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Everything posted by WageslaveX14

  1. @RK - Demand for housing isn't just about people who want to buy a home to live in, so you can reduce demand without reducing people. For example, restricting BTL lending would reduce demand. If I have £100k to invest, without a BTL mortgage I can only buy 1 £100k flat. With 25% deposit BTL mortgages, I can buy 4 flats. Reduce the supply of credit and you reduce demand for housing. The implicit and explicit backstopping of lenders (i.e. an anti-free market policy) is one of the biggest drivers of the supply of credit - remove the subsidies and you'll see a drop on demand for housing. Similarly, by removing tax deductibility of interest payments, shifting council tax onto owners not occupiers, and removing subsidies to lenders to artificially increase lending (which otherwise stoke demand), you decrease both the attractiveness of BTL as an investment and the supply of credit, thereby reducing demand for housing. These are either more consistent or no less consistent with free market principles than the current system. Don't get me wrong, I disagree with John Redwood on almost every issue, but you can still be a free marketeer and consistently believe in reducing demand for housing.
  2. If I were a qualified engineer, I would struggle to see many reasons for staying in the UK. Being an expat can be a bit artificial, even in normal Western European countries (i.e. as opposed to the weird existence of a Middle East expat), but engineers have easily transferable skills, and in most disciplines can double or triple their salaries by moving to Germany, where the cost of living is cheaper. Either that or move to Aberdeen to work in oil & gas, which might not suit everyone.
  3. With 'masterful' timing from Osborne, I think the YoY negative figures will only start appearing in March/April 2015. He might just get away with it, but with a bit of luck the price fall headlines will arrive in enough time for the general public to become fully aware before the election. Down here in London, the market was still crazy going into Spring, and the stories about the MMR and 'something must be done to cool the market' only started in earnest in May/June - London prices in the areas I was looking at probably increased by about 15% in the first 4 months of 2014 alone. The real price increases were between summer 2013 and spring 2014. Because of this, I don't think we'll see any YoY falls in the figures until roughly 12 months from the April peak. There's still scope for an Autumn statement re-introducing mortgage interest relief for owner occupiers, removing IHT on primary residences, making it more tax efficient to use your pension fund to buy property, etc, etc, but I don't think we'll see any of these. If I were a Tory strategist (which I'm certainly not), I would float one or more of these options, blame the Lib Dems for vetoing them, and then try and blame the 'resulting' house price falls on Clegg & Co.
  4. Yeah, I've definitely read online comments, but people tend to behave differently on the internet than in real life. I've genuinely not had any conversation about housing with a member of my parents' generation that didn't involve some expression of sympathy or a comment along the lines of 'I'm glad I didn't have to pay those prices'. These are generally middle class, small town Scots. The attitude among people of the same age in London and the South East of England may well be different, but I only have work colleagues in the same age bracket as a reference point. That said, they don't appear to have the 'it was just as hard in my day' atttitude. At lunch last week with my boss, who is about to retire, he said that his generation had it much, much easier than mine, mainly in terms of career but also re: property and housing.
  5. I've actually yet to meet a boomer who doesn't 'get it', or at least I've yet to hear a boomer first hand say that things were just as hard in their day, and that today's generation are just whingers. I suspect it's yet another example of the views of the editors of the press (not confined to right-wing press) being mistaken for the views of the general population. My friends' parents recognise the unfairness of the situation, having seen their kids get good educations and good jobs but still being unable to afford the housing and financial security they had from the wage of a preceived 'lower status' job.
  6. My Dad bought his first house - 4-bed detached in NE Scotland - for 1/4 of his annual salary in the late '70s. This was in the early days of the oil boom, but while people had loads of money, the abundance of land and the lack of access to BTL funding and the culture of seeing property as an investment just meant that people's living standards increased. Aberdeen's still one of the very few places in the UK where you can get a decent private sector salary without having to hand most of it over to a landlord, but the property investment culture has nevertheless pushed prices up massively in the last few years.
