Reply to: Housing Boom

[wendigo100]

The last time this happened there where loads of cheap houses to buy!

Buy? Up north you got one free with a pound of tripe!

[Ollie]

The last time this happened there where loads of cheap houses to buy!

[NoddY]

There are many different types of 'inflation'. It generally means a decrease in the value of money. Therefore people who sell their time for money find the value of their labour less.

In the UK we have seen a marked decrease in the ability of money to purchase all asset classes, especially housing. People make up for this 'labour deficit' by incurring more debt. Monetarists argue the initial decrease in the value of money is caused by increases in the money supply (low interest rates). Ordinarily, such a rapid and pronounced decrease in the value of work would have people rioting on the streets as they find their labour to be literally worth-less.

However, undemocratic states, such as China, can artificially lower the value of their workers labour because, amongst other things, they don't have to finance legacy costs of industrialisation. Furthermore, world food production now exceeds world population growth. Thus food items and items exported from China have fallen in price, even in an inflationary environment.

Lower consumer inflation rates govern wage inflation. Thus, western wage inflation is low. Hence the value of labour remains low.

[Moscow Mule]

I think he meant the dollar:GBP exchange rate goes down.

Ah, that would solve the conundrum.

[wendigo100]

Eh?

1GBP = 1.5USD

Oil = 60USD = 40GBP

1GBP = 2USD

Oil = 60USD = 30GBP

I think he meant the dollar:GBP exchange rate goes down.

[Moscow Mule]

Yes, that's the problem, oil is priced in USD. Dollar goes down price of oil in pound goes up

Eh?

1GBP = 1.5USD

Oil = 60USD = 40GBP

1GBP = 2USD

Oil = 60USD = 30GBP

[alreadypacked]

Yes but just think how many dollars to the pound there are...

Yes, that's the problem, oil is priced in USD. Dollar goes down price of oil in pound goes up

[dotnetter]

See I'm kinda worried, I mean me and my girlfriend bought our first house less than 2 years ago, we choose a fixed rate interest only for the first 3 years, at the time I was just getting into contracting and wanted to keep my outgoings down as much as possible in case it went belly up.

I mean we bought an average house and payments are fine at the moment, we both work, I'm 25 and she's 23, obviously on a contractors wage full time it's easy to pay. We planned to remortgage after 3 years and try to secure better rate, doesnt look like thats gonna happen. Now it's coming close to remortgage time and I dunno whether to go for a long term fixed rate or get another short one I wanted to get a repayment mortgage next but if the rates keep going up

All a load of bollocks really, most of my mates still live at home because their still on 20-25k a year and can't even afford to rent anywhere.

Yet if they dropped a kid and gave up work they would have a house in a week, probably next to me!

[Clippy]

im not suprised. You really need to earn £60k PLUS to have a descent life these days nevermind a comfortable one.

Everything is just so expensive. People just get by these days and only just. People are not opting inot pensions because they need all the cash they can get their hands on now!

Everything is messed up.
And its only going to get worse before it gets better.

Oil is at $76 as of now which means in the next few days i'll be paying £1 for a litre. Who knows when it will end

Not according to an upcoming Money Programme

[Churchill]

Oil is at $76 as of now which means in the next few days i'll be paying £1 for a litre. Who knows when it will end

Yes but just think how many dollars to the pound there are...

[Maxamus]

im not suprised. You really need to earn £60k PLUS to have a descent life these days nevermind a comfortable one.

Everything is just so expensive. People just get by these days and only just. People are not opting inot pensions because they need all the cash they can get their hands on now!

Everything is messed up.
And its only going to get worse before it gets better.

Oil is at $76 as of now which means in the next few days i'll be paying £1 for a litre. Who knows when it will end

[Euro-commuter]

Went out with the 80's. Now that pensions are buggered - by you know who - the only virtual investment people have is property. I say "virtual" because when you're retired - you need to downsize quite significantly to realise the equity in your house. This assumes that there will be someone around who can afford to buy it.

Good point. Who will buy it? Not your contemporaries, they will be trying to sell theirs too. Not the following generations, they are fewer, poorer (from student loans etc), and less able (from not being on a jet-propelled housing ladder).

[lilelvis2000]

whatever happened to living within your means ?

Milan.

Went out with the 80's. Now that pensions are buggered - by you know who - the only virtual investment people have is property. I say "virtual" because when you're retired - you need to downsize quite significantly to realise the equity in your house. This assumes that there will be someone around who can afford to buy it.

[gingerjedi]

whatever happened to living within your means ?

Milan.

Everyone has been encouraged to get on the property ladder by any means necessary and in the long run they will be better off if they can ride the storm but a few of the over laden ships are going to sink, nothing has really changed in that department.

When I first bought rates were at 13% and the advise was to buy the most expensive property I could afford as in the long run that would make the most financial sense, if the rate had climbed further it would have wiped me out.

[Sockpuppet]

whatever happened to living within your means ?

That went out of fashion when the avg house price went north of £150,000.

These people would be living in thier means if house prices were the same as when they were 10 years ago.

Not that I am worried. All set to make cash offers on people houses when they and little timmy are kicked out onto the street.

Edit: they reported yesterday that consumer spending was up 3% in June. Seems like the BoE are going to add another .25%. Que more retailers pleading poverty, yet releasing reports that consumer spending is up 3%.

Ding bats.