Monday, May 25, 2009
Yes, falling house prices need to be stopped to give FTBs some hope of buying at inflated prices
Independent: Buyers seeking first home are giving up hope
The housing market remains mired in recession because seven in 10 first-time buyers have given up hope of ever owning their own homes, a leading property analyst said today.
Peter Bolton-King, a former head of the National Association of Estate Agents, accused the Government of doing little to help first-time buyers into the market and at the same time undermining the chances of a housing recovery. “With banks still refusing to lend and the Government doing practically nothing to help first-time buyers, it’s little wonder so many people have given up hope of every owning their own home,” said Mr Bolton-King, now chief executive of the National Federation of Property Professionals.
Posted by little professor @ 10:11 AM (2761 views) Add Comment
44 Comments
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1. taffee said...
well the answer is in the headline....a proper market cannot function if the people at the bottom cannot buy a property....it makes the rest of the market a giant ponzi scheme or tulips from amsterdam
Do we really see a situation where our next generation are marginalised?...of course not 'cos it will not continue
2. matt_the_hat said...
Buying a house in britain is like buying futures in the country - its an investment that doesn't appeal at the moment, maybe after the UK goes to the IMF then I will sell the gold and buy Yorkshire or something.
3. letthemfall said...
When I read the sort of guff that Bolton-King typically issues, I think how depressing it must be to have a job where one of your chief functions is to deliver the sort of stuff to the press that I doubt even he believes.
4. timmy t said...
Doing nothing is the best thing the government can do to help FTB's. Stop butting into a free market and let it operate properly, and houses will find their natural price level. It's only government intervention that's keeping prices so high that not enough people can afford them. Why can't idiots like this guy see that.
5. mark wadsworth said...
@ Timmy T, economically, doing nothing is nearly always the best option, and it certainly is here.
But politically, it is far better to be seen to be 'helping' FTBs (by reintroducing MIRAS, for example) which doesn't help them in the slightest as the value of the value of the subsidy just inflates house prices, so really it helps existing home owners (strictly speaking, those who want to sell or trade down), of course you're just churning tax and subsidies in a huge great circle with all the associated deadweight costs, but when did a greedy populace or politician ever care about that?
6. mark wadsworth said...
@ LP, that is a genius headline, I must remember to use that in everyday conversation. Worthy of Daily Mash.
7. matt_the_hat said...
4. timmy t - they don't want to be the "do nothing party"
8. Intothestorm said...
I'm just pretending to give up so a few mor bug gers will drop their prices..:-)
9. crunchy said...
Giving up hope?
FTBer's are popping the champagne. Banks, Gordon doing nothing?
Now let me see. I wonder why that could be. Gosh that's it, they can hear the popping. Bottoms up! lol
FTBer's are drinkers this time, not suckers.
10. icarus said...
Don't be too hard on the guy - he's on the side of "thousands of hard-working people". These are the people he really cares about, not the property professionals he represents.
11. uncle tom said...
What a load of tosh!
He implies that FTB's would come flooding back if stamp duty and HIPS were abolished.
Wrong. FTB's will come flooding back when:
a) They can genuinely afford to buy
b) House prices have stopped falling
It follows that satisfying factor a) is not enough on it's own, and that prices will continue to fall, even after they have reached a sustainable level.
This bargain basement period will be a great buying opportunity for those with hard cash, but borrowing is likely to be even harder. At the bottom of the market, the majority of UK mortgage holders will be in negative equity and default rates are likely to go into orbit.
Potential buyers will find that the Banks have no funds to offer, forcing prices even lower.
Not only is there a reluctance on the part of buyers to 'catch a falling knife'; price deflation also makes it much harder for the banks to lend.
12. Mikeyt said...
This really is the stupidest article I've ever read.
13. sybil13 said...
