Momentum, momentum, momentum

Interesting charts, I did a comparison with the real cost of the first house I bought in mid 70s for £17500 and adjusted that forward to today and found that a similar house now cost less than that house then in real terms, and that was before we consider interest rates. So my conclusion is that first time house buyers are in a better position than I was.

There may be considerable regional differences, where I am house prices have more than halved from peak.  Average house price now around £96,000 – £97,000. Average income I believe is £32,000. the norm on lending was at one time 3.5 average income which is £112,000.

Probably an entirely different tale in the South of England and as we all know they need inflation to square that circle.

You want dismal?

Maybe not. But here it is.

http://www.telegraph.co.uk/finance/economics/9501874/Despite-the-crisis-Britons-are-still-spending-like-drunkards.html 

Lotsa stuff in there, non of which offers much promise for a landing hard or soft. Freefall more like.

“In the 10 years before the credit crunch, our household debt rose from 90 per cent of disposable income to more than 160 per cent. It remains above 150 per cent today. A collective failure to grasp the scale of damage still being done to the economy by persistently overstretched consumers is why policy responses have been so ineffective.
“Unrealistic expectations for house prices and incomes,” says Fathom Consulting’s Danny Gabay, a former Bank of England economist, have left us with “zombie households and banks”. Our underlying problem, he concludes, is “excessive” private-sector debt. Yet the message from ministers and retailers is that we need to restore confidence so that shoppers will start spending again.”
And the public debt?
“ the Treasury expects national debt to increase by 40 per cent by 2016, to nearly £1.5 trillion. “Stick with us and your debts will soar” is a hard sell for George Osborne.”
Merv or his successor will be called into the fray to fix that one, Jim.

And here’s a special mention for Richard, who clearly thinks that savers have ridiculous notions of tryng to support themselves into old age.
“It is those over 70 who are most likely to require expensive care. Today, there are 5.3 people of working age to help pay for every citizen who is 70-plus. By 2030, that will have dropped to 3.7. At some point, the seams split.”

There you go, Richard, you have 25% of me to carry on your back. Or not, if my finances work out OK.
But don’t worry, there are lots and lots of old gits expecting you to support them, because they either couldn’t or wouldn’t take responsibility for their lives after leaving the work force. Ah, and one other point, by leaving the workforce, I left one well paid position which was taken over by a younger git with more drive and ambition than I had left.