How high will inflation go ?

[Casually made]

At least he has income producing assets, interest rates are still low, despite being on the rise. I would imagine he has 25-50% equity in those houses, his biggest potential problem is a bad tenant and or voids, and possibly utility bills if included in the rent.

I’m sure he will do better than most.

Ah yes that old chestnut that has virtually destroyed the residential housing equilibrium and leaves us in the state we are in today

Buy to let has caused a lot of problems with residential housing by trying to warp them into investment vehicles , now anyone who has watched YouTube fancies their chances of building a "cash flowing" BTL property empire

Sounds great on paper but todays margins in BTL are wafer thin primarily because the government has realised its a an easy cashcow for taxation. And tenants who are paying extortionate rents generally do not give a flying monkeys about damaging the properties and have more rights than the owners themselves.

The guy i know now finds himself in a scenario where by he is working a full time 50 hour a week job and after that is then trying to juggle the administration and maintenance of the "portfolio" of which there seems to be a new problem arising every week

I suggested contracting an admin assistant and a maintenance guy to take some of the stress off but in his own words " there's not enough money in it for that"

The worry is if he is barely breaking even now i dread to think what the bottom line is going to look like when all these BTL's mortgages need to be renewed onto far higher rates

Many homeowners don't seem to understand having a 300k mortgage on a 1% rate is a lot different to having a 300K mortgage on a 6% rate and them rates seem like they will continue to rise for the next 2-3 years

I honestly cannot see a scenario where by Britain's property market doesn't collapse

 

[Newchodge]

I honestly cannot see a scenario where by Britain's property market doesn't collapse

Always assuming the government doesn't intervene AGAIN with a helpful scheme to help people to buy, that only serves to increase prices even further beyond the reach of ordinary people.

 

[IanSuth]

Was that in the school holidays ?

was this August

 

[IanSuth]

Ah yes that old chestnut that has virtually destroyed the residential housing equilibrium and leaves us in the state we are in today

Buy to let has caused a lot of problems with residential housing by trying to warp them into investment vehicles , now anyone who has watched YouTube fancies their chances of building a "cash flowing" BTL property empire

Sounds great on paper but todays margins in BTL are wafer thin primarily because the government has realised its a an easy cashcow for taxation. And tenants who are paying extortionate rents generally do not give a flying monkeys about damaging the properties and have more rights than the owners themselves.

The guy i know now finds himself in a scenario where by he is working a full time 50 hour a week job and after that is then trying to juggle the administration and maintenance of the "portfolio" of which there seems to be a new problem arising every week

I suggested contracting an admin assistant and a maintenance guy to take some of the stress off but in his own words " there's not enough money in it for that"

The worry is if he is barely breaking even now i dread to think what the bottom line is going to look like when all these BTL's mortgages need to be renewed onto far higher rates

Many homeowners don't seem to understand having a 300k mortgage on a 1% rate is a lot different to having a 300K mortgage on a 6% rate and them rates seem like they will continue to rise for the next 2-3 years

I honestly cannot see a scenario where by Britain's property market doesn't collapse

The uk property market needs to crash - it is a bubble built on stupidly easy to access credit.

Take the median salary - in my view if the starting home price goes over 3x that plus 20% you are into both partners needing to be working before they can get a house which then causes issue if they decide to have a child and one needs to take time off work.

current uk median salary is about £27k, how many places in the uK can you get a starter home (as in 2 beds) for sub £100k (3x27=81 + 20% = 97)

 

[MBE2017]

Ah yes that old chestnut that has virtually destroyed the residential housing equilibrium and leaves us in the state we are in today

Buy to let has caused a lot of problems with residential housing by trying to warp them into investment vehicles , now anyone who has watched YouTube fancies their chances of building a "cash flowing" BTL property empire

I honestly cannot see a scenario where by Britain's property market doesn't collapse

Most landlords are accidental, ie inheritance, or maybe own just one or two where they bought to invest into, say part of their pension. I still maintain, at least his BTL are a partial defence against 20% inflation, whilst producing rental income at the same time. £100k in the bank next year is worth £80k. No one knows the alternative in property atm, but long term I would bet on it every time.

