Reply to: won't house prices go up now?

[DieScum]

I think property and stock investing are totally different. The main reason property shot up was because of cheap, easily available loans. That has gone now.

Stocks may well go down but they are much more liquid than property. So much more likely to undershoot and then recover.

I think there will be money to be made in the stockmarket in time to catch the undershoot of the property market.

[BrilloPad]

...because of the obvious reason that people will be staying clear of stocks?

If there are people with a job who have spare money to invest then fine.

But I think alot of people will be using their cash to reduce debt for sometime to come.

One day I hope to have spare cash then I can worry about where to invest it - cash, stocks, houses, commodities. Or I can just blow it on dancing girls!

Oh a happy problem to have.....

[Stan.goodvibes]

Yeah but if you consider the horrendous upward swing in Libor rates, factor in the soaring inflation thats keeping interest rates up, add in the nervousness in banks to loan other banks money, and the demise of the investment banks that encouraged risky lending, then we are back to the early 80s...

i.e. you need at least 25% deposit before the banks will give you a mortgage, and interest rates are gonna be closer to 10% than 5% (we are just coming down off the back of 10% rates here in NZ).

So even if you wanna buy a house, its going to be very difficult to do so. Add to that the Citibank report that suggests most big banks need to lose about 30% of their debt, and you'll be lucky if anyone can get a loan to do anything for a while.

Add on a few more years until inflation has reduced the mortgage/salary ratio closer to the historical average of around 3-3.5 (Instead of the current 7+) which in real terms means wages need to rise by about 70% or house prices drop by about 50%...

.. and property should start looking like a good investment again somewhere around 2030

;-)

[NickFitz]

...because of the obvious reason that people will be staying clear of stocks?

Your sense of logic seems peculiar to me. Tell me if I've got your views correct:

In the past, stocks were booming, and so were house prices.

Stocks are no longer booming, therefore, house prices will boom.

It isn't a two-way tradeoff. People aren't saying "OMFG my stocks are decreasing in value therefore I must buy a bigger house! "

They may think "OMFG my stocks are falling therefore I need to sell this house ASAP otherwise I'll be up to my eyeballs in debt because I was too stupid to realise that the Good Times always come to an end and 'leveraged my equity' to such an extent that the Halifax own both my kidneys..."

...but that's not the same thing as you're suggesting

[Francko]

You mean the ever expanding population of the British isles is going to crash and they are going to raise new land from the sea and expand Britain

Yeah, well first there were the egyptians, then the romans, then the americans, then the english... it's all history already. Soon we will be all slaves to the new Indian empire and all of us will be working for some big indian IT firms* answering support calls for indian customers at 50 rupees an hour. Come back and see this post in 20 years time.... finance has put us all in the biggest crisis of the last 50 years, outsourcing will put us down to our knees forever.

* That's when CEOs will realise that they can't run succesfully a company with just a PC and a couple of VoIP phones but it will be too late already

[TimberWolf]

You mean the ever expanding population of the British isles is going to crash and they are going to raise new land from the sea and expand Britain

Yeah, or maybe some long-term trends we've been used to for millennia will come to a crashing halt one day. Fortunately we in the UK are uniquely well placed to be able stare down doom in his face and break wind in his general direction.

[Diver]

In the long term that has been true

You mean the ever expanding population of the British isles is going to crash and they are going to raise new land from the sea and expand Britain

[TimberWolf]

In the long term that is true

In the long term that has been true

[Diver]

Harder than me.

I'm off to bed.

Goodnight and stay away from any machinery.

Goodnight mate

[PRC1964]

We don't need your anglo saxon roman arabic germanic trashy vowels in Wales.

We're ard we are

Harder than me.

I'm off to bed.

Goodnight and stay away from any machinery.

[Diver]

Can I lend you these: AIEOU

You seem to have run out of vowels.

pronounced my-veon glyn-dower by the way

[Diver]

Can I lend you these: AIEOU

You seem to have run out of vowels.

We don't need your anglo saxon roman arabic germanic trashy vowels in Wales.

We're ard we are

[PRC1964]

That's English second home policy in Wales

Meibion Glyndwr

Can I lend you these: AIEOU

You seem to have run out of vowels.

[Diver]

Ah, but you live in Wales. I should have added Property will only ever go up "in flames".

That's English second home policy in Wales

Meibion Glyndwr

[SandyDown]

Ah, but you live in Wales. I should have added Property will only ever go up "in flames".

Yawn