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Finances / Finanzen » uk.finance » House Prices Still Rising!!
House Prices Still Rising!! [message #373485] Mo, 13 März 2006 13:40
Richard Faulkner  
According to the ODPM prices rose by 4.3% in the 12 months to January


--
Richard Faulkner
Re: House Prices Still Rising!! [message #373497 ] Mo, 13 März 2006 14:58
Adrian Smith  
"Richard Faulkner" <richard [at] estate.demon.co.uk> wrote in message
news:SEWUJqA9gWFEFwgI [at] estate.demon.co.uk...
>
>
> According to the ODPM prices rose by 4.3% in the 12 months to January
>
>
> --
> Richard Faulkner

Percent increase Jan to Dec - England and Wales - All properties from
www.UpMyStreet.com

2000 7.7%
2001 8.9%
2002 19.5%
2003 4.8%
2004 9.7%
2005 5.3%

Between 2000 and 2005 prices rose by 92.4%. Wish my wages had done the
same:-)

--
Adrian Smith
Re: House Prices Still Rising!! [message #373501 ] Mo, 13 März 2006 15:42
Adrian Smith  
My previous figures were incorrect....

Percent increase from Quarter 4 to Quarter 4 the following year - England
and Wales - All properties from www.UpMyStreet.com

04 - 05 5.3%
03 - 04 11.6%
02 - 03 12.6%
01 - 02 22.3%
00 - 01 10.3%
99 - 00 11.9%
98 - 99 15.7%

Between Q4 1999 and Q4 2006 prices rose by 99.7%. Again I wish my wages had
done the same:-)

--
Adrian Smith
Re: House Prices Still Rising!! [message #373502 ] Mo, 13 März 2006 16:26
John  
To the list,

Are people surprised that prices are still rising?

Employment is generally good, interest rates are stable (which really
means no rapid movement and no unexpected moves), fewer house units are
built than are needed and the trend lines for all the above are pretty
stable for the last couple of years. Many expected a large correct so
headed for the sidelines. The correction did not happen so some are
deciding that their housing situation is a higher priority than market
timing.

A correction can only happen when there is a fundamental shift in the
prevailing conditions. Spike in unemployment, rapid rise in interest
rates or a large shift in the number of new units coming into the
market (or people moving out of the UK). None of the above are
predicted so most people look at their personal circumstances and then
decide if they want to buy rather than rent. The macro picture provides
no indication that waiting on the sidelines will be an advantage. Even
with flat prices many people would rather own their own home.

John Corey
Re: House Prices Still Rising!! [message #373509 ] Mo, 13 März 2006 16:58
Adrian Smith  
"John" <john.corey [at] gmail.com> wrote in message
news:1142263565.106808.282480 [at] j52g2000cwj.googlegroups.com...
> A correction can only happen when there is a fundamental shift in the
> prevailing conditions.
>
> John Corey
>

A shift in prevailing conditions can come in many guises and to 'the man on
the street' is usually unexpected.

--
Adrian Smith
Re: House Prices Still Rising!! [message #373511 ] Mo, 13 März 2006 17:07
Tumbleweed  
"John" <john.corey [at] gmail.com> wrote in message
news:1142263565.106808.282480 [at] j52g2000cwj.googlegroups.com...
> To the list,
>
> Are people surprised that prices are still rising?
>

Crowley is "gobsmacked".

And he hasnt seen the one from the BOE today yet either, LOL.

Sit down before you read one!

:-)

--
Tumbleweed

email replies not necessary but to contact use;
tumbleweednews at hotmail dot com
Re: House Prices Still Rising!! [message #373513 ] Mo, 13 März 2006 17:09
John  
Adrian,

I agree with the point that the man in the street is largely uninformed
or out of step with what matters in terms of pricing. Mostly because
they lack the time to study the fine point, etc.

This seems to be the reason why the prevailing wisdom about a
correction was wrong. Not that corrections can not happen. Just that
they do not happen for the reasons cited 1-2 years ago.