If your friend has not costed things as a business well, that puts him into the amateur section, anyone investing such some should have costed out increases such as higher inflation, interest rates etc. He could be forgiven regarding Gas and Electric hikes, since I doubt anyone seriously considered 200/1000% increases in a year or two. That said most BTL do not include utilities.

BTL investment has not caused problems with residential housing, 8 million new people over the last twenty years, and little increased supply is the problem. If I was to cost a BTL, and decided £100k was the maximum I was prepared to pay, even if on the market for £150k, I would only offer £100k, or look elsewhere. So anyone only has to offer £1 more than myself to buy the property.

Don’t fall for the lies that landlords are stupidly putting house prices through the roof, quite the opposite. A house I bid on recently went for £18k over asking price to a new buyer couple, no one else bid within £10k of the asking price.

Personally I don’t do BTL, I do another couple of strategies, and I know hundreds of similar investors and developers, all of whom cannot wait for a correction in prices, because we don’t sell, we invest long term, normally in properties that no one else considers, or cannot get a mortgage on. Any price drop means more properties that we can afford.

BTW, good call on advising him to get help, with the right systems it will free up his time, I work 3/6 hrs a week on admin, Mail, maintenance etc. I concentrate on what makes money, running a business, not letting the business run myself.

 

[Justin Smith]

UK fires up coal power plant as gas prices soar
https://www.bbc.co.uk/news/business-58469238
Warm, still, autumn weather has meant wind farms have not generated as much power as normal, while soaring prices have made it too costly to rely on gas.

This is particularly interesting because it is dated 7 September 2021.

More proof that, whilst the Ukraine war has definitely contributed to high energy bills, it was happening (albeit to a lesser extent) BEFORE the war.

 

[Justin Smith]

At least he has income producing assets, interest rates are still low, despite being on the rise. I would imagine he has 25-50% equity in those houses, his biggest potential problem is a bad tenant and or voids, and possibly utility bills if included in the rent.

I’m sure he will do better than most.

I predict house prices will start dropping fairly soon Though I have been wrong about this before the fact the interest rates are going up up and away MUST have a big impact.

 

[Justin Smith]

On my previous point re WWII and the Russian sacrifice consider the Allied landings in 1943 in Italy the difficulties experienced there were major learning points for 1944.

True, but the fact remains it is very possible the Russians could have defeated Germany on their rown (including the West's supplies to them), i.e., without D Day.
But, excluding the Atom bomb, the West could not have defeated Hitler on its own.
Whether we'd have used the Atom bomb against Germany is a big big question, but, bearing in mind how deranged Hitler was (and how determined he was not to surrender like they did in WWI) how many would they have had to drop.....

 

[DontAsk]

Most landlords are accidental, ie inheritance, or maybe own just one or two where they bought to invest into, say part of their pension.

We bought a place (a) for somewhere to put some cash and (b) somweher for our eldest to live whilst doing a PhD. It's now rented to a friend who was a lodger when our son lived there. If the curreent occupant leaves we will sell up. I have no desire to be a landlord to any old random person.

Don’t fall for the lies that landlords are stupidly putting house prices through the roof, quite the opposite. A house I bid on recently went for £18k over asking price to a new buyer couple, no one else bid within £10k of the asking price.

We bought for well under asking price because no one else wanted it, despite being a modern (1980s) property in a fantastic location. The problem? It stank of piss. The elderly previous occupant obviously had some problems. It just needed a thorough refurb. When we do sell we will make a handsome profit

 

[MBE2017]

We bought for well under asking price because no one else wanted it, despite being a modern (1980s) property in a fantastic location. The problem? It stank of piss. The elderly previous occupant obviously had some problems. It just needed a thorough refurb. When we do sell we will make a handsome profit

Exactly proving the point that there are certain houses which only landlords and developers tend to touch. Without this sector of the economy there would be thousands of fewer properties available, which would lead to further rent increases.

Well done for a bit of hard work.

 

[Casually made]

Most landlords are accidental, ie inheritance, or maybe own just one or two where they bought to invest into, say part of their pension. I still maintain, at least his BTL are a partial defence against 20% inflation, whilst producing rental income at the same time. £100k in the bank next year is worth £80k. No one knows the alternative in property atm, but long term I would bet on it every time.

