Unfortunately no-one dared deal with the issues of the costs of our ageing population when it would have helped. Surely now the only way to stop our children suffering is to…

Legalise Euthanasia 😉

Mudshark…. Fair play, maybe I misinterpreted your comments.

I’m not sure that reducing house prices does increase demand though…. It just means that they come down. Assuming they fell to 3x one salary (and ignoring any deposit for the sake of argument), then somebody earning 20k will have a house that costs 60k, and somebody earning 40k can have a house up to 120k. If the person on 20k wants the 120k, then tough luck. They would have to either save a bigger deposit or get a job earning more money.

You would potentially need to restrict the btl market too (maybe bring back rent controls, I’m not sure) but is that a bad thing? Why should people be priced out of basic necessities such as housing, just for the purpose of a pension? If the pension market was reformed, then btl wouldn’t be so attractive.

I haven’t read all the posts, but from what I have, this is my favourite :

cranberry – Member

“But it’s not fair mummy – a bad man made me do it” – not the words that you expect to hear from someone old enough to sign a loan form.

Beautiful, and without an obvious hint of irony.

Because of course it wasn’t British borrowers/consumers who caused the credit crunch and global recession which has screwed the UK economy – it was the greed-fueled incompetence of banks and financial institutions on the other side of the Atlantic which kicked things off.

Banks and financial institutions which were wallowing in a liberal climate of free-market fundamentalism overseen by an ultra-conservative president. British banks caught a cold, as indeed did banks throughout the world, because of exposure to these US institutions. It had nothing to do with British consumers.

And then, British banks demanded that ordinary British working people help them out of the horrendous hole which they had dug for themselves. This was very much a case of “But it’s not fair mummy – a bad man made me do it” by the bankers.

Despite the fact that those “top bankers” who took all the important decisions, and claimed that they alone understood the business and should therefore be free to do as they please without any government interference, rewarded themselves with mind boggling salaries precisely because they claimed they were so skilful at their jobs. And of course they were allegedly taking “risks”.

It turns out that they didn’t know what they were doing. Or at least they didn’t care what they were doing ……. just as long as they were getting rich of course.

So there you have it…….the greed-fueled incompetence of banks and financial institutions causes a credit crunch which leads to a global recession that in turn screws ordinary working people. The bankers demand that ordinary working people pay the price of their own incompetence in job losses, a collapse in services and living standards, stringent austerity, and bale them out of the mess they have created for themselves, and it’s all the fault of UK consumers !

Was there ever a better example of the victim being accused of the crimes of the perpetrator ?

You have got to give bankers and their friends in government some considerable credit when you hear people without a pot to piss in obediently arguing that the whole sorry mess is at least partially their own fault – so there is no need to point an accusing finger at bankers.

And whilst all this is going on bankers are still busy filling their pockets………they must be laughing all the way to the bank ! 🙂

Another excellent post ernie and this pseudo lefty got hookwinked by the establishment again
EDIT : that is not sarcasm in relation to your post

Bamboo – I completely disagree with your thinking! Both in the controls you want and the effect they’d have.

Philip Hammond said consumers and home-owners who took out loans, spent on credit cards and accepted large mortgages were “consenting adults”.

He seems to be against abortion and euthanasia, equal rights for gays, drug liberalisation… Going by Publicwhip, he’s only really in favour of accepting that people are consenting adults when it comes to blaming them for financial crises.

Bamboo – I completely agree with your thinking! Both in the controls you want and the effect they’d have.
As long as second properties, and their mortgages, are more tightly controled than first properties, through regulation or extra tax on them.
Then there is a chance that homes may return to being buildings to live in rather than investments to profit from.

Bamboo and ourmaninthenorth: spot on. The rest, educate yourselves.

Mudshark…. Fair enough you disagree with my points. But you don’t say why you disagree with my points. I would be interested to know why you disagree…..

Btw, I’m not looking to argue, this thread is very interesting so I’m looking to try and understand your viewpoint.

Well mainly I didn’t go into my reasons as it would take a lot of effort to get them across really. So you say 3x limit on mortgage and rent controls.

In recent years, I understand, mortgages have been hard to come by. People with seemingly perfectly good credit history and jobs have struggled to get a mortgage, this has affected prices but the seem to have bounced back. In the past people could borrow beyond 3x but not by much in the main, higher earners could borrow 4x maybe and then very rich more than that but in the main so I don’t think restricting to 3x will have a dramatic effect though not against it really if it helps less people borrow too much. But a professional couple could still only borrow 3x one of their incomes? Don’t agree with that. Or a higher earner with money to spare – if they can afford it then they can borrow it IMO.

