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| The UK housing market: a bubble about to burst? |
Tricky Ricky
by Jack Straw
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#1001422
of 3278
 09 Dec 2002
01:39 AM |
Ricky,
Thanks for proving that you respond purely to my postings, which suggests you either know me or still hold a grudge for my suggestion that you should brush up on “Helen MacGregor” literature. Infact, did you not attempt to post under that id for a period?
Despite the fact I use external quotes from the Federal Reserve, OECD, UK Govt, BOE, Joseph Rowntree Trust, The Guardian, The Financial Times...etc. I fail to receive any reasonable answer from you, and I presume you count yourself as one of the informed members of this forum? Although, of course you suggest in quote one that you hold some form of “informed opinion”, whatever you believe that to be. But in point two you identify that all is not certain? Well what can it be, you can’t have it both ways?
“I believe it is a well-informed opinion formed after considering a large number of different factors”
“Unfortunately I do not believe that the market follows a simple equation like this in the short-to-medium term”
Well I will not continue further with you, even Mr Britain attempts an informed debate. I shall but state: -
" I refer the gentlemen to my previous statements"
The proof of the pudding is in the eating; I fail to see either have a pudding or you inclination to produce one. You have yet to provide anything beyond a vague point about uncertainty.
Good luck, you may appear, as the emperor did, to be fully dressed! But sadly, some people see the truth "your arguments are naked, bare of any fact beyond". Further I would suggest that possibly they only expose a potential leaning towards pomposity.
Plus you fail to provide details of your grounding that prove any form of inherent knowledge? You state you do not work for the FT but you say the following,
“Unfortunately I am about to take an extended Christmas break”
Which, of course, is confusing. If you were not a work, when posting this, it would not be an issue, as you are posting from home and thus will remain there up to Xmas. But, this would not be logical, why state the above? Therefore it is reasonable to assume you are at work. Who works so late on a Saturday and Sunday, check the times of your postings, well clearly the people behind this forum? Bad luck you’ve been rumbled.
To quote Disraeli, or to dress you in a suit almost tailored for you,
“Inebriated with the exuberance of his own verbosity, and gifted with an egotistical imagination”
On Gladstone |
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Analysis is what counts
by Richard Head
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#1001421
of 3278
08 Dec 2002
06:01 PM |
Wow, I do believe Mr Straw has exceeded even himself and produced the longest posting on this forum to date, but I have better things to do than quantify this for him... Clearly he believes in the old maxim that "size matters". Unfortunately for him, in the information age everyone has access to a lot of data. It is the quality of analysis rather than the quantity of "information" that counts.
The gist of his argument is that there are insufficient houses and this trend is getting worse, and also that we are richer now so can afford to pay more for scarce houses. This is all well and good, backed up by some statistics to give it a veneer of respectability. So if we are trying to predict the pricing behaviour of the housing market, then we can use these statistics as inputs to our predictor, along with a lot of other relevant factors.
Mr Straw fails to create a convincing argument however because he does not understand what an equation is. The question that we have to ask is:
Is there a straightforward relationship between demographic data and house prices?
It seems that he would like to write a mathematical equation of the form:
Avg. House Price = k + f1(Demand - Supply) + f2(Avg. wealth) + terms for other relevant factors etc.
where k is a constant and f1/f2 denote functions of the bracketed variables.
Unfortunately I do not believe that the market follows a simple equation like this in the short-to-medium term, though it may be possible to derive some approximate equation to predict the long-term trend. Of course I remain open to correction, and would be very interested to see any attempts to create a proper mathematical house-price predictor.
My suggestion is that the equation becomes complicated by the fact that variables such as Demand and Avg. Wealth are themselves functions of the Avg. House Price, in other words there is feedback from the output of our predictor back into the inputs to the predictor. Cleary this can result in erratic behaviour in the short-to-medium term, which is what I believe we are witnessing.
So to conclude, Jack Straw's arguments may have some relevance for long-term price trend estimation, but I do not believe that simple statistics alone can explain current market behaviour as he would like to suggest.
I hope that this analysis is sufficiently "quantitative" - it is just a starting point, unfortunately I am about to take an extended Christmas break so will not be able to take this fascinating discussion any further until the New Year. I look forward to the development of a sophisticated mathematical predictor for house prices by the informed members of this forum in my absence. Even Jack Straw may be able to contribute his undoubted mis-guided talents to this endeavour, though I would suggest studying a more sophisticated mathematical tome than Tom Thumb's musical mathematics.