BTL investment has not caused problems with residential housing, 8 million new people over the last twenty years, and little increased supply is the problem. If I was to cost a BTL, and decided £100k was the maximum I was prepared to pay, even if on the market for £150k, I would only offer £100k, or look elsewhere. So anyone only has to offer £1 more than myself to buy the property.

Banks seemingly still not learning from past mistakes why FTB's are being facilitated to go so far over the list price is quite frankly insanity alas it will all come out in the wash....eventually

I still disagree residential property should be used as an investment vehicle especially in an area like the UK where there is a severe lack of it

BTL's and HMO's are both detrimental to residential housing because they create local monopolies and you end up in dangerous situation whereby you have inexperienced landlords with poor business acumen effectively managing local housing economies on behalf of banks

HMO's are extremely popular in my local area with landlords are charging up to £500 a month for a room ! .....yea read that again it's legalised extortion

Rents are also both extortionate and disproportionate compared to mortgages

People in this country have got to stop being so greedy and let go of this obsession of a house being a cash cow as opposed to it actually being ........well a house

 

[MBE2017]

HMO's are extremely popular in my local area with landlords are charging up to £500 a month for a room ! .....yea read that again it's legalised extortion.

That is an average rate in my area, but few landlords are struggling to fill the rooms, quite the opposite. With new insulation requirements being introduced many HMO’s will disappear, causing many to become homeless.

Another reason is the law, it states tenants have to have control of their heating. With HMO’s including the heating, many a landlord has visited a tenant in mid winter, to see them lounging in their underwear whilst the temperature is around 30 degrees c or more on a fan heater, with the windows open.

You only have to read several threads on the forum to imagine the bills many landlords are likely to face this year.

Whilst I understand your viewpoint, the push with new legislation from the Government will see many decent landlords leaving the industry, to be replaced by enormous venture capital funds.

Of course, you might think they are buying up huge property portfolios along with the banks because they feel they have a civic duty to help, to reduce rents, to improve standards, but I personally do not.

Rents will be increased, tenancies will be harder to acquire for many, these soulless multi nationals will not listen or be of much help, and many a tenant will wish for the good old days when they knew their landlord as a person.

 

[IanSuth]

That is an average rate in my area, but few landlords are struggling to fill the rooms, quite the opposite. With new insulation requirements being introduced many HMO’s will disappear, causing many to become homeless.

Another reason is the law, it states tenants have to have control of their heating. With HMO’s including the heating, many a landlord has visited a tenant in mid winter, to see them lounging in their underwear whilst the temperature is around 30 degrees c or more on a fan heater, with the windows open.

You only have to read several threads on the forum to imagine the bills many landlords are likely to face this year.

Whilst I understand your viewpoint, the push with new legislation from the Government will see many decent landlords leaving the industry, to be replaced by enormous venture capital funds.

Of course, you might think they are buying up huge property portfolios along with the banks because they feel they have a civic duty to help, to reduce rents, to improve standards, but I personally do not.

Rents will be increased, tenancies will be harder to acquire for many, these soulless multi nationals will not listen or be of much help, and many a tenant will wish for the good old days when they knew their landlord as a person.

in all my years renting in HMO's I only ever once had utilities included - that one we paid electric via a coin meter in each bedsit for the electric in that unit and the heating thermostat was in the communal hall and was covered (along with communal lighting) by the rent.

My son has to pay his utilities himself (4th year & 3rd landlord in HMO's)

 

[DontAsk]

Euro zone inflation hits another record of 9.1% as food and energy prices soar

Euro zone inflation hit a new record high in August at 9.1%, exceeding economists' expectations.

www.cnbc.com

Must be due to Brexit

 

[Casually made]

in all my years renting in HMO's I only ever once had utilities included - that one we paid electric via a coin meter in each bedsit for the electric in that unit and the heating thermostat was in the communal hall and was covered (along with communal lighting) by the rent.

My son has to pay his utilities himself (4th year & 3rd landlord in HMO's)

Again unless landlords are on the ball and savvy they are going to find themselves in a lot of trouble in the coming months as skint and drained tenants start to moved out Whilst defaulting on energy bills .