I thought the headlines over the past few weeks said that "FTB's were FLOODING back". Given that the CML figures show that the average FTB has never borrowed more than 3.5 income I can't imagine what is stopping FTB's flooding back can you? What ? The CML figures only refer to people with ABOVE AVERAGE wages as they were the only ones who could afford to get themselves into tens of thousands of negative equity buying in a market that was allowed to inflate 147% since 1999? Oh I see. Oh come on, the headline should be FTB's REJOICE your time will come sooner than you can say "thank god I didn't buy in 2007". Last boom crash saw prices going up 47% and they fell 37% . With £200bn of mortgage funding a year gone, (RMBS market) , I will leave it up to you to consider how much prices might come down this time given that interest rates have only one way to go.
14. bellwether said...
The level of ignorance within the property industry can be breathtaking. Ignorance about the larger ecomomic issues besetting us is maybe forgiveable, but that they refuse to see something simple like the unsustaianable dislocation between income and prices is not.
I guess they are in for a long and painful education.
15. icarus said...
bellwether @12 - a proper "property analyst" needs to fit property into a wider economic framework but, as you say, these jokers don't even make it to 1st base. That's because they're PR/propagandists first and foremost and not analysts at all.
The level of ignorance in the property game is matched by many of those FTBs whose joint income and savings allow them to get onto the "ladder". Last Nov I advised a couple (joint income probably £60+k) to stay out of the market. Their heads had been filled with the nonsense of property jokers and I may as well have talked to myself. Well, they're now losing £2.5k a month - but I doubt if they'd even recognise that.
16. braindeed said...
12. bellwether said...
but that they refuse to see something simple like the unsustaianable dislocation between income and prices is not.
The market does seem to be resisting any correction to a degree that surprises me - the utterly entrenched view that 'I'll sell when the market recovers', is everywhere. I expected painful reajustment before now.
I'm amazed at the number of EA s that continue to trade too - mabey the FTB s are in for a very long wait also, because the consensus that the market is overtraded may be common in here, but it flies in the face of Joe Soap's self image.
I've even got a grown up son buying up BTLs(cash so far) - with a nod and a wink from 'top' advisors at Coutts.
It stinks - and not one major party has the stated view that rising prices are a 'bad' thing.
17. bellwether said...
Fair points Icarus although I kind of don't blame the public, most people just aren't analytical and they just want to own a house in part becuase renting is now such an makeshift alternative in this country. The PR machine works to assuage them of any concerns they have.
There is something else as well I think, I've noticed that people are more shrewed when it comes to buying a car and you would think because a house is a bigger commitment they would become more cautious. The opposite seems to happen perhaps because the finanical commitment is so mind blowingly large they have to switch off their critical faculties to make it.
18. bellwether said...
Braindeed it does look as if it will be protracted process although equally I sense there is a complete inevitabilty about it that no amount of PR can stop. Reality always catches up in the end.
19. icarus said...
bellwether @15 well said - there's a lot of truth in that last sentence.
20. braindeed said...
16@bellweather
I hope you're right - but all the parties are talking about recovery in the vein of 'more of the same (ponzi)'
21. timmy t said...
Matt-the-hat @ 7 - They are the "do-nothing-party", that's why we're in this mess. The time to do something was when prices were escalating out of control.
22. crunchy said...
19. timmy That's when they were doing!
23. it_is_going_with_a_bang said...
I would like to know what the definition of recovery is for Peter Bolton. It would be interesting to hear it.
A reasonable recovery and stabilized housing market wouldnt be much use to most of his members.
Greed is all that motivates most of them - not a desire to help anyone other than themselves and their pockets.
24. _woody said...
It's a pity Labour were 'the do nothing party' as they watched asset prices inflate at an alarming rate, and refused to apply the brakes. Now they look to intervene to sustain impossibly high house prices - and socially we all continue to pay the consequences.
I have long given up hope in the effective working of government.
25. Unbeliever said...
Bellwether @ 16 - I have 2 children and sold to rent 3 years ago when we could'nt afford a family home. The years go by and it seems that we will be most of the way through their childhood before we can afford one. No doubt we will end up buying a family home shortly before they leave it and then insist on hanging onto it well into our retirment, ensuring that other families with young children are shut out of suitable housing. What a mess!!