Finally, I am flattered that Jack Straw evidently believes that I possess journalistic skills. While I am multi-skilled and would prefer not to define myself in terms of a particular occupation, journalism is something that I had not considered until now. I wish you all an enjoyable festive season! |
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Through pride we are ever deceiving ourselves. But deep down below the surface of the average conscience a still, small voice says to us, 'Something is out of tune.'
by Jack Straw
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#1001420
of 3278
08 Dec 2002
03:02 PM |
In Macbeth one of the first lines in the play is,
“fair is foul and foul is fair”
The intention is to suggest that when the natural order is upset, good can appear to be bad and bad appear good. This is similar to the concepts prompted in this forum, what is bad or good in/for the housing market? My point is, that although the I believe the housing market will rise, it is not necessarily a good thing, for FTBer’s, but a symptom of the causes I will discuss in the following posting. To present an even argument I source, mainly, the Guardian and the Joseph Rowntree Foundation, who are traditionally bearish/liberal institutions in their views.
The topic will cover the following areas: -
1. Housing Shortage –
2. Increased income availability, OECD / Fed Reserve
Housing Shortage
Dickie Head states,
"I believe the supply and demand scenario presented has led to a bubble in those parts of the country where prices have risen significantly in recent years"
But sources, who have done real research disagree! Infact the traditionally leftist Guardian states,
““The obvious conclusion to be drawn from the news that house prices rose by 4.3% in September is that Britain has taken leave of its senses. Lost it. Gone barking mad. Suffering from grade-one denial …….There are some solid economic reasons for what is going on in the housing market. There are too many people chasing too few properties, the number of new homes being built is at its lowest level for many decades, taxes and subsidies for home buyers and landowners tend to exacerbate the mismatch between demand and supply.”
Larry Elliott, in the Guardian
http://education.guardian.co.uk/mba/story/0,12010,806125,00.html
What does Larry mean? Why is Dick so far from the truth? A Housing Shortage? Demand exceeding supply? As I said to Richard Head, don’t make a statement without quantifying.
"submit that the model in my mind is a more sophisticated predictor of the housing market than the simple equations presented to date on this forum. "
Afterall most people must depend on external forces to prove market positions/ movements. Infact I may suggest that Dick's senses can be put to use by the Govy, afterall whats the need of a census when Dick can calculate those figures in his mind.However I must rely on the 2001 census figures the following rise in the level of population within the UK,
1991 56,466,680
2001 58,789,194
http://www.bedfordshire.gov.uk/BedsCC/SDimr3.nsf/Web/ThePage/2001+Census
It is generally agreed the actual figure is nearer 60 million, but let us take these figures as an example, and allow for the same error on both census. We have a net population increase between 1991 and 2001 of 2,322,514. Now using the statistics of the same census we find the average occupancy per household is,
“The average household size in Great Britain stands at 2.4 people (2000-01). Trends towards smaller families, and more people living alone, have contributed to the increase in the number of households”
2 Office for National Statistics - Social Trends Report (32), 2002
Now let us match these two figures together to generate a housing stock requirement. Now 58.8 million divided by 2.4 gives us a housing stock requirement of 24,495,497. Now using the same Government figures, which Martin Summerskill quotes in the Guardian,
“Just 162,000 new homes were built in 2000-01. The figure is lower than in any year since 1927, except the war years, and takes Britain's housing stock to 21.1 million homes - a figure now exceeded by the number of households”
http://society.guardian.co.uk/housing/story/0,7890,707666,00.html
WE see we have a current shortfall of 3.4 million homes, using official government figures. This clearly backs up the points made in the Guardian we have supply pressures on our housing market.
Beyond 2002 the Government quote the following as factors, some already used, requiring increased house stock improvement: -
”The proportion of people living alone doubled from 6% in 1971 to 12% in 2001
The average household size in Great Britain stands at 2.4 people (2000-01). Trends towards smaller families, and more people living alone, have contributed to the increase in the number of households.
Household composition has become more varied in recent decades and increasing numbers of people are living alone. In Spring 2001 almost three in ten households in Great Britain comprised one person, more than twice the proportion in 1961.
