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Are we heading for a second recession? and ….
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davesmumFree Member
The high house prices in the UK are a poison to this nation. The problem is Labour have made everybody feel rich because their house value has risen at stupidly high rates for a number of years. Any politician who has the balls to take action that would result in a house price crash would be very brave, but ultimately that is what this country needs.
I don't want to see anybody lose their home, but in the same sense, I don't want to see anybody slave away to buy an overpriced cr@ppy flat/starter home for a massive proportion of their wages, because they are scared that 'if they don't do it now they never will be able to afford to do it'.
If car/food/energy/bike/whatever prices rise, this is seen as a bad thing. Yet people in this country see price rises in the biggest single purchase they will over make as a positive thing. Crazy.
Bring on the house price crash I say.
Rant over 😀
rumbledethumpsFree MemberChrist, is it that bad? I better go and get my 99p bike oil from Wilko's then before it all goes to rat shit.
coffeekingFree MemberBloody hell, I hope nobody from Haiti reads that, they would feel seriously patronised
Not patronising at all unless you have a different definition to me (patronising is to treat condescendingly, which I wasn't at all), it's just a positive outlook on a negative thing.
And to the poster above who suggested that price crashes only affect those who borrowed more than they could afford – not at all, it affects those who borrowed 200K but whos house is now worth 100K, but who are still paying for the 200K house anyway. Regardless of whether they can afford to or not.
shortbread_fanylionFree MemberI'm clinging to the hope that the situation has been greatly exaggerated by the media looking for the next bandwagon….like the millenium bug, swine flu, arctic chaos….but it seems pretty serious 😥
Do any of you reckon that your job is 100% safe?
zeickeFree Memberffs has any one got a rope or a razor blade,it's like reading the daily mail
Colin-TFull Membernot at all, it affects those who borrowed 200K but whos house is now worth 100K, but who are still paying for the 200K house anyway. Regardless of whether they can afford to or not.
…but when they paid 200K for the house they thought it was worth paying 200K for. They still have the house, all that has changed is other people's opinion of what the house is worth.
I'm also pretty certain that for some time now (since the housing crash of the 80s) its been pretty clear that house prices can go down as well as up.
coffeekingFree Member…but when they paid 200K for the house they thought it was worth paying 200K for. They still have the house, all that has changed is other people's opinion of what the house is worth.
Correct, meaning they are now stuck with that house, instead of being able to move/sell etc
RichPennyFree MemberDo any of you reckon that your job is 100% safe?
No job is 100% secure. But to add some sunshine to the black clouds on the thread, my company has grown by approximately 10% pa for the last few years, and the workload appears to be accelerating.
woffleFree MemberWe bought our house in 2007. And we plan on living in it for the next 10-20 years. The issue seems to have been the shift in viewing houses as homes to seeing them as chiefly commodities / money making ventures.
On a recession related note – does anyone want a job? (in all seriousness – we've been looking for a decent grad level support / developer. London, IT, finance, good prospects etc). You'd have thought it'd be easy to fill a vacancy. Has been a complete nightmare…
Colin-TFull MemberCorrect, meaning they are now stuck with that house, instead of being able to move/sell etc
Then to qoute from earlier, they should get a better job or move somewhere smaller.
or perhaps they bought into the collective madness surrounding housing prices that had more in common with pyramid schemes than sensible economics.
rightplacerighttimeFree Memberdave's mum said
The problem is Labour have made everybody feel rich because their house value has risen at stupidly high rates for a number of years.
This is an interesting proposition. Why do you think the price of housing is down to the Government, and if it is, how have they caused house prices to rise?
coffeekingFree MemberThen to qoute from earlier, they should get a better job or move somewhere smaller.
or perhaps they bought into the collective madness surrounding housing prices that had more in common with pyramid schemes than sensible economics.
Or perhaps they bought a house the size they needed at a time they needed it, rather than buying into anything, and are in a very well paid job anyway. As stated earlier "get a better paid job" is a very stupid argument, as if everyone's lounging about getting the least wages they possibly can 🙄 . Their job and why they bought a house are totally irrelevant in this discussion, the only thing that's relevant is that you want them to lose money and don't care as if it's somehow their own fault, so that you and/or others can get in on the act. I'm a first time buyer, but I sure as hell don't want others to lose out so that I can buy one, that's incredibly selfish.