John
Re: House Prices Still Rising!! [message #373540 ] Di, 14 März 2006 00:04
Crowley  
Tumbleweed wrote:
> "John" <john.corey [at] gmail.com> wrote in message
> news:1142263565.106808.282480 [at] j52g2000cwj.googlegroups.com...
> > To the list,
> >
> > Are people surprised that prices are still rising?

Not round these parts they're not, and there's plenty slashing their
prices ...... one round the corner down from =A3375k to =A3300k. Plenty
more like that though not quite so big drops percentage-wise (yet)

> Crowley is "gobsmacked".

Yes, but only by the fact that so many still believe this VI spin in
the face of most of the fundamentals.

> And he hasnt seen the one from the BOE today yet either, LOL.
>
> Sit down before you read one!
>
> :-)

I'm sitting very comfortably thank you ;-)

http://www.housepricecrash.co.uk/forum/index.php?act=3DSF&am p;s=3D&f=3D22
Re: House Prices Still Rising!! [message #373553 ] Di, 14 März 2006 01:52
Richard Faulkner  
In message <1142291051.283413.272080 [at] v46g2000cwv.googlegroups.com>,
Crowley <crowleyalastair [at] yahoo.co.uk> writes
>I'm sitting very comfortably thank you ;-)

In 1985 I bought a house for £20,500 and sold it in 1987 for £21995 - I
didnt buy another at the same time.

In 1988, I had to pay £42,000 for a similar property... so I lost a real
£20,000, by not owning a property.

After this experience, I promised myself that I would never ever be
without property again.

The market has risen and fallen over the past 18 years so, when prices
were low, I did whatever was necessary to avoid selling, and traded up
during the recent boom.

If you dont get on the housing ladder, you will live to regret it, (not
that you would ever admit it <g>)

lets say you buy a house now, (and dont give me that bullshit about not
being able to afford one..... maybe not where you want, but who ever
bought their first house where they really wanted it), for £150,000. In
5, or 7 years time, it will probably be worth £250,000 or so, and its
not cost much more than the rent you are paying to own it, (and you dont
have to give a monkeys what it's been worth in between). Sell it, trade
down your own home, (size, type or location), and use the balance to get
some investments, or buy some junk and do it up - BINGO, you're on the
way.

I have no axe to grind, and have nothing to gain or lose, whatever you
do.

I dont actually care if the market rises or falls.

If it rises I am worth more, if it falls, I may buy more. If it falls
and never rises, I'll just keep collecting the rent till I die......

I have lost count of the number of friends I have advised at various
times, who have had your attitude, and who are still working 9-5 for a
pittance, and who will be waving me off in June.

They aint making more land!!

--
Richard Faulkner
Re: House Prices Still Rising!! [message #373558 ] Di, 14 März 2006 08:41
John  
One example does not make a trend. It does not even make a line on a
graph.

I accept there will be someone who either is motivated to sell quickly
or was over priced when they put the property on the market so slashed
the price. I also expect that the averages are the averages and
therefore are closer to the present reality than any one property.

A crash would be more obvious by this point. What we see is very low
inventories as people refuse to sell at lower prices. Until they are
forced to sell (rising interest rates or job loss) they will continue
to go to work and pay the mortgage rather than put the home on the
market.

Prices should go up and down so examples of prices being higher or
lower is proof of market forces at work. The forces are not requiring a
large correction to find a new balance. There is still a shortage of
housing and people with jobs looking for a place to live.

A bit of a rant and some background for why I take the position I do...

I am long property. Money where my mouth is. I have multiple units in
multiple countries. I have been investing in property for over 20
years. Ups and downs are expected. What causes them is rather well
understood at a macro level if you look at the data over the years. You
also have to note fundamental changes which shift the rules a bit.
Eviction law changes in the late 1980's and in 1996) is an example in
the UK. It was only after the changes that lenders would loan to
investors for rental properties. That was a bit of a shift so the data
prior and the data after is not directly comparable in the full sense
of the phrase.

