How far will house prices fall? [Volume 3]
Discussion
Digga said:
NoelWatson said:
Digga said:
mondeoman said:
I'd agree that the QE isn't filtering into the economy though. 3 years ago, I could lay my hands on £50-£70k of personal credit (cards, loans, overdraft), no problem at all. Now I'm struggling to get a £2k credit card, O/D has been slashed in half on an account I've held for over 20 years that has made the bank (now spanish..) a fair fortune in interest and charges (which in general I don't have a problem with) and not offered at all for a new account.
^Multiply this precise experience accross hundreds of thousands of SMEs and you being to see why the economy is to royally f
ked. I've lost count of the numbers of customers and suppliers who've been through similar issues with their banks since 2008 - some survived, some didn't - but this is the real elephant in the room as far as I'm concerned.I must stress that I can understand qwhy the banks did it - to reduce gearing, shore-up reserves, survive their own crises in some cases - but that doesn't change the fact that when the government talk about growth, especially in the private sector, I wonder which planet they've been on for the last eighteen months.
Which makes this:
groak said:
the bank was identified as the single biggest threat to my business and its prosperous survival.
a very sound piece of advice for any small business owner. Know your enemy!There's customer risk and supplier risk - too many eggs in one basket etc. etc. - but the bank is usually not factored as such. For many now extinct businesses, this was a grave error.
"It may be that lending is somehow artificially scarce – as opposed to more prudent, rational and expensive – but I have yet to be shown any real proof of this (surveys of wannabe borrowers, such as small firms, don’t count as they are not objective). Please email me if you have some real proof that banks are curtailing lending en masse for the “wrong” reasons, as opposed to making the odd stupid mistake or pricing loans more expensively to reflect the increased risk of default and the increased cost of capital and liquidity requirements."
What proof is he expecting? A missive on bank letterhed paper saying "Dear Mr Small Business Owner Don't know why, but we won't give you any money. Now p
s off. Love from, The Bank"?What an utter t
t.If he got his shiny arse up from his desk, descended from his ivory tower and deigned to visit the many and various business parks and industrial estates of the nation and spoke to businesses, he'd get the idea soon enough.
Edited by Digga on Tuesday 26th October 08:22
The banks are saying one thing, SMEs another - the press need to highlight some examples.
Noel, one thing I have never dodged is the long term financial problem that Banks and SME's built up prior to the crunch.
However, I do not beleive it is a black and white case of blaming one party over the other. Neither now are banks decisions to not lend entirely black and white. (I do hope you don't naiively assume - like Mr City AM - that it is in any way possible to glean incorovertable and objective proof of this in either way.)
Most small start-up businesses gow to who they know to set up their businesses banking - their 'friendly' one size fits all, high street bank. Since the early nineties, most banking relationships developed along these lines;
Now we can all see the error of letting businesses rely on unstructured, immediately repayable funding - no argument - but the fact is it happened, and on a huge scale.
Trouble was that post 2008, as I have repeatedly pointed out, this funding was arbitrarily withdrawn. Openly and also by stealth, where unused facilities vanished overnight. Sometimes the bank totally cut it's funding or cut it enough to deliver a killer blow. Other times the funding gap could be worked around. In another variation on the shafting theme, overdrafts were cut but replaced by (expensive and administratively onerous) factoring arrangements.
Did the banks need to recapitalise? Yes.
Did the banks have a duty to reduce their risk, post crunch? Yes.
Was a lot of business lending unwise? Yes.
Yes to all of the above but, at the same time, for the sake of the economy and their customers, I also beleive banks had a moral commercial duty to do all of this in a way which did not cause collosal and irreversable damage to the UK SME economy. Yet this does not ever seem to have been considered. Neither, once the problem was out in the open and the subject of concern - identified as a severe risk to the UK recovery since early 2009 by Alister Darling, Merving King and even the IMF - has it been resolved.
I've heard the banks and I've heard the businesses and I know who I beleive here. I have not axe to grind - I'm not singing for my supper here - but personally beleive this to be a far bigger problem than anyone presently acknowledges.
