Saturday, May 17, 2008
Housing crisis in full swing
Standard: Town halls fear two million families will need social housing
Councils are struggling to cope with the flood of people turning to them for housing because of soaring mortgage costs, high property prices - particularly in London and the South-East - and more repossessions. Experts have already predicted that young middle-class people face having to live in council houses because they will be unable to buy or rent a private property." Tell me, how are prices and rents going to rise if people can't afford them?
Posted by confused76 @ 05:58 PM (1267 views) Add Comment
19 Comments
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1. i remember the 90`s said...
There is a member of my family that in less than two years will be in this situation after imo going bankrupt and the sad thing is they don`t even know it yet ,they have a mortgage of £300,000 on a house worth the same at this time and to make things worse he is a mortgage broker with blinkers on ,I`ve tried to talk to him for the past two years about how bad things were going to get but to no avail my point is there must be a lot of people like this .
2. confused76 said...
Lucky enough he is not also a BTL
3. Sc7 said...
The local councils should buy up those empty 2 bed flats for 25% of the asking price and hey presto problem solved, A return to sixties social housing to be knocked down in the next boom.
It might even spawn a new "Only fools and horses" based in Leeds, "This time next years Rodney, We'll be millionaires".
4. last_days_of_disco said...
The social consequences of this are going to be interesting. Will people pull together and look after each other, or will they pull apart. I suppose it depends on the community in question.
5. uncle tom said...
"Experts have already predicted that young middle-class people face having to live in council houses because they will be unable to buy or rent a private property"
This is really dumb journalism - any genuine expert will tell you that young middle-class people have as much chance of getting a council house as there is of hell freezing over (unless they've sprogged half a dozen kids)
The generation that ramped house prices have to come to terms with the horrid truth - the next generation can't pay, or if they can. they won't.
6. uncle tom said...
Disco,
Good question, but I think the answer is no, people will not pull together - althoguh many young people will probably leave home later or return to live with their parents after getting their fingers burned.
Demand for housing will almost certainly shrink during the downturn, and when stability eventually returns, there will be millions in their thirties and forties who will not only still be financially crucified, but will also have to watch the depressing spectacle of younger people (who have yet to enter the market at this time) leapfrogging them to snap up nice properties for a song.
Will people who have £50k or £100k of negative equity keep paying the mortgage? I have my doubts...
7. jack c said...
Good post Confused76
Just as genuine affordability ultimately underpins the house purchase process the same must be true in relation to rents eg my nephew and his girlfriend have for several years rented a rabbit hutch, sorry I mean new build appartment - the landlord recently pushed up the rent by approx £100 per month (I suspect because his mortgage payments have increased due to a fixed rate coming to an end) consequently my nephew very promptly moved out and found a better terraced flat with much more space etc for less than he was originally paying !!
8. plato said...
Well --------- it's all compounding isn't it? It's not just a case of property prices dropping. It's a whole group of associated factors that rely on, and support the housing market. People who never thought about it before (and didn't read this site - I must emphasize) are now being educated. This seems to include the 'honorable' gov't. Those who castigated the advice given by most on this site should be ashamed,as they are responsible for encouraging a ludicrous desire and the ensuing results.
uncle tom said...
"Disco,"
"Good question, but I think the answer is no............."
Totally agree------------ I think the concept of people pulling together has been removed since Thatcher days.
9. it_is_going_with_a_bang said...
Town halls what? There is a 5 year waiting list here. Due to the points system, if you have a job and live responsibly you can forget the idea of being housed by the council / housing associations.
As has been said before. If people can't afford their mortgage then they are unlikely to be able to afford silly rent increases either.
Also try renting a property with a bad credit score. Almost impossible.
Would someone like to explain to me why the brakes have been put on for social housing? If they were not going to sell it then whats the problem with building it?
The government should get off its ar*se and build decent homes to rent. Forget these buying schemes - they are rubbish.
Nobody really wants to buy half a property - what they want is to buy it at half the price!
10. titaniccaptain said...
@uncle tom and Plato
I believe that your both right im afraid to say. My wife and I always talk about the 1970s when people had b#gger all yet were alot happier because the community meant something to people and the place where you lived was your home and thats where you wanted to stay close to your friends and family. However with the advent of thatcher, the expansion of multi media, Mobile phones (The invention that de humaised the world) , The internet (Even though I use it I hate it, living in cyber space) and the increasing influence of america on our culture we have been left totaly insular. No wonder they drug the elderly out of their minds they are the only ones who remember what it was like to live a full and good life without the added mind control
11. plato said...
titancaptain
Don't be too sad -------- the Internet is the new Alexandria ------ the library of the world for exchange of knowledge. As long as we talk there's hope for a return to the physical community --------- only a small step forward once all this greedy,rubbish passes.
