What are your thoughts on the UK housing market?

[anley]

Atilla

Why anyone listens to ANYTHING a central banker says is beyond me as collectivly they have been so wrong with ALL their forecasts for the last 2 years.

Case in point is the US stimulus, remember when it just $700billion was needed? But how much has been paid out, $10trillion+ maybe a lot more.

Give it another 3-4 months and again most, if not all of the central bankers will come out with the same crap, ie

'It looks (the economy) more serious than we had forecast'

But they said that this time last year and at the end of last year and in March and just recently.

PS. I don't actually think they're that stupid but they have to keep talking things up for many many reasons and if I was in their shoes I'd probably do the same, otherwise I'd probably be forced out.

 

[subarashi]

I would like an economist to explain why property prices should ever move up. I buy a car and I expect depreciation to kick in immediately.

Land may appreciate but anything built on it should depreciate and the tax system ought to allow householders to use normal business rated for the depreciation of assets.

 

[Atilla]

I would like an economist to explain why property prices should ever move up. I buy a car and I expect depreciation to kick in immediately.

Land may appreciate but anything built on it should depreciate and the tax system ought to allow householders to use normal business rated for the depreciation of assets.

How many cars have they produced last year and at what time period and cost.

Compare to how many houses they have produced last year and at what time period and cost.

What is the turnover of these two commodities and life span?

Supply and Demand.

 

[shatztrader]

some people (central bankers) believe in credit creation as a stimulus for the econmy, some people believe in governemnt deficit and fiat currency money creation as the only way to stimulate the grwoth. Which one was first then money creation or credit creation?
Sorry, it was tempting to contribute...

I have just relised this thread was about housing... sorry pls ignore or move my post to the right spot..
regards

 

[subarashi]

How many cars have they produced last year and at what time period and cost.

Compare to how many houses they have produced last year and at what time period and cost.

What is the turnover of these two commodities and life span?

Supply and Demand.

Manufacturing costs, number of subsequent owners or questions of supply and demand do not affect the lifecycle of an individual item. That is fixed into a downward spiral of depreciation. Paying more than this value means you are applying the "greater fool method" of trading to housing.

In my opinion that is ridiculous and can only ever end in bursting bubbles. With peoples' houses and lives at stake that is too much to risk. It is time banks and politicians stopped promulgating the lie that a house is the best investment a person can make. Until the motgage is paid the house lies on the banks asset column and not the person paying the mortgage!

 

[Trader333]

In my opinion that is ridiculous and can only ever end in bursting bubbles. With peoples' houses and lives at stake that is too much to risk. It is time banks and politicians stopped promulgating the lie that a house is the best investment a person can make. Until the motgage is paid the house lies on the banks asset column and not the person paying the mortgage!

In the UK more money has been made by more people through property than anything else. If you wish to take the approach that it is mad and not engage in it then fine, the rest of us will carry on continuing to make money. Japan may be different but here it has worked and will continue to into the future although there will always be retraces. The projection for what the population will be in the UK in the next 20 years is up to 50% higher than it is now and all those people will needing somewhere to live. We currently do not have enough property to cater for our existing population let alone a further increase of 50%. That in itself will cause prices to rise and our government know that this is a major issue for which they have still not been able to come up with a good enough solution for.


Paul

 

[Technically Fundamental]

I would like an economist to explain why property prices should ever move up. I buy a car and I expect depreciation to kick in immediately.

Land may appreciate but anything built on it should depreciate and the tax system ought to allow householders to use normal business rated for the depreciation of assets.

Inflation can raise house prices. If someone paid 2K for a house in 1965 should it be depreciated? It wouldn't be worth what it people would be willing to pay in current monetary terms. The reason for this housing crash is because house prices became so far removed from the underlying fundamentals of the market and were completely fuelled by speculation. Unfortunately thre was a massive knock on effect in the wider economy because the banks had every one of their fat fingers in the big pie of people with low income who bought the proverbial top of the market because they though it would x=y them all the way to the bank.

Depreciation is not a allowable for tax so no businesses receives benefits from it. Depreciation/appreciation are only used to ensure that an asset is valued at its actual realisable/resale value i.e. in the balance sheets. Building are depreciated, land isn't.

You get an allowance for capital gains every year so I suppose you could, in theory, benefit from releasing a portion of equity every year providing you got a good enough deal on the squeeze which is quite unlikely.

What you do get is to claim all capital expenses against any gains you make. If you add value to your property then it is worth more. If you left it to rot it would be worth less (depreciation). You can claim say, putting a conservatory in so you'd effectively be claiming the depreciation if you see what I mean.

 

[Atilla]

Manufacturing costs, number of subsequent owners or questions of supply and demand do not affect the lifecycle of an individual item. That is fixed into a downward spiral of depreciation. Paying more than this value means you are applying the "greater fool method" of trading to housing.

