Jump to content
DOSBODS
  • Welcome to DOSBODS

     

    DOSBODS is free of any advertising.

    Ads are annoying, and - increasingly - advertising companies limit free speech online. DOSBODS Forums are completely free to use. Please create a free account to be able to access all the features of the DOSBODS community. It only takes 20 seconds!

     

IGNORED

Credit deflation and the reflation cycle to come (part 2)


spunko

Recommended Posts

Democorruptcy
9 hours ago, sancho panza said:

 We use NS&I for storing cash as it's 100% guaranteed to give you your specie back.Thanks for the heads up.

I have some money there that matures this year and had never heard anything about it until digging on their website yesterday. It's a big change having to have the money there until maturity, another one obviously aimed at deterring savers. The NS&I CEO since 2017 is Ian Ackerley ex-director of investments at Barclays.

I presume when people get their maturity info this change will be well highlighted. I like to think I would have noticed instead of just looking at the new rate! Every cloud.... might mean a few houses SSTC might go back on the market when the buyers cannot get to their funds!

Link to comment
Share on other sites

  • Replies 35.1k
  • Created
  • Last Reply
Democorruptcy
9 hours ago, Tdog said:

I can buy one of these 2 in the coming month, one with minimal borrowing, the other with say 60k if they go for close to advertised price at auction.
https://www.rightmove.co.uk/property-for-sale/property-75699973.html One in Beverley
https://www.rightmove.co.uk/property-for-sale/property-76683292.html One in Christchurch

One hell of a gamble with ones life savings considering i know sweet FA about building structures.

Or a plot in Immingham to knock up 4 houses ... but my get up and go, got up and left when i hit 40.
https://www.rightmove.co.uk/commercial-property-for-sale/property-65096850.html

Talking about building structures.... look at this wood hut for about the same as your higher priced one.

 It's a shell that doesn't even include a kitchen or bathroom and although it's got a 12 month holiday licence you cannot live there as a main residence.

https://www.rightmove.co.uk/property-for-sale/property-76779973.html

pod.jpg

Link to comment
Share on other sites

In the opinion posters here, is it still worth buying Centrica and SSE at this stage? They've done well recently and are not near previous highs

Anything you post will be for information only and will not be acted upon without consulting an expert IFA etc etc.

Link to comment
Share on other sites

10 hours ago, Tdog said:

We'll see what ways and levels the Tories are going to prop (or unprop) the property market in the March budget, as it is clearly known by TPTB that there is extreme anger at the housing bubble and that they're going to need considerably more owners come the summer 2024 election.

But its whether they're willing to let a lot of air out the bubble in a short space of time, or not.

There may be considerable anger, but I can't see the government allowing the banks to be left with mountains of junk mortgages.

Therefore it'll need to be inflated away, surely.

Link to comment
Share on other sites

17 minutes ago, Loki said:

In the opinion posters here, is it still worth buying Centrica and SSE at this stage? They've done well recently and are not near previous highs

Anything you post will be for information only and will not be acted upon without consulting an expert IFA etc etc.

I'm waiting to see how the warm winter effects share price when profits announced.

Link to comment
Share on other sites

10 hours ago, Bobthebuilder said:

Hi SP, I know different areas of the country had bouts of inflation/deflation at different times like TCON said, but what i meant in my post is, life can pass you by while waiting for things to change.

Absolutel;y.we're nearly the same age and I can't believe how long  the madness has gone on for.

I was trying to demonstrate what ordinary folk in Leicester are facing.Average salary circa £25k. Average house price £255k as of Sept 19.I'm not particualrly bothered as we won't be buying anywhere in Liecester but from a societal, demogrpahic and economic point of view (given housing's prevalence as an asset class for the majority of people), this bubble has huge implications.

There's a great interactive chart on the ONS link for average median pay by consituency.Some of the South Eastern light blue consituencies(light blue=low earnings) face even worse issues re buying a home.Stunning the govt let it get like this.