If someone owns a rental and it is easily covering the mortgage then
there is no rush to sell. The owner can just sit and let the tenant pay
off the mortgage. At some point in the future the value will rise.
Anyone who doubts that prices will rise again also has to believe that
wages will not rise as house prices have a connection to wages. The
ratio does swing around a bit so the relationship is not a strict one.
History says X times income for prices. Maybe better is Y times income
to the monthly mortgage or rent payment as it is more about cash flow
than actual house prices. Some BTL owners are in over their head and
are having issue with making the monthly payments. The smart ones are
not in that camp so the smart ones will continue to collect the rents
and watch the portfolio value rise with time. Similar in a strange way
to the homeowner who wants a home and has no need to move just because
prices are up or down. They get the utility value and own a home for
that utility value and not as a way to play the market. When prices are
soft they continue to own. When prices are rising the homeowner
considers trading up.

John

Crowley wrote:
> Tumbleweed wrote:
> > "John" <john.corey [at] gmail.com> wrote in message
> > news:1142263565.106808.282480 [at] j52g2000cwj.googlegroups.com...
> > > To the list,
> > >
> > > Are people surprised that prices are still rising?
>
> Not round these parts they're not, and there's plenty slashing their
> prices ...... one round the corner down from =A3375k to =A3300k. Plenty
> more like that though not quite so big drops percentage-wise (yet)
>
> > Crowley is "gobsmacked".
>
> Yes, but only by the fact that so many still believe this VI spin in
> the face of most of the fundamentals.
>
> > And he hasnt seen the one from the BOE today yet either, LOL.
> >
> > Sit down before you read one!
> >
> > :-)
>
> I'm sitting very comfortably thank you ;-)
>=20
> http://www.housepricecrash.co.uk/forum/index.php?act=3DSF&am p;s=3D&f=3D22
Re: House Prices Still Rising!! [message #373566 ] Di, 14 März 2006 10:46
Crowley  
Richard Faulkner wrote:
..

> In message <1142291051.283413.272080 [at] v46g2000cwv.googlegroups.com>,
> Crowley <crowleyalastair [at] yahoo.co.uk> writes
> >I'm sitting very comfortably thank you ;-)
>
> In 1985 I bought a house for =A320,500 and sold it in 1987 for =A321995 -=
I
> didnt buy another at the same time.
>
> In 1988, I had to pay =A342,000 for a similar property... so I lost a real
> =A320,000, by not owning a property.
>
> After this experience, I promised myself that I would never ever be
> without property again.
>
> The market has risen and fallen over the past 18 years so, when prices
> were low, I did whatever was necessary to avoid selling, and traded up
> during the recent boom.
>
> If you dont get on the housing ladder, you will live to regret it, (not
> that you would ever admit it <g>)
>
> lets say you buy a house now, (and dont give me that bullshit about not
> being able to afford one..... maybe not where you want, but who ever
> bought their first house where they really wanted it), for =A3150,000. In
> 5, or 7 years time, it will probably be worth =A3250,000 or so, and its
> not cost much more than the rent you are paying to own it, (and you dont
> have to give a monkeys what it's been worth in between). Sell it, trade
> down your own home, (size, type or location), and use the balance to get
> some investments, or buy some junk and do it up - BINGO, you're on the
> way.
>
> I have no axe to grind, and have nothing to gain or lose, whatever you
> do.
>
> I dont actually care if the market rises or falls.
>
> If it rises I am worth more, if it falls, I may buy more. If it falls
> and never rises, I'll just keep collecting the rent till I die......
>
> I have lost count of the number of friends I have advised at various
> times, who have had your attitude, and who are still working 9-5 for a
> pittance, and who will be waving me off in June.
>
> They aint making more land!!
>
> --
> Richard Faulkner

You make some good points as always Richard and I agree it's no bad
thing to have your own property but timing can be important if you want
the best deal. The 'property ladder' goes up aswell as down and you can
get much better property and/or save yourself a packet if you put some
thought into timing though I don't want to sound like I'm teaching my
grandmother to suck eggs :-)

For instance, I bought a house in the north west for =A3135k in spring
89. In 92 I had it valued at =A395k. Prices had dropped considerably in
many parts of the country as you doubtless remember and continued to
drift lower for a further 2 or 3 years. Eventually it regained it's
original value and no doubt is now worth considerably more (I don't own
it now) as the long term trend of prices is up.

