davegtt

I'm not a fan of yours but this is the best policy! Spend it all on beer and hitting 60 won't be an issue either

tony de wonderful

I was reading the latest house price forecasts:

6% 2013
+10% 2014
+10% 2015

GlesgaKiss

Crazy. People will just start doing the same again if prices are rising 10% a year.

ALi-B

iTrader: (1)

Nuts.

How can you predict a increase when the property market is stagnant, unless its a in demand area (London, Surrey etc).

I wouldn't complian though as guess where my money is invested Not much choice these days but to put funds into a good house in a good area and improve it.

I hate houses. I hate owning one, I hate managing/maintaining one, but in this current market I'm left with little or no choice with what to do with the money if I sold up and rented.

dpb

That would indeed be fckung ridiculous, relative to expansion of the economy or lack of it rather

Chip

There's still plenty of relatively safe companies out there paying 6%+ divi's.

Dr Hu

House prices need to come down 10% year on year not fricking up!!

House prices is one my major bugbears - I'm OK I got a nice house in the 90's before they went stratospheric - its all the kids looking to buy now.... its criminal the price of them, the gov. seem happy to let people mortgage themselves to the hilt then wonder when it all goes **** up....

Dingdongler

We might like them to come down but at the moment in London they are headed in one direction only and that is up.

tony de wonderful

Interests rates could easily stay at records lows for another decade IMHO and now you have the various state sponsored schemes (help to buy) which are/will stoke the market more. Even flatlining property prices are politicised as a problem, the state can and will keep prices moving (for now).

I can't see any option for someone like myself not to get mortgaged up on a very modest house. It's not so much that I think it's a magic money tree, more the cost of renting and being sick of not having my own house basically. I know I will be shafted, just I have a choice of lube or dry.

Matteeboy

Interest covered most of our annual bills a while back. Now it barely buys a Mars bar. ****.

Yet to find anywhere better for it though and I guess it's sort of safe(ish).

Chip

We manage to cover all of our monthly household bills with our divs so will just leave them there. Always a higher risk with shares but sometimes it seems worth it.

Matteeboy

Hmm - maybe I should fling some money at some.

Knowing my luck, they'd bomb immediately.

Chip

Nat Grid, Vodafone, Chesnara, Aviva etc all pay a healthy div and are worth a shot.

http://www.topyields.nl/Top-dividend...of-FTSE100.php

Matteeboy

Cheers - I will do some checking out. Best we get is 2% on our ISAs. The rest gets naff all - ARRGHHHH!!!!

Petem95

Rates are so low thanks (or not) to the governments Funding for Lending scheme which lends a load of tax payers money to the banks at 0.5% so they can lend it out to business, but whats really happening is its going to mortgages making them very cheap and keep house prices over inflated (which the government want) so you 'feel' rich and go spend.

Banks dont need savers money now, so the rates are terrible. I don't know when Funding for Lending ends, but when it does savings rates will rocket as the interbank rates are quite high.

I voted conservative, but they really have thrown in the towel on the economy now and are just 'curing' the debt crisis with more debt. Next they'll be copying the Sub Prime scheme that went so horrifically badly in US and trying to inflate house prices even more... oh hang on they are with 'Help' to Buy (aka lets get people absolutely maxed out on debt at historically low interest rates - just so long as the party keeps going after the re-election date..)

The longer this sort of thing goes on, the worse the pop when it goes bang - but how long it will be until then is anyones guess!

Petem95

http://www.independent.co.uk/news/bu...s-8692679.html

Article there explains it quite well! Always thought Conversatives were good at managing they economy, but guess I was wrong - even Labour would struggle to be worse than this with crazy schemes like 'Help to Buy'.

tony de wonderful

Yeah could be years. Will be a disaster when it happens.

hodgy0_2

But if everyone save, like Japan, you get 20 years of a flatlining economy

Petem95

Japan entered a liquidity trap in the early 90's, after they were pumping money into the economy to try and stimulate demand (sounds familiar...). The result has been stagnation and deflation.

We have a chance of going in the same way. The UK (and to be fair US and other Western governments) are pretty much out of tricks now regards the economy.

All these people maxed out on debt won't be enjoying it as deflation means that debt will be getting bigger in real terms!

It's all one big mess, but our government is only looking short term now. They want to get people borrowing and spending, and are even providing tax payer backed up cheap money for them to spend with! :s Really is beggers belief.

hodgy0_2

Maybe the US and the UK should have let the Banks go bust

Petem95

Maybe, it would've caused some pain in the medium term, but you'd be in a better position at the end of it having wiped that slate clean.

All we are doing is keeping an unsustainable situation (everything built on too much debt) going with even more and even cheaper debt..

