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The biggest problem with rising house prices is they're a complete illusion when it comes to making people richer. A house which goes up £100k in a year is not money which can be spent, it's just a number on a computer screen, which deludes people into thinking they're wealthier when in fact they have no more actual cash in their pocket than they had a year ago.
Sure, they can borrow off the back of it but that's more debt, not wealth...
It'll come crashing to a halt at some point. You can't spend money you don't actually have, forever. The banks found this out in 2008 and UK house prices are only being kept up by government subsidy...
It'll be interesting to see who all the BTLers blame when they lose their shirts...
brooess - Member
The biggest problem with rising house prices is they're a complete illusion when it comes to making people richer.
Not true, the "wealth effect" associated with rising prices has a direct impact on consumption/aggregate demand and national income.
A house which goes up £100k in a year is not money which can be spent, it's just a number on a computer screen, which deludes people into thinking they're wealthier when in fact they have no more actual cash in their pocket than they had a year ago.
Yes and no - but things would be better if people talked about the net asset value (ie, minus liabilities) than the value of the house they own!
@brooess - of course its real money, you downsize, sell up and move away to retire somewhere nice and cheaper. Alternatively you leave the money to your kids or charity. House prices are where they are as we have huge demand with a growing, ageing population and more divorced people living alone. I'm in my 50's as I've been reading about excessive property prices since I was in my early 20's. The financial markets crash has shown property is a great investment, property has outperformed most other asset classes and it's subject to the smoke and mirrors nonsense like happened with Madof. You can see it, feel it, touch and rent it out for an inflation "linked" income stream.
On the original point I would think Surrey is a good place to collect money for foodbanks as its an affluent county so people have more money to give. Where its spent / needed is a different issue, plenty of parts of London (in Surrey) would benefit.
[i] Also Surrey has some decent vineyards.[/i]
I must say being Surrey born and bred I wouldn't have thought of vineyards as being high on the list of Surrey attributes. As Jambalaya says, living here, you get one 'get out of jail card' free. You can sell up, move further South and cash in the money. Houses are way cheaper only a few miles out. Of course you can never move back, but you wouldn't want to if you had retired.
The biggest problem with rising house prices is they're a complete illusion when it comes to making people richer. A house which goes up £100k in a year is not money which can be spent, it's just a number on a computer screen, which deludes people into thinking they're wealthier when in fact they have no more actual cash in their pocket than they had a year ago.
Depends what you do with it.
We sold our '2 up-2 down' terrace in the South East for an inflated amount and took that money to Wales where it has gone much further and bought us the kind of place we'd have never been able to afford in the South.
I agree with your sentiment if you're talking about people who struggle to make their mortgage payments and just sit on a house that is supposedly 'an investment' but do nothing with it....ours was always something to get halfway through paying off and then to use as a deposit somewhere cheaper in the UK, we're mid to late 30s and now have less than 75k of mortgage left on a house we're not going to move from....work until i'm 70?!...get stuffed, i'll be mortgage free and semi retired at 50....i'll leave the rat race to the sheep who cant seem to see a world beyond the M25.
re. house prices, as above people have been predicting the mother of crashes for decades...still hasnt happened. We live in a tiny island, with the population concentrated in certain areas and restrictive planning laws preventing building in the countryside that we do have....its supply and demand in its most basic form.
Demand is outstripping supply so prices stay as they are and often move up...artificial?...maybe but unless a government goes on a massive house building spree it will remain like this for some time yet.
Buy a house, pay a load of it off...now is as good a time as any with interest rates virtually non existent...then sell it and move somewhere cheaper, relax and enjoy semi retirement about 20 years sooner than you'd thought possible.
There was a good interview with Adair Turner on the issue of housing debt and the recovery in the Economist...
http://www.economist.com/multimedia
Like @deviant says good friends of our have sold their house in Hertforshire and retired early to Pembrokeshire. You can take a view on rising prices and simply get a mortgage and then sell up and retire whilst staying in Surrey, just like @Rockape says for example sell in family house in a Surrey town buy small 2/3 bed cottage in the Surrey Hills with the biking/walking trails on your doorstep.
if Blair is smart he'll only take the money when he's resident offshore sometime in the future
A cell block near The Hague is offshore.
http://www.icc-cpi.int/en_menus/icc/structure%20of%20the%20court/detention/Pages/detention.aspx
@OP, thanks, but salt and vinegar next time please.
& I trust you selflessly injected a few quid into our local economy at Cobbett's?