UK House Prices Forecast 2014 to 2018 - Conclusion

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biffvernon
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Post by biffvernon »

Meanwhile, slipped out last week just in time for nobody to notice was the news that:
The UK’s deficit with the rest of the world has ballooned to its worst for 24 years despite ambitions to rebalance the economy towards exports, official figures revealed on Friday.

The current account deficit, which includes the trade balance, earnings on foreign investments and cash transfers in and out of the country, widened to £20.7bn between July and September from £6.2 bn in the second quarter. This equals 5.1 per cent of the overall economy, its biggest share since the third quarter of 1989.

The figure, far higher than the £14bn expected by most economists, overshadowed better news from the Office for National Statistics showing stronger-than-expected growth in the past two years. Although overall growth was unchanged at 0.8 per cent between July and September, the economy is now only 2 per cent below its previous peak rather than the 2.5 per cent previously estimated.

The deepening of the current account deficit was caused by a much poorer export performance than previously thought – down 3 per cent in the latest quarter – as well as weaker investment income from abroad. The size of the trade deficit doubled to £10bn while income from overseas investments plunged by £6.9bn.
http://www.independent.co.uk/news/busin ... 18001.html

I suppose Boris's fireworks the other night were a further distraction.

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PS_RalphW
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Post by PS_RalphW »

Renting out property is not entirely unearned income. After maintenance, insurance, upgrades and other costs, we get only a small single figure percentage return, which is taxed as income. We had tenants who did a runner and left the house trashed. We lost a year of income in repairs and lost rent. Generally, the better you look after a house, the better the tenants treat it. I simply see houses as a means of getting a reasonably reliable return for a level of work i can sustain into my declining years in a very uncertain future.

The UK energy budget deficit now exceeds twenty billion per year. That is a very significant fraction of our total deficit.
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UndercoverElephant
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Post by UndercoverElephant »

biffvernon wrote:Thanks guys, I thought I was on safe ground as this topic wasn't about immigrants.

If anybody can shed light on why anybody should think that "house prices have nothing to do with homelessness", or why anyone should imagine that I am "saying that it doesn't matter that people who are much poorer than me are condemned to rent slavery", or that I don't "give a sh*t about justice in the wider society", I'd be glad to hear from them.

Just for the record, I tend towards the extreme egalitarian left wing end of socialism/communism, think the banks should nationalised, and that there should massive wealth redistribution both within the UK and across the world. However, these things should not distract us from the much more urgent existential crisis that we are bringing upon ourselves through global warming. I'm thinking that undue concern about the financial situation in general and house prices/interest rates in particular, is one of these distractions.
I was with you right up until the last sentence quoted above, at which point the callous indifference resurfaces. You think that "concern about...house prices...is a distraction." A distraction??? No, Mr Vernon, it is not "a distraction" (from more important matters). I happen to know quite a few people for whom this "distraction" will make the difference between them spending the rest of their lives with the biggest outgoing every month being rent payments that ultimately pay off other people's mortgages, or enable the already-rich to get even richer, and them spending the rest of their lives paying off a mortgage which will ultimately result in them owning a property, not having to pay that major outgoing, and having a valuable asset when they retire instead of having nothing. The moment you describe that as "a distraction", my blood boils. I do not understand how somebody who talks about radical redistributions of wealth does not understand that the rise in house prices predicted in the opening post of this thread is the single most important factor in exacerbating the existing inequalities in our society. And the most bizarre thing of all is that you seem to think this has nothing to do with environmentalism and sustainability. I have a newsflash for you, Mr Vernon: until we sort out the problem of grotesque inequalities in our society, you can kiss goodbye to any hope of the majority of the population actually caring enough about ecology/sustainability for things to change. So this is not a distraction at all, but absolutely central to those things you claim to believe in.
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UndercoverElephant
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Post by UndercoverElephant »

Shortfall wrote:Interesting debate folks.