The proportion of households consisting of a couple with dependent children fell from 38% in 1961 to 23% in Spring 2001, while the proportion of lone parent households with dependent children tripled, accounting for 6% of all households in both 1991 and 2001²”
2 Office for National Statistics - Social Trends Report (32), 2002
Clearly we are moving into a society where the occupancy levels will be eroded further over time, now interestingly we are at the lowest level of house building since 1927, Martin Summerskill/Guardian quote above.
Now this short supply plus the low interest rates obviously increases the competition for each property. This excess demand, or short supply, has the inevitable consequences on the housing market. This is backed up by the Joseph Rowntree foundation, which finds that,
“For many decades, governments have set as their goal a decent home
Within the means of every household. Much progress has been made in
Removing slums, improving conditions and reducing overcrowding. But
The evidence suggests that there are underlying trends that point to
Renewed housing shortages – with consequent impacts on house prices,
Conditions, overcrowding and homelessness.”
http://www.jrf.org.uk/bookshop/eBooks/2022.pdf
Joseph Rowntree foundation believes housing pressures are created by the following trigger’s:-
The Impact of Affluence
Rising living standards mean that each household today expects to live
in a self-contained house or flat.
Impact of demography
increased number of homes, previously discussed.
Longer Lives
In 1971 in the UK life expectancy at birth was 69 years for males and 75 years for females; this had reached 75 and 80 respectively by 2000.
2 Office for National Statistics - Social Trends Report (32), 2002
More singles,
as previously discussed
International migration,
150k net between 1998 and 2001.
In summary, what are we looking at? I’d suggest a reducing house building programme,
“Pierre Williams of the House Builders Federation said: 'The reality is that a 30-year campaign by the anti-housebuilding lobby, coupled with a collapse in public investment in housing, has resulted in a society unable to house itself. Far from concreting over the countryside, urban expansion takes up just 1 per cent of England's land area every 50 years”
http://society.guardian.co.uk/housing/story/0,7890,707666,00.html
environmental pressures exerted assist in the slowing of this number, see link below: -
http://www.environment-agency.gov.uk/yourenv/eff/people_lifestyles/household/?version=1&lang=_e
Further we have a population that is gradually increasing, but the number of average householders, per dwelling, is actually reducing! This clearly places inflationary pressure on the housing market. The BoE’s main tool for housing market price management is the interest rate. Now increasing interest rates would inhibit housing increases, but go further in destroying the manufacturing environment Zorro laments the loss of. But as Larry Ellison, of the Guardian refers to the big EG,
“Sir Eddie George, the Bank's governor, is effectively underwriting house prices. He is not just a one-club golfer, he is a one-club golfer up to its knees in thick rough trying to take a hack at an almost buried ball with a bent driver. The Bank has tried to send out warning signals, but borrowers sense there is little chance of higher interest rates, so their behaviour is not that irrational.”
http://education.guardian.co.uk/mba/story/0,12010,806125,00.html
Increased income availability, OECD / Fed Reserve
In terms of affordability, and the disposable incomes, Federal Reserve Governor Edward M. Gramlich, before the International Bond Congress, London, U.K.
February 20, 2002 stated
“In the United States, the average ratio of household wealth to disposable income was about 4.5 from 1970 to 1995. Over the next five years, fuelled by a modest boom in real estate values and a huge boom in equity values, the wealth-income ratio shot up to more than 6, the highest recorded value in the fifty years for which wealth data are available. Since 2000, equity prices have moderated, but the wealth-income ratio is still above 5. Perhaps because of that, consumption remained strong throughout the downturn of 2001.
The experience has been remarkably similar in the United Kingdom. Here the wealth-income ratio has averaged about 4.75 for the past thirty years, and a moderate boom in housing prices and a huge boom in equity values in the late 1990s took the ratio to 6.5 by mid-2000.”
http://www.federalreserve.gov/boarddocs/speeches/2002/20020220/default.htm
Now, if we take this gentleman’s figures, we see that the wealth manufacture of housing is a great improver of the net wealth of the UK population. This again contributes to the heating of the housing market. And I would suggest this is not a bad thing since we see a general enrichment of the whole population, which must surely be the objective of the Government when they release council housing to their tenants at a discounted cost.
In summary, “Oh Brave New World”, the main risk with regard to a crash is the “affordability level” of housing. Now, as previously argued, I would suggest that the only solution to this problem is either via the term extension of loans of the increase in the ratio of mortgage to income. But this has an apparent risk as we may see that people have a risk of exposure due to over leverage. Now if we look at taking the US’s example, with Freddie Mac, we would guarantee interest rates for the terms of the loans.
