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| The UK housing market: a bubble about to burst? |
The Oompa Loompas
by Happy Mango
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#1001026
of 3278
 25 Nov 2002
01:20 AM |
”Oompa Loompa, doompadee doo
We have a perfect puzzle for you.
Oompa Loompa, doompadee dee
If you are wise you will listen me.
What do you get when you guzzle down sweets,
Eating as much as an elephant eats?
What are you at getting terribly fat?
What do you think will come of that?
I don't like the look of it.
Oompa Loompa, doompadee dah
If you're not greedy you will go far.
You will live in happiness too
Like the Oompa Loompa doompadee do.
Doompadee do.” |
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And What Is More...
by Rob G
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#1001025
of 3278
25 Nov 2002
01:08 AM |
I think you'll find the following excerpt from the FT article of particular interest, for it will surely come to pass. I have stated as much several times.
Buyer confidence is king. It has ruled the bull marker as surely as it will destroy it.
it is perfectly possible to imagine a macroeconomic trigger for a house price fall. It would be generated by the housing market itself.
If the market starts to turn, the incentive to buy will dwindle. If prices start to fall, the market will dry up and prices will then fall still further. As negative equity starts to rise, consumption growth will slow.
That could induce a re-rating of sterling, making it difficult for the Bank of England to cut rates. It might have to raise them.
Alas, the very thing that everyone relies on for sustaining the market - low inflation and so low interest rates - then becomes a threat.
In the 1970s and early 1980s, huge price falls occurred, in real terms, without any declines in actual prices. Even in the 1990s, two-thirds of the house price fall, in real terms, was brought about by inflation. Even so, the problem with negative equity became very large.
This time would be worse. If, for example, prices were to fall 40 per cent, in real terms, over five years, and overall inflation were to remain 2.5 per cent a year, nominal house prices would need to decline by almost twice as much as they did in the early 1990s.
Be afraid. Be very afraid. |
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The End Is Nigh
by Rob G
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#1001024
of 3278
25 Nov 2002
01:00 AM |
Sorry to perpetuate my position as an arch doom-monger, but I think you'll find the following links of interest.
They just serve to illustrate in a rather more verbose manner the position I've been voicing here over the past few weeks.
Of course the supporting figures add useful weight and substance to my argument.
I hazard the 'business-as-usual' proponents here are destined to eat their words in the days and weeks to come.
http://ftyourmoney.ft.com/servlet/ContentServer?pagename=FT/FTym/
FTyourmoneyRender&c=StoryFTYM&cid=1037872225535&p=979554931542
http://www.thisismoney.com/20021124/nm55979.html
http://money.telegraph.co.uk/money/main.jhtml?xml=/money/2002/11/25/
cnhous25.xml&menuId=242&sSheet=/money/2002/11/25/ixfrontcity.html
I think you need to register for the last link, but it's free to do so.
Read 'em and weep, fellas.
Rob.
[This message was edited by ftmonitor on 25 Nov 2002 at 01:27 AM.] |
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The eye of a needle
by Happy Mango
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#1001023
of 3278
23 Nov 2002
11:24 PM |
I think capital gains tax should be paid on all expensive properties, at the highest tax rate. A capital gain is income, which if taxed could be used to help disadvantaged people. These people have more need for the money anyway.
You say the answer to key worker housing is not to supply subsidised housing, but to pay key workers a proper market wage. I do not understand why you believe the market is fair. It is about quality of life, not just money.
I will remind you of what the bible says:
“Children, how hard it is to enter the kingdom of God! It is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God."
Mark 10:21-25 |
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Envy
by stuthepooh
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#1001022
of 3278
23 Nov 2002
09:43 PM |
Hello Mr Mango
Have you been reading Socialist Worker?
Capital gains tax (CGT) on non-principle properties already exists. This does not stop house price rises.
To implement CGT on principle properties would be crazy. Consider an owner who lives in their property for 20 years, it rises with earnings, therefore creating a capital gain. If the owner wishes to sell and buy a similar house next to his new job they must pay a substantial tax bill. Result: they can no longer move house as they cannot afford to buy the similar and identically priced house. This destroys labour mobility which has serious implications for the efficient running of the economy.
The answer to key worker housing is not to supply subsidised housing, but to pay key workers a proper market wage.
To suggest that price falls of 70% are a good thing is clearly an opinion born of bitter envy. I do, however, agree that IF a price correction occurs it will be harder that the 80s crash. The reason for this is that the 80s correction in real house prices was greatly cushioned by high inflation meaning that nominal prices (ie in the estate agents window) did not have to fall by too much to redress imbalances.
In a low inflationary environment, however, a real price correction will mean much larger drops in nominal prices. This will also increase the number of distress sales as far more repossessions occur, adding further fuel to the downward correction (not to mention the buy-to-letters jumping from the skyscrapers)
Nevertheless, unfortunately for you, a 70% fall is extremely unlikely to occur. |
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More redistribution please
by Happy Mango
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#1001021
of 3278
23 Nov 2002
08:49 PM |
Alpha Zulu – thank you for presenting us with your brave new world. I agree with you and DryMartini with regards to 70% property falls in the next couple of years.
