I predict a very substantial fall in UK house prices in 2012 – and that will be a very good thing.
Average house prices currently stand at over 6 times average earnings. That compares to a long term average since 1945 of under 4, which charts show to be the norm.
People simply cannot afford to buy homes at six times their earnings. People living on average earnings, and paying the high rents such high property prices entail, would take ten years to save one years earnings, which would give them a deposit. They then would need five times earnings (or two and half times joint earnings for a couple) in mortgage. It is with good reason that banks will not lend at that level – it is more than people can pay.
There is a fascinating graph in this BBC report of a National Housing Federation (NHF) study last summer. It shows that the number of households under 30 living in private rented accommodation increased astonishingly, from 30 per cent to 48 per cent, in the bubble years between 1997 and 2009. That is a massive gain to a landlord class apparently very rich in assets -but the value of whose assets is strangely inflated.
This leaves ordinary people stuck in a very unpleasant position. Until last year, I was forced to live in private rented accommodation. My annual rent was about 6% of the nominal property value. I now pay substantially less than that in mortgage interest.
The NHF study predicts that current trends will continue, that the private rented sector will continue to grow, and that house prices will grow 21% over the next five years. But the NHF, who commissioned the study, are providers of rented accommodation and as usual this “academic” study uses assumptions which promote the economic interests of those who funded it.
In fact, I expect the massive decoupling of house prices from average earnings will end in 2012 or 2013 and we will see a major crash in house prices. It may not begin in 2012 – possibly it can be delayed until 2013, but I predict that by 2015 we will see house prices to earnings ratios back to four per cent. And as I see no significant increase in average earnings over that period, that means a fall in nominal house prices of over 40%.
House prices currently bear no relation to the ability of people to buy them to live in. They are like a rock balanced on an apex, requiring only a little push to crash them down. A number of pushes are coming:
– Cuts in housing benefit. The whole rush to the private rented sector has been underpinned by artificially high rents forced up by government payment of housing benefit. I am of course extremely sorry that individuals may be hurt by the implementation of these cuts. I also expect some backtracking as it dawns on MPs that the £2,800 per month does not actually go into the pocket of the Daily Mail’s Sudanese refugee family, it goes into the fat pocket of some Tory landlord. But the housing benefit cuts will reduce returns to landlords and knock house prices.
– Unemployment. The main impact of public spending cuts is yet to feed through in terms of higher unemployment – you ain’t seen nothing yet. Tories like unemployment – it reduces the costs and leverage of labour. 2012 is the year that it will really hit. By the end of 2012, repossessions will be very high. This would always spark a drop in house prices; people have not yet got their heads round what a fall it will be this time.
– Interest Rates. The key factor in balancing that house price boulder has been the lack of any high wind of interest rates. The short term outlook is for base rates to remain real terms negative (which is undeniably true yet strangely almost never said). But that will not last forever either…
The coming crash in house prices is of course going to have a huge effect on the viability of the financial sector, and will join together with sovereign bond defaults in precipitating the fall of the casino capitalists who live on our labour and have the rest of us in their lockhold. Those who saw 2011 as a global year of revolutionary change were only witnessing a tremor before the eruption. I cannot be sure that the crash will come in 2012 rather than 2013 or 2014; but I am looking forward to the new year with genuine hope that a deal of stench will be cleansed.
3280
Y dyn ifanc did well.
How they’re going to fix Ireland:
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“Moves to reform and modernise the Dáil are on the agenda for Ceann Comhairle Seán Barrett in the new year, including a parliamentary television channel by the end of the year, procedural changes, a new dress code and the banning of four-letter words.” [Irish Times]
The only thing that is crashing here is my greenhouse. Its being com prehensively trashed by the gales currently lashing us. Ah well, something else to fix and do.
Thanks for pointing to the lazy BBC during the Yuletide Mary, the taxpayers Alliance speaks for many in this country and tax evation gets a thumbs up on their web page, what an odious lot.
http://www.taxpayersalliance.com/tag/fairness
Not only did the BBC miss to turn up at David Halpin’s request for an inquest into Dr. kelly’s death, they are also running the show on a minimum budget over Christmas, hence these rightwing apologists talking tosh, with most of the stuff being recorded yonks ago.
So, how much money can we save on ‘our BBC’ in these times of austerity, our intelligence community, the infiltrated neocon racket, by sharing the pain and all that?
“At least 944 serving officers and police community support officers (PCSOs) have a conviction, according to the figures released by 33 of the 43 forces in England and Wales in response to freedom of information requests”
http://www.guardian.co.uk/uk/2012/jan/02/police-944-officers-criminal-record
The Met is by far leading this ‘little list’ and I wonder how the close and sometimes symbiotic relationships between cops and robbers is being tackled. Frequently moving PC’s about, something that was tried once, does not make for a better force, so whats to be done?
