated the numbers of other wealth producing workers. The public sector is now 53% of economy as a record 6.09million Britons work for the state.The government spends more than all private companies and individuals put together. Some areas of the UK are almost totally reliant on the government spending to keep the economy going, in Wales for instance 77% of the economy is public sector spending. The burden of paying for the public sector lies with wealth producing private sector.State spending now accounts for 53.4 per cent of gross domestic product (GDP) compared to 40 per cent when Labour came to power in 1997.You can try and ramp all you like on here Boris, but you should have done better at maths and economics at school.
(02 November 2011, 01:08AM) Complain about this comment
#38. Boris MacDonut #33 Andy. There are 6 million public sector workers or 20% of the workforce.....not 50%. Back to school indeed.You are right about the number, you've just underestimated the numbers of other wealth producing workers. The public sector is now 53% of economy as a record 6.09million Britons work for the state.The government spends more than all private companies and individuals put together. Some areas of the UK are almost totally reliant on the government spending to keep the economy going, in Wales for instance 77% of the economy is public sector spending. The burden of paying for the public sector lies with wealth producing private sector.State spending now accounts for 53.4 per cent of gross domestic product (GDP) compared to 40 per cent when Labour came to power in 1997.THIS WILL HAVE TO BE CUT, OR PRINTED....You can try and ramp all you like on here Boris, but you should have done better at maths and economics at school.
(02 November 2011, 05:50AM) Complain about this comment
I think one of the reasons why the UK hasn't corrected is due to the very fast quantitative easing measures that were enacted. I'm not sure of the exact timing, but I'm guessing Gordon Brown had a head start when he saw what was happening in the US. Another factor may be to do with the power of myths. The US is more transparent because it has a central listing service (MLS), that new online brokers tap into providing a wealth of information. The US market also mostly uses one index, the Case Shiller Index, which records price movements using previous sales, as opposed to medians or averages. Add in low interest rates, seller too under water to sell, and an industry hell bent on preventing further falls and it becomes clear we are straddling two worlds; myth and reality and the latter will most likely prevail.
(02 November 2011, 01:14PM) Complain about this comment
The only reason why house prices haven't crashed is the historically low interest rates. As long as the rates are kept at or near the current levels there won't be any significant falls, just a 'gentle' stagnation.Only a fool can assume that the rates won't go up eventually. Inflation is already out of control and sterling has been losing value over the last few years (may not seem like that now that euro is in crisis).As for BTL, I for one don't think that the rental market is quite as strong as some VIs would like us to believe. My rent hasn't gone up for three years. I simply can't afford to pay more and had to tell the landlord to take it or leave it. A friend of mine has been trying to let his flat in a sought after area of London. He hasn't had very little interest for a simple reason: the price is not right.I sold near the top but have no intention stepping back on the ladder in this economic climate.
(02 November 2011, 02:12PM) Complain about this comment
#39 Azazel. Your figure only proves that factory chefs are relatively worse paid today than in 1977.#40 Andy. Careful. It was you who said 50% of 29.3million workers, no mention of state spending. I did okay at Maths, but like most I shunned economics as a failed pseudo-science.
(02 November 2011, 03:34PM) Complain about this comment
Boris, base interest rates are at an unprecedented low because the government knows what will happen to the housing market if they were to raise them. People are already struggling to sell, but aren't desperate to sell. Yet.The reason why we haven't seen the massive crash yet is because people can just about afford their mortgages right now and don't want to risk negative equity. Once we see the economy drop again and interest rates rise in the wake of inflation because of idiotic QE then you really will see a crash.Skip around it as much as you like, but it's coming. Just as surely as Greek's default that has been put off for many months.
(02 November 2011, 09:44PM) Complain about this comment
Quote Boris MacDonut #40 "Andy. Careful. It was you who said 50% of 29.3million workers, no mention of state spending. I did okay at Maths, but like most I shunned economics as a failed pseudo-science."Yes apologies, I've not said it quite right there! What I should have said was that over half of the UK economy is government spending, that is surely unsustainable?
(02 November 2011, 10:01PM) Complain about this comment
No one has mentioned the banks in all this.The banks could not give a monkey's toss about the number of sales. All they want is to keep houses at the current prices or thereabouts so that they can continue to cream of the maximum interest (and, by the way, to state the bleedingly evident, current mortgage interest rates have no relation to the 0.5% bank rate).The banks' attitude is to keep sucking the blood of the current idiots who have mortgages. To this end they go easy on defaulters to maintain the image of stability.The situation bears no relation to economic reality. All the above discussion seeks to base it in reality. A foolish mistake
(02 November 2011, 10:50PM) Complain about this comment
@ 47. PeterQUOTE:'The situation bears no relation to economic reality. All the above discussion seeks to base it in reality.'I appreciate what you are saying about the banks and would add that they also seek to protect their mortgage equity, but the context of the discussion IS being based on the economic reality; I suspect, at the risk of being chastised, that what you meant was:'The situation bears no relation to economic sensibility (in the longer than short term, if at all).' I should imagine that not many of the above posters would disagree with that.A HP crash would be very painful but it would help purge some of the poison out of the system; and it would, to the majority, be a damage limitation exercise, in my view. If it coincidentally purged some of the Zombie parasites out of the system that would be a very welcome bonus.I should imagine there are many Greeks with analogous views.How about a referendum here: should BoE be raised 0.5%?
(04 November 2011, 12:23PM) Complain about this comment
I have been living in Japan now for 10 years, home loans are fixed at a set rate for the term of the loan, unlike the UK where the rates go up and down like a yoyo. Buying a house in Japan is now a lot cheaper then buy one in the UK. I own a 4 bedroom home and the cost to build was only £240,000 my loan is fixed at 1.45% for 35 years, you would never get that in the UK. The truth is it is now cheaper to live in Japan then the UK, I pay a 1/4 of the number of taxes I use to pay in the UK. My wage is double that of the UK and the cost of food, water, power, gas and fuel is lower by 1/3 then the UK. I would be made to move back to the UK.
(04 November 2011, 01:25PM) Complain about this comment
Just a little fact about what's happening N.Ireland house prices. Like a mindless drone I purchase my house in Nov 06 at 130k. Neighbours house has been for sale at 49k for the past six months.
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