I think we are at a similiar point to 1989, prices have risen
considerably over the past few years but this is a bubble just waiting
to burst and IMO anyone waiting patiently will benefit from a major
correction in prices over the next year or two and beyond until the
up-cycle starts all over again.

http://www.housepricecrash.co.uk/forum/index.php?act=3DSF&am p;s=3D&f=3D22
Re: House Prices Still Rising!! [message #373569 ] Di, 14 März 2006 11:20
Tumbleweed  
"Crowley" <crowleyalastair [at] yahoo.co.uk> wrote in message
news:1142329575.557036.90200 [at] e56g2000cwe.googlegroups.com...

>I think we are at a similiar point to 1989, prices have risen
>considerably over the past few years but this is a bubble just waiting
>to burst and IMO anyone waiting patiently will benefit from a major
>correction in prices over the next year or two and beyond

"the next year or *two* or **beyond***"??!!

Less than a week ago you said "tar and feather me if there hasnt been a
major correction by the end of this year"

--
Tumbleweed

email replies not necessary but to contact use;
tumbleweednews at hotmail dot com
Re: House Prices Still Rising!! [message #373572 ] Di, 14 März 2006 12:11
Richard Faulkner  
In message <1142329575.557036.90200 [at] e56g2000cwe.googlegroups.com>,
Crowley <crowleyalastair [at] yahoo.co.uk> writes
>I think we are at a similiar point to 1989, prices have risen
>considerably over the past few years but this is a bubble just waiting
>to burst and IMO anyone waiting patiently will benefit from a major
>correction in prices over the next year or two and beyond until the
>up-cycle starts all over again.

But if you are wrong, prices will keep rising, and you will never buy,
(I think 5% compound doubles prices in 12 years or so).

If you buy now, you may lose in the short term, but you win in the long
term. There are some deals to be had, and some properties where the rent
will fund the mortgage and costs, (obviously not a 100% mortgage), or
where the costs will not be much more than your rent.

Anyway - I can see that you are being rational, but cant help getting
wound up by your posts..... <g>

--
Richard Faulkner
Re: House Prices Still Rising!! [message #373573 ] Di, 14 März 2006 13:20
Crowley  
Tumbleweed wrote
> "Crowley" <crowleyalastair [at] yahoo.co.uk> wrote in message
> news:1142329575.557036.90200 [at] e56g2000cwe.googlegroups.com...
>
> >I think we are at a similiar point to 1989, prices have risen
> >considerably over the past few years but this is a bubble just waiting
> >to burst and IMO anyone waiting patiently will benefit from a major
> >correction in prices over the next year or two and beyond
>
> "the next year or *two* or **beyond***"??!!
>
> Less than a week ago you said "tar and feather me if there hasnt been a
> major correction by the end of this year"

I think we will have seen a 'major correction' within a year but it
won't stop there and prices will continue the downward path for several
more years to come before the cycle turns again. IMO
Re: House Prices Still Rising!! [message #373574 ] Di, 14 März 2006 13:28
Crowley  
Richard Faulkner wrote:
..

> In message <1142329575.557036.90200 [at] e56g2000cwe.googlegroups.com>,
> Crowley <crowleyalastair [at] yahoo.co.uk> writes
> >I think we are at a similiar point to 1989, prices have risen
> >considerably over the past few years but this is a bubble just waiting
> >to burst and IMO anyone waiting patiently will benefit from a major
> >correction in prices over the next year or two and beyond until the
> >up-cycle starts all over again.
>
> But if you are wrong, prices will keep rising, and you will never buy,
> (I think 5% compound doubles prices in 12 years or so).

