Growing evidence that the downturn is upon us....
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I think your main concern should not necessarily be the housing market but what's causing the underlying problems. For most of your life and for all of your "conscious life", you've lived in an era of cheap money. All this cheap money has led to extraordinary growth in the value of assets in all classes. That era has now come to an end.
These are the questions that I would be trying to answer if I were in your shoes:
How will this affect student pilots ability to secure funding for their training? How will this affect the flight training industry?
How will this affect the ability of the paying punter to fly for leisure or businesses to send employees abroad for meetings?
And the demand for your skills as a new pilot? How will this affect the training costs for airlines? How will it affect your ability to pay back that loan? What interest rate can you expect to be paying?
Remember that the banks don't want you to pay back the principal, they just want you to keep paying the interest as long as possible, your entire life if possible.
These are the questions that I would be trying to answer if I were in your shoes:
How will this affect student pilots ability to secure funding for their training? How will this affect the flight training industry?
How will this affect the ability of the paying punter to fly for leisure or businesses to send employees abroad for meetings?
And the demand for your skills as a new pilot? How will this affect the training costs for airlines? How will it affect your ability to pay back that loan? What interest rate can you expect to be paying?
Remember that the banks don't want you to pay back the principal, they just want you to keep paying the interest as long as possible, your entire life if possible.
Last edited by v6g; 7th Apr 2008 at 02:15.
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Some good info there.
I suppose it depends on the market price for pilots over the next 30 years. Eventually, there will be one pilot, entrusted to watch the computer, but that's around 15-20 years away. So aviation is still a good industry to be employed in - although there have been better times.
Funding for the qualification is a separate issue. If the property is in a nil or negative equity situation, the banks won't lend on the property alone. But they still have you to lend on. In other words, if you go to the bank and explain what the loan is for, the bank may well feel that it's an acceptable risk (although they'll still want that second mortgage over the house, negative equity or otherwise.)
I suppose it depends on the market price for pilots over the next 30 years. Eventually, there will be one pilot, entrusted to watch the computer, but that's around 15-20 years away. So aviation is still a good industry to be employed in - although there have been better times.
Funding for the qualification is a separate issue. If the property is in a nil or negative equity situation, the banks won't lend on the property alone. But they still have you to lend on. In other words, if you go to the bank and explain what the loan is for, the bank may well feel that it's an acceptable risk (although they'll still want that second mortgage over the house, negative equity or otherwise.)
Above shows house prices related to wages. It is used alongside this article from Roger Bootle in Her Majestys Daily Telegraph today:
http://www.telegraph.co.uk/money/mai...07/ccom107.xml
Below shows house prices with retail inflation adjusted for so is therefore often referred to as 'Real Prices'
You can clearly see that we are very much at the top of a very steep peak in the graphs. If history is any guide, and it usually is, prices will now fall to a point below the long term mean as it overcorrects. In the last house price crash of the early 1990s we saw a peak in July 1989 when the average house price hit £113,869. By Oct 1995 prices were £71,725.
The correction will be faster this time in my view. More perfect information due to the internet will counter the spin of the Vested Interests of the mortgage/construction/sales industry. More importantly the role of Buy-To-Let mortgages will prove disasterous. At the start of 1999 in the UK there were 58,800 BTL mortgages in existence.
The numbers rose in a sharp straight line up to the summer of last year when there were 938,500 such mortgages in the UK. 58 to 938 is one heck of a fundamental market shift. As these 'portfolios' of depreciating assets, assembled by amateurs with borrowed money, enters negative equity you will see them being offloaded or repossessed at a phenomenal rate.
This will be a turbocharged crash.
I expect the impact on the UK airline sectors to be worse than in the last recession of the 1990's as its bigger now, consists of more discretionary travel and lacks some of the protectionist rules that were in place 20 years ago.
As FTO's go bust the others will cut their prices to the bone to survive.
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Price correction
I have to say that I find WWW's gloom & doom a bit hard to take and wish if I my post is not removed for disagreeing with a moderator to offer another view.