“It is the tension between creativity and scepticism that has produced the stunning and unexpected findings of science”
Carl Sagan
This would remove all risk and leave us warming our hands on further increased valuations. Given that this will not happen what will the future hold?
Well the BoE have a great responsibility here with their interest rate management, only substantial increases in the rate would cool the market. But of course this is contrary to the rest of the world, EU have just cut their rates by 50 bp’s. The Government could take a hand by introducing a tax on housing gains, on sale of property. But given their “success” in the pensions market, which they were attempting to improve. I would hazard a guess that even the boldest minister must be looking over their shoulder at the next election when/if considering this. I fail to see where doom mongers find a trigger to a crash given the present variables, but of course I can be proved wrong, where’s Martini when you need him? Now of course Dick states,
"This implies that the fundamentals referred to by certain less sophisticated contributors are perhaps not as sound as they would like to think. Bubbles tend to burst at some point, and therefore I predict that the housing bubble will burst in due course."
Well given all the evidence I have supplied Mr Head's argument does look decidedly thin. No tangibles, no reality just "stuff and nonsense". As to my sophistication level, well as Orwell stated,
"Does alion in a cage know that it is free?"
I have yet to see information that Mr Head is able to judge anyone, or....
The common dogma [of fundamentalists] is fear of modern knowledge, inability to cope with the fast change in a scientific-technological society, and the real breakdown in apparent moral order in recent years.... That is why hate is the major fuel, fear is the cement of the movement, and superstitious ignorance is the best defence against the dangerous new knowledge. ... When you bring up arguments that cast serious doubts on their cherished beliefs you are not simply making a rhetorical point, you are threatening their whole Universe and their immortality. That provokes anger and quite frequently violence. ... Unfortunately you cannot reason with them and you even risk violence in confronting them. Their numbers will decline only when society stabilizes, and adapts to modernity.
G GAIA
P.S anyone questioning my use of quotes/numbers please identify specific ones and why they are wrong. This wooly theory of,
"fundamentals referred to by certain less sophisticated contributors are perhaps not as sound as they would like to think"
Has worn as thin as the "Cool Britannia" badge.
One might question old dick as to why he fails to refer to Mr X, Andy B, or Hoogies postings in his responses. I would hazard to suggest that ,like a wronged lover or a temperamental child, his logic is clouded by pure emotion, quoting intangibles, and with no physical justification. Just as Martini stated, “Jack, what you say is all wrong”, but how could it be I quoted his theories also? With regard to sophistication, eh Dick, well to quote Arsne Wenger,
"Everyone believes they have the prettiest wife."
The fleet street folly of self congratulatory praise don't wash in the cold light of day. So Dickie why not qualify what you do?? I'm sure you have the courage to, after all you don't snatch purses do you?? |
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Intangibles are valuable.
by Richard Head
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#1001419
of 3278
08 Dec 2002
02:09 PM |
Just to clarify matters, for those with large egos, this posting is directed to the forum in general and not to any specific individual, though reference may well be made to other contributors. This is known as discussion, and as far as I am aware is the purpose of the forum. I should also like to clarify that I am not FT, or Delaney, or Mr Britain, or Jojo - or a journalist for that matter. I also do not work in the evenings at the weekend, although unlike certain contributors I do actually work during the week. Somebody seems to be rather paranoid!
I am so glad that the Straw Man appreciated my previous posting so much that he saw fit to quote it in its entirety within his own response, despite thinking that I am somehow unreal. Unfortunately, while performing the Copy and Paste operations he neglected to understand the content - perhaps it was too subtle?
The source of my comments are my own mind, influenced by the myriad of facts and opinions that it is exposed to. Surely this is valid input to a discussion? Or is the forum now dedicated to robots that perform Copy and Paste operations, interspersed with quotations, mild insults and other random verbiage? I can assure the forum that my mind is capable of more advanced numeric operations than any posted to date by Mr Straw and his colleagues. In fact, a few simple tabulated numbers and words are not a "simple equation" - I would advise the honourable critic to move beyond page 1 of the musical maths book referred to previously.
Also, the human mind is capable of taking a large number of factors into account at the same time, unlike any simple equation. I submit that the model in my mind is a more sophisticated predictor of the housing market than the simple equations presented to date on this forum.