In my opinion that is ridiculous and can only ever end in bursting bubbles. With peoples' houses and lives at stake that is too much to risk. It is time banks and politicians stopped promulgating the lie that a house is the best investment a person can make. Until the motgage is paid the house lies on the banks asset column and not the person paying the mortgage!

In trying to make a point I would say you are missing a great deal. Red mist has descended over your reasoning and sound judgement.

A house is an excellent investment imo. Personally, I see it as a hedge against inflation - a way of protecting and preserving wealth. Money kept anywhere else by your average man will be taxed.

It is a pension pot too. Once children leave the bigger household downsizing will take place and equity will be released - used in buying an annuity or world travel... Where else can anyone manage their own finances without giving it away to bankers in pin stripes.

Radio 4 was questioning pension management charges at 1.5% on premiums one puts in. Work out how much of your savings go to some big pension fund for investing it poorly?

 

[Technically Fundamental]

It is time banks and politicians stopped promulgating the lie that a house is the best investment a person can make. Until the motgage is paid the house lies on the banks asset column and not the person paying the mortgage!

:clap:

In my opinion that is ridiculous and can only ever end in bursting bubbles

I'd have though it was obvious by now that bubbles are the new economic model.

 

[Atilla]

:clap:



I'd have though it was obvious by now that bubbles are the new economic model.

Eureka... I think not...


economic cycle - Bing Images

 

[Technically Fundamental]

I'd have thought these were more "boom and bust" (I could't reist ) than cycles. It's ridiculous speculative driven prices and then epic crash. When so much of the countries wealth is allowed to be tied into punting by people who don't really know what anything about the products they're dealing with (outside of their effect on a remuneration package) the central bank should have stepped in and ensured there was some sort of contingency in place to at least save people's jobs. There are no benefits of unemployment.

 

[zambuck]

Eureka... I think not...


economic cycle - Bing Images

....Puplava wrote a great article sometime back in mid 90's, if I find it in my many HD's, I will post it here....

 

[zambuck]

....Also, anyone here following Kondratiev chart...?

....Not a trick question, but interested as to see where we are now on that chart...!

 

[shatztrader]

....Also, anyone here following Kondratiev chart...?

....Not a trick question, but interested as to see where we are now on that chart...!

heading south.... yet as you probably know its has been only 5 waves insofar - there is no enough data as capitalism has been fairly young (covering from 1760 to 1940 and so on) to prove the validity of the theory. According to the 5th wave we are heading south. But Kondratiev focused mainly on demographic means, where in fact the forces driving the cycle are apparently endogenous.
we are right after Minsky`s Financial Stability idea (Ponzi schemes, etc), similar to Juglar cycle (9-11 years) - crisis caused by thightning of credit, which is a part of larger Kondratieff wave.

the model consists of 4 phases: prosperity - recession - depression - recovery.
I ll leave you to contemplate the words of the one of the greatest economists of the 20th century

…In the atmosphere of secondary prosperity there will also develop reckless, fraudulent, or otherwise unsuccessful enterprise, which cannot stand the test administered by recession. The speculative position is likely to contain many untenable elements which slightest impairment of the values of collateral will bring down. A considerable part of current investment operations will show loss as soon as prices fall, as they will by virtue of the primary process. Part of the debt structure will crumble. …Further along, comes liquidation and depression is the phase of absorption, incorporation of the new things and their adaptation to the economic system, an approach to the new static state… That may trigger the Vicious Spiral – crisis. …vicious spiral breaks naturally or by humanitarian government intervention (J. Schumpeter, Business Cycles, 1939).

why?

 

[Atilla]

House prices rise for fifth month in succession | Money | guardian.co.uk :whistling

 

[chump]

show me the Jan 2010 report

 

[Atilla]

show me the Jan 2010 report

I'm in trepidation about this winter season too but I do feel it will be another buying opportunity in spring for the poor souls who missed out this years lows.

Anyone betting on another stimulus bill... :cheesy:

 

[Trader333]

Anyone betting on another stimulus bill...

In my view this is highly likely as Labour are desperate to give the electorate a reason to vote for them so they will do something to boost this and I agree it will give opportunities.


Paul

 

[Hoggums]

It can't and won't last. House price rises are not sustainable in either a deflationary or inflationary environment. We are probably going to end up with both of these in the next decade. It's the none-inflationary period that we've had over the last 10 years that have let house prices rise so much.

I still think that we are way overpriced. It's a lack of sellers that are keeping prices high at the moment. They can all afford their cheap mortgage rates but they won't make much of a profit if they sell now - so they are holding on. So either high mortgage rates or high house prices are going to convince them to sell. If we end up with scenario (1) then we could see a accelerating drop in house prices and seller try to dump their properties before prices fall even lower.

 

[Nut]

I think it's too early to take a long term view though if markets have put in THE bottom then perhaps five years to get back to where we were, if we experience a depression, still possible then I would say 25 years to recover.
cheers
Nut