Hours prices particlarly in the UK have been over-inflated for years, this is due to the actions of estate agents, morgage company's and the british obssesion with making money from your house.
The fact of the matter is that it matters not one iota how much your house is worth if you don't intend to sell it. In fact for most people a downward price correction is a good thing after all less Stamp duty (govermment house buying tax), lower estate agent charges and lower morgage charges.
It is unfortunare if you have a just got a house at top of the market prices that is now worth less than you owe for it but remember the rest of the market has fallen so you will pay less for your next house.
The real victims of lower house prices are the Mr 5%'s YES the leaches you have to use to buy and sell houses that work the percentage game, these people have driven houses out of the grasp of first time buyers for there own proffit.
What we need is lower house prices this will eventualy result in lower morgage payments and more free spending money, it will free the british from a 25 year enslavment to the morgage company's.
I have no doubt that the aviation market will slow and that getting a job might be a bit harder for about 18 months but one answer to all this is to go down the modular route to trainning and save your selfs £20,000 in trainning costs over integrated route. After all you get the same licence at the end of the course and £20,000 is a lot to pay for for a bit of help getting a job.
The doom & gloomers on this forum are busy putting peope off spending money on trainning so the first to be hit will be the expensive integrated courses so in 18 months when the market picks up the supply of these people will dry up quickly and the airlines will drop the obssesion with "integrated" pilots like a hot potato when they can't fill the seats on the flight deck.
Hours prices particlarly in the UK have been over-inflated for years, this is due to the actions of estate agents, morgage company's and the british obssesion with making money from your house.
The fact of the matter is that it matters not one iota how much your house is worth if you don't intend to sell it. In fact for most people a downward price correction is a good thing after all less Stamp duty (govermment house buying tax), lower estate agent charges and lower morgage charges.
It is unfortunare if you have a just got a house at top of the market prices that is now worth less than you owe for it but remember the rest of the market has fallen so you will pay less for your next house.
The real victims of lower house prices are the Mr 5%'s YES the leaches you have to use to buy and sell houses that work the percentage game, these people have driven houses out of the grasp of first time buyers for there own proffit.
What we need is lower house prices this will eventualy result in lower morgage payments and more free spending money, it will free the british from a 25 year enslavment to the morgage company's.
I have no doubt that the aviation market will slow and that getting a job might be a bit harder for about 18 months but one answer to all this is to go down the modular route to trainning and save your selfs £20,000 in trainning costs over integrated route. After all you get the same licence at the end of the course and £20,000 is a lot to pay for for a bit of help getting a job.
The doom & gloomers on this forum are busy putting peope off spending money on trainning so the first to be hit will be the expensive integrated courses so in 18 months when the market picks up the supply of these people will dry up quickly and the airlines will drop the obssesion with "integrated" pilots like a hot potato when they can't fill the seats on the flight deck.
Since when do I remove posts that offer an alternative opinion to my own?
You have to understand that millions of people in the UK for many years now have used rising house equity to clear their annual 0% interest credit card debts. With this option now removed they face crippling costs leading to bankruptcy OR heavily changing their spending habits. Either is enough to curtail growth to an extent where a recession is entered.
The market is defined at the margin. With marginal falls in prices the market is going into reverse with estate agents desperately applying pressure to sellers to lower prices before the agency goes bust.
Take a look at http://www.propertysnake.co.uk/site/search and check your postcode. In mine there are 45 properties who have reduced their asking prices in the last 7 days alone..
You don't like my doom and gloom views. OK. But is that sticking your head in the sand, shooting the messenger or just a plain refusal to stare facts in the face? In aviation we always consider the risks and the worst case likely scenario. A House Price Crash and Recession firmly fits into the likely range of outcomes.
A V1 cut is unlikely - but we practice it every 6 months and brief it on every departure..