Prices round here are not rising and even after cuts upto 15% many are
still not attracting buyers. I can't see anything that will get prices
rising again for some considerable time to come (years) so I am
confident that waiting will get a far better deal.

> If you buy now, you may lose in the short term, but you win in the long
> term. There are some deals to be had, and some properties where the rent
> will fund the mortgage and costs, (obviously not a 100% mortgage), or
> where the costs will not be much more than your rent.

Mortgage, schmortgage.

> Anyway - I can see that you are being rational, but cant help
getting
> wound up by your posts..... <g>

Wound up by me ? Surely not ! :-)

Now if you really want to get wound up have a wade through some of
these ...............
http://www.housepricecrash.co.uk/forum/index.php?s=394e59a1c f221cd65ca1807fe0ea1b86&showforum=22

Some of them make even a doom-monger like me appear bullish.
Re: House Prices Still Rising!! [message #373575 ] Di, 14 März 2006 13:31
John  
Crowley,

Your logic on the surface sounds reasonable. Lets leave out the
prediction and the suggestions about the timing for a correct. I want
to poke a bit with the bigger issues.

1. Housing for many people is more about a home than it is about market
timing an investment. A home had utility value to the occupants. Hence
it could be priceless in some ways as a home even if the financial
value is going up or down. In a typical year almost everyone stays put
so almost everyone has not real connection to the possible value their
home might fetch in the market.

2. If someone is investing they are not just trying to buy the average
if they are intelligent. Hence they look for a bargain. A bargain can
mean different things. I know one guy who pays retail but then changes
the use or the utility of the property so that it now has much greater
value. A simple example is he purchases a 3 bedroom home at full price
knowing it would not cash flow as a BTL. He then proceeded to convert
one living room into a bedroom, fitted the place out with everything
you can imaging a university student would want and has a place that is
in high demand. The property produces a high yield and provides
something 1.5 to 1.6 debt coverage (income greatly exceeds the debt
service).

3. Professional RE investors know that property is not a short term
game most of the time. The transaction costs are high (stamp duty,
other selling costs, time delays). Hence a property that is purchased
for a medium to long term hold which covers all the running costs
including maintenance reserves means that the investor can just wait
for the market to come to the investor. The investor does not need
appreciation. Over time rents will generally rise (wages tend to do the
same all things being equal). Over time the property can be paid off
from the surplus cash flow. If appreciation kicks in every 10 years or
so then the game would be to have as many properties as possible with
the tenants covering the running costs.

In conclusion.

House prices are largely determined by the owner occupant. The BTL
investor is on the margin compared to the number of owner occupant
sales out there. The behavior of the owner occupants is the key. If
they are buying prices will rise. If they are not buying they are
likely renting so the investor has a hedge. When prices are soft of
falling the owner occupant will want to stay rather ran recognize the
loss if at all possible. As the market has changed since 1989 (the last
major correction) more owner would consider renting a place before
selling compared to then (legal differences related eviction makes this
a better option than in 1989). Hence housing markets tend to have a
floor based on people staying put and continuing to pay the mortgage.

Remember that in 1989 the interest rates spiked over 15%, inflation was
very high (higher than 15% I believe) and unemployment was high. Now we
have historically low interest rates, full employment about 10 years of
building less housing that is needed and a low inflation outlook.

Corrections happen all the time. They come from changes in the market.
The housing market is not facing negative factors other than low
affordability. Low affordability is almost the definition for housing
in London for a very long time so affordability is not the main driver
of house prices.

John
Re: House Prices Still Rising!! [message #373576 ] Di, 14 März 2006 14:01
Ronald Raygun  
Richard Faulkner wrote:

> (I think 5% compound doubles prices in 12 years or so).

