Rolling UK Economy Into The Shitbin Thread

Matt - is it just the idea of a property ladder that you find weird, or the idea of ladders in general?

It is specifically the idea of property ladders - I associate actually buying a house with a settled period of eg more than ten years, it's entirely a personal thing. I accept that for people who need to move around for work reasons or have kids or whatever things are very different.

Haha spot the flaky commitmentphobe.

So you have no problem with the ladders that window cleaners use?

Kind of scary.

Those are nominals prices too presumably - real falls would have been more pronounced

I hadn't thought of that. Inflation was much higher then. Apparently the RPI rose nationally by just under 25% between the summer of 89 and the winter of 92, so that would make the real fall in house prices in London and the south east more like 50-60%.

I think the above is correct and that a larger proportion of the falls this time around may be experienced almost entirely nominally, as opposed to the crash 18 years ago when it was partially nominal and partially hidden by inflation, and the 'hidden' crash 18 years before that when it was entirely masked by inflation

Of course there is some dispute at the moment as to wether the CPI/RPI reflect real inflation right now.

In the worst affected area (the 'Outer South East') property prices fell by 36% between the summer of 1989 and the end of 1992 (and by about 32% in London during the same period) and took until the autumn of 1999 to get back up to their 1989 levels.

So how much are these houses worth now?

Washers

So how much are these houses worth now?

At the peak last summer they were worth 4 times what they were (nominally) worth in the trough at the end of 1992. It's difficult to say what they're 'worth' now as the housing market has pretty much seized up.

So how much are these houses worth now?

-- Ned Trifle II, Tuesday, 13 May 2008 16:43

in london? 15x average salary?

CPI/RPI reflect real inflation right now.

-- Ed, Tuesday, 13 May 2008 16:40 (13 minutes ago)

what about m4?

what's crazy to me is that the financial authorities, the govt and the mortgage lenders have

1) seen this coming for about two years
2) done fuck all about it
3) have no plans to do fuck all about it any time soon

i mean, i know that is the subject of pretty much every opinion column about this ever, but still

Why would they? To curtail things at the time would have been electorally unpopular. No elected govt has ever tried to curtail a boom. As for lenders, 1) were chasing market share, 2) huge bonuses for bringing in business at any cost, 3) protected to an extent because consumers still responsible for debt even after repossession - no jingle mail here, 4) knew they would be bailed out by govt as no serious bank can be allowed to fail

no one ever wants to know when the cash is rolling in, it will always be someone elses problem down the line

Plus Nulab has always been in thrall to the city

http://www.boltdepot.com/images/Chrome/chrome-flat-washers.jpg

Wrong image!

http://www.geocities.com/susanmhpublishersmarketplace/2007/litparkrocktheboat.jpg

Also looking back to previous episodes, particularly pre-war, many of the smaller banks went under and ended up being picked up at basement rates by bigger institutions (esp in US, where the fed was basically created to facilitate this)

or to put it another way. jp morgan getting bear stearns for basically nothing, with help from the fed, which they part own

<i>2) done fuck all about it </i>
This is all basic incentives: the banks had a fucked-up bonus system that rewarded people for behaving like this. And MPs have a massive incentive system for keeping house prices going up, as it gets them votes (witness the massacre right now). There was nobody else to prevent it apart from the people in the market, and that's not gonna happen unless they're too busy panic-buying petrol or something.

Er...and also a lot of people (myself included) did alright out of the whole thing. We've moved pretty painlessly from an inner city two-bed terrace with a yard to a four bed detached house in the 'burbs with a lovely garden. We're not high earners by any stretch and have no major debts (except of course the mortgage), we rarely save any money but being sensible we are sitting on a house which even if it were to drop 50% would still not be less than we paid for it five years ago. There are a lot of people like us, but, it seems unlike a lot of them, I regard myself as quite lucky and am not crying to Cameron about how hard done by I am.

Yes booms produce many winners if your timing is right

Timing nothing. We bought when we got fed up with paying crappy landlords tons of cash for shitty housing. We had no idea what would happen and cared even less. The worse that could have happened is that we went back to renting.

Timing everything, even if you weren't aware of it! The worse that could have happened is that you ended up in horror negative equity or had yr home reposessed and the end of yr credit rating forever.

Ahh, you guys worry too much. Plenty of people (no, scratch that, just about everybody I know who bought around that time) went into negative equity. They didn't die, or get their houses repossessed or have their credit rating nuked. They sat tight and now are sitting on houses worth, as laxalt implied, about 15/20 times what they earn. With tiny mortgages. They did better than we did in the long run.

They sat tight and now are sitting on houses worth, as laxalt implied, about 15/20 times what they earn

Think about the implications of this sentence

Don't patronise me.

Again.

No,actually, you can. I sound like an asshole. Forgive me, I'm having a bad day for completely unrelated reasons! And I always end up taking it out on laxalt!

http://realonomics.net/wp-content/uploads/2007/05/chill-pill.jpg

Thanks, I need 2.

a £200m fund to buy unsold new homes and rent them to social tenants
So if you can't sell your overpriced house, don't worry -- the government will buy it! This is a good idea how?

http://news.bbc.co.uk/1/hi/uk_politics/7399340.stm

Don't think they are going to buy *your* house, its new houses only to keep builders and developers afloat and to continue building all the new houses that will also be unsold

Shared Ownership is an incredible ripoff, the govt really shouldn't be pushing this kind of thing...especially now

Shared ownership is a way of forcing people to long term save. So that this equity can be released back to pay for care once decrepit. Bricks and mortar are magic like that.

Shared equity means the buyer gets 50% the profit. In a rising market this means other houses are actually getting further away from them

Shared equity means the buyer gets 100% the losses. In a falling market the buyers equity is wiped out before the govt lose their share

oh and guess who is responsible for 100% the maintenance?

oops ive just noticed the actual figure here

a £200m fund to buy unsold new homes

how many houses do they think this will actually buy?

more tomorrow than today

Are they finally beginning to admit to it now? Did Healey or even Philip Snowdon actually say anything like that? (Esp when you consider the last 60 years included rationing of food!)

Motive: Is it

a) Breaking ranks
b) Preparing us for a series of 'rescue packages' of some kind

LOL HBOS

http://newsvote.bbc.co.uk/nol/shared/fds/hi/business/market_data/chart?style=bbc-big_thick-line&ins=1.E:HBOS&from=2008-09-12%2015:27:00&to=2008-09-15%2015:30:00&timeoffset=0&filter=weekend&filter=markettime(07:00,15:30)&src=intraday&plot=value&fixedxaxis=on

Uh, please don't LOL at my bank. Am I fuX0red?

I've never known trade as bad as this. It's worse than the '80's up here.

you are fine as long as you don't have more that £35,000 in savings and even then the government ended up guaranteeing all deposits when Northern Rock went titsup.

Oh, that's share price, not the bank actually falling apart or anything. I hope? What happens to your savings (ha ha, they just gave me an overdraft... oh wait, my paycheck just went in.) in the UK if your bank fails? There isn't an FDIC or whatever over here, is there?

x-post OK, phew.

Best comment I've heard so far, 'I'm keeping my money in my mattress, at least I know it'll be there in the spring'.

RBOS owns my US bank... let me know when I should be worried.

Strange. It's like I've posted here before.

Never mind, it was just a passing sensation.

Best comment I've heard so far, 'I'm keeping my money in my mattress, at least I know it'll be there in the spring'.

― Billy Dods, Tuesday, September 16, 2008 7:00 PM (3 hours ago) Bookmark Suggest Ban Permalink

not where i live.

you used to be able to kick a ball in the street.