Interesting charts from ONS re salaries

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/bulletins/annualsurveyofhoursandearnings/2019

image.png.36a510e55027eefdb7a44b9fffa52a50.png

image.png.d7bfa64df6b816db7cbf48c427f91e2b.png

image.png.9a5943ff797614c5875699b01024bbe1.png

image.png.9d8886df26323aea99309a0ca44aa066.png

image.png.f4f9bed8a8b94993d75037beb7e79799.png

Link to comment
Share on other sites

Democorruptcy
10 hours ago, Tdog said:

We'll see what ways and levels the Tories are going to prop (or unprop) the property market in the March budget, as it is clearly known by TPTB that there is extreme anger at the housing bubble and that they're going to need considerably more owners come the summer 2024 election.

But its whether they're willing to let a lot of air out the bubble in a short space of time, or not.

Is it?

Have I a missed a riot or protest rally, was it on the So-Called BBC?

Since the Tories started HTB in 2013 as part of the coalition formed in 2010, they have won 3 elections and the last one with an even larger majority.

Link to comment
Share on other sites

10 hours ago, Tdog said:

I can buy one of these 2 in the coming month, one with minimal borrowing, the other with say 60k if they go for close to advertised price at auction.
https://www.rightmove.co.uk/property-for-sale/property-75699973.html One in Beverley
https://www.rightmove.co.uk/property-for-sale/property-76683292.html One in Christchurch

 

An auction 'guide price' exists to get people through the door and doesn't necessarily reflect what they think it'll go for.

34 minutes ago, Democorruptcy said:

Talking about building structures.... look at this wood hut for about the same as your higher priced one.

 

Well, that's an investment that'll go to zero next time the economy tanks.

Link to comment
Share on other sites

Democorruptcy
4 minutes ago, sancho panza said:

Absolutel;y.we're nearly the same age and I can't believe how long  the madness has gone on for.

I was trying to demonstrate what ordinary folk in Leicester are facing.Average salary circa £25k. Average house price £255k as of Sept 19.

You aren't still looking at single income?

Those figures are doable on joint incomes for shared equity, to prop it up.

The way that people could get cheaper houses is if they only sign up to mortgages at 3x main income plus 1x second income for a whole house.

 

Link to comment
Share on other sites

1 hour ago, Democorruptcy said:

I have some money there that matures this year and had never heard anything about it until digging on their website yesterday. It's a big change having to have the money there until maturity, another one obviously aimed at deterring savers. The NS&I CEO since 2017 is Ian Ackerley ex-director of investments at Barclays.

I presume when people get their maturity info this change will be well highlighted. I like to think I would have noticed instead of just looking at the new rate! Every cloud.... might mean a few houses SSTC might go back on the market when the buyers cannot get to their funds!

Thing is the rates are so derisory,you're not saying goodbye to much.

Got to laugh at bit in bold.He's doing his work.¬¬

https://en.wikipedia.org/wiki/National_Savings_and_Investments

 

Role

NS&I manages around £150 billion in savings.[6] Funds from NS&I have historically been a relatively cheap source of government borrowing. NS&I sets interest rates both to attract savers and provide low-cost finance for the government, and 100% of any individual's savings are guaranteed by HM Treasury; rules are in place to ensure that it does not offer market-leading products that would stifle competition.[7]

 

Link to comment
Share on other sites

21 minutes ago, Democorruptcy said:

You aren't still looking at single income?

Those figures are doable on joint incomes for shared equity, to prop it up.

The way that people could get cheaper houses is if they only sign up to mortgages at 3x main income plus 1x second income for a whole house.

 

I always look at single income.Only way to definitively measure HPI with reference to salaries to allow for direct comparison.Otherwise we're taking guesses at hosuehold formation in terms age/friends buying together/kids/part time.Lot of hosuehold formation factors change over time for a variety of reasons.

Using single income figures and comparing with average purcahse price excludes factors such as IR's which can be gained.

But I do take your point.People could stretch themselves and buy together with IR's where they are.But that isn't my point.

Household income figures may be available from the ONS and that would offer a worthwhile comparison as it'd be based on HMRC data

Link to comment
Share on other sites

@Democorruptcy

ONS household income report.

