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Things looking grim here (construction related) hardly any work on and not much on the horizon. So much so that I have applied for a part time job working evenings / weekends in a local shop. If I get the job it should help keep the wolf from the door should the worst happen, or I can add the extra money to my savings / investments. Quite a few people I know have been made redundant / facing redundancy in 2011 and from talking to them and what I see it looks like this year will be grimmer than 2007, 2008, 2009 or 2010. I don't know if I really want to buy/stay in the UK long term.

 

What area of construction and where in the UK are you?

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I don't live in the UK now, nor do I plan to return there.

 

But it occurs to me that...

 

Some older folk with a bit of money, should be thinking of hiring (unemployed?) younger folk to start building a refuge for them in farming areas of the UK.

 

This would:

+ Give meaningful work to the young

+ Establish a relationship, which might be of value to both

+ Begin the build a "lifeboat" which could provide a safer future for the families of the investor, and the young worker

 

Does anyone else see potential in this idea ?

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Real Interest rates are negative, and markedly so.

And that is encouraging people to speculate in things like commodities and properties. The BofE would be prudent to raise rates back to more sensible levels, so that real rates are POSITIVE, and that will help to reign in speculation and reckless lending.

 

If they do not do that, the losses for banks will be HUGE if inflation keeps rising and gets out of control. Then the required rate rise to slow inflation would be massive. It is better to be cautious now.

Yes but as Bold as Brass points out, it will make verry little difference to global commodity prices if the BoE acts (actually, I don't think anyone would notice).

 

Besides, as you have pointed out, reckless lending isn't happening in the UK (hardly any lending happening here) especially re property.

 

The balance is between a bit of inflation (which BoE and Gov are quite happy to have for now) vs asset price collapse from raising rates to high to quick, which would really hit our banks.

 

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Some older folk with a bit of money, should be thinking of hiring (unemployed?) younger folk to start building a refuge for them in farming areas of the UK.

Try getting planning permission in the UK :lol:

 

Nice idea though. I think they have these retirement villages in the US don't they?

 

The thing is, although not purpose built, there are lots of villages in England, for example, where the older folk with a bit of cash have taken over and priced out the young, undesirables already (and bought up all the surrounding farmland to keep off the gypsies etc).

So a potential angle could be to bring services/workers/self-sufficiency ideas to them in a type of partnership approach.

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Yes but as Bold as Brass points out, it will make verry little difference to global commodity prices if the BoE acts (actually, I don't think anyone would notice).

 

Besides, as you have pointed out, reckless lending isn't happening in the UK (hardly any lending happening here) especially re property.

 

The balance is between a bit of inflation (which BoE and Gov are quite happy to have for now) vs asset price collapse from raising rates to high to quick, which would really hit our banks.

 

A stronger Sterling would make them cheaper though.

 

Lets see what happens with the coming CPI figures. The VAT increase from 15 to 17.5 & the devaluation are now out of the yearly figures and not only should they cancel out the VAT increase to 20% they should be putting downward pressure on CPI. Instead there is talk of 4% CPI.

 

Dangerous game the BOE are playing, it's all falling apart regardless, but if inflation starts running away. The UK is finished. GAME OVER.

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I don't live in the UK now, nor do I plan to return there.

 

But it occurs to me that...

 

Some older folk with a bit of money, should be thinking of hiring (unemployed?) younger folk to start building a refuge for them in farming areas of the UK.

 

This would:

+ Give meaningful work to the young

+ Establish a relationship, which might be of value to both

+ Begin the build a "lifeboat" which could provide a safer future for the families of the investor, and the young worker

 

Does anyone else see potential in this idea ?

 

Ok i have a VI in this idea.

 

But what if the government goes on a mass house building program like the 1960's. Funded by more QE. More social housing,downward pressure on house prices,construction GDP would rocket. Unemployment figures would be helped.

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A stronger Sterling would make them cheaper though.

 

Lets see what happens with the coming CPI figures. The VAT increase from 15 to 17.5 & the devaluation are now out of the yearly figures and not only should they cancel out the VAT increase to 20% they should be putting downward pressure on CPI. Instead there is talk of 4% CPI.