JoeBonesFree MemberRant mode on
Capitalism is where it is at, if you think that business has any morals then you are in lala land.
Life (particularly during the recession) is based on survival of the fittest whether you like it or not. People have to sharpen their game, work smarter, harder and no be scared to innovate or change. The world is your oyster and your choices are yours.
Trade unions have wrecked industry and lunch breaks are for losers. People who only care about "rights" and "entitlements" are good value for being on the dole queues right now.
I genuinely sympathize with the decent non union supporting people who have fallen on hard times.
My family construction business has been through hell and back over the last two years, we have survived and are fitter and more dynamic than ever, all as a result of mistakes we were making during the "boom".
I am sorry to say it but am not too proud to admit that it took this recession to for us to see the error of our ways.
Going forward our business has some new blood, new enthusiasm and new ideas and the drive (having survived the recession) is greater than ever. Work is picking up.
I look forward to the future and will never forget the lessons learned during this recession.
Rant mode off
davesmumFree Memberrightplacerighttime – ok maybe my comment wasn't worded to make the point I was trying to make, so I'll try and clarify
Under the current government, house prices have risen at very high rates, causing people to think they are rich, and people are defensive of this wealth and don't want to see it eroded with falling house prices.
The role of the government in allowing house prices to rise so rapidly includes (IMO of course):
– House prices not been linked to inflation measures in any way.
– Poor regulation of the banks – joe public has got a bad credit habit now which the government have largely ignored. If for example the government was to impose limits on the amount one person can borrow on a mortgage as a function of their salary (say 3.5x single income/ 2.5x joint income/ any other sensible number), then that would have put a ceiling on how high house prices can rise. Instead, people have been borrowing >5x income, >100% ltv, self cert mortgages etc, and house prices have increased accordingly.
– Poor regulation of buy to let investors which force out first time buyers and jack up the lower end of the market.I'm sure the government have been doing very nicely indeed from the tax of very large bank profits, so in a sense have not wanted to rock the boat in any way.
The government talk a lot about affordable housing, but in reality don't look to solve the major cause of unaffordable housing.
As I said above – all in my opinion of course 😀
coffeekingFree MemberJoeBones – you can work as smart and hard as you like but if theres no cash in the pot for people with your skills you're a bit stuffed. What you say makes sense on a business scale, but on a personal scale I know that if I lost my job I'd have a lot of trouble finding work in my field and would likely have to resort to a "normal" job on a lot lower wage, if I could find one. There are some out there, for sure, but plenty of applicants for them (I know someone job hunting at hte moment, despite being very dynamic and highly/broadly skilled, getting knocked back for people with more experience. Catch 22.
El-bentFree MemberTrade unions have wrecked industry and lunch breaks are for losers. People who only care about "rights" and "entitlements" are good value for being on the dole queues right now.
Ha, ha, still blaming unions after all these years?
HTTP404Free MemberUnder the current government, house prices have risen at very high rates, causing people to think they are rich, and people are defensive of this wealth and don't want to see it eroded with falling house prices.
Boom and bust is not linked to any particular government. The phenomenon is familiar to all governments.
House prices not been linked to inflation measures in any way.
How in a free market economy is this possible? Inflation (by definition) only goes in one direction. House prices go in two directions.
government was to impose limits on the amount one person can borrow on a mortgage as a function of their salary (say 3.5x single income/ 2.5x joint income/ any other sensible number), then that would have put a ceiling on how high house prices can rise. Instead, people have been borrowing >5x income, >100% ltv, self cert mortgages etc, and house prices have increased accordingly.
Credit checks taken by the lenders governs how much an individual can borrow. It is not something requiring legislation as such, more like financial maturity of the individual and sensible lending from the lender. What you suggest sounds impossible to govern or implement.
Poor regulation of buy to let investors which force out first time buyers and jack up the lower end of the market.
I think you'll find the effect of buy-to-let has been very small on the actual supply of first-time buyer properties. More likely, builders are not building and banks aren't lending to anybody with less than a 20% deposit.
The government talk a lot about affordable housing, but in reality don't look to solve the major cause of unaffordable housing.
eh? by producing affordable housing – surely this addresses unaffordable housing?
RioFull MemberHouse prices not been linked to inflation measures in any way.