Thinking about it,this hosuehold data might include friends flatting which would again distort the ratio's.

I've had a flick through.I know the ONS publish hosuehiold income data,but I'd need to see the specifics to see if it was viable for my needs.

https://www.ons.gov.uk/peoplepopulationandcommunity/wellbeing/bulletins/personalandeconomicwellbeingintheuk/november2019

 

Link to comment
Share on other sites

40 minutes ago, Democorruptcy said:

Since the Tories started HTB in 2013 as part of the coalition formed in 2010, they have won 3 elections and the last one with an even larger majority.

you're an aexpereinced politcal gambler.Don't try that oneB|.Labour lsot the election.The Tory vote went up 1.3% or something equally shite and that was with Farage letting huge chunks of the country down.

Brexit party beat the Tories in Barnsley ffs.....

Agreed though on your point re HTB/FLS/ZIRP/QE.Tory policy is to protect Worcesterwoman from neg equity

Link to comment
Share on other sites

16 hours ago, TheCountOfNowhere said:

It stopped in 2005 in large parts of the country. It collapsed in 2008.

It restarted in 2012ish in the south. The North is still lucky to be at 2003/4ish  prices.  All in all it is still down in real terms and this is with rates a 0.bugger all and HTB/FLS. 

Not to mention prime London down 20%+ in real terms in the, last 3 years 

Asking prices, driven by the South, now down 7% in 18 months. 

House prices have not gone up in a straight line since 2005, if you didn't buy before 2000 or in 2009 then you missed those boats but unless you cash out its a paper profit. Plenty people have lost on property, a friend of mine went all in on London property 3 tears ago... I found out at Christmas his could not lose gamble has sent him back several years. He 'didn't lose much'. He was acting like Billy Big baws so I'm glad he's learned a lesson. How many more in London are facing losses that they have not yet been forced to take? 

It's all about your personal circumstance, although mine is, given the area I am in, the, prices are crazy. Makes no sense to buy. Makes more sense to save, invest, retire abroad. 

All you can do is make your choice and position yourself best you can to take advantage of the collapse if/when it comes. 

MMR hammering prices in the South as they are getting realigned to earned money. Asking isnt getting.

Southern employment and wages have dropped off a cliff.

Unless you have a large deposit/ sub 60%LTV, then mortgage SVR are around 4%.

If you need 5+ LTI then you are not getting a mortgage.

Most of the Nprth - at least the various areas I follow - have been stuck at 2004ish prices.

If mortgages rates go up, say, ~6%/8% then theyll go back to late 90s.

Basically, there will be *no* Northern HPI for over 20 years.

Both South n North face a massive demographic lump of property coming to the market over the next 20 years. Already started in alarge number of areas.

Horrendous in the South as the over 50s tend to have been well paid and property owners.

Yes the under 40s tend to much lower paid and renters.

The only way this market can clear is for prices to drop to under 40s earnings - the 80% of the property market has always been under 50s buying houses to live in.

Im still waiting for  the dawning of reality of mass IO BTL to dawn on property owners - its destroyed OO equity as the person buying your house will have been milked by a leverage LL and has no equity.

 was chatting to a EA who ive known for 20 years. Hes basically admitted thats what hes seeing - under 40s have been milked by IO BTL banks, with LL skimming tiny money. No equity , MMR, kids so only 1 income - ~4x that income minus expenses.

BoE needs to push to get all IO loans off regualted banks and into the specialist i.e.expensive finince providers.

 

 

 

 

 

 

 

 

Link to comment
Share on other sites

10 hours ago, Tdog said:

Life has passed a generation of priced out by whilst waiting for sanity to occur, the only solution for that not to happen was to take on absurd levels of debt. But id hazard a guess most priced out couldn't get a big enough loan to buy that overpriced hovel once they were locked in the £1000 + a month to rent a 2/3 bed house.

Hence why the age of women given birth has got so high, and why growing numbers are not bothering to have kids .. when for all the philosophy on offer knocking out a sprog is the only thing we're on this planet to do.