 

Dangerous game the BOE are playing, it's all falling apart regardless, but if inflation starts running away. The UK is finished. GAME OVER.

A little cheaper perhaps (eg petrol which is mostly tax, wouldn't be much cheaper), but they would have to raise a lot to do that, and the markets know the problems that would cause. If I were a bond trader, it wouldn't fill me with confidence.

 

Not sure what you mean re the latest Vat increase. Is it the thought that this will add positive pressure to CPI, or negative as it really causes people to tighten their belts?

 

I think we will see a bit of both of these effects. Although, from the lack of pull-forward demand seen in the auto trade and retailers reports over the last few days, it seems this might not be the case, hence upwards pressure on cpi and talk of 4%.

 

However, the cuts etc and possible demand pullback will bring downwards pressure and I don't think inflation will run away without wage inflation. We are nowhere near there, (yet).

 

I agree it is a risky game, but with inflation on one side and deflationary on the other, the best trick is to keep inflation bubbling away (eroding the debt, and reducing the deficit), while making everyone scared of deflation so they don’t demand pay rises.

 

It seems to be working very well so far.

 

4% is not a problem for them (for a few months), more than this, for longer, would result in wage demands.

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A little cheaper perhaps, but they would have to raise a lot to do that, and the markets know the problems that would cause. If I were a bond trader, it wouldn't fill me with confidence.

 

Not sure what you mean re the latest Vat increase. Is it the thought that this will add positive pressure to CPI, or negative as it really causes people to tighten their belts?

 

I think we will see a bit of both of these effects. Although, from the lack of pull-forward demand seen in the auto trade and retailers reports over the last few days, it seems this might not be the case, hence upwards pressure on cpi and talk of 4%.

 

However, the cuts etc and possible demand pullback will bring downwards pressure and I don't think inflation will run away without wage inflation. We are nowhere near there, (yet).

 

I agree it is a risky game, but with inflation on one side and deflationary on the other, the best trick is to keep inflation bubbling away (eroding the debt, and reducing the deficit), while making everyone scared of deflation so they don’t demand pay rises.

 

It seems to be working very well so far.

 

4% is not a problem for them (for a few months), more than this, for longer, would result in wage demands.

 

The VAT increase puts upward pressure on CPI through price increases.

 

But this should be cancelled out by the previous rise & the devaluation filtering out the figures, but it's starting to compound and snow ball.

 

That why i doubt inflation will fall back from 4%.

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The VAT increase puts upward pressure on CPI through price increases.

 

But this should be cancelled out by the previous rise & the devaluation filtering out the figures, but it's starting to compound and snow ball.

 

That why i doubt inflation will fall back from 4%.

Right

 

PS, sounds a bit harsh on the job front. Good luck. (You don't do rendering do you?)

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Right

 

PS, sounds a bit harsh on the job front. Good luck. (You don't do rendering do you?)

 

Thanks something will come up, if not will start advertising, Yellow pages etc, although reluctant to spend money advertising in the present climate.

 

No, had experience but not enough,wet trades,bricklaying & plastering take years to prefect, some professional plasterers don't touch rendering.

 

 

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wet trades,bricklaying & plastering take years to prefect, some professional plasterers don't touch rendering.

Well said, and spoken like a true pro. I have a friend who is a plasterer (very good), he won't touch render.

 

It's a pity you don't live closer, I could have given you a few small jobs.

 

All the best, JD

 

 

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Halifax Dec 10 -1.3% MoM

Very nice indeed.

The Long march at Crash Cruise speed continues...

 

Back on Dec.29th, I Said about the forecast for a no change in 2010:

I think 2010 will come in at about -1.6 to -2.0%.

So their call of "flat" missed the direction

Two days later, I got this reaction:

 

Possibly a bit of a premature call Dr B.

And the final figures for 2010 are......... drum roll........... +0.4% YOY!

http://www.bbc.co.uk/news/business-12096125

 

Pretty bl**dy close to the vast majority of VI forecasts, I'm sure you'd agree?

Now if the HF come in at -0.4% YOY, we would have to conclude that they were bang on!

(Of course, that would also be the first year in history that they got it right :lol: )

We now have the year-on-year figures for both Nationwide and Halifax....