A police force in lieu with political parties, the media and establishment, for other reasons than to gather information, is what we’ve got, now they got the neck to tell us about it.
Can you think of a good chat up line the next time you get stopped apart from ‘how much’?.
3440
Would have been a perfect score but timed out on one while separating fighting cats.
@nuid
They should at least keep the four-letter words, thinking along the lines of the Scottish politician who said that the only time an MP tells the truth is when he calls another a liar.
@ingo
A fiend of mine was travelling with Russian colleagues in Canada. One of the Russians was driving when they were pulled over for speeding. The Russian automatically reached for his wallet and began counting out notes. ‘That won’t work here’, said my friend. The Russian looked perplexed. ‘How do they live?’ he asked.
off the subject
That Stupid, ignorant woman Michele Bachman!
There is a website about the ten craziest things she has said,
http://thinkprogress.org/politics/2011/06/16/246618/bachmann-craziest-quotes/
Next there should be a website for her quotes due to she being so ignorant, she recently said:
“If I am elected to the office I will close American Embassy in Iran”
That beats even the Georgie boy , the stupidest American president of all times.
Tommi,
Re helping out victims of the equity trap. I did not mean that everyone should be bailed out immediately, only when they could prove that they needed to move home.
A lot of the victims are younger people who have been mis-led into probably 100% or worse mortgages. Having to pay of negative equity is sore, but what is worse is that they can only leave the property by breaking off their arrangements by bankruptcy. Some careers entail moving to different locations as work dictates.
These people need help, and it should be possible to set up some kind of repayment vehicle for that part of their loan not covered by the properties value. There would need to be some sort of tribunal to prove that they qualified for the help and the repayments could be over a shorter term than a normal mortgage as the state and the lender would be contributing as well.
Well it has started with a bang all right;
Whilst the gales are battering UK, the atmospherics are hotting up too.
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“We advise and insist that this warship (USS John C. Stennis aircraft carrier) not return to its former base in the Persian Gulf,” said Brigadier General Ataollah Salehi, Iran’s armed forces chief.
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The potential for Iran-US conflict sent a shiver through oil markets Tuesday, helping oil prices jump more than a dollar a barrel.
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Ray McGovern (former CIA analyst) has gone on record reiterating; the notion that stirring up hostilities towards Iran will make Israel more secure will prove to be “the big mistake of the century.” He has gone on to add: “If this rhetoric spins out of control, if there are incidents in the Persian Gulf or the Strait of Hormuz that lead to wider hostilities, as night follows the day, this could spin not only into a regional war but even farther; and… of Israel, I fear, may cease to exist,”.
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Meanwhile president Sarkozy suffering the affects of hypoxia due to altitude sickness brought on by his high-heeled shoes; is pontificating putting sanctions/embargo on Iranian oil exports.
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Evidently the little man has not had time to be debriefed about the Iranian sentiments;
Senior lawmaker Kazem Jalali says if faced with a threat Iran will definitely use the defensive potential of the strategic Strait of Hormuz.
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If an embargo is imposed on Iranian oil exports, we will certainly take measures to block oil shipments through the Strait of Hormuz by other countries, said Deputy Chairman of the Majlis National Security and Foreign Policy Committee Esmail Kowsari on Tuesday.
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Although Monsieur le President may be intent on diverting attention from; Investigation into misuse of cash from two decades ago which threatens to derail his re-election campaign. (serial wrong doers never give up gaming the system).
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Meanwhile back in China;
Chinese President Hu Jintao has warned against efforts by the Western countries to “westernize and divide” China through “cultural warfare.”
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“Hostile international powers are strengthening their efforts to westernize and divide us,” Hu said in an article published on the latest edition of the ruling Communist Party’s magazine on Monday.
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Notwithstanding the above, Putin is pretty annoyed by the “colour revolution” getting sprung on his presidency bid, and is already back at the planing room to deliberate on his next move.
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My respect to the Iranian system, the judiciary have found guilty the daughter of one of the westophile grandees namely ex-President Rafsanjani, and apparently an untouchable, one of the organisers and provocateurs during the “colour revolution” in Iran that was masqueraded as demonstrations against “rigged elections”, as it is now occurring in Russia. (no one has proper elections other than the West; using the Dibold miracle vote making machines)
The daughter of influential former Iranian president Akbar Hashemi Rafsanjani was on Tuesday sentenced to jail and banned from political activities for “anti state propaganda” dating back to the 2009 disputed presidential election, Iranian media reported.