How in a free market economy is this possible? Inflation (by definition) only goes in one direction. House prices go in two directions.It's more the other way round – Gordon Brown explicitly refused to include house prices in the inflation measures used by the BoE. If he had we might not be in quite such a mess now.
mrmoFree MemberCredit checks taken by the lenders governs how much an individual can borrow. It is not something requiring legislation as such, more like financial maturity of the individual and sensible lending from the lender. What you suggest sounds impossible to govern or implement.
You have to remember people are stupid, they act as herd animals. For the last decade the media has banged on about getting on the housing ladder, a one way route to prosperity. The banks have been only too willing to buy into the same game. Too many people have bought property on interest only basis, enabling them to inflate the amount they can borrow, also pricing out those who are looking at buying on a repayment basis.
The role of government is to look outside the game and provide a framework, it is not to change the rules to their own benefit, or to buy into the same game as everyone else. There is a reason why banks have had tradtional lending criteria, they work.
But using traditional lending criteria in todays market does not work, houses and average wages are to diverse. Something has to give? For those saying that inflation will solve the debts, inflation only works if wages also increase, if wages are maintained, remember we are in a global market, then inflation will take the food from the table.
Listen to the media, the talk is no longer about the worst recession since the thirties the mood is more upbeat, it feeds through. Everything feels better.
But listen and everyone talks about the election and what is going to happen, no one really knows but it affects the behaviour of all.
RioFull MemberOh, and on the original topic, if the best figure they can come up with for the last quarter is 0.1% growth despite all the efforts they will have made to find money down the back of the nation's settees then I doubt whether we're really out of the last recession. So no, we're probably not heading for a second recession, just continuing the one we've come to know and love. 😥
mrmoFree MemberI think you'll find the effect of buy-to-let has been very small on the actual supply of first-time buyer properties. More likely, builders are not building and banks aren't lending to anybody with less than a 20% deposit.
And why aren't builders building? and why are banks demanding deposits? if banks were confident they would get there money back then they will lend the money, if they don't think they will get there money back then they won't.
But buy to let has had a different effect, look at the market distortion of the last decade, flats, not family homes, that has been the mainstay of the building market. On top of this why are the units built some of the smallest in Europe and far smalller than historic standards?
As for what the builders are building don't get me started!
El-bentFree MemberSays one lot of economists, whilst another lot says something totally different.
The trouble is, we're really deep in it this time, and if something isn't doen to start balancing the books, external factors rather than internal ones could start causing us problems due to decreasing confidence in us as a country.
This is what its about. Economists worrying about external factors and how it affects their business. Its simply trying to sway the electorate into making sure their votes in the next election doesn't result in a hung parliament.
All these stories on the run up to an election are about politics, not economics.
1-shedFree Memberbuy once but buy well
dither and a bargain will come
dont spend more than you earn
save stuff and re-use
enjoy the outdoors it's free
smile to people
shop local
set your kids barriers
encourage learning
work less and enjoy your time
change jobs even if your fat and middle aged
talk to your nieghboors
donate unwanted things to charity
wear a coat inside
go on holiday in this country
welcome difference
treat yourself when you can afford it
lie in bed and rest
if youre upset share it
speak to our friends
dont get angry
learn to cook
speak on forums
load of old tosh
but I'm sure the world would function better.JunkyardFree MemberTrade unions have wrecked industry and lunch breaks are for losers. People who only care about "rights" and "entitlements" are good value for being on the dole queues right now.
I know 1876 was such a good year for industry. I miss the days when my employer could house me, dock my pay for breaking their machines, pay me in tokens for use only in their shops, injury me and then just throw me out on the streets to starve 🙄 I mean who is not tired of having sick pay, paid holidays, Health and Safety I mean do we really need rights and entitlements … You might want to check the statistics on who is most likely to be made redundant is it someone in a union or someone not in a union? Both groups contain "decent" people BTW just one lot has more ability to protect the rights and entitlements that people fought employers to get …attitudes like yours are why we still need Unions today …Lunch breaks are for losers 😯
rightplacerighttimeFree Member@dave's mum
Looks like there was a housing spike under the Tories prior to the current Govt too? Maybe house prices aren't something the Govt can't control very well?
How would you suggest that house prices should be"linked to inflation"?