 

Mon.: Rt'move : London : Hometrack chg./ Na'wide H.old.SA Hali.SA Hali.nsa: H&Nindex : mom :DelusIdx

2009

D : : 221,463 : 398,426 : 156,900*+0.1% / 162,103 169,042 168,763 167,260 : £164,681 :+0.30% :134.5%

2010

D : : 222,410 : 408,248 : 155,100 - 0.3% / 162,763 = n/a = 162,435 161,498 : £162,131 :- 0.74% :137.2% :

Year on Year:

yoy: +0.42% : +2.47% : Est.DI: 137.2 % / : +0.41%: = n/a = :-3.75%: -3.44% : - 1.55%

 

To summarise, my H&N Index (average of Halifax & Nationwide) was:

 

£162,131, down from £164,681, that's -1.55% yr-on-yr !

 

And the last 5 months are:

- 0.68%, - 1.49%, - 0.02%, - 0.91%, - 0.74% : for an average of -0.77% monthly.

 

That's in the middle of "Crash Cruise Speed" (ie: -0.5 to -1.0%)

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Halifax Dec 10 -1.3% MoM

Of course the ACTUAL NSA number was : -1.08%*

 

Here's an interesting excerpt from the report:

The low interest rate environment has reduced the burden of servicing mortgage

debt. Typical mortgage payments for a new borrower have fallen from a peak of 48% of

average disposable earnings in mid 2007 to 29% in the last quarter of 2010. This key

measure of affordability is at a better level than the long-term average over the past 25 years

(37%) and is an important factor supporting housing demand.

 

Despite this, House prices are FALLING at crash cruise speed.

 

DO YOU THINK, that maybe both banks and borrowers are a little concerned that ultra-low rates

may not persist, and the borrowers might face paying mortgages when rates are a bit higher?

 

It is refreshing to see a glimmer of reality creeping into borrowing decisions.

 

== == ==

*data:

Mon.: Rt'move : London : Hometrack chg./ Na'wide H.old.SA Hali.SA Hali.nsa: H&Nindex : mom :DelusIdx

2010

N : : 229,379 : 420,248 : 155,575 - 0.4% / 163,398 = n/a = 164,708 163,268 : £163,333 :- 0.91% :140.4% :

D : : 222,410 : 408,248 : 155,100 - 0.3% / 162,763 = n/a = 162,435 161,498 : £162,131 :- 0.74% :137.2% :

=====================================

mom: -3.04%: - 2.86% : Est.DI: 137.2 % / : -0.39%: = n/a = :-1.38%: -1.08% : - 0.74%

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Of course the ACTUAL NSA number was : -1.08%*

 

Here's an interesting excerpt from the report:

The low interest rate environment has reduced the burden of servicing mortgage

debt. Typical mortgage payments for a new borrower have fallen from a peak of 48% of

average disposable earnings in mid 2007 to 29% in the last quarter of 2010. This key

measure of affordability is at a better level than the long-term average over the past 25 years

(37%) and is an important factor supporting housing demand.

 

Despite this, House prices are FALLING at crash cruise speed.

 

DO YOU THINK, that maybe both banks and borrowers are a little concerned that ultra-low rates

may not persist, and the borrowers might face paying mortgages when rates are a bit higher?

 

Actually I think the large deposits lenders are asking are causing this. I'm sure that if you could get a mortgage with 5% deposit then prices would be into the stratosphere at current interest rate levels. Simply, after a few years of non-rises, people have run out of ways to raise the required deposit. Everyone who was sitting on the sidelines waiting to jump in has jumped in, and there's no more lemmings left.

 

 

-1.3% is very nice and welcome BTW. It's a good small step for the health of the UK economy overall in the long term where we need lower house prices.

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Actually I think the large deposits lenders are asking are causing this.

I'm sure that if you could get a mortgage with 5% deposit then prices would be into the stratosphere at current interest rate levels. Simply, after a few years of non-rises, people have run out of ways to raise the required deposit. \

That's a good point : about the EROSION.

 

But I also think that lenders must be thinking a bit about their customers' ability to make mortgage payments in a higher interest rate environment. They are not going to get bailouts as easily as last time, so if they want to stay alive, they had better mind the store.