To move on to the property market, I attempted to illustrate how a bubble might form in my previous posting. I am sure that most people understood the reasoning, so I will simply reiterate for those who prefer "Copy and Paste" to understanding:
I believe the supply and demand scenario presented has led to a bubble in those parts of the country where prices have risen significantly in recent years. The bubble has formed because of feedback, which has been well explained by previous contributors so I will not repeat those details here. Feedback can be extremely powerful, but is perhaps a difficult concept to understand for those with limited numerical ability. This implies that the fundamentals referred to by certain less sophisticated contributors are perhaps not as sound as they would like to think. Bubbles tend to burst at some point, and therefore I predict that the housing bubble will burst in due course.
This is of course my opinion, so anyone is free to disagree with it, but I believe it is a well-informed opinion formed after considering a large number of different factors. With this "intangible" concept, I leave you all to wallow in the mire of clipboard operations and Shakespearian profundity. |
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"Intangibles are values with mass" - Jack Straw
by Jack Straw
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#1001418
of 3278
07 Dec 2002
10:34 PM |
Dickie Head, I see you’ve spent time in the boozer again today before coming to work! To comment on your previous posting: -
“So, Mr Straw, or whatever your current name is. You see fit to comment on the frequency of Mr Britain's posting on this forum. Again I must comment that it is time for you to take your own medicine, since I believe that you personally hold the record for sustained posting here. “
I fail to see that this is the case until I see figures proving this. Secondly I further fail to see what relevance this has to the question, well unless you like to provide personal insults. Thirdly you are not a real poster! Your silly little comments only come as a response to me; therefore I discount your postings as mere filibuster.
“Not to mention the record for pompous rhetoric and spurious quotation. Has one of the estate agencies or mortgage banks employed you to try and monopolise this forum, by any chance?”
As “beauty is in the eye of the beholder”, quotation is at the digression of the quoter. I always love statements about the intangible, what does it mean something or nothing? As with Mr Britain, who I’m thinking you may well be, I can only responded to work of due diligence. Aferall I have taken the time over the previous number of days to provide sources to prove my case, you can at least do me the same courtesy.
”Unfortunately for you, there is no way that you can prove any of your absurd conjectures, not least because they are almost certainly incorrect! Providing a few miserable statistics relating to one or two aspects of the marketplace only demonstrates naivety - do you really think that things are this simple? If so, perhaps a sandpit would be a better place to continue the discussion.”
Dear Richard, statements, statements everywhere and not a fact to view. Please stick to the subject and quote tangibles.
“Intangibles are meaningless and are pure management speak, they are the food and drink of dreamers and not doers.”
Jack Straw
To quote myself.
”I particularly enjoyed your attempt at demonstrating basic numeracy:
"Supply Demand Price Influence
100 100 stagnation
100 105 rises
100 95 falls"
How profound! Presumably you believe that "demand" will always exceed "supply" unless a lot more houses are built, and since you don't think this will happen then prices will always rise. How nice! So there is absolutely no risk involved with purchasing property!! In that case, I think we should all pile in and leverage ourselves to the hilt, and we just can't lose! And since we all want a piece of the action, this will push demand up even further.
Lets extend the theory:
100 110 accelleration
100 120 boom time!
So the greater the returns, the greater the demand... Oops, what is wrong here, I can't quite work it out?”
What’s your point it’s a simple equation meant to simplify my answer. I see you criticize but never provide any debate yourself, interesting as it is a journalistic style. Hmm I wonder what you do for a living? Please provide a structured debate, with a reasoned backing, before darkening my door again. We can both post childishly but this does not prove anything.
”To quote another poster:
*Bubbles*
Perhaps the fundamentals aren't quite as solid as you would like to suggest. But never mind, if we all keep buying perhaps it can go on indefinitely! I'm up for it if you are!! Now I just need to work out how to get my hands on some of those gains...
There is a reason why people such as yourself are referred to as bulls. It is related to the amount of "bull" that you produce. To quote you, "I do enjoy this forum and our discussions"!”
LOL I know bubbles, he got this forum address of Hoogie. If you knew his current housing and stock position you’d know the validity of that quote. Still, as I don’t know who posts to this from the editorial staff, you don’t know who I know who posts to this forum.
In summary let us raise this debate beyond the sewer. My point to Mr Britain, and now to you, is that I took the time find and quote sources for my points. These sources are both from the FT and outside, yes you must be shocked one of your posters reads the FT; please grant me the same benefit. I would like to ask whether you are FT, or Delaney, or Mr Britain, or maybe even Jojo? Further discussion, by you Dickie, will receive the following,
“ I point the honourable gentleman to my previous answer”,
If it is directed to me and groundless.