Think again. Close, pero no puro.
Re: House Prices Still Rising!! [message #373577 ] Di, 14 März 2006 14:06
Richard Faulkner  
In message <1142339311.053382.215690 [at] i40g2000cwc.googlegroups.com>,
Crowley <crowleyalastair [at] yahoo.co.uk> writes
>> But if you are wrong, prices will keep rising, and you will never buy,
>> (I think 5% compound doubles prices in 12 years or so).
>
>Prices round here are not rising and even after cuts upto 15% many are
>still not attracting buyers. I can't see anything that will get prices
>rising again for some considerable time to come (years) so I am
>confident that waiting will get a far better deal.

As I said - I respect your decision - it could be right.

Where are you? I'm sure you've told us, but I cant remember.

--
Richard Faulkner
Re: House Prices Still Rising!! [message #373578 ] Di, 14 März 2006 14:20
Crowley  
John wrote:
..

> Crowley,
>
> Your logic on the surface sounds reasonable. Lets leave out the
> prediction and the suggestions about the timing for a correct. I want
> to poke a bit with the bigger issues.
>
> 1. Housing for many people is more about a home than it is about market
> timing an investment. A home had utility value to the occupants. Hence
> it could be priceless in some ways as a home even if the financial
> value is going up or down. In a typical year almost everyone stays put
> so almost everyone has not real connection to the possible value their
> home might fetch in the market.
>
> 2. If someone is investing they are not just trying to buy the average
> if they are intelligent. Hence they look for a bargain. A bargain can
> mean different things. I know one guy who pays retail but then changes
> the use or the utility of the property so that it now has much greater
> value. A simple example is he purchases a 3 bedroom home at full price
> knowing it would not cash flow as a BTL. He then proceeded to convert
> one living room into a bedroom, fitted the place out with everything
> you can imaging a university student would want and has a place that is
> in high demand. The property produces a high yield and provides
> something 1.5 to 1.6 debt coverage (income greatly exceeds the debt
> service).
>
> 3. Professional RE investors know that property is not a short term
> game most of the time. The transaction costs are high (stamp duty,
> other selling costs, time delays). Hence a property that is purchased
> for a medium to long term hold which covers all the running costs
> including maintenance reserves means that the investor can just wait
> for the market to come to the investor. The investor does not need
> appreciation. Over time rents will generally rise (wages tend to do the
> same all things being equal). Over time the property can be paid off
> from the surplus cash flow. If appreciation kicks in every 10 years or
> so then the game would be to have as many properties as possible with
> the tenants covering the running costs.
>
> In conclusion.
>
> House prices are largely determined by the owner occupant. The BTL
> investor is on the margin compared to the number of owner occupant
> sales out there. The behavior of the owner occupants is the key. If
> they are buying prices will rise. If they are not buying they are
> likely renting so the investor has a hedge. When prices are soft of
> falling the owner occupant will want to stay rather ran recognize the
> loss if at all possible. As the market has changed since 1989 (the last
> major correction) more owner would consider renting a place before
> selling compared to then (legal differences related eviction makes this
> a better option than in 1989). Hence housing markets tend to have a
> floor based on people staying put and continuing to pay the mortgage.
>
> Remember that in 1989 the interest rates spiked over 15%, inflation was
> very high (higher than 15% I believe) and unemployment was high. Now we
> have historically low interest rates, full employment about 10 years of
> building less housing that is needed and a low inflation outlook.
>
> Corrections happen all the time. They come from changes in the market.
> The housing market is not facing negative factors other than low
> affordability. Low affordability is almost the definition for housing
> in London for a very long time so affordability is not the main driver
> of house prices.
>
> John

I wouldn't necessarily agree with any of that John. Property is a
fairly complex market in which factors other than
investment/money-making potential come into play, and I don't disagree
that it can be a sound long-term investment for someone who has not
over-leveraged himself in order to buy.

My point is that timing is important particularly at the present time
when IMO the cycle is changing. The massive house price increases in
the UK in recent years are not simply down to demand, popularity of
BTL, shortages of homes, or whatever. The bubble has largely been
caused by the easy availability of ralatively cheap credit which has
enabled people to take out and service levels of debt way above the old
3=2E5 loan to wage ratio and has pushed up house prices as a consequence.
Hence the record debt hangover now at =A31.2 trillion and rising.

