Graemsay

It strikes me that the worldwide housing boom or bubble has had two negative consequences: The growth in credit and the subsequent implosion of the financial sector is the root cause of the current recession. House prices are unaffordable for those not already on the ladder, particularly in London and the Southeast. The affordability problem isn't going to be fixed by pumping ever more money into the system. A better alternative would be to let the market take its own course, and eventually it would find a level where young people could buy in unassisted. But that would mean a large part of the population are going to get messed up by negative equity, and the banks would be in even more trouble than they already are. The downsides of re-inflating the bubble are really scary. At some point prices are going to fall, and if you hot things up now, it's going to take a wrecking ball to the economy.

I like this proposal by Oof Architects. It's for a dilapidated shack in on Withers Street in Albert Park, which currently looks like this. The property was up for sale recently, with an asking price of around $500K.

If you're looking to get a lot of use out of a suit the I'd suggest you take a look around Perth for an old fashioned tailor's shop. You'll get something that's better made, fits perfectly, and will last longer than anything from a mainstream shop. It could well cost less too. A quick Google search brought up recommendations for Fullin Tailoring and Joseph Anthony Bespoke. That's where I'd start.

Anyone who believes the above doesn't grasp exponential series. The median household income in Sydney is around $80K and the median house price is around $640K. (Approximately, the numbers are easy to work with.) That makes the price to income ratio of around 8. Now take a thirty year time frame, which is roughly when most PiO posters will be looking to retire by. The average Sydney property will now cost $5.1 million, whilst the average household income would be around $225K. That would need the income of perhaps five families to afford comfortably. How about in a century's time? Median household income would be $2.5 million, and the median house price would be $650 million. You'd need eighty families earnings to buy an average home. And after two hundred years, the median house price would be $670 billion, versus an income of around $80 million. You'd need two thousand families to buy one.

No one has articulated a reason why property prices won't fall, except Australia is different. Given the four most expensive words in the English language are this time is different, I don't have a huge amount of confidence in those assertions. My suspicion is that the property market in Australia remains buoyant because of three main reasons: The mining boom, and associated investment kept the country out of recession. As did being tied into the Asian economic cycle, rather than the Atlantic. Higher interest rates in Australia meant an ongoing flow of foreign capital, meaning that the banks weren't starved of credit. Foreign investment has flowed into residential property. If you consider that London has 8.1 million, and has been hugely distorted by £5 billion (about $8 billion), and Australia has 24 million residents and $20 billion, then the per capita figure isn't that different. I don't know what the outcome will be, but I once calculated that Sydney property would have to halve just to reduce the cost of an average house to a level where it just caused mortgage stress to an average household. That suggests it'll correct. But if it does blow out then the likely outcome will be that property prices fall to historically cheap levels. This will likely take down the banks and the economy. It's not going to be a pleasant experience to live through.

Whereabouts is the flat? The market in London is generally up from 2007. It might be worth getting the place revalued and see what it's worth. Trying to sell it with sitting tenants will limit your market to investors, but if it's on a shorthold tenancy then that might not be a problem. I'd suggest talking to your bank and a couple of estate agents first to see if a solution can be found. The banks are keen to avoid foreclosure at the moment due to their somewhat perilous balance sheets, so there might be something they can do to help. If you are going to declare bankruptcy then let your tenants know in advance, otherwise they might be turfed out of their home with minimal notice.

Sounds like a good plan Bellyboo. Good luck, and have fun.:biggrin:

I believe that Sydney is more expensive than London, but if Bellyboo would be earning (say) $100K there, versus £40K in London then it might put a different spin on things.

Flag of Convenience, I actually agree with your sentiments. I really like London, and think that the experience would be worthwhile as an adventure, if that's what Bellyboo is after, but it's a sodding expensive place to live. I've got a friend who's in the top 5%, possibly top 1% of earners and he can't afford to buy a house in a reasonable area that's big enough to accommodate his wife and three kids. If she's looking at a better income in Sydney then it might be worth heading there.