Many landlords currently view BTL and HMO as "passive income" and aren't really bothered about the admin side as it's such a ball ache

Problem is now unless readings and tenancy agreements are absolutely watertight and often enough they aren't ( especially in HMO's) guess who eventually will become liable to settle them bills......

 

[IanSuth]

Again unless landlords are on the ball and savvy they are going to find themselves in a lot of trouble in the coming months as skint and drained tenants start to moved out Whilst defaulting on energy bills .

Many landlords currently view BTL and HMO as "passive income" and aren't really bothered about the admin side as it's such a ball ache

Problem is now unless readings and tenancy agreements are absolutely watertight and often enough they aren't ( especially in HMO's) guess who eventually will become liable to settle them bills......

What is the actual liability of a landlord if a tenant does a runner - when does the liability switch from the missing tenant to the landlord and for how long ?

 

[IanSuth]

Euro zone inflation hits another record of 9.1% as food and energy prices soar

Euro zone inflation hit a new record high in August at 9.1%, exceeding economists' expectations.

www.cnbc.com

Must be due to Brexit

Well if you want to read your article (quotes below) and actual figures here - https://ec.europa.eu/eurostat/docum...ual inflation is,office of the European Union.

France 6.5
Malta 7.1
Finland 7.6
Germany 8.8
Ireland 8.9
Spain 10.3

Now in July we had 10.1% so a bit better than Spain (10.7 in July) - considering we USED to be somewhere between Germany and France economically - let's see how our inflation for August looks when the ONS releases it, before you start making assumptions. I think anything above the 6.5-8.8% window would I think make us look in relatively worse shape inflation wise - I mean when did we last crow about having an economy like Spain's !!!


Drilling down into national figures, the French inflation rate decreased to 6.5% in August, down from 6.8% in July. The rate was lower than expectations, with economists polled by Reuters having anticipated a drop to 6.7%.

Spain also released slowing inflation figures for August, at 10.3% year-on-year compared to 10.7% for July, according to the Eurostat flash estimate.

Meanwhile, the region’s largest economy, Germany, saw inflation reach its highest level in almost half a century at 8.8% year-on-year in August.

Estonia currently has the highest inflation rate in the euro zone at 25.2%, followed by Lithuania (21.1%) and Latvia (20.8%). Malta and Finland follow France with the lowest inflation rates, at 7.1% and 7.6% respectively.

 

[Casually made]

What is the actual liability of a landlord if a tenant does a runner - when does the liability switch from the missing tenant to the landlord and for how long ?

The owner is always liable he is responsible for the supply and the only one a legally binding contract is possible to be formed with

You can have terms written into tenancy agreements but it assumes the tenant will play ball regarding opening and closing meter readings and informing the utilities they do actually live in the property

I have heard stories where tenants move in and then close the utility accounts 3 weeks later saying they've left , bills then default back to owner and off down the rabbit hole you go....

In a dispute tenant can always turn around and say landlord wouldn't allow me access to the meters i couldn't confirm the readings sorry not paying

It's a minefield and highly reliant on the tenant

A) being straight as die

and

B) not knowing any better

 

[IanSuth]

The owner is always liable he is responsible for the supply and the only one a legally binding contract is possible to be formed with

You can have terms written into tenancy agreements but it assumes the tenant will play ball regarding opening and closing meter readings and informing the utilities they do actually live in the property

I have heard stories where tenants move in and then close the utility accounts 3 weeks later saying they've left , bills then default back to owner and off down the rabbit hole you go....

In a dispute tenant can always turn around and say landlord wouldn't allow me access to the meters i couldn't confirm the readings sorry not paying

It's a minefield and highly reliant on the tenant

A) being straight as die

and

B) not knowing any better

INteresting

My son was chased by a utility company for the usage of prior tenant and they had no interest in who the landlord were, they refused to believe the meter reading he gave for his moving in and wanted to go back to the last verified one they had (6 mths previous).

 

[The Byre]

Well if you want to read your article (quotes below) and actual figures here - https://ec.europa.eu/eurostat/documents/2995521/14675409/2-31082022-AP-EN.pdf/e4217618-3fbe-4f54-2a3a-21c72be44c53#:~:text=Euro area annual inflation is,office of the European Union.