WWW
You have to understand that millions of people in the UK for many years now have used rising house equity to clear their annual 0% interest credit card debts. With this option now removed they face crippling costs leading to bankruptcy OR heavily changing their spending habits. Either is enough to curtail growth to an extent where a recession is entered.
The market is defined at the margin. With marginal falls in prices the market is going into reverse with estate agents desperately applying pressure to sellers to lower prices before the agency goes bust.
Take a look at http://www.propertysnake.co.uk/site/search and check your postcode. In mine there are 45 properties who have reduced their asking prices in the last 7 days alone..
You don't like my doom and gloom views. OK. But is that sticking your head in the sand, shooting the messenger or just a plain refusal to stare facts in the face? In aviation we always consider the risks and the worst case likely scenario. A House Price Crash and Recession firmly fits into the likely range of outcomes.
A V1 cut is unlikely - but we practice it every 6 months and brief it on every departure..
WWW
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I agree that we have to look at all the likely outcomes of the current situation but you are taking a very pesamisitc view, in fact in aviation terms you are allowing for two engines on the same side failing at V1.
If you took this view then you would never start the take off roll, and this is what your advice may do for some peoples flying careers.
During the mid 80's I was working on the ground for a large airline, a large number of the pilots were into share dealing big time and most people thought (including themselfs) that they were very very clever with all the money they were making. One day it all came to a very sudden stop when the city crashed, you could smell the fear of these people who had got themselfs involved in something that they did not fully understand and lost a lot of money.
Since then I have not taken advice from "flight deck" experts on anything except flying, you are welcome to your opinions but that is just what they are opinions.
If you took this view then you would never start the take off roll, and this is what your advice may do for some peoples flying careers.
During the mid 80's I was working on the ground for a large airline, a large number of the pilots were into share dealing big time and most people thought (including themselfs) that they were very very clever with all the money they were making. One day it all came to a very sudden stop when the city crashed, you could smell the fear of these people who had got themselfs involved in something that they did not fully understand and lost a lot of money.
Since then I have not taken advice from "flight deck" experts on anything except flying, you are welcome to your opinions but that is just what they are opinions.
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Some awful US airline traffic stats have been released for March...
United and Amercian (2 biggest airlines) posted declines of -7% and -5.9% respectively despite the early Easter break.
US airways also down 3.5%... US also cutting by capacity by 3-4%.
Other domestic carriers have also announced capacity cuts of up to 10% in domestic fleets.
Did someone say it was all about traffic numbers and these weren't going to be impacted?.... hmmmmm and its only just beginning...
United and Amercian (2 biggest airlines) posted declines of -7% and -5.9% respectively despite the early Easter break.
US airways also down 3.5%... US also cutting by capacity by 3-4%.
Other domestic carriers have also announced capacity cuts of up to 10% in domestic fleets.
Did someone say it was all about traffic numbers and these weren't going to be impacted?.... hmmmmm and its only just beginning...
Opinions shared by many economists and backed by some fairly strong statistical data and historical precedent though.
My views may be responsible for someone never persuing their dream to their lifelong regret. They may save someone from committing financial suicide and ruining their life. Its been said that timing is EVERYTHING in this industry.
Right now I'd have to say there is a grave danger that the time is for recession and airline failures.
Anyway, lets stay on topic and keep this to house price inflation/deflation and its outcomes for wannabes and for funding training.
WWW
My views may be responsible for someone never persuing their dream to their lifelong regret. They may save someone from committing financial suicide and ruining their life. Its been said that timing is EVERYTHING in this industry.
Right now I'd have to say there is a grave danger that the time is for recession and airline failures.
Anyway, lets stay on topic and keep this to house price inflation/deflation and its outcomes for wannabes and for funding training.
WWW
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I'll offer a more blunt opinion:
People are generally stupid, short sighted and greedy, I have seen hundreds of folk watch the value of their house rise and immediately go and get a conservatory built on the back. Last time I looked into the value this added, it was 10%, that's 10% the cost of the conservatory, not the house, so at 5k they have just spent 4.5k which they will not get back.