I've spent the last couple of years living in London. I like the place, but it's horrendously expensive. The biggest cost of being in London is accommodation. A flat share in a decent place is likely to be £600 or £700 a month, possibly with bills and council tax (around £100) on top, whereas a one bedroom flat could be twice that. Travel is also expensive, with a monthly pass within the city being £150 to £200, and much, much more if you live outside and commute in. Day to day groceries are a bit more than in Holland, but it's been a few years since I lived out there. All three of these have risen sharply in price in recent years. According to the Salary Calculator, take home on £35K to £40K will be between £2200 and £2500 a month, so you can budget from there. The upside is that there are better career opportunities there, it's the cultural epicentre of the UK, and its sheer size supports niches that smaller cities cannot sustain. So if you're into a particular style of music, or like obscure brands in shops then it's the place to be. I think that it really depends on what you want to do. If you want to reboot your life and settle somewhere for the long term, then London might not be a great option financially. Furthermore the British economy is pretty shot right now, and it's likely to remain so for another four or five years. If you're looking for an experience, then a stint in London might not be a bad idea. Find yourself a six to twelve month contract and somewhere to stay, and head back to Sydney in the second half of next year. I'd also suggest looking at some of the other cities in the UK. Manchester is smaller, but still vibrant, and significantly cheaper. (You can rent a two bedroom flat for the cost of a room in a shared house.) Edinburgh is lovely, though it can be pricey. Brighton used to be really special a decade ago, but seems a bit more mainstream now.

I've done a quick Google, and the main applicant (that'd be you) has to be in the first group that enters Australia. Could you go with your over half, head back alone, and then follow him out there with the children?

Familybonesinoz, I'm really sorry to hear of your situation, and I hope that you can get some sort of resolution in the near future. I'd suggest speaking to your local Citizens Advice Bureau as a first point of call. If they can't help, then they'll point you in the right direction. But I'd reiterate the point that any voluntary agreement is likely to be a lot easier if you have to return. Also, go and speak to your doctor. You sound stressed and depressed, and being referred to a counselling service could be of benefit. Good luck with whatever you decide.

Purplethunder, congratulations on your other half's job offer. Ignoring the financial aspect, it's worth taking as it's the sort of opportunity you're likely to regret not taking. I'd agree with Kel1 about not dipping into the Melbourne housing market just yet. Australian property strikes me as a bubble in search of a pin. However, I'd suggest thinking about selling your house in the UK. Zoopla reckons Wokingham is only down 5% or 6% since the market's peak in 2007, and if you parked your money in a bank account whilst overseas you'd be locking in any profits. I can't see prices rising substantially in the next year or two, and at some point houses are going to have to get substantially cheaper because a family home in the Southeast is now unaffordable. It'd also be less tricky then renting a property out from the other side of the world, and if you decided to stay Down Under permanently then it'd make life much easier.

I don't know the scale of tax avoidance by companies, but £50 to £100 billion is a seriously big chunk of change. And, as you say, it would allow for rebalancing the burden away from individuals. I'm a nasty capitalist compared to some people in this thread, but I'd agree that the shipping of multinational companies' profits to tax havens isn't ideal. In particular, avoiding paying corporation tax gives them a competitive advantage against more local competition. I'd add various entirely legal avoidance measures in the UK, such as the differential between capital gains and income tax, and loopholes such as for non-domiciled residents. And I'd also change the culture of HMRC making cushy deals that involve individuals and corporations paying less tax.

UK GDP is around £1.5 trillion, and government spending is nearly £700 billion. The deficit, the difference between what the government is taking in tax and what it's spending is about 8% of GDP, or £120 billion. In order to balance the budget the government would either have to cut the amount spent by between 15% and 20%, or increase taxes to the sorts of levels seen in the Nordic countries. As for doctors, they're threatening to strike over very generous final salary pension schemes. I don't know all the details, but there's talk of having to work until they're 68, and contribute more for lower benefits. The fact is that the liabilities of the entire public sector in retirement are growing due to increasing lifespans, whilst there's a shrinking ratio of workers to retirees, and this means that the whole system will become unaffordable in the long run. It's very easy for groups to advocate more public spending, particularly when they're beneficiaries, but there's a cost that needs to be borne. Those of us in the private sector will get the downside and little or none of the upside. I'm in agreement with thombatt that they need to show us where it'll be funded from.

I spent a couple of years in Delft, and despite being around 6'3" / 1.90 metres felt rather short.