However, I do not beleive it is a black and white case of blaming one party over the other. Neither now are banks decisions to not lend entirely black and white. (I do hope you don't naiively assume - like Mr City AM - that it is in any way possible to glean incorovertable and objective proof of this in either way.)
Most small start-up businesses gow to who they know to set up their businesses banking - their 'friendly' one size fits all, high street bank. Since the early nineties, most banking relationships developed along these lines;
- Overdraft agreed
- Annual meeting to review/amend overdraft
- Repeat streps 1 & 2
Now we can all see the error of letting businesses rely on unstructured, immediately repayable funding - no argument - but the fact is it happened, and on a huge scale.
Trouble was that post 2008, as I have repeatedly pointed out, this funding was arbitrarily withdrawn. Openly and also by stealth, where unused facilities vanished overnight. Sometimes the bank totally cut it's funding or cut it enough to deliver a killer blow. Other times the funding gap could be worked around. In another variation on the shafting theme, overdrafts were cut but replaced by (expensive and administratively onerous) factoring arrangements.
Did the banks need to recapitalise? Yes.
Did the banks have a duty to reduce their risk, post crunch? Yes.
Was a lot of business lending unwise? Yes.
Yes to all of the above but, at the same time, for the sake of the economy and their customers, I also beleive banks had a moral commercial duty to do all of this in a way which did not cause collosal and irreversable damage to the UK SME economy. Yet this does not ever seem to have been considered. Neither, once the problem was out in the open and the subject of concern - identified as a severe risk to the UK recovery since early 2009 by Alister Darling, Merving King and even the IMF - has it been resolved.
I've heard the banks and I've heard the businesses and I know who I beleive here. I have not axe to grind - I'm not singing for my supper here - but personally beleive this to be a far bigger problem than anyone presently acknowledges.
Edited by Digga on Tuesday 26th October 09:09
So, "millionaire mansions double as house prices fall"?
This seems at odds with some of what I've read on this thread (the last volume) recently, seems quite surprising to me.
http://blogs.telegraph.co.uk/finance/ianmcowie/100...
This seems at odds with some of what I've read on this thread (the last volume) recently, seems quite surprising to me.
http://blogs.telegraph.co.uk/finance/ianmcowie/100...
I thought I’d share this encounter with you lot as it may or may not be representative of a large portion of the UK’s middle class.
Our village pub held a community event over the weekend. I took the GF and met up with a number of friends and neighbours. We soon split up into lad and lasses groups so we could talk freely.
One of our neighbours likes to rattle on about his entry level 997 being the fastest car known to man. He was soon educated by some of my mates in a rather harsh manner, in true PH style. We each offered him rides in our various motors which he declined before making an abrupt exit with his wife.
Now this where the post gets on topic.
When I walked home with my GF she told me that this chaps wife tried to pay for a round of drinks on their credit card. The credit card was refused and my GF covered it. My GF made light of the situation and blamed the technology.
Whilst walking back from the bar the chaps wife took my GF to one side and unloaded the following in a 2 minute tirade: Both her and her husbands credit cards are maxed out, the lease on their 911 has two more years to run at a cost of nearly £1,400 per month, their £230k mortgage is due for renewal early next year and is a I/O 100% mortgage, they haven’t had a holiday in nearly 4 years, rarely go out, they work every hour that god sends (long weekdays, weekends, etc) and her middle manager role for the local council could be under threat.
She wants to go to Citizens Advice as she thinks they should be helped but her husband refuses to accept there is a problem. My GF couldn’t offer much in the way of advice except just talk to the husband as she was caught off guard.
What’s worse is I’m sure one of my mates mentioned a house selling on that road for £180k earlier this year. All the houses are fairly similar 2 bedroom new builds.
I was gobsmacked when I heard how this couple managed to get themselves into this situation. I do feel for families that genuinely struggle but I find it hard to have much sympathy for couples that live beyond their means through keeping up with the neighbours.
I know this won’t sit well with the PH community but I think their car is a noose around their necks. I’ve spent a sickening amount of money on cars over the years when I look back, particularly in my younger years. However, I can’t imagine for a second that I would put a car ahead of security and quality of life as an adult.
I do wonder if this is an isolated case or is this common amongst a portion of the middle classes.