Delayed hosuehold formation is a major issue economically.One of the ironies means that we need more immigration which the priced out get to pay the school bills for.

Surreal.Can't afford kids,but get to pay for other people's.

Link to comment
Share on other sites

1 hour ago, Tdog said:

If you're keeping them for the long term they still look cheap, case of copying DB's laddering if you're buying enough.

Wish i'd bought my Centrica at these prices!

 

53 minutes ago, subutai80 said:

I'm waiting to see how the warm winter effects share price when profits announced.

Thanks guys, yes long term definitely. Very happy with my complete fluke timing - i just didn't have the money to buy them at the time they were higher

Link to comment
Share on other sites

19 hours ago, DurhamBorn said:

Service companies etc.Im in a position where im not really chasing outsized gains,im simply aiming for inflation+ over the next cycle.I dont expect big oil to x times my capital,but i do think they will keep the divis growing faster than inflation,and thats my main aim.I already own some big oil stocks,but not a lot at the moment.A lot of people on this thread have different aims due to age etc.Someone 25 might be chasing higher growth,people like myself who have reached their goals to retire might be after simply preserving their capitals buying power and income from it.

Would you expect the share prices of service companies to follow the oil price more closely than the likes of Shell and BP?

Link to comment
Share on other sites

Talking Monkey
4 hours ago, sancho panza said:

Absolutel;y.we're nearly the same age and I can't believe how long  the madness has gone on for.

I was trying to demonstrate what ordinary folk in Leicester are facing.Average salary circa £25k. Average house price £255k as of Sept 19.I'm not particualrly bothered as we won't be buying anywhere in Liecester but from a societal, demogrpahic and economic point of view (given housing's prevalence as an asset class for the majority of people), this bubble has huge implications.

There's a great interactive chart on the ONS link for average median pay by consituency.Some of the South Eastern light blue consituencies(light blue=low earnings) face even worse issues re buying a home.Stunning the govt let it get like this.

Interesting charts from ONS re salaries

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/bulletins/annualsurveyofhoursandearnings/2019

image.png.36a510e55027eefdb7a44b9fffa52a50.png

image.png.d7bfa64df6b816db7cbf48c427f91e2b.png

image.png.9a5943ff797614c5875699b01024bbe1.png

image.png.9d8886df26323aea99309a0ca44aa066.png

image.png.f4f9bed8a8b94993d75037beb7e79799.png

For things to even normalise in Leicester that implies one hell of a drop in house prices. One of the things DB says is the market punishes the most people, I reckon when it comes it will be brutal 

Link to comment
Share on other sites

Talking Monkey
3 hours ago, spygirl said:

MMR hammering prices in the South as they are getting realigned to earned money. Asking isnt getting.

Southern employment and wages have dropped off a cliff.

Unless you have a large deposit/ sub 60%LTV, then mortgage SVR are around 4%.

If you need 5+ LTI then you are not getting a mortgage.

Most of the Nprth - at least the various areas I follow - have been stuck at 2004ish prices.

If mortgages rates go up, say, ~6%/8% then theyll go back to late 90s.

Basically, there will be *no* Northern HPI for over 20 years.

Both South n North face a massive demographic lump of property coming to the market over the next 20 years. Already started in alarge number of areas.

Horrendous in the South as the over 50s tend to have been well paid and property owners.

Yes the under 40s tend to much lower paid and renters.

The only way this market can clear is for prices to drop to under 40s earnings - the 80% of the property market has always been under 50s buying houses to live in.

Im still waiting for  the dawning of reality of mass IO BTL to dawn on property owners - its destroyed OO equity as the person buying your house will have been milked by a leverage LL and has no equity.

 was chatting to a EA who ive known for 20 years. Hes basically admitted thats what hes seeing - under 40s have been milked by IO BTL banks, with LL skimming tiny money. No equity , MMR, kids so only 1 income - ~4x that income minus expenses.

BoE needs to push to get all IO loans off regualted banks and into the specialist i.e.expensive finince providers.