Aren't you Dutch? I thought that everyone there was at least seven feet tall. :biggrin:

GeorgeD, in the event that Scotland becomes independent then my understanding was that Scottish nationality would be extended to anyone who was either born there, or lived there at the point of separation. But I wouldn't be surprised if anyone who holds a British passport would be able to apply. The SNP's position is that a newly independent Scotland will automatically be an EU member, but this isn't necessarily the case. José Barroso, president of the European Commission, has said that an application for membership would need to be made. His position is intended to deter other separatist regions, such as the Basque Country or Catalonia, but I suspect that in practice Scotland would either immediately become a member, or apply as an accession state. But once EU membership had been achieved, Scots would have the same rights to free movement as they do now. In fact, I wouldn't be surprised if that is granted immediately because otherwise a number of expats would suddenly have visa issues! Actually, given threats by the British government to withdraw from the EU, I suspect that it might be worth considering Scottish nationality in the event of independence to retain the rights to live and work across Europe. I don't know how things are going to pan out, but it's going to be interesting to see how things develop. My suspicion is that we won't see an independent Scotland, but we'll see a looser political settlement than we do now. Sovereignty aside, which is in itself a huge deal, there doesn't seem to be a big difference between the SNP's plans post-independence and Devo Max.

I use Oanda for my FX needs. They tend to offer better exchange rates than most bureaux or banks, and that includes the like of Moneycorp. XE is another provider that I've used in the past. Neither are covered or regulated by the FSA, so if something happens you might be out of luck in getting money back. I don't trust either as much as I would a retail bank, but haven't had any problems with them to date.

The Economist's analysis of independence can be found here. It's worth a read. http://www.economist.com/node/21552564 Their number crunching leads them to conclude that an independent Scotland would be in a similar sort of position as it is today, but as a smaller country its position could be a bit more precarious and very dependent on oil revenues. So not dependent on the rest of the UK, but not incredibly wealthy either. If you want some hard figures on oil revenue then this document (via the Guardian) has the details. http://image.guardian.co.uk/sys-files/Guardian/documents/2012/03/02/HypotheticalScottishSharesofRevenues.doc From the figures in the report, roughly 80% to 90% of revenue would go to Scotland in a hypothetical split. Over the last few years it's been towards the top of that range. Production is falling off, but the price per barrel is rising.

Have a good flight Missus B, and I'm glad the luggage allowance worked out for you. :biggrin:

I was up in Glasgow this summer for the first time in a long time, and found that a lot of the centre is scruffy these days. It hasn't had the same sort of regeneration programme that Birmingham and Manchester have. I didn't make it up into the West End, so I might have missed the better parts. That said, it's got some absolutely fantastic buildings, and the quality of the architecture is ahead of its southern rivals. It also reminds me of a smaller scale version of Melbourne. I'd agree that Manchester has a worse reputation for violent crime. I'd probably agree about Birmingham, though the centre has changed a lot from the late nineties when I was there. They've flattened the old Bull Ring for a start.

Incidentally, Scottish and European students get free tuition in Scotland, whereas students from the remainder of the UK have to pay fees. I'm surprised that there hasn't been a massive outcry about this.

I've heard that whether Scotland is a net contributor or beneficiary to the UK tax system depends on the price of oil. My guess is that it could get along just fine as an independent country, but I think that it would be more vulnerable to the markets than the UK, and probably wouldn't have the same AAA bond rating that the UK has. I do believe that Salmond is overstating Scotland's relative wealth and potential for growth. Whilst Edinburgh is a lovely city, Glasgow looks very run down, particularly when compared to Manchester or Birmingham. The choice of the date, the proposed form of the question ("Do you agree that..."), and the extension of the franchise to 16 and 17 year olds all seem to be intended to load the vote in favour of independence. I'd rather see a fairer vote, and so disagree with the SNP's choices. The third option for Devo Max, now excised, struck me as what Salmond is really after, and also offered a consolation prize. My preferred option would be a single, two option question written in a neutral language, held sooner rather than later, and with the standard electorate. That would be a more honest test of public opinion, and would reduce the period of uncertainty over whether or not there will be independence. Looking at opinion polls, I'd expect Scotland to vote to remain a part of the union, though I suspect that Devo Max will be on the agenda in a year or two's time. Labour and the Lib Dems are in favour, but there's also a bunch of constitutional issues that need to be sorted out on both sides of the border.

On a serious note, I agree with Petals. Get in touch with the electricity company and explain that your bill has tripled. It could be that the smart meter is over-reading, so ask them to compare usage before and after. If there's a fault then it might be resolvable in your favour. But if you're running electric for heating and water instead of the wood stove that might explain the rise.