The credit explosion cannot last forever and there are increasing signs
it's now coming to an end with interest rates on the rise worldwide,
even in Japan where they are reigning in the cash they churn out which
has fed the carry-trade market enabling western banks to borrow low in
Japan and lend high in the west. All that easy money is coming to an
end.

Global liquidity is tightening, there is probably a credit crunch on
the way. Asset bubbles of any kind, including house prices, cannot
survive in such an environment.

Give it 6 or 7 years of price falls and stagnation and the whole
merry-go-round will start all over again.

That's all IMO of course. If I turn out to be wrong then I hope to
still be around here to humbly admit it and to undergo a verbal
'tarring and feathering' from Tumbleweed and Richard.
Re: House Prices Still Rising!! [message #373579 ] Di, 14 März 2006 14:23
Crowley  
Richard Faulkner wrote:
> In message <1142339311.053382.215690 [at] i40g2000cwc.googlegroups.com>,
> Crowley <crowleyalastair [at] yahoo.co.uk> writes
> >> But if you are wrong, prices will keep rising, and you will never buy,
> >> (I think 5% compound doubles prices in 12 years or so).
> >
> >Prices round here are not rising and even after cuts upto 15% many are
> >still not attracting buyers. I can't see anything that will get prices
> >rising again for some considerable time to come (years) so I am
> >confident that waiting will get a far better deal.
>
> As I said - I respect your decision - it could be right.
>
> Where are you? I'm sure you've told us, but I cant remember.
>
> --
> Richard Faulkner

I'm a manc (like yourself ?) but now based in the Glos/Worcs area.
Re: House Prices Still Rising!! [message #373580 ] Di, 14 März 2006 14:45
Richard Faulkner  
In message <1142342446.504357.109660 [at] i40g2000cwc.googlegroups.com>,
Crowley <crowleyalastair [at] yahoo.co.uk> writes
>Give it 6 or 7 years of price falls and stagnation and the whole
>merry-go-round will start all over again.
>
>That's all IMO of course. If I turn out to be wrong then I hope to
>still be around here to humbly admit it and to undergo a verbal
>'tarring and feathering' from Tumbleweed and Richard.

Now you want 7 years <g>

tarring and feathering is a particular perversion which doesnt flick my
switch, so I'll leave it to "T" <g>

--
Richard Faulkner
Re: House Prices Still Rising!! [message #373589 ] Di, 14 März 2006 19:10
M Holmes  
Crowley <crowleyalastair [at] yahoo.co.uk> wrote:

> My point is that timing is important particularly at the present time
> when IMO the cycle is changing. The massive house price increases in
> the UK in recent years are not simply down to demand, popularity of
> BTL, shortages of homes, or whatever. The bubble has largely been
> caused by the easy availability of ralatively cheap credit

Bingo! Give this man a cigar.

> The credit explosion cannot last forever and there are increasing signs
> it's now coming to an end with interest rates on the rise worldwide,
> even in Japan where they are reigning in the cash they churn out which
> has fed the carry-trade market enabling western banks to borrow low in
> Japan and lend high in the west. All that easy money is coming to an
> end.

Japan will be one hit. I also notice that the property bubbles in China
are going into reverse. The Japanese and Chinese money is what's been
feeding this monster for a decade.

> Global liquidity is tightening, there is probably a credit crunch on
> the way. Asset bubbles of any kind, including house prices, cannot
> survive in such an environment.

> Give it 6 or 7 years of price falls and stagnation and the whole
> merry-go-round will start all over again.

Maybe. There were five flower bubbles in Holland before people quit
bidding up the prices of flowers. How many housing bubbles before people
learn not to bid up the prices of housing?