 

 

 

 

 

 

 

 

SP you reckon with a rate rise Northern house prices would fall back to late 90s prices, kin hell that would be something

Link to comment
Share on other sites

21 minutes ago, Starsend said:

Would you expect the share prices of service companies to follow the oil price more closely than the likes of Shell and BP?

Id expect service companies to outrun oil,but more dangerous.Big oil can pay the bills by slashing capex,service companies struggle.Iv noticed a few chemical companies saying sales are slack of chems used in rigs etc in the US.It could be oil production is topping out there.

Link to comment
Share on other sites

5 minutes ago, Talking Monkey said:

SP you reckon with a rate rise Northern house prices would fall back to late 90s prices, kin hell that would be something

You can get houses in my home town (2 up 2 down terraces) for the same price as 1992.

The nice 3 bed semis where i live are going for 2004 prices.Back then they doubled in price in around 18 months,then never moved again.

I was on a just finished new build site yesterday,its looking crap already and people were paying £140k there for a 3 bed shoe box.One couple said they wanted to get away from the scum,i didnt have the heart to tell them 20% of the houses on the estate were HA and another 15% BTL.There are more social/free rent people on that estate than on the council estate near me (most RTB,only 28% council left)

Link to comment
Share on other sites

Talking Monkey
2 minutes ago, DurhamBorn said:

You can get houses in my home town (2 up 2 down terraces) for the same price as 1992.

The nice 3 bed semis where i live are going for 2004 prices.Back then they doubled in price in around 18 months,then never moved again.

I was on a just finished new build site yesterday,its looking crap already and people were paying £140k there for a 3 bed shoe box.One couple said they wanted to get away from the scum,i didnt have the heart to tell them 20% of the houses on the estate were HA and another 15% BTL.There are more social/free rent people on that estate than on the council estate near me (most RTB,only 28% council left)

It really is horrible the way young families have been cornered into these new build estates with the insane house prices and government schemes that target new builds. A whole generation either priced out or locked into a mega mortgage on a shoe box that will be uninhabitable in 25 years

Link to comment
Share on other sites

18 minutes ago, DurhamBorn said:

You can get houses in my home town (2 up 2 down terraces) for the same price as 1992.

The nice 3 bed semis where i live are going for 2004 prices.Back then they doubled in price in around 18 months,then never moved again.

I was on a just finished new build site yesterday,its looking crap already and people were paying £140k there for a 3 bed shoe box.One couple said they wanted to get away from the scum,i didnt have the heart to tell them 20% of the houses on the estate were HA and another 15% BTL.There are more social/free rent people on that estate than on the council estate near me (most RTB,only 28% council left)

Which will be the same price as it was in 1988, which, when you start adjusting for inflation n whatnot, means prices have never gone up. Ever. Since mass mortgages were created in the 60s/70s.

Its not nominal or real prices you need to look for wit housing, its price to income multiples.

Its not whether Northern prices go back to late 90s - most livable place I monitor are stuck somewhere between 2002/2004. (Id note that prices doubled 99->2003ish - strange, as prudent Brown was in place ...) - its the fact when Southern prices fall, theyll fall like a brick - theres no well paying jobs holding them up.

Southern prices only went up because they went up i.e. there was no job boom or vast wage increases.

To get the boom the South has required insanitiy of IO mortgages - these are mainly a southern thing.

MMR removes that now, putting hard link to wages, which are suffering due to the loss of the FinSec.

 

 

 

 

Link to comment
Share on other sites

25 minutes ago, DurhamBorn said:

You can get houses in my home town (2 up 2 down terraces) for the same price as 1992.

The nice 3 bed semis where i live are going for 2004 prices.Back then they doubled in price in around 18 months,then never moved again.

I was on a just finished new build site yesterday,its looking crap already and people were paying £140k there for a 3 bed shoe box.One couple said they wanted to get away from the scum,i didnt have the heart to tell them 20% of the houses on the estate were HA and another 15% BTL.There are more social/free rent people on that estate than on the council estate near me (most RTB,only 28% council left)

Its fucking stupid, and falls int othe new shiny shiny snobbery.

New builds are v poor built, small and have v poor neighbours.

