h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

Glad I'm not!

http://news.yahoo.com/s/ap/20070122/ap_on_fe_st/tiny_apartment

This place is smaller than the baby's room!

And someone is going to be stupid enough to buy it. I don't care how prestigious the location is, that is a ridiculous price for something so tiny. It doesn't even have utilities!

Thanks for sharing that, broe. I am now a lot happier with my little house than I was.

I was thinking of you when I posted it.

erm... that's pretty good value for that part of town (even allowing for the size), Property in the Big Smoke is not cheap

This feels like a flashback to 1989. Damn that brown acid! It's like deja vu all over again.

A Grauniad letter pointed out that last time there was a news story about a cupboard in london going for a ridiculous price it heralded a massive collapse in the housing market. I was one of the people who got severly burned last time.

Living in such a tiny space would provide me, at least, with a very low quality of life. It would be terribly depressing. From the photo, it looks dreadful. I'd rather have a less prestigious address and have enough room to actually enjoy my home.

For just over half the price of that, you can get a one-bedroom flat with nice big rooms and a little bit of garden in the delightful rural town of Langport in Somerset... which is precisely what I'm about to buy. I earn a lot less since I moved out of London, but I wouldn't have been able to buy somewhere if I'd stayed.

I'm a bit worried about an impending price crash though. I've stayed out of the housing market for the last three years in the hope that one would happen, and it hasn't. At least I've got a fixed rate mortgage for four years so I'll be proof against spiralling interest rates if the balloon does go up.

But the London market does seem to be bombproof. And I mean that literally. Not even the suicide attacks on London Transport put people off living in the capital, and I thought if anything would it'd have been that.

I recommend an excellent book on economics (no - don't fall asleep!) which explains why house prices will always increase 'in the long term'.
Free Lunch by David Smith.
http://www.amazon.co.uk/Free-Lunch-David-Smith/dp/1861975066

On the other hand, as John Maynard-Keynes said, "In the long run, everyone's dead."

I've been brushing up on economics to try and understand a mystery. Many years ago, I bought a house. Shortly after, the price collapsed. I'd moved jobs/cities/countries so spent some eight years misery renting it out to unreliable tenants at a monthly loss. Eventually I sold it, and gave away £15K for the privelege.

So...my question is...what happened to my £15K.
The new owner didn't get it. She bought the house with a loan from her bank.
My lender didn't get it. I just paid back the loan I'd taken out.
I certainly didn't blow it all on booze, slow horses and fast women.
So what happened to the £15K that I pissed into the wind?

It's a very complex question. To answer it, I'll need to know a lot about markets, theories of value, pricing structures, money supply and so forth. If I ever come up with an answer I'll probably be awarded a Nobel prize.

You gave the extra 15k to the bloke who sold you the gaff in the first place.

Ah, no. I'd thought of that - and believe me, I've thought about it *a lot*. If only t'were so simple.

gave them £65K in exchange for the house, using a £65K (near as dammit) loan from a bank. Later I paid tham back this same £65K.

Supposing I *had* given them an extra £15K of my own - difficult, because my parents wouldn't die and I inherit that £15K for another eight years or so - but let's assume that I gave them a notional £15K...

They would have had to buy another house, using this £15K towards it. HOWEVER...in tbe same crash, their house price would have gone sown similarly. So, supposing they also sold at a £15K loss. Would they have been giving the £15K to *their* vendor? Maybe...but their vendor would have been in the same position...and so on down the chain.

So, when the music stopped and everyone sat down, who ended up holding my £15K?

It really is an elegant economics problem, no?