12. Yoss said...
Go bankrupt like the Jones's!
Time the councils to break out the "Empty Dwelling Management Order" legislation, tuff Mr BTL, people need homes and bottom dollar is all you will get.
13. uncle tom said...
"Nobody really wants to buy half a property - what they want is to buy it at half the price!"
Agreed - think about these schemes in the longer term, the people who buy in to them are effectively trapped there.
14. Bananasplit said...
We are managed by morons so what makes you think councillors on £100+k salaries are able to resolve a serious housing problem. The fact is private rents are just as out of reach as mortgage payments and the likely repossessions and walkaways are going to be lower paid workers earning less than 40k and a lot earning less than 20k. when unemployment rises this year and next by up to 1 million and high taxation saps the rest of us to pay for increased social demand. The economy is going to be in dire straights with excessive borrowing spiralling and house prices crashing the negative impact on the health service with malnutrition, depression and serious increased use of alcohol and drugs. Crime will increase, shoplifting,burglary and other theft related crimes. The problem is not just about housing, we are all over taxed and the majority underpaid, a population that has been forced to live life on credit and get used to debt created globally but also by our goverment not being able to look at what was happening and understanding the outcome we are now faced with. When politicians talk they are still only interested in themselves and not the wider population.
15. titaniccaptain said...
@plato
Prehaps its me being a technophobe I do actually believe S2R1's information war theories due to the fact that I believe that mankind has been lied to for a very long time but also I think we are all very depersonalised by the leap in technology. I hade my fist moblie phone when I was 26 and have been tied to it since. getting back on topic I have this strange feeling that the government will nationalise all unsold and empty new builds and turn them into social housing. I know the financial logistics of this may seem implausible but if there is a house price crash and houses go down over 60% in the next two years then who knows
16. Mytimeisnigh said...
The government needs to buy up houses for decent social housing. I'm a social worker and see it first hand. There are young couples out there with one or two babies living in tiny council flats with one bedroom. One small bedroom with a double bed and a cot leaving hardly any space to even walk around the bed. In my experience, they have made the best of a bad situation, put down their own flooring, decorated and changed the fronts of kitchen cupboards. They have waited (for example) over a year for a house or even a two bedroomed flat. My experience has been that they're nice people and so desperate to be offered something they can call home to safely bring children up in. These are the sort of people who flog their guts out doing the kinds of jobs most people using this site would not do. This is the reality of modern Britian. Thatcher should not have sold council houses. And, after ten years of boom, labour has had the opportunity to invest heavily in social housing, getting people out of the run down post war estates. Instead they have turned a blind eye and let the buy to let brigade buy up cheap properties leaving ever more people out in the cold. And they call this socialism?
17. montesquieu said...
@uncle tom
You put the finger on a not-yet-much-discussed-here topic which is this one: the scale of negative equity this time could beggar belief, when you combine 100% (and more) mortgages with house-as-ATM syndrome, neither of which were big features of the last crash, with the additional factor of the sheer scale of the potential losses. 20% negative equity on a £200,000 property back in 1990 was £40k, a lot of money but payable over time even at high interest rates. The same sort of property now is £600k, and 20% negative equity on that is £180,000.
Why pay that to the bank (plus interest) potentially over decades nothing back when you could go bankrupt and owe nothing after a few years? (Of course multiplying up the losses on 2-3 BTLs comes to the same number ....)
18. uncle tom said...
montesquieu,
I can remember just how depressed people became over negative equity last time - even though most were out of it within a couple of years (thanks to inflation and repayment mortgages)
People were throwing in the towel when they were less than £10k in the red.
I can see it becoming fashionable to go bankrupt in a year or two - stuff the IVA's!
19. indiablue19 said...
If there are millions in peril then laws will need to change, and that may wipe out the sting of bankruptcy and create a new financial moray. This dilemma, for today's mainstream generation will become "normal" and they, after all, represent a lot of votes and a lot families in trouble. On the order of a vast population of financially disabled. I dont' think people can conceive how to "pull together" anymore. Generally, there are no local organisations [churches, volunteer groups, clubs]which unite them so that they are even aware of each other. And to pull together they would have to perceive themselves as local communities of a managemable size. Maybe those organisations need to be created NOW.