UK House Prices Forecast 2014 to 2018 - Conclusion

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RenewableCandy
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Post by RenewableCandy »

vtsnowedin wrote: the government could certainly deliver more and nicer space for less money then the private sector.

Correct. The government could borrow money cheaply and procure in bulk in order to carry out the much-needed upgrade of the (mostly "Heritage", by USA standards) UK housing stock.
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vtsnowedin
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Post by vtsnowedin »

Borrow money from whom? If you destroy the private sector there will be no wealth being generated to borrow or tax. And yes Biff I took your point correctly but think that you would be disappointed with the results if perchance you got your wish. It is a good thing the voters won't go for it.
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Post by woodburner »

IMO house prices and rents are high because the government an banks keep printing money. This helps keepinflation going. People have always got as much money as they could lay their hands on when buying a house, with the expectation the prices will always go up. I think life is about to change, and now is not the time to buy. Rents seem to be driven by landlords who have bought to let. Then again, I could be wrong.
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biffvernon
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Post by biffvernon »

woodburner wrote:and now is not the time to buy.
I think you're about right, but surely the way things ought to be is that the time to buy is not when you think you might make an unearned income from property investment (in a zero-sum world, one person's unearned income is another's loss) but when you and yours are old enough, independent enough and numerous enough to get out of your parents' nest.

Buy a house because you need a house not because you want to make a profit.
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Post by Little John »

woodburner wrote:IMO house prices and rents are high because the government an banks keep printing money. This helps keepinflation going. People have always got as much money as they could lay their hands on when buying a house, with the expectation the prices will always go up. I think life is about to change, and now is not the time to buy. Rents seem to be driven by landlords who have bought to let. Then again, I could be wrong.
Rents follow prices and prices follow the money and the money [currently] comes from the magic money printer. The major reason for currently insane house price is the wall of lent into existence FRB credit that has chased the real estate sector for the last thirty or so years and the main reason they have not crashed in the last five years is because central banks have made "good" on all those broken FRB promises with their magic money printing.

It will end with hyperinflation or hyperdeflation. It's just a matter of when. And when that happens there will be a 3rd World War.
Last edited by Little John on Thu Jan 02, 2014 7:57 pm, edited 4 times in total.
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RenewableCandy
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Post by RenewableCandy »

vtsnowedin wrote:Borrow money from whom?
Billionaires looking for a reasonably safe place to put it. I remember a story not so long ago about things in Germany almost getting to the point of demurrage(sp? well, negative interest rates) because large investors were willing to pay for somewhere safe to invest their money.
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biffvernon
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Post by biffvernon »

And you get a bonus by getting to live in Chelsea, have an underground home cinema in the basement and a swimming pool in the sub basement. What's not to like?
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Post by raspberry-blower »

biffvernon wrote:And you get a bonus by getting to live in Chelsea, have an underground home cinema in the basement and a swimming pool in the sub basement. What's not to like?
The sub basement was dry before all that monsoonal we've had in the past few days hit :P
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Post by extractorfan »

biffvernon wrote:And you get a bonus by getting to live in Chelsea, have an underground home cinema in the basement and a swimming pool in the sub basement. What's not to like?
God that sounds awful.
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Post by Catweazle »

Just before WW2 my Uncle Alf got married, her parents had saved some money and gave him a choice of wedding present - a lovely oak dining table and chairs or a house. Alf chose the furniture, because he "already had a council house sorted".

Rent was very low, the council took care of maintenance, and people were happy to live like that.

Where did it all go wrong ?
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Post by extractorfan »

PS_RalphW wrote: 2. The large building corporations ensure maximum profits from their land investments by corrupting the planning process and squashing building regulation reforms.
I agree with the other points, but I'm not sure about this one. The competition to win tenders is so great now that margins are being eroded to the point that there's a lot of work but not much money to do it well and make a profit. Sure there's some big salaries being paid, but not much in the way of dividends.

I'm going to look at the latest accounts of some of the large building corporations to see if my opinion is correct, right now I just base it on what people have told me, but I have no reason to believe they are lying.
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Post by woodburner »

The corps have always done ok.When the margins get small, they just stop paying their subcontractors. If they can hang out long enough, the subs go bankrupt, then there is no one to pay.
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Post by extractorfan »

woodburner wrote:The corps have always done ok.When the margins get small, they just stop paying their subcontractors. If they can hang out long enough, the subs go bankrupt, then there is no one to pay.
I have experience of this too, and it's true, I believe Michael Heseltine (sp?) actually had the audacity to recommend the practice publicly.

However, I suspend judgement until I look at the public record when it comes to profit.
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Post by raspberry-blower »

stevecook172001 wrote:
It will end with hyperinflation or hyperdeflation. It's just a matter of when. And when that happens there will be a 3rd World War.
This should read asset price hyperinflation or hyperdeflation.

All the money printed by QE isn't going into the real economy - it's gone into blowing bubbles into the financial sector and this is but one example of it. There are signs that the former is starting to take hold - in asset prices

Meanwhile, there is wage deflation going on - people are turning to payday lenders, such as Wonga who charge over 5000% APR just to cover day to day living as they are maxed out on everything else whilst the banks are getting their loans from HM Government at 0.1%

It's all geared in favour of the banksters
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SleeperService
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Post by SleeperService »

woodburner wrote:IMO house prices and rents are high because the government an banks keep printing money. This helps keepinflation going. People have always got as much money as they could lay their hands on when buying a house, with the expectation the prices will always go up. I think life is about to change, and now is not the time to buy. Rents seem to be driven by landlords who have bought to let. Then again, I could be wrong.
Indirectly Yes, I'd agree with you. However the rising house prices have been necessary for some years now to allow people to expand their debt to keep spending. The debt is what generates the money. TPTB think they're onto a winner as the debts are 'guaranteed by the 'property' and all the risk is with the debtor. Except now, as is starting to become apparent, that is no longer the case for a huge number of households.

One example I know of; Hubby is in the same job as he was in 2008, since then his pay reviews have been 0, -10, 0, 2 and 2%. All overtime is now paid at flat rate, was +25% for first 10 hours, +50% for the next 10 hours then any more at +100%. Wifey has seen her hours drop from 40 to 20 but still over 5 shifts, pay reviews of 0, 2, 2, 2 and 2%. They have either to cut down their discretionary spending or borrow to cover the shortfall. Either way this means, if repeated by enough people, a recession or a smaller recession followed by a much bigger one down the road. Either way isn't good for HM Govt....
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