Any young couple inthe North, employed -even at average wages will, if they get a ~20% deposit (40% theyd be laughing) are actually fucking Kings of the EA and house market  -theres so few buying non new houses that any vaguely sane EA should be offering to go round to the sellers houses and knock an extra 10% of the asking price, just to get some business.

Say 2 x 20k. Or 30k + 20k - thats a max mortgage of between 160-200k, chuck in 20% (30k/40k), house fund of 200-250k - which they should not pay, as most towns show average sale price of ~150k.

 

Lets say 150k mortgage for argument. Fix at 2% for 5 years, 25 year mortgage - £700/m repayment - ~150/week, £75/week each, if you must.

Thats pretty much how much youd pay for rent. HB seems to fix lowest rents @ 400/m.

 

Say, overpay 200/m for the 5 year fix,preparing for when the kids come along/income falls.

Debt will be reduced by an extra 12k off, plus what will be repaid too.

The overpayment and 5 year fix will give a hedge if IR go up, which I think theyll do.

I doubt youll make money of he house - I dont think anyone will for the foreseeable future/next 30 years.

But I dont think theyll lose much.

However theyll have a safe base.

This is for people based in the North only.

I cant think of any advice to offer anyone under 40 in the South - other than leave.

 

 

 

 

 

Link to comment
Share on other sites

On 12/01/2020 at 21:02, Cattle Prod said:

Marcellus and the natural gas bear market, excellent blog post here: 

http://blog.gorozen.com/blog/modeling-the-haynesville-and-marcellus-recoverable-natural-gas-reserves

His models look ok, I don't think he's allowing for rig number declines, but they predicted the older plays pretty well. If the Marcellus tops out in a year or so time, that will certainly mark the end of the US bear market in gas.

Disc: I have a small position now. I'll be watching this closely and will steadily buy f it looks to be playing out. This whole sector is "rubber band" - the commodity itself has spiked 7x from here in recent years. Dyodd - this is the widowmaker trade

Screenshot_20200112-104920_Chrome.jpg

It took a Wolf St piece for me to understand your point in my mind.Echoing your thoughts....Whoever is left standing will do well.How you getting exposure to the commodity CP?

Decl-we have a 0.1% position in EQT from August amongst other FCG/XOP/XLE trades.

https://wolfstreet.com/2020/01/14/eqt-largest-us-natural-gas-producer-takes-1-8-billion-write-down-admits-it-cant-succeed-in-low-price-shale-gas-environment/

The largest natural gas driller in the United States just announced a massive write-down for its assets, offering more evidence that the shale sector faces fundamental problems with profitability.

In a regulatory filing on Monday, Pittsburgh-based EQT took a $1.8 billion impairment for the fourth quarter, as the natural gas market continues to sour.

Although not a household name, EQT is the largest gas producer in the country, and is a giant in the Marcellus shale.

EQT itself admits that it can’t succeed in this environment. “Gas prices are down. It has a big impact, the difference between $2.75 gas and $2.50 gas,” Toby Rice said in December “A lot of this development doesn’t work as well at $2.50 gas.”

“Additionally, EQT’s cash flow metrics compare poorly to other Baa3 rated oil producing companies, despite EQT’s size and scale,” Moody’s concluded

EQT’s share price is down by more than half since last spring, and it is also down by more than 75 percent since 2017.

These problems are obviously much larger than EQT. Range Resources recently slashed its dividend in order to pay off debt, while also taking out another $550 million in new debt in order to pay off maturing debt this year. Meanwhile, Chesapeake Energy, the second largest gas producer, is now trading at pennies on the dollar and faces the prospect of being delisted from the New York Stock Exchange.

EQT’s predicament reflects the broader financial questions that have long plagued the shale industry. Fracking can produce lots of oil and gas, but steep decline rates make profits elusive. If the largest gas producer in the country is struggling, and has a credit rating in junk territory, then something is wrong with the business model.

Link to comment
Share on other sites

Archived

This topic is now archived and is closed to further replies.

  • Recently Browsing   0 members

    • No registered users viewing this page.

×
×
  • Create New...