Apologies for such a long winded and downbeat post, I thought it might be worth sharing with you on this topic as it could be a factor in the future for house prices if this is a common situation.
Our village pub held a community event over the weekend. I took the GF and met up with a number of friends and neighbours. We soon split up into lad and lasses groups so we could talk freely.
One of our neighbours likes to rattle on about his entry level 997 being the fastest car known to man. He was soon educated by some of my mates in a rather harsh manner, in true PH style. We each offered him rides in our various motors which he declined before making an abrupt exit with his wife.
Now this where the post gets on topic.
When I walked home with my GF she told me that this chaps wife tried to pay for a round of drinks on their credit card. The credit card was refused and my GF covered it. My GF made light of the situation and blamed the technology.
Whilst walking back from the bar the chaps wife took my GF to one side and unloaded the following in a 2 minute tirade: Both her and her husbands credit cards are maxed out, the lease on their 911 has two more years to run at a cost of nearly £1,400 per month, their £230k mortgage is due for renewal early next year and is a I/O 100% mortgage, they haven’t had a holiday in nearly 4 years, rarely go out, they work every hour that god sends (long weekdays, weekends, etc) and her middle manager role for the local council could be under threat.
She wants to go to Citizens Advice as she thinks they should be helped but her husband refuses to accept there is a problem. My GF couldn’t offer much in the way of advice except just talk to the husband as she was caught off guard.
What’s worse is I’m sure one of my mates mentioned a house selling on that road for £180k earlier this year. All the houses are fairly similar 2 bedroom new builds.
I was gobsmacked when I heard how this couple managed to get themselves into this situation. I do feel for families that genuinely struggle but I find it hard to have much sympathy for couples that live beyond their means through keeping up with the neighbours.
I know this won’t sit well with the PH community but I think their car is a noose around their necks. I’ve spent a sickening amount of money on cars over the years when I look back, particularly in my younger years. However, I can’t imagine for a second that I would put a car ahead of security and quality of life as an adult.
I do wonder if this is an isolated case or is this common amongst a portion of the middle classes.
Apologies for such a long winded and downbeat post, I thought it might be worth sharing with you on this topic as it could be a factor in the future for house prices if this is a common situation.
shamrock said:
an interesting tale
Personal experience suggests that this is more common than most people would expect. I know a couple of people in a very similar situation, where the mortgage is I/O on a quite high rate, with no real option to remortgage due to reduced income from the good years, car finance where the car is worth substantially less than the outstanding finance, resulting in significantly higher payments when the original finance agreement ends - all to "save face", credit cards maxed out to maintain the appearance of wealth, and unless things pick up fairly quickly, I think a lot of these will get very badly burnt and you will see a fair few properties coming onto the market.shamrock said:
I know this won’t sit well with the PH community but I think their car is a noose around their necks. I’ve spent a sickening amount of money on cars over the years when I look back, particularly in my younger years. However, I can’t imagine for a second that I would put a car ahead of security and quality of life as an adult.
I do wonder if this is an isolated case or is this common amongst a portion of the middle classes.
It's very common.I do wonder if this is an isolated case or is this common amongst a portion of the middle classes.
Visiting teh BIL and driving through their new 'exec' estate, the evidence is plain to see everywhere - £200k to £250k houses, with two new or nearly new motors on the drive, combined value at purchase of at least £50k.
I also have some friends who live in a (very nicely appointed) semi, worth IMHO between £250k and £300k; he has an 09 RS6, she's just got a Q5. I sincerely hope they're okay. I [io]think[/i] they're doing well, they're about ten years younger than me (I used to put far more priority on 'enjoying' my cars), so it might all be fine...
anonymous said:
[redacted]
Toppy for a 3 bed, but then it's a nice period property (the 'Boden' middle classes love this) in a very scenic (unless it's an artful EA shot) setting.I'm looking at the map, the golf clubs, the commuting potential and guessing this is not a bad area? But it's still probably £50k to £100k over IMHO.
XJ40 said:
So, "millionaire mansions double as house prices fall"?
This seems at odds with some of what I've read on this thread (the last volume) recently, seems quite surprising to me.
http://blogs.telegraph.co.uk/finance/ianmcowie/100...
