From: System Prompt 
Newsgroups: uk.finance
Subject: Re: Financial Lemonaid from "impending" Financial Lemons??
Date: Thu, 17 Jul 2003 00:32:20 GMT

On Thu, 17 Jul 2003 00:01:35 +0100, "Stephen GoldenGun"
 wrote:

>
>System Prompt  wrote in message
>news:ebibhvckhavo991s0pegn366tm64jhkb39@4ax.com...
>> I have been following the thread "Property Prices are still moving
>> higher in the midlands" with a great deal of interest.
>>
>> As a Canadian who is contemplating a move back to the UK in the next
>> couple years with the wife and children I am wondering if there is an
>> effective way prepairing for the market correction that is coming and
>> if there is a way of determining how far the powers that be can
>> inflate the credit bubble before it bursts.
>
>
>You have to remember that it is easy to be a Mr. Doom and Gloom
>merchant..have you any idea for how many years people have been saying about
>this impending doom and gloom senario...
>
>We had it all during the last war, ten years ago! I remember hearing all of
>this ten years ago! Allways the same, but somehow we all struggle on.

Around 1991 my in-laws sold their home (which they had purchased for
around 70,000 in 1983) for just shy of 169,000.  They subsequently
bought a bungalow for 80,000 which is now valued at just over 200,000.
GBP.  They live in the Midlands and their last home dropped about 12%
in value a year after they sold it.  From what I have been able to
find from the UK census (2001 & earlier) people's income has not been
keeping anywhere near the rate of housing inflation.  If people's real
income hasn't been rising and there has not been an enormous transfer
of inherited wealth the only rationale for the housing prices that I
can think of is greed induced collective self delusion.

On this side of "the pond" my father purchased a home in the early
1980's for $29,000 CDN that had previously sold for over $120,000
(granted when my father purchased interest rates were 19.5%).  The
last time I was in the neighborhoods I spoke with a realtor selling an
almost identical home for $180.000 CDN.  Perhaps my family's
experiences have been extremely unusual but if there is a possibility
to purchase a niceish detached  house in England for 3.5x the average
salary instead of 8+ x the average salary I would prefer to go that
route even if it were to mean waiting a year or two.  

Guess where I am coming from is the viewpoint that it is possible to
make a positive personal outcome from a larger negative situation.  I
am trying to figure out if there are any alternate routes to interest
only 50 year mortgages.  (well, that & I would HATE to end up in a
negative equity situation, an older colleagues here in Toronto is
still in that situation from a house he purchased in 1991). 

Stephen.


>
>Don't give any more credibility to them than the people who say
>otherwise....
>
>For every expert who thinks its going to be crashes and peopel jumping off
>ten story buildings, you can find exactly the same number who have good
>predictions.
>
>