France 6.5
Malta 7.1
Finland 7.6
Germany 8.8
Ireland 8.9
Spain 10.3

Now in July we had 10.1% so a bit better than Spain (10.7 in July) - considering we USED to be somewhere between Germany and France economically - let's see how our inflation for August looks when the ONS releases it, before you start making assumptions. I think anything above the 6.5-8.8% window would I think make us look in relatively worse shape inflation wise - I mean when did we last crow about having an economy like Spain's !!!


Drilling down into national figures, the French inflation rate decreased to 6.5% in August, down from 6.8% in July. The rate was lower than expectations, with economists polled by Reuters having anticipated a drop to 6.7%.

Spain also released slowing inflation figures for August, at 10.3% year-on-year compared to 10.7% for July, according to the Eurostat flash estimate.

Meanwhile, the region’s largest economy, Germany, saw inflation reach its highest level in almost half a century at 8.8% year-on-year in August.

Estonia currently has the highest inflation rate in the euro zone at 25.2%, followed by Lithuania (21.1%) and Latvia (20.8%). Malta and Finland follow France with the lowest inflation rates, at 7.1% and 7.6% respectively.

The Eurostat people carefully avoid comparing their figures with the one European country that didn't indulge in any QE - Switzerland. Their inflation shot up from 1.8% to the present 3.4%.

So supply-side inflation (so far) has been 1.6%. The rest is irresponsible governments all trying to borrow and print their way out of trouble!

 

[IanSuth]

The Eurostat people carefully avoid comparing their figures with the one European country that didn't indulge in any QE - Switzerland. Their inflation shot up from 1.8% to the present 3.4%.

So supply-side inflation (so far) has been 1.6%. The rest is irresponsible governments all trying to borrow and print their way out of trouble!

Thanks I only just learnt that Switzeland is in ESS (European statistical service which does eurostat) so should be included in Eurostat comparisons.

I notice nothing from us either on the UK August inflation rate !! - I am guessing an official rate of 11% give or take 0.2 when they actually announce it - likely hidden on a day of other big news

 

[MBE2017]

I am beginning too think the UK could be looking at 20-22% inflation at the rate things are going, and a general election within the next six months.

 

[Jeff FV]

and a general election within the next six months.

At the start of the summer I would have agreed with you - I could see a scenario whereby a new PM got a popularity bounce, threw some money at the populace - tax cuts, most likely - and go for a snap election.

Now, though, I think that ship has sailed. People are (quite rightly) really, really concerned about how they are going to pay their bills this winter, I don’t think there will be any bounce for a change of PM - needed to be swifter, the “hustings“ have been focused on a v.v. small minority of the electorate and I don’t think (now) any splurging of cash from the gov. will be enough to solve the problem (plus, as they’ve moved so late, the blame (on the gov) is already baked in )

The risk of an early election is too great for the Conservative party, likely to see them wiped out. I now think they will hang on, in the hope that something turns up to change their fortunes* between now and Nov 24/Jan 25 when they must hold a general election.

*One scenario I wouldn’t rule out is British boots on the ground in Ukraine. Truss would not be the first politician to try and save their own skin by shedding the blood of others. I don’t think this is likely, but I would now put it in the possible category.

(Note: the above is not what I want to happen, but how I think things will happen. Personally, I would welcome an early election and see the current Conservative party removed from office.)

 

[fisicx]

Who says the British Army isn’t already in the Ukraine. I’d put money on at least some special forces and/or SPADs being on the ground.

 

[NickGrogan]

(Note: the above is not what I want to happen, but how I think things will happen. Personally, I would welcome an early election and see the current Conservative party removed from office.)

Replaced by who?

What is Labour's policy on anything? I can't really see them winning,

 

[simon field]

Replaced by who?

What is Labour's policy on anything? I can't really see them winning,

Maybe he doesn’t want them replaced, just removed and that’s that!

 

[thetiger2015]

Maybe he doesn’t want them replaced, just removed and that’s that!

Would that be any worse than we have now? Rudderless and adrift...