You also say:
I'm sure the government have been doing very nicely indeed from the tax of very large bank profits
What do you think the Govt has been doing with the money? The Govt isn't some offshore corporation. They spend the money on things like roads, schools, hospitals etc.
Don't get me wrong, I'm not a Labour supporter, but the problem isn't with Labour any more than with Conservative. IMHO we have many many very badly thought out systems in place, but it is more to do with apathy/greed/laziness of the ciitzenry than with the particular Govt that is in power at any time. I'm afraid that most people would rather do nothing to get involved with politics or even with the running of local services, then bitch about it all afterwards.
roachFull MemberSo there was one hell of a boom, but the country was doing exceptionally well for a number of years so that's got to be expected, right? More confidence so people borrow more and the banks will lend more too. How did the government affect it?
ooOOooFree MemberI did think a few years ago that borrowing 5-6 times my salary, to pay for a shoebox, was not good value. Those graphs seem to back up my feeling.
RioFull MemberHow did the government affect it?
Tempted to go into a long rant here but must resist… Monetary policy is set by the government; loose monetary policy – particularly after 9/11 – and a lack of regulation led to asset price inflation which in the UK's case gave the impression that the country was doing exceptionally well. One of the assets that inflated badly was house prices. The government knew after 9/11 that they risked a house price bubble but at the time considered it the lesser of 2 evils. Unfortunately we seem to have now based a lot of the economy on that bubble (people still seem to think we can pay our way in the world by selling houses to each other at ever increasing prices) and as it deflates we're seeing the consequences. IMHO, I am not an economist etc etc…
rightplacerighttimeFree MemberRio,
But could Govt have realistically done anything different?
Unfortunately I think that they are a bit like a kayaker going down a set of rapids. They're going in a particular direction whatever happens. The only thing they get to do is try to keep the boat more upright than not.
If we want to paddle on a nice flat lake, that means a different system, not just a different Govt.
RioFull Memberrprt – They could have included house prices in the inflation measures used by the BoE to set interest rates.
After 9/11 they loosened monetary policy to prevent a possible recession, but they probably did it too much and created a bubble that made a collapse almost invevitable. IMHO etc etc. Unfortunately they seem to have become like a man on drugs – house price inflation can lead to a feel-good factor if spun correctly that works in the governments favour. Hence the need to keep stoking it until at least the election…
HTTP404Free MemberThey could have included house prices in the inflation measures used by the BoE to set interest rates.
House price inflation was/is taken into account by the BoE when setting interest rates. The fact it was not used to measure inflation is not really relevant.
The BoE has always taken house price inflation into account when setting the interest rates.
And the setting of the interest rate has so much more impact then just cooling down a buoyant housing market. It would affect the exchange rate for a start and that would affect imports and exports.roachFull MemberWhat that Halifax graph shows to me is that in March 2009 the house price to earnings ratio was close to the long term average. Doesn't that mean that house prices are not currently too high?
ooOOooFree MemberThe other graph shows that too.
What they both also show is that these factors are not stable.ctznsmithFree Member@roach or the 'average'* wage is higher.
*which in itself is not a good thing to be basing any kind of policy/view on.
ooOOooFree MemberAs the long term trend is around 3%, similar to inflation, doesn't that mean that houses never really get more valuable in the very long term?
HoratioHufnagelFree Memberif you think that business has any morals then you are in lala land.
but people have morals, and people may make decisions on who to place their business. Sometimes there is a backlash against companies, such as McDonalds or Nestle.
i know it doesn't always work, there was a great South Park episode about Wal-mart taking over everything and people shopping there anyway.
maybe a high street Bank will start advertising that it does not use the bonus culture or take big risks, and attract a lot more of peoples money that way.
ianvFree Member"As the long term trend is around 3%, similar to inflation, doesn't that mean that houses never really get more valuable in the very long term?"
I have heard this argument before and there is probably a lot of truth in it. I think the problem this time was that people were far quicker to remove the perceived extra capital from their homes to buy other luxuries and/or to trade up.
The government cannot be blamed for peoples greed or the banks willingness to feed it. The government cannot also be blamed for suffering the contagion of a US problem. Personally (await flaming but), I think Brown and Darling have made a pretty good fist of reacting to the crisis and things could have been much worse without the monetary policy decisions they they have made.
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