The next thing they must do is borrow against the house to get a secondhand, clocked, ex-fleet, silver 3 Series BMW on the drive to 'keep up with the Joneses'. (Older types will get a Golf)
Then comes the laminate flooring, and huge TV.
If there is any money left they MUST have a jet wash for the new brick drive and PS2, etc., etc., plus a mini moto, and other 'boys toys': All on credit cards.
It's a long story but I would come into contact with these types a lot and out of curiosity I would ask them if they thought there would be a house price crash. The answer, from just about all was no.
The credit crunch is more than a crunch IMO, it's the start of it and a lot of stupid, greedy people are going to lose their homes, some through not being able to re-mortgage and others through not being able to borrow more to live.
Borrowing money in the way we have been doing for the last few years is over.
Like I said people are generally stupid, short sighted and greedy.
People are generally stupid, short sighted and greedy, I have seen hundreds of folk watch the value of their house rise and immediately go and get a conservatory built on the back. Last time I looked into the value this added, it was 10%, that's 10% the cost of the conservatory, not the house, so at 5k they have just spent 4.5k which they will not get back.
The next thing they must do is borrow against the house to get a secondhand, clocked, ex-fleet, silver 3 Series BMW on the drive to 'keep up with the Joneses'. (Older types will get a Golf)
Then comes the laminate flooring, and huge TV.
If there is any money left they MUST have a jet wash for the new brick drive and PS2, etc., etc., plus a mini moto, and other 'boys toys': All on credit cards.
It's a long story but I would come into contact with these types a lot and out of curiosity I would ask them if they thought there would be a house price crash. The answer, from just about all was no.
The credit crunch is more than a crunch IMO, it's the start of it and a lot of stupid, greedy people are going to lose their homes, some through not being able to re-mortgage and others through not being able to borrow more to live.
Borrowing money in the way we have been doing for the last few years is over.
Like I said people are generally stupid, short sighted and greedy.
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Once again a bit more copy/paste
http://www.columbusdispatch.com/live...N.html?sid=101
"At this current level, there's no such thing as a low-cost carrier," said Darryl Jenkins, a Virginia-based airline expert and aviation professor at George Washington University. "There's currently no airline in the United States that has a viable long-term plan for survival. Jet fuel is a killer category, and it's a desperate time for the industry."
Grass strip basher, it is interesting to read your opening post of this thread again, posted only two months ago. It is about 'high oil prices' of $75 and $85 p/b. Now everything less that $100 looks cheap...
http://www.columbusdispatch.com/live...N.html?sid=101
"At this current level, there's no such thing as a low-cost carrier," said Darryl Jenkins, a Virginia-based airline expert and aviation professor at George Washington University. "There's currently no airline in the United States that has a viable long-term plan for survival. Jet fuel is a killer category, and it's a desperate time for the industry."
Grass strip basher, it is interesting to read your opening post of this thread again, posted only two months ago. It is about 'high oil prices' of $75 and $85 p/b. Now everything less that $100 looks cheap...
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To be balanced some "okay" traffic numbers out of the Big Easy this morning and Aer Lingus (although largely due to fleet expansion... thinnk load factor was down). But Easter in March may have helped Easy... April numbers will be interesting
BoE credit conditions survey released last week suggests banks are now really starting to turn the screw on consumers.... it is 3-4 months time that I think we have to worry about, but you are right the outlook has got a lot worse in the past 2 months if you ask me.
BoE credit conditions survey released last week suggests banks are now really starting to turn the screw on consumers.... it is 3-4 months time that I think we have to worry about, but you are right the outlook has got a lot worse in the past 2 months if you ask me.
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www thanks for the link to Snake - it's worse than I suspected near me. 15% drop in prices in the Cranfield area in the last 2 months.
plinkton yes and not only greedy but we now have a young tribe of property feeding predators that have been encouraged by previously cheap money too. Property renovation as promoted by TV as a hobby meams some of the gullible have also been trapped into thinking that property was fail-safe.
plinkton yes and not only greedy but we now have a young tribe of property feeding predators that have been encouraged by previously cheap money too. Property renovation as promoted by TV as a hobby meams some of the gullible have also been trapped into thinking that property was fail-safe.
