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House Price Crash Forum


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Everything posted by ingermany

  1. They can control the price an owner gets for a house by the same mechanism that the EU can control the price a Spanish farmer gets for a litre of olive oil. It is just a much bigger quantitative intervention. It is a new era, because government has crossed the Rubicon into territory where they are indemnifying investors in UK residential property. They nationalised mortgage lending. They directly funded sub- prime loans. They introduced massive subsidies. Once they did this there was no going back.
  2. Banks couldn't lend because they were insolvent. They had also fuelled UK sub prime by irresponsible lending, self cert, liar loans, 125% loans etc. Sub prime lending in UK is what keeps HPI going. UK government is now the sub prime lender, because someone has to do it, or house prices will fall. Shared ownership and HTB are just filling in the space left by Northern Rock. Rates can't go up. Even when inflation was 250% above target they couldn't rise.
  3. I agree. 10 years ago who would have predicted nationalisation of UK money lending and government paying 40% deposits to allow buyers to get a mortgage? HPI is like a pyramid scheme. It begins to fail when liabilities exceed assets and investors can't cash in their holdings at face value. That happened in 2008. If government begins indemnifying potential losers, as it has done for the last 7 years, there really is no limit. Sellers, buyers, borrowers and lenders are all wholly dependent on government support. Buyers will only invest in property if they are confident that government will continue to ensure they make a profit, or if they fear for the security of their cash in the banks. A combination of HPI subsidy from government and threat to confiscate savings looks inevitable. They really can't stop. I don't think a simple election would bring an end to it. It would need complete regime collapse; of reserve bank, government, currency. Albania 1990 style.
  4. Are you suggesting that market forces should determine property prices? Burn the heretic. Last time it nearly happened UK government found £1200 billion and spent it within weeks to prop up the market. The odd 5 billion to reassure those with flooded properties is small change. My point was that this aid should come from a tax on property ownership, as it is exclusively for the benefit of home owners.
  5. The size of investment needed to make any meaningful difference is huge, and we just do not have the engineering skill base to complete the work. Cheaper to finance a flood compensation scheme via a land value tax on all homeowners.
  6. What about a judicial review on how income tax from PAYE was used to finance "funding for lending", that gave would be landlords unlimited loans at cheap interest rates in order to push up house prices for ordinary taxpayers? The taxman giveth and the taxman taketh away. The lawyer always wins.
  7. Simply lending at volumes and rates determined by the forces and risks of the free market would control prices well enough. There would still be booms and busts of course, but these would be synchronised with the economic cycle. Only massive government financial intervention could create a record housing bubble in a recession. And a perverse incentive to keep the economy in "special measures".
  8. He forgot to say "no more boom and bust". He did admit to being a builder though, which is maybe a little too honest of him, given he is siphoning off 6 billion of taxpayers' money to builders.
  9. Lawyers for HBOS execs have used the word "unforeseeable" to describe the bank's collapse. The word demonstrates that no lessons have been learned.
  10. Yet we have zero inflation according to BoE. Just on the news that care homes are acutely short of cash and will be closing, due to wage costs. Hardly surprising if living wage is now effectively approaching 50k....albeit subsidised by benefits. All those old biddies with million pound homes they can't live in need residential care. Their houses are only worth that much if people like care workers can earn 50k a year, and if care workers earn 50k, the care homes go bust and old biddies have to look after themselves. Aging population will eventually kill off HPI. 4 Bed houses will be worth 3 years of care costs. When unqualified part time nursing assistant salaries reach 100k the BoE might recognise that there is some inflation starting to creep into the economy.
  11. And imagine a a doctor who doesn't have Scottish parents. Totally fcuked........for life.
  12. This is one big reason to thank the EU. The fact that a Bulgarian family can come to the UK, and one of them can work 2 days a week in Macdonalds, but get family income equivalent to that of a lawyer, all paid for by UK taxpayers will finally get under the skin of Cameron and his mates. He will have to reduce these subsidies for everyone. Unfortunately, the real beneficiaries (Btl investors) will squeal. They don't care about the origin of their tenants so long as the taxpayer is paying off their mortgages.
  13. That sums it up doesn't it? In order to engender a feeling of wealth house prices have been artificially pumped up by ultra low interest rates and subsidies. The consequence is that people earning reasonable wages like nurses and teachers, who would previously been able to afford a roof over their heads, now need welfare payments to supplement their income. The fact that ordinary people are now living in million pound houses is trumpeted as a massive achievement. However these people still need teachers, nurses and carers, as well as supermarkets and cafes. The people who provide these services can no longer afford to live near the million pound houses. Government either needs to allow teachers to live in tented encampments like refugees, or pay 10s of billions in benefits to allow them to breathe the same air as the residents of the SE England. Successive governments have seen house price inflation as the only way of creating wealth. In pursuing this policy to the utmost they have completely screwed up the country. I predict that child and working tax credits will be replaced by HTB3.....tax credits that can only be used to spend on housing. It will be sold as a "help to get on the housing ladder/pyramid" scheme.
  14. How is it thar economists always get cause and effect the wrong way round? The "too big to fail" decision was made by central banks and national administrations over 10 years ago. ZIRP, QE, and state subsidies to housing markets were policies that followed logically from that decision.
  15. That's what they are planning for though. Government and BoE are pushing the banks to lend more to house buyers (and funding the lending through FLS/HTB etc). If this wipes out the banks, it is the depositors that take the hit. And yes, it has already ended any sort of functioning economy. Manufacturing is ended. The Telegraph is talking about the chancellor's proposed BTL tax like it is the economic apocalypse. Taxing BTL will cause a deep recession/quote. What sort of economy is powered by interest only loans used to fund asset price (one way) speculation? The problem is that the Telegraph is probably right. HPI is the only functioning engine of this economy, and George is about to shut it down.
  16. Alternative to working. Borrow money and use it to invest in property. Do nothing and and wait for price to rise. This is the prevalent mindset, to use property like a bank account. It is bound to create boom and bust. If Btl is removed from the mix, there will be no buyers until prices fall to 2003 levels. Those with big mortgages will need bail outs, as will the banks. Savers will lose again.
  17. Compo. Dead cert, and it will be 10s of billions. Government are relying on institutional mis-selling to finance the recovery. Mortgages and Mew can never be repaid. The real fools are the people with bank deposits. It makes sense to get the biggest liar loan conceivable.
  18. Borrowing to live, on the assumption that in 2 years time house prices will be £340k for a 2 bed. We are back in tulip territory. Money is being created on the assumption of massive HPI. Borrowing on assumption that banks will go bust and deposits will be confiscated. Logical position is to load up on debt. Banks and government are doing everything to support this view. Precarious to say the least.
  19. Got to keep GDP going up somehow. The British way is credit mis-selling coupled with government bail outs and compensation.
  20. Prostitution is a major contributor to GDP, so most of the rise is probably attributable to Lord Sewel, who seems to have been keeping his end up on behalf of the nation.
  21. And an additional £5k a year gift to anyone with kids and earning less than £150k. To cover child care costs. Or rather, to meet MMR affordability tests and cover some mortgage interest.
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