Management Summary for dickie
1. Quantify
2. Qualify
3. Reason
4. Debate
5. Source proof of argument
6. All intangibles will be ignored |
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Jojo
by
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#1001417
of 3278
07 Dec 2002
09:53 PM |
Being new to this forum I am guessing that Jojo you've returned! I thought you'd been banned!
I think quotes are important to prove ones case. |
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Jack Straw
by Guest
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#1001416
of 3278
07 Dec 2002
09:12 PM |
Being new to this excellent site and having read both sides of the story we both have our own concept of where prices are going but please stop the silly quotes since they do you no credit.
Your clipper board is over working
“Quality is better Than Quantity” my friend but we hope you pass your 2nd year exams. |
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Straw Men behaving badly
by Richard Head
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#1001415
of 3278
07 Dec 2002
08:50 PM |
So, Mr Straw, or whatever your current name is. You see fit to comment on the frequency of Mr Britain's posting on this forum. Again I must comment that it is time for you to take your own medicine, since I believe that you personally hold the record for sustained posting here. Not to mention the record for pompous rhetoric and spurious quotation. Has one of the estate agencies or mortgage banks employed you to try and monopolise this forum, by any chance?
Unfortunately for you, there is no way that you can prove any of your absurd conjectures, not least because they are almost certainly incorrect! Providing a few miserable statistics relating to one or two aspects of the marketplace only demonstrates naivety - do you really think that things are this simple? If so, perhaps a sandpit would be a better place to continue the discussion.
I particularly enjoyed your attempt at demonstrating basic numeracy:
"Supply Demand Price Influence
100 100 stagnation
100 105 rises
100 95 falls"
How profound! Presumably you believe that "demand" will always exceed "supply" unless a lot more houses are built, and since you don't think this will happen then prices will always rise. How nice! So there is absolutely no risk involved with purchasing property!! In that case, I think we should all pile in and leverage ourselves to the hilt, and we just can't lose! And since we all want a piece of the action, this will push demand up even further.
Lets extend the theory:
100 110 accelleration
100 120 boom time!
So the greater the returns, the greater the demand... Oops, what is wrong here, I can't quite work it out?
To quote another poster:
*Bubbles*
Perhaps the fundamentals aren't quite as solid as you would like to suggest. But never mind, if we all keep buying perhaps it can go on indefinitely! I'm up for it if you are!! Now I just need to work out how to get my hands on some of those gains...
There is a reason why people such as yourself are referred to as bulls. It is related to the amount of "bull" that you produce. To quote you, "I do enjoy this forum and our discussions"! |
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Trend
by Doctor Doctor
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#1001414
of 3278
07 Dec 2002
08:34 PM |
The long-term trend of growth in UK house prices is RPI inflation plus 1.9% according to the Nationwide Building Society, this being roughly the same as growth in wages or GDP since the War.
The short-term movements in house prices are driven by changes in short-term interest rates and unemployment with appropriate time lags.
We have been above trend for the past 3 or 4 years. So if history is any guide, one would expect a return to trend over the next 5 years.
It's impossible to tell whether this will be done with a flat line or a peak and trough.
Who can say what is going to happen to war, petrol prices, city unemployment, US stock markets, UK consumer confidence ? Very unpredictable year to year.
Whatever bad news there is will probably hit London first. Indeed it already is.
I do find it very worrying that some building societies are now giving 5* and 6* single income mortgages. |
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"To deny, to believe, and to doubt absolutely -- this is for man what running is for a horse." - Blaise Pascal
by Jack Straw
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#1001413
of 3278
07 Dec 2002
05:15 PM |
To Mr Britain,
Sadly the forum goes on, but I don’t believe you will not be reading this forum after posting over 50 messages in a week. Although I am defying my previous point to you, that I would not respond to any point you make without any form of due diligence or justifications. I’m afraid the volume of your doom postings has increased to a worrying level, unfortunately we cannot lock you in the tool shed like the clergyman in the Zulu movie.
Anyway I will cover each point in turn so we can identify where there are areas for improvement: -
”So lets say property continues upwards then those people who have just got themselves a two bed property in the middle of London will need to save (Borrow) an extra £80k just to get on the next rung of the ladder so they themselves become losers.”