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Great start to 2011.

Looks like London is holding the whole thing up, glad i don't live there. We get things sliding there it should pick up speed.

Yes.

You may have noticed the detail from my data grid:

 

Year-on-year figures...

 

Mon.: Rt'move : London :

2009

D : : 221,463 : 398,426 :

2010

D : : 222,410 : 408,248 :

Year on Year:

yoy: +0.42% : +2.47% :

 

London was up 2% more than UK-wide for Rightmove.

But both were down almost -3% in December.

It will be interesting to see whether this rapid rate of collapse continues into 2011.

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Inflation is as damaging as interest rate rises

whether they steal it from your mortgage rate

or straight from your pocket with higher living costs

the end result is you have less money to pay for the basics

 

Stealing from everyone to help subsidise mortgage payers

in an attempt to keep the bubble inflated just edges out

the FTB even more

 

http://www.telegraph.co.uk/finance/newsbys...st-lending.html

 

I interpret that as

"if we trap more young people in debt can we steal some more money "

and the Govt saying "go right ahead"

 

 

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That's a good point : about the EROSION.

 

But I also think that lenders must be thinking a bit about their customers' ability to make mortgage payments in a higher interest rate environment. They are not going to get bailouts as easily as last time, so if they want to stay alive, they had better mind the store.

 

Doesn't that make the mistake of thinking that bankers care about anything other than themselves?

 

Take such as Fred Goodwin, Andy Hornby, etc. They lent to customers who couldn't pay, they bought rubbish - they got massive pay and perks for doing it. What do they care now? They have only profited from what they did. What is there to discourage the bankers now in their jobs from doing the same? They make so much money in such a short space of time they don't have to "stay alive" in the job for long do they?

 

It seems to me that banks have been blackmailing the government by requesting larger deposits and limiting business loans. If the article I posted on the bankers bonus thread is true about Cameron totally capitulating to the banks then the banks have won and can now lend any amount to anyone - take their massive pay and bonuses then swan off into the sunset when it next goes pear shaped.

http://www.telegraph.co.uk/finance/newsbys...st-lending.html

 

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Very nice indeed.

The Long march at Crash Cruise speed continues...

 

Back on Dec.29th, I Said about the forecast for a no change in 2010:

I think 2010 will come in at about -1.6 to -2.0%.

So their call of "flat" missed the direction

Two days later, I got this reaction:

 

 

We now have the year-on-year figures for both Nationwide and Halifax....

 

To summarise, my H&N Index (average of Halifax & Nationwide) was:

 

£162,131, down from £164,681, that's -1.55% yr-on-yr !

Thats fair enough, but the NW and Hal forecasts for 2010 were for flat and NW came in at +0.4% and Hal at -1.6%

 

And to be really fair, they made their forecasts a year ago, yours was a couple of weeks ago.

 

For these VI's that's the best I have ever seen them forecast in many years. (Although, if Hal uses MOM instead of 3M, then they would have had a -3.4%YOY :unsure: )

 

PS looks like we have had a fall of about 5% over the last 5 months up here in Glasgow (following a rise earlier in the year).

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Yes.

You may have noticed the detail from my data grid:

 

Year-on-year figures...

 

Mon.: Rt'move : London :

2009

D : : 221,463 : 398,426 :

2010

D : : 222,410 : 408,248 :

Year on Year:

yoy: +0.42% : +2.47% :

 

London was up 2% more than UK-wide for Rightmove.

But both were down almost -3% in December.

It will be interesting to see whether this rapid rate of collapse continues into 2011.

 

The rightmove index is so volatile its really just noise.

Hometrack and Home indices are better IMO

 

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Thats fair enough, but the NW and Hal forecasts for 2010 were for flat and NW came in at +0.4% and Hal at -1.6%

 

And to be really fair, they made their forecasts a year ago, yours was a couple of weeks ago.

I think you need to compare their forecasts, with their own indices.

 

My forecast of 12 months ago was negative (I think: -3 to -5%), so I missed by as much as they did.

But once the top was in place (Q2-2010), we go the sort of drop I expected.

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