FoFP
Re: House Prices Still Rising!! [message #373596 ] Di, 14 März 2006 20:55
Tumbleweed  
"Richard Faulkner" <richard [at] estate.demon.co.uk> wrote in message
news:JMiSLLJujsFEFwiy [at] estate.demon.co.uk...
> In message <1142342446.504357.109660 [at] i40g2000cwc.googlegroups.com>,
> Crowley <crowleyalastair [at] yahoo.co.uk> writes
>>Give it 6 or 7 years of price falls and stagnation and the whole
>>merry-go-round will start all over again.
>>
>>That's all IMO of course. If I turn out to be wrong then I hope to still
>>be around here to humbly admit it and to undergo a verbal 'tarring and
>>feathering' from Tumbleweed and Richard.
>
> Now you want 7 years <g>
>
> tarring and feathering is a particular perversion which doesnt flick my
> switch, so I'll leave it to "T" <g>
>


I'm ordering the tar already,and planning on buying surplus swan feathers
(should be a lot to spare if bird flu hits)

--
Tumbleweed

email replies not necessary but to contact use;
tumbleweednews at hotmail dot com
Re: House Prices Still Rising!! [message #373606 ] Mi, 15 März 2006 14:04
Tim  
> Richard Faulkner wrote:
> > (I think 5% compound doubles prices in 12 years or so).
>
"Ronald Raygun" wrote
> Think again. Close, pero no puro.

A good rule of thumb (which isn't far off
for most reasonable interest rates), is that :-

Rate(%) x Period = 72

Thus 5% doubles in about 72 / 5 = 14.4 years (really 14.2), and
the rate which doubles in 12 years is about 6% (really 5.95%) ...
Re: House Prices Still Rising!! [message #373607 ] Mi, 15 März 2006 15:12
Ronald Raygun  
Tim wrote:

>> Richard Faulkner wrote:
>> > (I think 5% compound doubles prices in 12 years or so).
>>
> "Ronald Raygun" wrote
>> Think again. Close, pero no puro.
>
> A good rule of thumb (which isn't far off
> for most reasonable interest rates), is that :-
>
> Rate(%) x Period = 72
>
> Thus 5% doubles in about 72 / 5 = 14.4 years (really 14.2), and
> the rate which doubles in 12 years is about 6% (really 5.95%) ...

"For most reasonable interest rates"? It's interesting to note
that because rate and period are so closely linked in that formula,
you might as well say "for most reasonable periods" instead.

You might even define reasonableness in terms of those rates and
periods which work best for the key number 72. Clearly the
"most reasonable" interest rate, that for which the rule of thumb
gives the best approximation, is 7.847% and the most reasonable
period is therefore 9 years and 64 days.

How far away from this maximally reasonable rate do you have to get
for the rule to give wonky answers? Well, it depends how you
quantify "wonky". Your example results above are roughly 1% off,
which certainly isn't bad considering how much further than 1% 5% is
from 7.85 and 12 from 9.2.

On the other hand, consider that for both 5% and 12 years, 71 is
a better key number than 72.
Re: House Prices Still Rising!! [message #373608 ] Mi, 15 März 2006 18:03
John  
The 'rule of 72' is pretty well established and many times close
enough. If someone needs something more precise they can use a
calculator or spreadsheet.

John
Re: House Prices Still Rising!! [message #373676 ] Do, 16 März 2006 23:01
Richard Faulkner  
In message <dv93cs$586$1 [at] nwrdmz02.dmz.ncs.ea.ibs-infra.bt.com>, Tim
<me [at] home.uk> writes
>> Richard Faulkner wrote:
>> > (I think 5% compound doubles prices in 12 years or so).
>>
>"Ronald Raygun" wrote
>> Think again. Close, pero no puro.
>
>A good rule of thumb (which isn't far off
>for most reasonable interest rates), is that :-
>
> Rate(%) x Period = 72
>
>Thus 5% doubles in about 72 / 5 = 14.4 years (really 14.2), and
>the rate which doubles in 12 years is about 6% (really 5.95%) ...

Many Thanks! <g>

--
Richard Faulkner
Vorheriges Thema:Ireland's kamikaze capitalism
Nächstes Thema:IT Contractor, self-employment, trusts and the Isle of Man
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