What does this mean? Are you inferring that the 2-bed house/flat owner naturally looks for a 3 bed as a step up, also in central London? If you believe this is the case you don’t have much knowledge of the demographics of central London. Central London demographics illustrate that the market is generally made up of a maximum 2 person households, people appear to move to the suburbs when children appear. Still if you provide numeric justification to this point you will not be seen as a laughing stock.
”Many FTB can not afford to enter the market at the moment so rising prices is not helping them”
What does this mean? FTB entering the market where? When does a FTB not become a FTB? If an FTB bought earlier this year and has benefited from 25% increases are they worse off? Another point I would like to make is that if we factor in simple supply and demand,
Supply Demand Price Influence
100 100 stagnation
100 105 rises
100 95 falls
Now your theorem only works if production of new houses outpaces new demand for housing, sadly….
“Downside Risks Not Deterring Bullish Buyers
Further fuelling the housing boom, unfailingly confident UK house buyers are ignoring predictions of an impending property price crash, and dismissing as a 'temporary blip' the idea of using rate rises as a supposed deterrent. “
http://www.surveysonline.co.uk/anon/information/15-07-02downsiderisks.asp
Sadly I must again point out that,
"Nothing is easier than self-deceit. For what each man wishes, that he also believes to be true."
Demosthenes
Clearly we can see that the market does not perform as you are predicting, and therefore I again warn you of predictions based on pure emotion, and not by reasoned logic.
“And for the first time, it also shows that a surprising number of potential first time buyers are considering resorting to personal loans to scrape together necessary deposits. “
Same source
You appear to be dogmatic, as I repeat time and time again there are new market factors, which are influencing the market, I will not repeat again – reread my previous posts. The market is not predictable; unlike the premiership you do not get 3 points for a win, 1 for a draw and 0 for a loss.
Financial flexibility is the key; you can get personal loans now at half the mortgage rate Rik emphasises with, 15%. Still if you provide numeric justification to this point you will not be seen as a joke.
”Maybe you fail into the category where you release equity from your current home and get that new car and good luck to you but do calculate just how much that car cost you because by the time you workout it out over the life of your mortgage then I’m not so sure it will gleam so bright.”
To quote “Big Ollie”, perhaps this is a confusion between “their and there”. Personal experience cannot as a guide to the whole market. Still if you provide numeric justification to this point you will be taken more seriously than a Morris man.
”For the bulls go ahead make my day punk, buy as much as you can because just like the FTSE someone needs to losses money so other s can make some. “
Thank you very much I will. Still if you provide numeric justification to this point you will taken more seriously than a British dossier on Iraq.
”This guy brags to his poor friend in India that he’s just brought a bran new moped after 25 years of hard saving and then goes on to explain how rich he is. His friend on his pushbike thinks to himself ‘You call that rich’”
What does this mean? Seriously……… Still if you provide numeric justification to this point you will taken more seriously than a militant FBU leader. I presume you are inferring that if you rent a pushbike for say 100 rupees a week, instead of buying for 100 rupees a week, then you are better of because you never own. I will not comment beyond this :
"Out, out brief candle!
Life's but a walking shadow,
a poor player That struts and frets his hour upon the stage
And then is heard no more.
It is a tale Told by an idiot,
full of sound and fury Signifying nothing."
Macbeth
I do enjoy this forum and our discussions. But you must quantify your theories to prove they are nothing beyond the politics of emotion. |
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And it's good bye from him
by Mr Britain
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#1001412
of 3278
07 Dec 2002
01:55 PM |
Sorry you guys but this is my final posting for a few weeks so don’t expect any replies.
So lets say property continues upwards then those people who have just got themselves a two bed property in the middle of London will need to save (Borrow) an extra £80k just to get on the next rung of the ladder so they themselves become losers.
Many FTB can not afford to enter the market at the moment so rising prices is not helping them
Maybe you fail into the category where you release equity from your current home and get that new car and good luck to you but do calculate just how much that car cost you because by the time you workout it out over the life of your mortgage then I’m not so sure it will gleam so bright.
For the bulls go ahead make my day punk, Buy as much as you can because just like the FTSE someone needs to losses money so other s can make some.