I've read this somewhere else and see evidence of the amount of money going into high end property daily. I live in an area of London where there are a lot of very,very expensive houses (not on my street). Houses get bought for £5 to £10 mil and have several million more spent on them.....huge basements dug out and the house built back on top of them. Literally the only thing they leave is the facade and everything else is ripped down. This seems at odds with some of what I've read on this thread (the last volume) recently, seems quite surprising to me.
http://blogs.telegraph.co.uk/finance/ianmcowie/100...
It's got nothing to do with the rest of the housing market....different world. The wealth gap between the genuinely rich and the middle and working classes (for want of a better expression) had closed hugely over the last thirty years....it's now appears to be going back to where it was in Victorian times.
mondeoman said:
shamrock said:
an interesting tale
Personal experience suggests that this is more common than most people would expect. I know a couple of people in a very similar situation, where the mortgage is I/O on a quite high rate, with no real option to remortgage due to reduced income from the good years, car finance where the car is worth substantially less than the outstanding finance, resulting in significantly higher payments when the original finance agreement ends - all to "save face", credit cards maxed out to maintain the appearance of wealth, and unless things pick up fairly quickly, I think a lot of these will get very badly burnt and you will see a fair few properties coming onto the market.We all - well those, who are home-owners - have affordable mortgages, cheap cars and live well within our means. Arguably we're all middle-class too, although possibly some of us are at a different end of the middle-class spectrum.
What are we all doing wrong?! I'd quite happily pootle around in a 997 instead of a Primera!
Yours confusedly,
Bill
Bill Carr said:
I think my friends and I must all be very boring.
We all - well those, who are home-owners - have affordable mortgages, cheap cars and live well within our means. Arguably we're all middle-class too, although possibly some of us are at a different end of the middle-class spectrum.
What are we all doing wrong?! I'd quite happily pootle around in a 997 instead of a Primera!
Yours confusedly,
Bill
Whenever wealth or matters alluding to wealth come up in posts on PH I wonder to muself what the hell I did wrong as my circumstances seem so minor and dreary.We all - well those, who are home-owners - have affordable mortgages, cheap cars and live well within our means. Arguably we're all middle-class too, although possibly some of us are at a different end of the middle-class spectrum.
What are we all doing wrong?! I'd quite happily pootle around in a 997 instead of a Primera!
Yours confusedly,
Bill
Can I have a go in that 997 after you? I promise I'd drive it like a pansy. (I probably would, actually).
Bill Carr said:
What are we all doing wrong?! I'd quite happily pootle around in a 997 instead of a Primera!
Nothing at all.There is no shame in shelling out on a 997 - or something more extravagant - if it's within you means and is your priority.
Equally and more importantly though, there is nothing clever about being orange and financed up to the next century to pay for you new, white Audi.
shamrock said:
An interesting tale
I see a lot of people in similarly extended circumstances as I wander through life - all these late plate X5s and Cayennes you see in Tescos can't be cash purchases, surely? It seems only yesteryear a Cortina Ghia X was considered posh and a 518i was for the seriously well off. On a professional level I have dealt with them for a decade (at least). I fear for these people the "good times" are over. They did seem to have a hell of a laugh on the way, mind.
scenario8 said:
It seems only yesteryear a Cortina Ghia X was considered posh and a 518i was for the seriously well off.
I often ponder this.I had a mate whose dad had a BMW 635i - a journey in which was like a glimpse of a level of motoring so far ahewad of anything else I'd been in, it might as well have been space travel. Round our part of the world, cars like this were like rocking horse s
t and very, very much more than most other kit you saw on the roads. Now look.scenario8 said:
It seems only yesteryear a Cortina Ghia X was considered posh and a 518i was for the seriously well off.
Not sure about this. I had a 518i in 1988, when aged 26. No choice, company car. It was truly and wilfully awful by the way. I lived in a two bed Wimpy terrace on the outskirts of Southampton. I was earning a decent lick but would not have considered myself "seriously well off". To be fair, and being young and foolish, everything I earned I spent on red braces and champagne. Well it was the Eighties, which on reflection were very like the Noughties...
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