Saturday, Aug 30, 2008
Sensible advice for FTBers
Telegraph: Why first-time buyers should wait for house prices to fall further
News that house prices are falling at the fastest rate seen since the slump of 1990 prompts a predictable outcry from an unholy alliance of estate agents and politicians: “Something must be done!” Rather than parade the naked self-interest of middle-aged homeowners – or people like you and me – most of these calls for action focus on help for first-time buyers.
Posted by quiet guy @ 09:53 AM (367 views) Add Comment
2 Comments
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1. Dave said...
Would the idiots who want a so called HPC explain to me where the hell first time buyers are going to get the mortgages from. There is a credit crunch, remember!
Some use a HPC is!
2. quiet guy said...
@Dave
The HPC and all associated economic pain is a necessary and unavoidable requirement to steer our economy back to sound principles. I admit that when I first found this blog I did not understand this - ultimately, the HPC has to be seen from a banking and economic perspective to make any sense.
To answer your question, the first time buyers are effectively out of the market until income multipliers return to sensible levels. There is no easy way out of this mess but it is definitely not the right time to take on big mortgage debts.
Perhaps this does not make sense to you? Try the following idea: recessions are GOOD!!!! Recessions remove the bad investment from the economy and set the scene for further productive economic activity. It seems to me that a large part of the problem we are facing now is that we kept putting off the inevitable economic reckoning by borrowing and cutting interest rates. The necessary economic correction will hurt but we cannot avoid it now. Small, regular recessions would have been better but unpalatable to out elected incumbents.