The government are likely to just do more bail outs for sectors they have an interest in. Housing for one. I don't see them letting prices crash because that would cause huge issues for their friends..I mean...the banks! They'll just prop it up, borrow pension money and hike taxes.

 

[Justin Smith]

Euro zone inflation hits another record of 9.1% as food and energy prices soar

Euro zone inflation hit a new record high in August at 9.1%, exceeding economists' expectations.

www.cnbc.com

Must be due to Brexit

Brexit is contributory to the inflation we now have, as is Ukraine, but the main cause was pumping many many Billions into the economy so as to avoid economic meltdown when they shut down half the economy in March 2020. All that money just put the evil day off.

 

[The Byre]

I’d put money on at least some special forces and/or SPADs being on the ground.

SAS/SBS and members of other less well-known units will be those SpAds. They will be holding cadres of the local forces in 1st aid, tactics, basic training, etc. Not only does that help boost local morale and improve their performance significantly, but it's also a great way to win friends and influence people in preparation for when this nonsense is over.

In-the-field SpAds is a very common practice. They cannot be at the front line for very obvious political reasons, but just being instructed by a really well-trained person who emanates a sense of discipline and authority will sharpen up the locals and get them to up their game.

They will not be in uniform or carry any rank or insignia, but they will be in battle fatigues.

 

[Jeff FV]

Replaced by who?

What is Labour's policy on anything? I can't really see them winning,

Almost anyone. The current (and, I fear, the “new” come next week) government is the worst in my lifetime. I would be happy with a Labour majority, Lib/Lab coalition, Lab/Lib/Green/SNP progressive alliance; although its not possible, I’d be happy with a “one nation” Conservative party in charge, but one of the reasons this current gov. is so poor is the purge Johnson undertook in 2019, ridding the party of a number of very good people. The narcissist that he is, Johnson didn’t want anyone around him that was any good, as they may take the limelight from him. Nadine Dorris: a minister of state - Q.E.D.

This current gov., which will be continued under Truss, is damaging our democracy and is for the few not the many.

Labour have been frustratingly quiet on many things, but they have a clear policy on what to do re the immediate energy crisis. I don’t think it is the perfect policy, but I don’t think the perfect policy exists. At least it is a policy (I’d be happy with it, I’d also be happy with the Green’s policy, or the Lib Dems) but our government have been missing in action for the last two months. What is their policy?

 

[IanSuth]

Who says the British Army isn’t already in the Ukraine. I’d put money on at least some special forces and/or SPADs being on the ground.

I was speaking to a coach at rugby yesterday. He had just come back from a bit over 2 weeks running an ACF cadet camp. They were shifted around accommodation on Salisbury plain as there are currently c5k Ukranians there receiving instruction and they couldnt be in the same place as cadets. He was very much under the impression that "instructors" will be returning with them - also most of our Challenger2s have now been deployed into Poland/Baltic states - In Poland they are theoretically backfilling for Polish T72's given to the Ukranians and in the Baltics to deter any Russian aggression there, but it means the heavy equipment is already basically in theatre.

 

[Casually made]

Would that be any worse than we have now? Rudderless and adrift...

The government are likely to just do more bail outs for sectors they have an interest in. Housing for one. I don't see them letting prices crash because that would cause huge issues for their friends..I mean...the banks! They'll just prop it up, borrow pension money and hike taxes.

They can't prop housing up any longer because any attempt to prop it up will create more inflation as everything the government spends is borrowed from the future ....I'd imagine the chief economists at the bank of England are already at panic stations.

The risk of this country entering an era of hyper inflation is very real so any more QE is going to be very very difficult for the government to mention let alone sanction

MP's tend to either have holiday homes or buy to lets so a decline isn't really going to bother them , heck we pay for 90% of their living expenses including accommodation in central London anyway

It's joe public that usually has a mental breakdown at any mention of a property crash as they've been conditioned to believe that their house value is a direct correlation to their wealth ( even when the bank owns it)

It's quite baffling as when property is on the rise people tend to look at taking the biggest mortgage they can get their hands on along with the most expensive property in the assumption it's value will just keep on going up and up.

When the prices start dropping there is suddenly a rush to "cash in" combine this with the masses finally starting to realise their mortgage is suddenly far more expensive than they can afford and the undercutting will begin

It's gonna be a hell of a ride.