You also ignore deposits. First timers should ideally have a deposit so that would add to the value of the property they buy. And then over time people will build up capital and so later move into a more expensive house – if they have an easily affordable mortgage they’ll build up savings quickly and so have a big pot for when they move. There are lots of people who don’t have mortgages – indeed I don’t – so limits on their borrowing won’t control what they can pay.

Time to ride….

The reality is house prices have at least 30% to drop, this can happen over a few years of depreciation or over 15 years of house price stagnation while wages slowly increase. Either way it will happen. Would be better for the ecconomy if the prices all dropped overnight and people could start to move about a bit more.

The government want people to be mobile for work but how can you do that if you cant afford to move? Its crazy!!!

I am not sure many home owners would be moving if the price of their property dropped 30%. A large number would be trapped by negativity equity
However it happens it will be a very bumpy road.

Mudshark..

Sorry for the delay in my answer but I was out.. on my bike.

Where did you get that from? They certainly do auction property and I’m not aware of them holding onto stuff so curious. If developers or banks are holding onto stock then I assume they’re confident about prices picking up soon. I suppose with interest rates so low they might only sell if they need the cash in the short-term.

Banks ARE holding onto stock. There are many reports about this and it has nothing to do with them expecting the market to pick up. Yes, they send stock to auction, but with unreasonable reserves that in the main are never reached.

There’s a saying in the trade.. “a rolling loan gathers no loss”. ie. It is much better for the banks to show a 100% mortgage asset on their balance sheet than a big loss if they have to sell the property at a price people are willing to pay.

Unfortunately neither the gov nore understandably the banks have any intention on working with this as a large proportion of pensions ‘values’ are unfortunately tied up in the value of property (commercial and residential stock).

We can continue kicking the can down the road or we can face what has to inevitably be done and housing assets take a hit.

My personal theory is that they’re simply playing for time whilst they re finance the banks with OUR money before this ultimately happens.

Elzorillo, a very possible outcome.

Junkyard….. In reality though, how many ‘homeowners’ would be in negative equity if prices dropped by 30%?

Only people who bought during the boom and who over extended themselves would really end up in negative equity. Many who moved during this time will have lots of equity from their previous house.

People have a mindset of not wanting to sell that for ‘less than it is worth’, but their idea of ‘what it is worth’ is based on a 2007 valuation. Somebody who bought in 96 (for arguments sake), wouldn’t lose anything now if they sold for 30% off 2007 price; paper gains don’t exist until you sell and have the money in your hand.

So we can either worry about those in neg equity and maintain the status quo, or bring in legislation to regulate the market for the greater good. Have your legs broken, or break the legs of your children?

Well assuming annual sales of 700,000* houses and a 30 % reduction on todays prices [ takes us back roughly 7 years] so about 5 million homes of 17,500,000 million homes
Quite a few basically and enough to reduce mobility.
i am not saying it wont happen[reduction] but it wont help mobility
tha t is higher than i thought and the middle links shows surprising rapid increases in price.

sales
* actually 810,000 last year !! that is surprisingly high
http://www.bbc.co.uk/news/business-16284992
tables to get average prices
http://www.communities.gov.uk/housing/housingresearch/housingstatistics/housingstatisticsby/housingmarket/livetables/
house numbers
http://news.bbc.co.uk/1/shared/spl/hi/guides/456900/456991/html/

But 810,000 sales doesn’t equal 810,000 first time buyers though, and it is ftbers that are those likely to be at risk of negative equity…. Others will have years of built up equity from monthly mortgage payments, and house price inflation.

I understand your point about mobility and that is fair enough. What about the mobility of the younger generation/ lower paid, who can’t afford prohibitively high housing costs (house prices and rental rates). Should this ever increasingly large group of people pay the price to protect people in negative equity?!

I cant help but think a 30% drop in house prices will not happen in many areas when rents are so high. Demand for places to live isnt falling.

Such a drop would put us in negative equity pretty much or zero equity, but not a problem really if we want to buy a bigger house.

how many ‘homeowners’ would be in negative equity if prices dropped by 30%?

Pretty much the whole BTL market?

Of course, the Government could do something overnight to stimulate the housing market – restrictions on the expenses that can be offset against rental income.