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chronyx

When the money flows out of property

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Where do you all think it will flow into?

Will the amount of debt and inflation involved in the property market simply cause the funny money to vanish into the ether?

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33 minutes ago, chronyx said:

Where do you all think it will flow into?

Will the amount of debt and inflation involved in the property market simply cause the funny money to vanish into the ether?

Money will not flow out of property. It will be passed down as rental property. I have seen many examples of gifted property coming up for rent. In fact i am renting one at the moment.

Why should it flow out? Its a one way bet, up. 

It wont change until rates rise and they wont in our lifetimes.

 

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1 minute ago, Frank Hovis said:

I think your latter one.  Money can't easily get out of property so once the tide turns you're into fire sales or people just "renting it out" because they can't get what they paid for it or think it's worth.  After a few years of being an accidental landlord people will want out and will accept the crystallistaion of their losses.  The money wil just go down the black hole of negative equity and Joe Normal will cease their delusion that they are a canny property developer / landlord.

I bought the flat I was renting off my landlady back in the 90s, she'd been trying to sell it for years and actually told me this when I moved in and regularly reminded me.  After a couple of years I bought it as the price falls had meant that the mortgage was half of the rent.

People have been too indoctrinated by the 20 year bullish market on property and are back to the "property only ever goes up" mantra.  It always takes years to shift that midset but it does happen eventually.

My first flat bought for 72 k, sold for 50. A 30 percent drop.  Property can and does drop in price but has not done so since the early 90s.

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Just now, One percent said:

My first flat bought for 72 k, sold for 50. A 30 percent drop.  Property can and does drop in price but has not done so since the early 90s.

That's the thing, people forget their history.  I remember 88 - 96 very well indeed.

I was at a cocktail party with some city worker in the early 90s and they were bemoaning how much of a liability their Islington house was, dropping in value and mortgage rates going up, yet no way out of owning it because selling it woudln't pay off the mortgage by a long way.

To say over the long term that property only ever goes up is true but is also a truism, as there is something called inflation.

Over the long term the price of copper, apples, beer only ever goes up.  But I don't sit there smugly thinking what a financial genius I am because I have a bowl full of apples.

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8 minutes ago, Frank Hovis said:

That's the thing, people forget their history.  I remember 88 - 96 very well indeed.

I was at a cocktail party with some city worker in the early 90s and they were bemoaning how much of a liability their Islington house was, dropping in value and mortgage rates going up, yet no way out of owning it because selling it woudln't pay off the mortgage by a long way.

To say over the long term that property only ever goes up is true but is also a truism, as there is something called inflation.

Over the long term the price of copper, apples, beer only ever goes up.  But I don't sit there smugly thinking what a financial genius I am because I have a bowl full of apples.

Nice analogy frank.  Yes, they all think they are financial wizards because the price of their property has gone up.  Until it hasn't. I remember that dual issue of rising interest rates 17 percent I think for a couple of days) and dropping prices.  Once it began, the downward spiral went relatively quickly.  It was like a game of musical chairs and the music had stopped. 

Iirc, it was the end of miras for two people and the erm? Where the pound was linked to the euro that brought it about.  There could easily be similar trigger events today, especially as housing is so out of sync with wages. 

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36 minutes ago, One percent said:

My first flat bought for 72 k, sold for 50. A 30 percent drop.  Property can and does drop in price but has not done so since the early 90s.

But there is one crucial difference. We had interest rates back in the 90s.

TPTB have figured out that to impoverish the poor and and the working, just get rid of interest rates.

Edited by Green Devil

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13 minutes ago, Green Devil said:

But there is one crucial difference. We had interest rates back in the 90s.

TPTB have figured out that to impoverish the poor and and the working, just get rid of interest rates.

Until they can't. 

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19 hours ago, One percent said:

My first flat bought for 72 k, sold for 50. A 30 percent drop.  Property can and does drop in price but has not done so since the early 90s.

In fairness, there have been drops - even in London. A small one in around 2005 and another around 2009.  Sadly, not enough to make a meaningful difference to sentiment or prices. 

Elsewhere, there have been some massive drops e.g. Northern Ireland. Some other areas have been stagnant at best for years. About five years ago, I was lucky to find a rare combination of an unloved house with a few problems and a distressed seller in a flat market - and got nearly 40% off their original asking price they first listed it at 6 months earlier.  Cheapest house in the street for nearly a decade and gratifyingly several other houses sold for more realistic prices afterwards enabling younger people to move into it. 

In answer to OP's original question, whatever the media/powers that be are pumping next. It will have to be easy for the average fool in the street to understand it and get the $ signs flashing in their eyes. 

Edited by SCC

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Yep, I don't see money rotating out of property. For as long as central banks and govt props can keep global housing costs high, it's the perfect asset class to ensure the ever expanding debt levels that the financial system depends on. When central banks and govt ability to keep the thing afloat eventually comes to an end, the money in property will be about as tangible as the air in a burst balloon.

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4 minutes ago, Fully Detached said:

. When central banks and govt ability to keep the thing afloat eventually comes to an end, the money in property will be about as tangible as the air in a burst balloon.

That's a fantastic simile!

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31 minutes ago, Fully Detached said:

Yep, I don't see money rotating out of property. For as long as central banks and govt props can keep global housing costs high, it's the perfect asset class to ensure the ever expanding debt levels that the financial system depends on. When central banks and govt ability to keep the thing afloat eventually comes to an end, the money in property will be about as tangible as the air in a burst balloon.

They have had many chances to pop the balloon. Yet it wont happen if they have their own way.