BTW, when did we all stop believing in peace on Earth and goodwill to all men? :wink:
Personally speaking, when I was 21. I am now 45.
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PS_RalphW
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Post by PS_RalphW »

I can't remember the last time I got a pay rise, maybe three years ago, rate of inflation only. Also I cut my hours by twenty percent some years ago. I now earn less than a decade ago, a lot less than twenty years ago.
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UndercoverElephant
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Post by UndercoverElephant »

PS_RalphW wrote:I'm not sure on housing in the UK. (being a modest property owner my views are inevitably coloured).

House prices are high because

1. There are not enough houses where people want to live
This is partly because of the generational shift from north to south as we have de-industrialised.
2. The large building corporations ensure maximum profits from their land investments by corrupting the planning process and squashing building regulation reforms.
3. People are living separately more - therefore need more, smaller houses.
4. More people - partly demographic bulge and partly immigration .
5. Few people want to rent because the rents are so high and tenancy security low.
6. The rents are so high because the welfare state pays the rents of the poorest families so skewing the market and transferring tax payers money directly into the pockets of the property owning class - err, me included.
7. The property owning class then buy small, relatively affordable properties and extend them into mcmansions that no sane person would buy.
8. People desperate to buy are then encourages into life-long debt servicing by taking out ridiculously big mortgages at (currently) low interest rates. Supply and demand then drives house prices to whatever level the desperate can afford with no contingency for future rate rises, redundancies, etc.
9. The media report that rising house prices are a Good Thing without anyone thinking for a moment WHY?

I personally want stable house prices and a stable economy. I have made/inherited my pile and I am not greedy for more. I would be happy with steady price deflation (and even falling rents) because I am planning to live on less money as I prepare for power down, but collapse would do me no favours.

Just my biased 2p
The main reason property prices are so high is that banks are allowed to create money out of thin air and lend it to people to be repaid with interest. Once that is understood, it should be fairly obvious why house prices are ludicrously inflated.
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UndercoverElephant
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Post by UndercoverElephant »

RenewableCandy wrote:
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.
Why couldn't the government just print the money it needs? Why should the government have to borrow money at all?
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UndercoverElephant
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Post by UndercoverElephant »

vtsnowedin wrote:Borrow money from whom?
Good question. Only one possible answer, ultimately: banks, and central banks, who get to create it out of thin air.
If you destroy the private sector there will be no wealth being generated to borrow or tax.
I'll ask you the same question: why does the government have to borrow or raise taxes? Why can't the government print the money it needs, instead of allowing private banks to create the money supply and then loan it into the economy at interest?
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UndercoverElephant
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Post by UndercoverElephant »

woodburner wrote:IMO house prices and rents are high because the government an banks keep printing money.
Somebody gets it...
This helps keepinflation going.
It keeps house price inflation going. Wages aren't following suit because fear of unemployment means workers can be exploited.
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.
Why do you think prices are not going to go up? How rents are determined varies from place to place. In Brighton there aren't enough rental properties compared to the number of people who want to rent, so it is a landlord's market. In Hastings the reverse is true. It comes down to more people wanting to rent in Brighton for the amount of houses available, which is also linked to house prices already being so high that many people have no hope of getting a mortgage.
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UndercoverElephant
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Post by UndercoverElephant »

Catweazle wrote: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 ?
May have had something to do with Margaret Thatcher...
Tarrel
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Post by Tarrel »

UndercoverElephant wrote:
RenewableCandy wrote:
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.
Why couldn't the government just print the money it needs? Why should the government have to borrow money at all?
To maintain integrity of the sovereign balance sheet.

Borrow money to build state housing; houses appear as an asset on one side. Borrowed money appears as a liability on the other side. The balance sheet balances.