26. crunchy said...
http://www.nypost.com/seven/05242009/business/no_new_lease_on_trillions_in_debt_170812.htm
With the next commercial devastation coming to our shores of course it's a great time to buy into UK property.
The banks will not know what to do with all this extra capital. D'oh. Peter Bolton-King if only you were a blogger, that would be interesting.
You could call yourself Bon-King Bull. Where do they find em.
27. crunchy said...
The banks are on the frontline and nobody wants to stick a head up. Any loose money will be safer in the markets for now. Go figure!
28. mander said...
Peter Bolton-King who probably owns a few properties accuses the Government for doing little to preserve his wealth artificially inflated in the last 10 years by not helping the FTBs to get into negative equity.
So basicly 7 in 10 FTBs think they will not be able to own a home but they are reporting a return of buyers to the market. So who is deceiving here?
29. monty032 said...
Braindeed at number 14 - it is indeed surprising how many house owners are waiting for the unearned, untaxed property profits to start rolling in again in a few months' time. I was just looking again at the real house price charts in the ABN AMRO 'Home Truths' 2007 report. The booms and busts seem to be lasting longer and with a larger amplitude, probably due to the supply of new houses becoming ever tighter over the years. After each of the last two booms, prices relative to earnings have declined for one year longer than the boom lasted. So since house prices rose from 1996-2007, we could be looking forward to twelve years of house price falls relative to earnings. People will be struggling to maintain that irrational optimism in 2019.
30. britishblue said...
Monty032 @25
Excellent comment!
31. uncle tom said...
monty032,
Think of the house price boom as a 50yr event with every increasing oscillations along the way. The motion is a bit like someone cracking a whip.
What is happening now is not the same as before. This is not just another down oscillation, to be followed by another boom, this is the end of the whip, the crack, the final bust..
32. icarus said...
UT @27 - I'm inclined to agree. They've really done it this time.
33. denzil said...
Crocodile tears from Bolton-King.
Bolton-King was too ready to "big up" the market when BTL were killing the FTB. A house price crash will be the best thing for a stable and fair housing market.
34. braindeed said...
UT @27
I cant help thinking that housing is a physical, tangible and emotional asset that will be 'worth' something - even if our money becomes toilet paper.
It could be the only game left in town......think I'll buy a new Blaser.
35. devo said...
30. braindeed said... I cant help thinking that housing is a physical, tangible and emotional asset that will be 'worth' something - even if our money becomes toilet paper.
Welcome aboard, braindead. I learned this 30 years ago.
3 moves later, my opinion hasn't changed.
36. braindeed said...
Devo@31
I'm talking about a calamity that is potentialy unique in it's scope - nothing in the last 30 years has come near.
37. devo said...
32. braindeed said.. I'm talking about a calamity that is potentialy unique in it's scope - nothing in the last 30 years has come near.
We're on the same page (probably).
My comment @ 31 stands.
38. devo said...
Life is short.
If you have no children, what are you living for?
39. devo said...
If you do have children, what are they living for?
40. braindeed said...
Keeps
nuances
overly
banal
41. devo said...
Yes, you are a k.n.o.b. braindead...move on...
42. devo said...
If anyone is interested, my comments @ 38, @39 were aimed at no one in particular..
Probably says more about me, than about anyone else, eh?
43. taffee said...
its quite profound imo....the reality is we have been spending money on things we don't need 'cos we have lost perspective.
44. Greenshootsandleaves said...
I expected nothing less from Mr PBK (regular readers will of course have recognised his now tried and trusted post-budget message, the one designed to tap into anti-Government-of-the-day sentiment, on the lines of '... and what has the Chancellor done to help a beleaguered chocolate teapot industry?' asks the chairman of the Chocolate Teapot Manufacturers' Association).
I expected more from the Indie.