 

[simon field]

Property doesn’t ‘go down’.

Every so often there’s a small ‘blip’, but look at the overall trend for the last 40 years!

Even now, they’ve gone up 10%+ in the last year.

 

[IanSuth]

Property doesn’t ‘go down’.

Every so often there’s a small ‘blip’, but look at the overall trend for the last 40 years!

Even now, they’ve gone up 10%+ in the last year.

The only reason property has not gone down is because for the last 50 years we have been persuaded that property is a safe investment and we should do all we can to place our trust in property as a safe ever appreciating asset.
That is logically wrong - the country is not producing ever increasing amounts of wealth (or rather the increase is not at anywhere near the same speed as the rise in housing prices)
The ONLY reason we have long term house price inflation > real inflation is because the government has pumped money into the market. From the original Right to buy, via help to buy, shared ownership schemes, relaxation of pension investment rules, relaxation of bank lending rules and stamp duty holidays the various governments have been pumping up the housing market.

Because of this couples now NEED both to work to produce the income to allow a multiplier for a mortgage so they can also jump into the bubble. At some point it will burst, economic logic says it has to. The issue is that no government (particularly a conservative one that since Maggie has been built on the promise of home ownership) wants it to be on their watch, so they keep coming up with schemes to punt it down the road a bit - that punting is getting harder and with each extra inflation of the bubble the burst will be more spectacular.

 

[MBE2017]

The risk of this country entering an era of hyper inflation is very real so any more QE is going to be very very difficult for the government to mention let alone sanction
It's joe public that usually has a mental breakdown at any mention of a property crash as they've been conditioned to believe that their house value is a direct correlation to their wealth ( even when the bank owns it)

It's quite baffling as when property is on the rise people tend to look at taking the biggest mortgage they can get their hands on along with the most expensive property in the assumption it's value will just keep on going up and up.

When the prices start dropping there is suddenly a rush to "cash in" combine this with the masses finally starting to realise their mortgage is suddenly far more expensive than they can afford and the undercutting will begin

It's gonna be a hell of a ride.

A risk of high inflation I would agree with, but not hyper inflation. Inflation will be high for a couple of years at least, but should then fall back. Most people, totally misunderstand property, buying a house etc, and I include myself in that.

I finally woke up ten years ago. Everything you are taught, get into school, get qualified, get a job, buy a house, pay the mortgage down, get a pension is wrong, and designed to keep you where you start in life, broke.

Follow that path and the future for 98% of people is having a mortgage that leaves you broke most of your life, getting a job where you hardly earn enough to live on, and after a lifetimes hard work and struggle, ending up on a measly pension condemning yourself to another 20-30 years of struggling with ever increasing bills. When you die your estate if you have acquired any wealth has been ravaged by care home bills or inheritance tax.

That is the Governments plan for the majority of its people, and supplies the elite with a desperate workforce who make them millions, when they already have 90% of the wealth.

That is why a JOB is referred to as being just over broke, get paid just enough to survive on, but not enough to give to any independence or freedom. There are alternative ways to do things, but that is down to individuals to look into. What’s right for one person is not necessarily right for all, but “following” the standard route taught to you, well, look around at how successful that is.

Maybe that is the reason money matters are not taught in schools, because more people would question how crazy “the plan”, and how low their chances of success truly is.

 

[UKSBD]

Property doesn’t ‘go down’.

They may not go down over a long period but try telling that to the people who bought in late 2007 and had no choice but to sell in early 2009

Anyone in the situation where they can just ride things out isn't effected as much, but there are probably going to be lots of people who have no choice about selling in a trough

 

[Casually made]

Property doesn’t ‘go down’.

You just mean it hasn't yet , but unfortunately it can't keep going up either , as others have mentioned there simply isn't enough high paying jobs in the UK to support the current bubble and now the government has run out of monopoly money to support too.

The market is / was trying to punt 2 bed starters out for north of 200k the same house was worth 100 , 10 years ago

I am sure i don't need to draw a diagram showing how average wages are actually declining not increasing.