Things are happening faster than I thought possible.
This morning the Halifax (UK's largest mortgage lender) published its monthly house price survey results.
They have shown prices declining by 0.3% - 0.4% every month since September 2007.
For last month, March 2008, they report that UK house prices dropped 2.5% in the month. 2.5% in one month makes it the biggest monthly drop for 16 years since we were in the middle of the 1990's house price crash and recession.
Its really no longer a debate about whether there will be a HPC and a recession - its about how bad it will be.
WWW
This morning the Halifax (UK's largest mortgage lender) published its monthly house price survey results.
They have shown prices declining by 0.3% - 0.4% every month since September 2007.
For last month, March 2008, they report that UK house prices dropped 2.5% in the month. 2.5% in one month makes it the biggest monthly drop for 16 years since we were in the middle of the 1990's house price crash and recession.
Its really no longer a debate about whether there will be a HPC and a recession - its about how bad it will be.
WWW
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WWW
Why do you post this stuff? I've never seen so many people in active denial, remind me what comes next - is it fear or panic?
Radio 4 'Listen Again' is a must this morning. Hearing the Halifax 'economist' and Mr Coogan from the CML is hilarious, both desperately trying to talk it up.
Why do you post this stuff? I've never seen so many people in active denial, remind me what comes next - is it fear or panic?
Radio 4 'Listen Again' is a must this morning. Hearing the Halifax 'economist' and Mr Coogan from the CML is hilarious, both desperately trying to talk it up.
I post this stuff because:
a) Quite a few Wannabes are young and don't follow or read or consider the issues of broad economic conditions or the impact of a HPC on pilot jobs,
b) I find it easy to write as I'm actively involved in this field,
c) It is by far the most important thing for any Wannabe to get right, enter the industry at the right time and its Jets and Smiles all the way. Enter at the wrong time and its bankruptcy and regret and and a bedsit in Albert Square..
WWW
ps The next stage is Fear and within 3 months we should move on to Panic.
pps I agree - the Today programme was hilarious - it reminded me of Saddams spokesman in Baghdad denying there were any American tanks anywhere..!
a) Quite a few Wannabes are young and don't follow or read or consider the issues of broad economic conditions or the impact of a HPC on pilot jobs,
b) I find it easy to write as I'm actively involved in this field,
c) It is by far the most important thing for any Wannabe to get right, enter the industry at the right time and its Jets and Smiles all the way. Enter at the wrong time and its bankruptcy and regret and and a bedsit in Albert Square..
WWW
ps The next stage is Fear and within 3 months we should move on to Panic.
pps I agree - the Today programme was hilarious - it reminded me of Saddams spokesman in Baghdad denying there were any American tanks anywhere..!
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Is this the chap who was talking up the UK housing market on the radio this morning??.... http://www.welovetheiraqiinformationminister.com/
A and C you took the words right off my keyboard! 
The example of the conservatory is absolutely spot-on. I've seen so many people spending their equity, buying things they could never otherwise afford, completely ignoring warnings of a future house price fall. Someone close to me borrowed money to buy a car, spent that money on high-living, borrowed more to build a conservatory, spent much of that on other stuff, had to borrow more to finish the conservatory, and is now talking about getting a further loan to buy a TT...That person is a teacher and should know better
There are a lot of ill-educated and naiive people in the world, and that's sad, but what angers me is the fact that itis all been fuelled by the money-grabbing irresponsibility of the lenders and the tax-grabbing antics of the Labour Government. As for estate agents, they have made fortunes out of the house price boom for doing pretty much nothing. I have no time for them.