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The Islamic state has piled pressure on the opposition ahead of a parliamentary election in March 2, the first test of the clerical establishment’s popularity since the 2009 vote that critics say was rigged to re-elect Mahmoud Ahmadinejad.
Not that, the above paragraphs wreak of Iranophobia.
Show me where else other than in the occupied “revolutioned” countries have the ruling elite been subject to the common laws?
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Happy new year to all, enjoy it because there may be troubles ahead!
What happened to my comment; it was published, and since then it has vanished?
Chapter and verse here on the illegal detention of Palestinian children by the Occupier.
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http://www.dci-palestine.org/sites/default/files/solitary_confinement_website_dec_2011.pdf
The Israeli Occupation Force trumpets itself as being ‘the most moral army in the world’. You will see its involvement here (and it has happened thousands of times) in the violent seizing and abduction of youngsters, their imprisonment and interrogation. British Mandate Law is being used in part for this.
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What happens to these children? Some, possibly a majority, are scarred in their minds for life. Some become joyless and silent. Individuals within the native population are broken for ever by interlopers from Brooklyn.
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Another aspect of such barbarism is the deliberate shooting of boys’ legs as they gather and sift concrete rubble at Erez. At least four more boys have been shot since then. Some will never be able to work –
{http://dhalpin.infoaction.org.uk/index.php?option=com_content&task=view&id=107&Itemid=2}
Did I miss something in media? I hardly saw any of the main news channel mentioning
Obama Signing into the new Law for Indefinite Detention of Americans without Trial, and not giving them right to defence?? the only TV channel I saw it on was press TV????
the only TV channel I saw it on was press TV????
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That is why OFCOM is shutting it down!
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Who needs news? People can only need opinions, and that is just about their lot from the commercial Media including the zioBBC.
Passerby, you are right, actually my hubby saw it on RT, so I wonder when OFCOM will shut that down??
Excellent Article by Dr Craig Roberts in FPJ,” The Outlook for the New Year: Tyranny in the Forecast”
http://www.foreignpolicyjournal.com/2012/01/03/the-outlook-for-the-new-year-tyranny-in-the-forecast/2/
Around here in Glasgow there are loads of properties on the market which just aren’t selling at price demanded- they aren’t being marked to market. The same can be said of most of Britain’s assets which maintain a fictional paper value. This fictitious economy can keep going buoyed by QE2 until the run on the pound starts. This is being held off so far by the offensive against the Euro. Economic war against the eurozone has bought us a bit of time. As it becomes clear that neither the euro or the eurozone are going to collapse, the collapse of Britain will begin in earnest and it will be like nothing seen in British history; the total collapse of an economically, morally, socially and culturally bankrupt society.
“As it becomes clear that neither the euro or the eurozone are going to collapse”
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According to whom?
@Mary all except my own comments of course 😉 Actually I didn’t mean madness – I love the comments. It’s just they’re usually on a tangent to a tangent by now.
If the Euro goes down, Colin, then it will be gradual and it will leave Britains EU markets in jeopardy, it will not be in the dollars interest either. Fact is all western currencies have been build on sand and unless we address the fundamental flaw of our financial and ecological existence here, our unsustainable societies, we will continue to decline, with the odd blip upwards, times of growth will be limited to those who are innovative and entrepeneurial, we must not expect that western economies will ever reach national growth figures of 3% again, ever. This will come with all the social unrest as our ‘have’s will kick and struggle to make us pay for their lifestyle’s.
Julian Assange
http://www.guardian.co.uk/media/video/2011/dec/02/julian-assange-iphone-blackberry-gmail-surveillance-screwed-video
@ Anapa
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Agree with you that speculation on housing market caused current housing mess in the US and UK and also in some European countries.
But suggested way of controlling estate agents and banks will not work. What government should have done instead is build affordable houses or even apartments especially for the first time buyers on average family income of 40K. If government was able to offer apartments in London for average 120K no one would go paying 250K for an apartment from private speculative estate agent. Thus instead of renting and inflating housing bubble further many on 40K income could have become owners BUT this failed to materialise.
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Now we will see many more repossessions, negative equities, banks with more toxic loans, government borrowing more and more money, putting them into private banks and make us work to pay their debts.
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This problem is never going to be resolved positively until government either encourage or keep their eyes shut on how banks make us to borrow more than we can afford in order to pay them for the rest of our lives.
@ Passerby
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It was obvious that your knowledge about Iran was somewhat illusive AND it is now also obvious that your knowledge about current state of affairs in Russia is inexistent.
@Passerby – I presume your missing comment is the one at 3 Jan, 2012 – 12:26 pm? I expect it fell into the moderation queue, and was later released by a moderator.
Another one you could not make up.