Create money out of thin air to build state housing; houses appear as an asset on one side. Nothing to balance on other side. All hell breaks loose. Currency goes down the toilet.
Engage in geo-engineering. Plant a tree today.
Tarrel
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Post by Tarrel »

UndercoverElephant wrote:
Catweazle wrote: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 ?
May have had something to do with Margaret Thatcher...
..And peak-cheap-oil.
Engage in geo-engineering. Plant a tree today.
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UndercoverElephant
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Post by UndercoverElephant »

Tarrel wrote:
UndercoverElephant wrote:
RenewableCandy wrote:
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.
Why couldn't the government just print the money it needs? Why should the government have to borrow money at all?
To maintain integrity of the sovereign balance sheet.

Borrow money to build state housing; houses appear as an asset on one side. Borrowed money appears as a liability on the other side. The balance sheet balances.

Create money out of thin air to build state housing; houses appear as an asset on one side. Nothing to balance on other side.
OK.
All hell breaks loose. Currency goes down the toilet.
Why?
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biffvernon
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Post by biffvernon »

UndercoverElephant wrote: I was with you right up until the last sentence
Well, that's progress. :)

But then you interpret the last sentence in exactly the opposite way in which it was meant. I agree with you about the importance of everybody being able to afford adequate housing.

My point was that with relative stable numbers of houses and people, the number of people in the bad position of not being able to afford adequate housing is not much affected by changes in house prices or interest rates. Of course it's bad for those people that are affected, but even for these it's probably other factors that are more important, so I warn about giving undue attention to these matters. Due attention is fine; it's the undue attention I wrote about.

As for distractions, well, there are just too many distractions from global warming. There's not much point if we are all fabulously wealthy in an egalitarian world if global warming then makes us all dead.

Of course it would be nice to solve inequality and global warming at the same time but one has to be, er, realistic.
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UndercoverElephant
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Post by UndercoverElephant »

extractorfan wrote:The atmosphere of the PS forum has deteriorated since the stop EU migrants thread. Sure it's been heated and attacking on occasions in the past but it's an almost constant thing now.

The way I read Biff's post was that we are not going to see hoards of homeless people whether house prices rise or fall as there is x amount of housing stock that isn't going to sit empty, nothing more. I didn't read anything that suggested Biff thought anything in particular about renting versus owning, just merely pointing out that people shouldn't get worked up to the point of being hysterical about these things.
OK. I agree that the atmosphere has deteriorated, and wish it had not. However, I also wish that Biff would stop posting the kinds of things that provoked myself and SteveCook to respond in the way that we did. Unfortunately I think this is a sign of things to come as the standard of living in the western world deteriorates in the coming years. It is going to be one of the defining characteristics of the post-peak world, as the people at the bottom of the wealth pyramid get ever-more desperate about their own future even as the ecological/sustainability situation continues to deteriorate.

There are some clear common factors between the argument in the EU immigration thread and the debate in this one. It's exactly the same attitude that set off the response from me here as there. I understand that Biff was making a point about homelessness and the comparitive numbers of houses and people. The problem was that at the same time he described house price movements as "a distraction", which really does sound like he doesn't think it matters very much. The common factor between this and the immigration thread is that it matters much more to poor people, who are mainly concentrated in urban areas, than it does to wealthy rural folk like Biff Vernon. He apparently either doesn't understand what reality is like for the poor in the UK, or he doesn't care. And he also does not appear to be able to take on board that he comes across like this (because he keeps on doing the same thing.)

He responds to what we say by claiming we must be misunderstanding what he posts. And yet when I go back and read them, they still appear to be saying the same thing to me. It still looks like he doesn't understand what it is like to be a poor, urban-dwelling person in the UK, or doesn't care. If he was a Tory, this would not bother me - I'd just despise him like I despise them, but I wouldn't waste any effort getting upset about what he posts or trying to change his mind. But he isn't a Tory. He claims to be a socialist and an environmentalist. That causes me a major problem, and leads to big arguments.
Last edited by UndercoverElephant on 02 Jan 2014, 22:14, edited 2 times in total.
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