It will unravel when the public move their money out of banks and fiat into bitcoin, this would cause the mother of all crashes.

I can see hyper inflation occuring in fiat and bitcoin going to 1million.

This is looking increasingly likely as bitcoin rockets, and house prices get to unrealistic levels, where is all that money going to go? NIRP might be the final straw for fiat.

Edited by Green Devil

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2 hours ago, Green Devil said:

They have had many chances to pop the balloon. Yet it wont happen if they have their own way.

It will unravel when the public move their money out of banks and fiat into bitcoin, this would cause the mother of all crashes.

I can see hyper inflation occuring in fiat and bitcoin going to 1million.

This is looking increasingly likely as bitcoin rockets, and house prices get to unrealistic levels, where is all that money going to go? NIRP might be the final straw for fiat.

I agree that it will only happen when the public lose confidence in fiat, but I'm personally not sure about bitcoin. When people lose confidence in fiat, I think they're going to want something more tangible than a digital currency that we already know can be stolen e.g. Mt Gox, and is not proven to be beyond the reach of the NSA and others. I have a feeling bitcoin is going to bite a few people on the arse yet, but I'm quite prepared to be wrong.

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2 hours ago, Green Devil said:

They have had many chances to pop the balloon. Yet it wont happen if they have their own way.

It will unravel when the public move their money out of banks and fiat into bitcoin, this would cause the mother of all crashes.

I can see hyper inflation occuring in fiat and bitcoin going to 1million.

This is looking increasingly likely as bitcoin rockets, and house prices get to unrealistic levels, where is all that money going to go? NIRP might be the final straw for fiat.

Surely the most likely scenario is that the BoE, as it always does, grudgingly follows US rates upwards so that mortgages become more expensive and the link with wages slowly begins to reassert itself through simple mortgage affordability.  This stops the rises and staganation / slow falls become the order of the day.

Long long period of slow decline in HP IMHO after the twenty year bull market because it will take ten years for people to accept that nobody will ever pay a million for their million pound house as it is not a million pound house except in a 2017 estate agent's brochure.

I don't see fiat collapsing, the gold bugs were creaming themselves about this being about to happen when gold hit $1900.  Well it's not there any more.

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4 hours ago, Frank Hovis said:

Surely the most likely scenario is that the BoE, as it always does, grudgingly follows US rates upwards so that mortgages become more expensive and the link with wages slowly begins to reassert itself through simple mortgage affordability.  This stops the rises and staganation / slow falls become the order of the day.

Long long period of slow decline in HP IMHO after the twenty year bull market because it will take ten years for people to accept that nobody will ever pay a million for their million pound house as it is not a million pound house except in a 2017 estate agent's brochure.

I don't see fiat collapsing, the gold bugs were creaming themselves about this being about to happen when gold hit $1900.  Well it's not there any more.

Gold is different. Its controlked by the banksters. And we know their agenda. Bitcoin isnt. You can buy 1000 coins and put 2mill on a zip drive. Totally out of the system. Its like gold but you xan keep it in your picket with zero counterparty rusk which makes it attractive.

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Property can be phenomenally illiquid - long transaction times, loads of legals and potential ruts in the road by which time a shift in the market can still encourage the buyer to pull out. Back in 2008ish heard of one estate agent (single branch agent) that did not have a completed sale for 6 months. Under those circumstances any positive money flow out of property can be very slim indeed especially with falling prices.

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1 hour ago, onlyme said:

Property can be phenomenally illiquid - long transaction times, loads of legals and potential ruts in the road by which time a shift in the market can still encourage the buyer to pull out. Back in 2008ish heard of one estate agent (single branch agent) that did not have a completed sale for 6 months. Under those circumstances any positive money flow out of property can be very slim indeed especially with falling prices.

Property should be considered a home not an investment. Its only an investment because cash is worth shit. You have Mark Carney Super Dumb Fuck Bankster and the various other central banker puppets to blame for that with Zero Interest Rates.

Once money goes off grid -ie gold or bitcoin, then the bankers are toast. 

Once you own your own home my advice would be to stick it all off grid. Wait for the big crash. Then stick your zip drive in your computer, look under your floorboards, and hey presto happy fucking days, system 0- dosbod 1

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When?

From my cursory research it already is, within the next year it'll turn into a major flow. Those in the know must be worried by the record low volumes and record high asking prices - where can it lead I wonder?

I'm going to disagree on Bitcoin. I can't see it being the main cryptocurrency for long, it's dominance is already down to 47%. Another cryptocurrency will take its place within a few years.

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5 hours ago, spunko2010 said:

I'm going to disagree on Bitcoin. I can't see it being the main cryptocurrency for long, it's dominance is already down to 47%. Another cryptocurrency will take its place within a few years.

There will always be a market for a digital gold IMO. Transaction times are of less important with respect to preservation of wealth. There are other alt coins to fit that market. Just gotta find the right one and load the boat.

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On 28/05/2017 at 10:08, One percent said:

My first flat bought for 72 k, sold for 50. A 30 percent drop.  Property can and does drop in price but has not done so since the early 90s.

You were born up-North, and yet you paid seventy-two thousand Pounds for a friggin' flat...?

And then you managed to con some greater-fool into paying fifty-thousand for something worth less than fifteen...?

Hang your head in shame...

 

XYY

 

 

 

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1 hour ago, The XYY Man said:

You were born up-North, and yet you paid seventy-two thousand Pounds for a friggin' flat...?

And then you managed to con some greater-fool into paying fifty-thousand for something worth less than fifteen...?

Hang your head in shame...

 

XYY

 

 

 

Just wait until I sell my house for gazillions. 

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