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‘Gross is moving to reclaim his past success by ramping up his purchase of mortgage-backed securities. The self-styled “bond king,” analysts say, is betting on the likelihood the Federal Reserve will also purchase those securities in a bid to boost the U.S. housing market.’
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Gross well named?
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Gross’s bond fund bleeds $1.4 billion in December: Morningstar
http://www.reuters.com/article/2012/01/04/us-gross-fund-redemptions-idUSTRE8021QY20120104?feedType=RSS&feedName=businessNews&utm_source=dlvr.it&utm_medium=twitter&dlvrit=56943
@ Sam
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How long do you think banks could hold on repossessed properties? Would not this be like huge stone on their neck? With raising unemployment, raising repossessions it would be hard to tell when tipping point is exactly going to be but for sure banks would not be able to cover their toxic debts by credits indefinitely and bail-outs would not last forever.
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It is true however that rent will come down after the housing price crash and then we might enter in another cycle of housing price crash when buyers to rent sell their properties and invest money in something else.
Azra,
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Is there any source that indicates that state pension in Iran is higher than in the UK? If yes, can you please provide it?
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It is hard to believe that in Iran where average salary is below 412 sterling that pension could exceed the average salary.
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And also your statement about only 15 years of contribution does NOT correspond to this official information http://www2.tamin.org.ir/web/sso-en/law/ch7
Uzbek In The UK
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Yeah she had made a mistake; (did you read the link or just shoved it in for good measures?)
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They shall have paid the stipulated insurance contribution for at least ten years before they apply for retirement.
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The male shall have completed 60 years of age and the female shall have completed 55 years.
£95 per week is not much of a pension even in Africa, average manual/unskilled workers pension in Iran is £165 per week.
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However, sure as the day is long you will find that to be objectionable too, because Iran is Islamic, and the Iranians hate zionists, so needless to point out they are on the hit list no matter what they do.
@ Fedup
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Lets not make fools out of ourselves, and what is even more important, lets not make fools out of others.
Iranians are expected to work for at least 30 years before being qualified for pension as per this statement.
‘Note 1. Insured persons (Male at age 50 and females at age 45 Years old) who have worked for a total 30 years may ask for retirement pension provided that they have paid the contribution to the Organization on a regular basis.
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This contradicts to the suggested statement that Iranians can get pension after 15 years of work.
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Yes retirement age in Iran is earlier than in Europe but the same goes life expectancy issue.
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And yet again claims that ‘average manual/unskilled workers pension in Iran is £165 per week’ need to supported by some kind of credible source (BBC or Sky for instance as you suggested in the other tread that I only trust Commercial Media). If true that would make an average Iranian pension much higher than average Iranian salary.
Jon,
Thanks, I did not want to pepper the thread with useless comments about my missing comment. My surprise was based on; after it had been initially published then it was missing, hence the comment.
Uzbek,
Your expertise on all matters are indeed sufficient for this board, and indeed leave room for no further references to be forwarded by anyone else, including me.
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Having read the link you have provided yourself (in the spirit of refuting the contentions forwarded by Azra, about pensions in Iran being higher and better than UK). The source in fact stipulates that anyone contributing for ten years or more are eligible for a pension, which is then highlighted to you by others too.
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However, you then proceed to reiterate “Note 1! that deals with anyone of the age fifty for men and forty-five for women wishing to retire ought to have worked/contributed thirty years. which you find it contradictory too. Let us face it your hatred of all thing Iranian have dulled your senses, and you seem to have difficulties in seeing through the red mist arising; note 1 is dealing with those whom wish to retire even earlier than the pensionable age.
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Further your mendacious take on the amounts of the pensions paid in Iran, that you feel ought to be found in BBC/SKY (reputable sources, rofl! Fedup has got it right) after which you add, they (Iranians) don’t live that long there anyway.
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However to piss you off even more, next couple of months Iran has planned to send an astronaut into orbit, the Iranian space agency will be sending a primate and returning it to back to the Earth.
@ Passerby
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Why would you think that I will be pissed off by that Iran is going to send a primate to the space. I am more than happy with this extraordinary achievement. Who knows one day it might be Iran and not Russia that will be taking western astronauts into the orbit. My only regret is that instead of primate Iranians could have sent their Ayatollas and their president into the orbit so that by one shot they kill two rabbits (conquer the space and liberate themselves).
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Note 1 clearly states (or at least my understanding of it) that both women and men need to work for 30 years and regularly contribute towards their pension before being qualified for the pension.
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Also you are the third person mentioning pension sum in Iran but I see no source pointing confirming that Iranians get on average over 415 sterling per month in pension. Any source please.
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I was actually rather sarcastic about BBC or Sky. This was my sarcastic response to Fedup’s subjective prejudice about me.