This guy brags to his poor friend in India that he’s just brought a bran new moped after 25 years of hard saving and then goes on to explain how rich he is. His friend on his push bike thinks to himself ‘You call that rich’
See ya folks |
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all bets are down
by sho_ryuken
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#1001411
of 3278
06 Dec 2002
10:42 PM |
Nice to see I am now a qualified black magician:
"Having been trained as a mathematician and statistician I frankly view chartism as another form of black magic. It suffers the same flaws as all correlation techniques, that one can construct connections between all sorts of factors which have no bearing on each other. Correlations by thamselver prove nothing at all."
Thanks a lot for that waste of time synopsis. If I remember Mr Jeff Morgan, oh trained mathematician and genius we revere - I already said that technical analysis has its flaws - why do you try to pretend I did not say that ??? Maybe nothing better to say ??
My own opinion is - all bets are already down. There is no money now to be made from the property market. Any money down now is already too late.
If you want to dispute this please tell me what "economic fundamentals" underly your reasoning, given that the CML has said that there are no more economic fundamentals supporting the market.
If you cannot give a convincing argument, good luck. |
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The real enemy
by Mr Britain
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#1001410
of 3278
06 Dec 2002
08:06 PM |
So what would you prefer a one percent rise in Income Tax / National Insurance or a 2% rise in interest rates. Since most people spend less than half there take home pay on paying the mortgage then a 2% rise in interest rates would be less harmful but I’m sad to say that it looks like both are on there way.
Both Tenants and the home owner should unite and resist Tax increases because this will help reverse the 3.4% drop in the UK’s living standard during the past year.
Try this one out. Draw a line down the middle of a piece of paper and on one side write all the good things that are happening to the economy and on the other side put all the bad things that seem to be happening. If the good list is longer than the bad then I’ll bet your not in a position to do anything anyway and you think house prices are not linked to the economy in the first place. |
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Flawed
by Rik
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#1001409
of 3278
06 Dec 2002
07:53 PM |
Mr X, I really think it is your arguement that is flawed. The example that you gave, inflation goes up so interest rates go up so wages go up does not result in a happy little equilibrium where everything remains the same. For a start it is rather naiive (no offense) to suggest that they are all so closely linked. Just ecause interest rates and inflation go up it does not follow that wages will immediately rise. Secondly assuming inflation goes up to 4%, approx 2% above what it is now. Your arguement would follow that interest rates will go up by approx the same amount so interest rates rise to, lets be generous now, 5.5%. Lets even assume that wages rise by 5.5% aswell. a 1.5% rise in the mtg interest rates equates to a 40% rise in monthly payments. No matter what effect inflation and payrises have it will not offset that sort of drain on salary. Whichever way you look at it there is trouble ahead. All IMHO of course 
Rik |
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Mr Blow by Blow
by Mr Britain
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#1001408
of 3278
06 Dec 2002
07:32 PM |
You said
“Mr Britain - please !!!! I know your argument is flawed and so do you. I am not suggesting that property will crash at all. Listen carefully now - people have bought recently [including several friends] They know what they are paying each month, and can afford it [nobody would take on something they could not afford to pay each month - perhaps yourself even]. Then, next year they expect a 2 - 4 % wage increase. In one year their level of affordability ratio declines. Agree ? Also on a 25 year mortgage after 1 year they will have paid just over 2 % of their debt Agree ? Therefore, they will feel more comfortable after 1 year. So long as they continue to work, why should they need to sell. Therefore why should they even consider putting it on the market for a price less than they purchased it at. Explain ?”
I Say
Was these same friends not in this position just before the last crash ?
You Said
”Then, interest rates rise, so does inflation to follow and so do the wage demands.Then increase in wage compensates for increase in mortgage payment.”
I Say
Yes we know they are linked but you seem to suggest that interest rates are pegged to inflation and that wages are pegged to interest rates. You simply can not compare a 2% Rise in wages as being the same as a 2% Rise in interest rates. One has no affect since Taxes are going up by that much and the other has a massive affect since interest repayments will go up 50%
You said
”So, unless unemployment increases rapidily, then these same people will not or need to put their propoerty on the market. Result ? Price stability.”
I Say
Do you know any one who is unemployment. No they are students or on Family Tax Credits, Disability benefit or placed in a position where they simply can not claim. Jobs are going in the City and manufacturing from the North so maybe your friends job is not so secure.
You said
”Do you get it know ? [and please, do not flee the forum without at least presenting a decent mathematical arguement to disprove mine]”
I Say
Please put this mathematical theory forwards and I will try |
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