So, I have absolutely no sympathy for people who are now crying about house-prices falling, negative equity, rising costs of borrowing etcetera. This was all entirely predictable. I've been saying it for awhile and have no economic training. We bought a house at the tail end of last year despite the current situation because we worked out what we could afford irrespective of what the mortgage lenders were offering (three times what we wanted in fact). Unfortunately, we're probably the exception to the rule and those who borrowed enough to buy the ludicrously over-priced properties will be the first to go bankrupt.
The only thing that annoys me about the downturn is the effect it will inevitably have on the aviation industry if there is a recession.
I'm all heart me...
The example of the conservatory is absolutely spot-on. I've seen so many people spending their equity, buying things they could never otherwise afford, completely ignoring warnings of a future house price fall. Someone close to me borrowed money to buy a car, spent that money on high-living, borrowed more to build a conservatory, spent much of that on other stuff, had to borrow more to finish the conservatory, and is now talking about getting a further loan to buy a TT...That person is a teacher and should know better
There are a lot of ill-educated and naiive people in the world, and that's sad, but what angers me is the fact that itis all been fuelled by the money-grabbing irresponsibility of the lenders and the tax-grabbing antics of the Labour Government. As for estate agents, they have made fortunes out of the house price boom for doing pretty much nothing. I have no time for them.
So, I have absolutely no sympathy for people who are now crying about house-prices falling, negative equity, rising costs of borrowing etcetera. This was all entirely predictable. I've been saying it for awhile and have no economic training.
We bought a house at the tail end of last year despite the current situation because we worked out what we could afford irrespective of what the mortgage lenders were offering (three times what we wanted in fact). Unfortunately, we're probably the exception to the rule and those who borrowed enough to buy the ludicrously over-priced properties will be the first to go bankrupt. The only thing that annoys me about the downturn is the effect it will inevitably have on the aviation industry if there is a recession.
I'm all heart me...
Last edited by Mikehotel152; 8th Apr 2008 at 09:31.
In my minds eye that was the chap the Council of Mortgage Lenders have hired to do their PR work ;-)
UK house price figured have already gone Year on Year negative, the average house price was:
March 2007: £194,094
now:
March 2008: £191,556
---------
-£2,538
The Halifax are reporting three month rolling average figures which are softening the blow.. It does however allow the various vested interests to use phrases such as "house price growth is slowing".
However this will change in a month or so times as even the massaged figures go Y-o-Y negative. Perhaps its happened already as The Sun wades in today (online - watch tomorrows paper for the print version) with:
House prices plummet
By SUN MONEY REPORTER
Published: Today
HOUSE prices have plummeted in the worst fall since the early-90s property crash, the latest monthly data from Halifax has shown.
Job losses in the City are going to hurt the Business and First traffic particularly on the London/New York route. Equity and inflation concerns will be hurting the middle class user of LoCos you enjoy several European jaunts a year. The bucket and spade working class Charter holidays may not get booked as the credit card is cancelled and the house repossessed.
Its going to hurt every airline. Badly. Which is what the shareprices were telling us months ago.
WWW
UK house price figured have already gone Year on Year negative, the average house price was:
March 2007: £194,094
now:
March 2008: £191,556
---------
-£2,538
The Halifax are reporting three month rolling average figures which are softening the blow.. It does however allow the various vested interests to use phrases such as "house price growth is slowing".
However this will change in a month or so times as even the massaged figures go Y-o-Y negative. Perhaps its happened already as The Sun wades in today (online - watch tomorrows paper for the print version) with:
House prices plummet
By SUN MONEY REPORTER
Published: Today
HOUSE prices have plummeted in the worst fall since the early-90s property crash, the latest monthly data from Halifax has shown.
Job losses in the City are going to hurt the Business and First traffic particularly on the London/New York route. Equity and inflation concerns will be hurting the middle class user of LoCos you enjoy several European jaunts a year. The bucket and spade working class Charter holidays may not get booked as the credit card is cancelled and the house repossessed.
Its going to hurt every airline. Badly. Which is what the shareprices were telling us months ago.
WWW