Where I disagree with some is that I think that property collapse will be a good thing. Key workers will get a fairer go. Property collapse will mean that people will care less about money, and more about other people’s feelings and livelihood. It is wrong that so many people in the world are living in such terrible conditions, yet city fat cats get rich off the backs of the worker.
Tax the capital gains on housing to stop house prices rises, and also to provide money to subsidise key workers houses (nurses, firemen and schoolteachers). |
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Consistency of naming
by Monitor_CS
FT Administrator  |
#1001020
of 3278
23 Nov 2002
07:46 PM |
Though our forums do not insist on a consistent or real name being used, it does help the conversation if participants choose a single 'handle' to be known by. Spoofs of other people's names will be deleted.
Childish versions of other posters names are also discouraged - let's raise the conversational level out of the playground.
[I refer in part to now-deleted posts.] |
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Beware imposters
by MutzNutz
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#1001019
of 3278
23 Nov 2002
07:06 PM |
Jack Straw
darling, I have already bought off plan before.
Don't doubt it JS and I trust it's got good tennants in secure jobs, your yields are good and your gearing is conservative.
But would you do it right now?
Oh and to close what do you think will happen to house prices when our interest rates are managed by europe?
Very interesting point Jack Straw. One theory, were we to join the Euro; At some point the ECB decides to raise interest rates for whatever reason. The effect it has on the UK housing market would not really be on their agenda would it? Why? because the rest of Euroland has a different take on 'homes'
Therefore joining the Euro could potentially be disastrous for over stretched come lately property investors.
Question is, will certain bits of our property market go tits up before we join the Euro?
I don't know. Do you?
ps don't pinch my handle again OK? |
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off plan
by mutznutz
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#1001018
of 3278
23 Nov 2002
06:35 PM |
darling, I have already bought off plan before.
Your logic falls down on the fact you think everyone wants to buy in the same street in fulham. Sadly, for you, this is not the case - emotional judgements that is is are flawed.
The structure of the housing industry is changing, talk has already be made to
a - extend payback to 40 years
b - change the regarded industry standard of 3.5 to 1 to a higher figure.
You logic if moved to the car indutry would lead to me having to employ some joe to walk infront of my car with a red flag.
Or the IT industry I would be sending you this message using a pigeon.
Time to get into the new century. Oh and to close what do you think will happen to house prices when our interest rates are managed by europe? |
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Nothing Down
by MutzNutz
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#1001017
of 3278
23 Nov 2002
06:00 PM |
I presume the flaw in the is that I have 4 chairs and will still own them in 12 months time.
Don't know your circumstances JS, so I assume you may well have those units in 12 months time.
However, would you in all honestly be buying 'off plan' flash 1-2 bed units for rent in certain areas of the SE?
It seems that some newbie property investors still are. They are also paying £000's to go on Property Investment seminars to be told about 'Nothing Down' financing & property auctions.
An important issue, I would have thought, is how will these newbies affect the market? |
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MutzNutz
by jack straw
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#1001016
of 3278
23 Nov 2002
05:50 PM |
Well
who refers to themselves as a hack accept some cheap journalist?
why you dont have a house? - read my preivous email
 |
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I'm insulted
by MutzNutz
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#1001015
of 3278
23 Nov 2002
05:47 PM |
Jack Straw
What on Earth makes you thnk that a) I'm a hack; & b) I don't have property?
PS.
Did you ever make the aquaintance of a Mr Bissell? |
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mutznutz
by Jack Straw
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#1001014
of 3278
23 Nov 2002
03:36 PM |
"This anology could well be used from the other side. Only time (6-12 months) will tell"
I presume the flaw in the is that I have 4 chairs and will still own them in 12 months time.
Hopefully youll be able to afford your 1st one . Good luck on a journalists salary |
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Alpha Zulu
by Jack Straw
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#1001013
of 3278
23 Nov 2002
03:33 PM |
Isnt it amusing when the administrator wishes to make quotes they create a new name?
Call yourself who you are, whats to hide?
"And in his brain which is as dry as the remainder biscuit after a voyage, he hath strange places"
As you like it - Shakespeare
I agree with hoogie, in his approach. I presume in a sickly liberal mind its a global conspiracy against them. I presume I am also sothpoo, Andy B, & the dark lord? Sad, very sad |
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Come clean boys!
by Alpha Zulu
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#1001012
of 3278
23 Nov 2002
02:48 PM |
Am I the only one to think that Jack Straw and Hoogstraten are very similar ? ... especially in the way they try to win arguments by name calling, selectively quoting others and trying desperately to divert attention from themselves when their arguments don't make sense. Not everyone on the doom & bust side had a reason for expecting a fall in the market. In fact, from my reading of their postings, most of them already owned property and most had sound reasons for expecting a fall, unlike JS & H who relied on third party that had absolutely no assumptions to back them up.
For me, Dry Martini & Engineer have been the most convincing so far. |
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