It's like someone who's got all their credit cards maxed out, but then they get accepted for another couple of cards. They can go out spending again until those are maxed, then they're in a worse position than before.

hodgy0_2

Iceland let there banks go bust, they are now experiencing the sort of growth we won't see for a generation

And they are to the left, yet took a stark free market approach to the problem, I.e let the risk land where it should, contrast this with the US and UK, free market capitalist economies, bailed the banks out with 100 of trillions of pounds worth of public money, State Socialism bailing out the wealthy

A bit weird

Matteeboy

Petem speaks wise words.

jonc

Deflation is the biggest threat to the economy, as demand falls prices fall, which mean companies cannot sustain themselves, therefore will have to lay off staff and source cheaper labour or go bust and thus fall into a deflationary spiral. What's currently happening is people are scared and are de-leveraging ie. reduce their exposure to debt and using their money in trying to pay off their debts instead of spending it.

There is decline the demand for credit despite the increase in liquidity, this is bad. The BoE has created a huge amount of liquidity but has nowhere to go. QE also devalued the currency to try and get more foreign investment into this country and make our exports more attractive. The Government is desperately trying to get people to spend to prevent stagnation and deflation. Also banks aren't about to lend money irresponsibly either. So it's a real tough job in trying to get people to spend and stimulate the economy. You might argue that the Government reduce taxes to give people more money in their pockets, but if people are de-leveraging this would be self defeating and this country cannot afford to reduce revenue from taxation as there is currently a massive public expenditure deficit.

So if getting people to spend and borrow is foolish, what would you do?

tony de wonderful

Firstly, inflation (even allowing for the very 'liberal' way the RPI is calculated) have been above the BofE target for ages yet they keep interest rates pegged at 0.5%. Deflation doesn't seem to be especially a risk.

Secondly, you write like the 'stimulation' of the property market is just a side effect of having interest rates at record lows and the funding for lending, which is intended to incentivise business to borrow and be lent to. However, the help to buy BS is very much targeted at the property market. Given property is just an asset, it is very hard to see this intervention as anything but a crowd pleaser with no economic merit at all.

jonc

Problem is, much of the inflation is fuelled by rising energy costs and less to to with demand. The economy is very much at risk of deflation which is much worse than inflation. The signs are there as the economy is almost stagnating with less than 1% growth for the past few years. My only guess at why the government is targeting home ownership is that once you have a new home you're more likely to spend more some money on it.

tony de wonderful

Perhaps. That doesn't seem very consequential though, just a minor thing. I'd admit that having people buy homes in the short term does boost the economy a bit, but like a sugar rush it is quickly gone. Somehow we have come to believe that buying and selling these assets we call homes can 'fuel' an economy. It's all good so long as prices keep rising. I know the builders claim that help to buy will incentivise them to build more houses but that is BS IMHO, they would say that.

jonc

The Government and the BoE are running out of options, that much is true. I wouldn't say what they are doing is a quick fix, far from it. I would say they are putting time limited systems in place to gradually ease people into spending their money. The last thing they want is a sudden increase consumption as that would drive up inflation dramatically. As interest rates are at an all time low already it leaves no scope for the BoE to adjust interest rates to control inflation as we have huge debts, as it is, it is already above the target rate. Liquidity is available, but if there is low demand, business see no point in borrowing more. The government has also eased planning laws for a year to make it easier for homes owners and businesses to extend. The property market is heavily interwoven into many other businesses and services and a significant amount of tax revenue can be generated from this industry. Is there any other industry that the Government could target? Finance industry, whilst it generates huge revenues is concentrated in tiny geographical location, has to remain highly regulated.

It is not all doom and gloom and I honestly think that it is slowly working. We are seeing growth in the retail sector, manufacturing is increasing output and the IMF have recently revised their growth forecast for the UK. Whether this is down to a growing optimism with talk of a recovering global economy or national policy, I can't say, maybe it's a combination of both.

tony de wonderful

So our economy consists of a property market and banking? It's no wonder we are screwed then!?

I do agree to some extent that more activity in property is 'good' for the economy, and yes it gives a boost to tax receipts, but ultimately all you have is a debt fuelled splurge on an asset; it sustains nothing, doesn't generate wealth
like if you build a factory with debt or something. To sustain growth from property - all things being equal - you need an exponential growth in personal debt. We know this doesn't end well. Building housing is of course good and a pick up in property should lead to this, however there could have been better ways to get houses built than state underwritten debt, bear in mind that property is really just shy of historical highs, so why home builders "can't afford" to build houses is an open question.

hodgy0_2

seriously, has it taken you this long to work that out


also, lets get one thing clear, there is nothing wrong with "debt" per se

an economy could not function without it