David Parsley writes in today's Sunday Express, a piece titled "Homes Panic Is A Bank Ploy" (not yet available on the Net for free, but look for it again soon). The content is self-evident, but please, read and believe him. Spread the word. Find more such pieces by optimistic counter-contrarians, and publicise them. Blow away all that negative thinking.
That way, I may have more time to sell my house at current ridiculous market prices, which for personal reasons I can't yet.
8 comments:
I'm thinking perhaps that the ownership of property in the U.K. is currently not such a wonderful idea.
He's absolutely right of course. So now I'm going to ask the question, why are the press going along with this game and why with so much vigour?
Oh and the connection with the dot-com bubble and oil prices?
Wolfie, I hope your comment is ironic. Long term average house prices are, I believe, 3 - 3.5 times income, average UK household income is c. £30k.
James, to have now but to sell, that would be my choice.
Parsley ain't sage.
I think your maths is a bit pessimistic old chap.
3 - 3.5 times income is the traditional mortgage level (excluding deposit), so given that the average house price in the UK is currently £218,112 that would suggest nearly 50% over value on £115,000 capital.
But what about inflation?
Not CPI fantasy etc, real value of money inflation (caused by government cash supply growth) runs at about halving the value of money every 15 years and this is reflected in many equity classes.
So the next question should be is what proportion of UK home owners have owned their property less than 15 years because they would be the only people, on average to even lose a penny.
Well I've done the maths at it looks more like a 20 - 25% correction is on the cards… at the very WORST. Unless of course doom-sayers with their own interests talk the market lower.
OK, so the average first-time buyer can't afford an average house - so what? I didn't lose my virginity with a super-model but it didn't do me any harm in the long run.
Food for thought, Wolfie.
DM: I say, that's rather good!
Wolfie. A whole load of things you have forgotten. I could start with mortgage equity withdrawal which became fashinable for the first time in this cycle. And the fact that on average peole tend to move home every 7 years, taking out their maximum mortgage each time they move. But the most important factor is the momentum that is gained in a depreciating market. How many people are interested in buying a home when homes are losing money at the rate of £10,000 a year?
Always remember that the value of an asset is determined at the margins. Most people DON'T trade at all during a falling market. They stay right where they are. Those that do trade do so because they have to. And there are always those that have to. But when the market is falling, finding buyers to build a long chain becomes impossible. Don't be under the impression that there are too few houses to go around. There are just enough, or there would be many thousands sleeping rough on the streets. In any case, in a downturn we could find the population rapidly decreasing.
Love your humor Sackerson :-)
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