It gets more scary the further up the ladder you go with 4/5 beds routinely being flogged for up to half a million possibly just about manageable for a couple earning 80K year on a 0.25% interest rate

On a 5-6% not so much , we will see disposable incomes liquidated and quickly ( that's if they can even keep their jobs during the recession )

 

[IanSuth]

The market is / was trying to punt 2 bed starters out for north of 200k the same house was worth 100 , 10 years ago

Exactly this - my old house was a 2 bed where you had to go through 1 bedroom to get to the only toilet.

1994 £50k bought
1999 £90k sold
2010 £195k (people we sold to got that valuation whilst buying semi derelict house next door)
2022 £300k (just looked on rightmove and one for sale next street over for that, or a 1 bed flat in a converted similar house in my old rd is £190k)


That is for a tiny terrace house 10'6" wide built by Huntley & Palmers for their biscuit workers in the 1890's, little insulation and zero opportunity to extend other than making the half width kitchen full width (the £300k has already had that done) - they were the lowest rung rental house H&P built for workers, as you were promoted you got a better house, initially you gained a corrido (and 2'6" of house width) then a bay front window and finally a loft room with dormer in the road with the school if you were a supervisor

 

[Casually made]

Follow that path and the future for 98% of people is having a mortgage that leaves you broke most of your life, getting a job where you hardly earn enough to live on, and after a lifetimes hard work and struggle, ending up on a measly pension condemning yourself to another 20-30 years of struggling with ever increasing bills. When you die your estate if you have acquired any wealth has been ravaged by care home bills or inheritance tax.

That is the Governments plan for the majority of its people, and supplies the elite with a desperate workforce who make them millions, when they already have 90% of the wealth.

That is why a JOB is referred to as being just over broke, get paid just enough to survive on, but not enough to give to any independence or freedom. There are alternative ways to do things, but that is down to individuals to look into. What’s right for one person is not necessarily right for all, but “following” the standard route taught to you, well, look around at how successful that is.

Maybe that is the reason money matters are not taught in schools, because more people would question how crazy “the plan”, and how low their chances of success truly is.

Yes it is intentionally designed that way where by layers of social indoctrination are embedded into you from childhood

when i turned 18 the banks were throwing overdrafts and credit cards at me........... i was earning £600 a month as an admin apprentice

I thought all my Christmases had come at once and went on a shopping / spending spree a few years later i was in 10 thousands worth of debt and they still wanted to give me more

At that stage i realised i was being sold down the river , i gave up my consumer lifestyle at 23 and went insolvent for 5 years

During that period i stopped buying things and effectively stopped contributing anything to society

Now i am 30 i have turned it all around with no debt and have made some wise investments and now supply consumer goods

But had i continued on my journey even 2-3 years longer i never would have escaped as there would have been to much debt for me to clear ....

I believe a lot of this country lives in a perpetual state of debt ...

 

[Casually made]

Exactly this - my old house was a 2 bed where you had to go through 1 bedroom to get to the only toilet.

1994 £50k bought
1999 £90k sold
2010 £195k (people we sold to got that valuation whilst buying semi derelict house next door)
2022 £300k (just looked on rightmove and one for sale next street over for that, or a 1 bed flat in a converted similar house in my old rd is £190k)


That is for a tiny terrace house 10'6" wide built by Huntley & Palmers for their biscuit workers in the 1890's, little insulation and zero opportunity to extend other than making the half width kitchen full width (the £300k has already had that done) - they were the lowest rung rental house H&P built for workers, as you were promoted you got a better house, initially you gained a corrido (and 2'6" of house width) then a bay front window and finally a loft room with dormer in the road with the school if you were a supervisor

I mean you will find examples like this up and down the country but where does the buck stop it can't just keep endlessly appreciating at the rate it is ?

Why is one bed flat worth 190 thousand pound ? in what reality is that sustainable we have got to take residential housing off a supply / demand model

I get people need places to live and the larger the family the more you have to shell out but surely we are reaching crunch point now where something has to give

I suspect we could find ourselves in a situation where "price ceilings" for residential property are put maybe by legislation it is what needs to happen

It will stop banks , estate agents and un-educated buyers from inflating the market beyond logic

There would be tremendous backlash in the initial stages but if we don't do something soon we will have future generations who will never have a secure roof over their heads