  7. My feelings exactly. In 2008 I remember thinking that I was finally being proved right, but I tried to keep the smugness to myself (didn't really succeed). However, from Spring 2009, normal service resumed (at least where I live in London), and everyone who loaded up on eye-watering amounts of debt made enormous tax-free gains that I could never hope to achieve via working. I am sure it will unwind at some point, but not to the point where I wouldn't have been better off buying in '09, '10, 11 or even '12. We might see the 2013-2014 HTB gains being knocked-off, though.
  8. For me it's the total unpredictability that's the killer. If govt just butted out, things would settle to an equilibrium and sensible people could make sensible long term plans. As things stand, the massive risk takers assuming what I had regarded as irresponsible debts have won and the sensible people have lost out, bailed out by a crazy, unpredictable govt intervention. This is the core issue that enrages me.
  9. But just look at that Inner London HTB spike! D'you reckon Osbourne looks on that with unalloyed pride or will there now be a hint of embarrassment?
  10. After posting above I had a quick look at Rightmove. Prices in my old area have indeed softened a fair bit in the past few weeks, but they have a long way to go to get back to early 2013 prices - you'd need to see a 30% fall, which I don't see happening any time soon. If it did start to happen, I think we'd just see another hare-brained scheme from Osborne and/or Carney.
  11. The London figures don't surprise me. Where I was in Tooting Bec, prices of 3-bed houses went up by about 40%. From 2010 to the start of 2013 prices were flat, and I felt comfortable not buying a place. Then, about 4 months after HTB was announced, prices started to go through the roof. Places that were selling for £450k in 2010 in Tooting (i.e. Tooting proper, not Tooting Bec) are now on the market at £850k+. It is impossible to sustain these prices - no one with that kind of money wants to live there, and the rental yield must be 2-3%, so BTL is a very risky gamble.
  12. I am now fairly used to terrible housing policies, but I am amazed that this is being presented as a measure to cool the housing market. Is it definitely 'capped' at 2x JOINT salary? The only confirmation I found in a quick search online is from one Jonathan Davis, so I am slightly sceptical: http://www.mindfulmoney.co.uk/wp/jonathan-davis/carneyge-on-house-market/
  13. Come on, a 0.05% reduction is pretty stable in my book. It will be interesting to see what happens now that the peak house-buying months are now coming to an end, just as talk of monetary tightening and introducing lending caps bites. I don't think we'll see that reflected in the published figures for a few months yet. The froth had to be knocked off the top of the market - asking prices in my old neighbourhood literally went up by 50% in a year for 3-bed houses. I think recent talk has had some effect, but even without the froth, London prices are still 3 times what they should be based on earnings. The front page of the Telegraph business section yesterday (bought it to get 'free' water from WH Smith) stated that the average London house price is now 14x salary based on ONS figures. The fact that the story was on the front page made me think the tide may be turning in sentiment, but as with the last Mortgage Market Review in (I think ) 2011, the politicians will look at what the real effect of capping non-liar loans at 3.5 or even 5x salary would be (i.e. volumes collapsing, sales that do complete taking place at much reduced prices) and back away slowly, leaving it for the next govt, and the next govt, and the next govt, to deal with.
  14. The first time I ever read about LVT was on Conservative Home, written by an HPC regular: http://www.conservativehome.com/platform/2008/03/mark-wadsworth-2.html
  15. I wish I was so confident that sanity would prevail, but I'm not. The only people who genuinely win from the current situation are multiple property owners in the SE. Now look at the composition of the cabinet, shadow cabinet, and the owners and operators of the news media. 5 years ago I would have told you that it was only a matter of time before the market reverted to the long term mean. Now I'm not confident I was looking at the right time period to measure the mean, i.e. post-WWII only.
  16. It can't be rectified without someone losing, but it's far from certain that the real problem (high prices) will be rectified (prices fall). Politicians and various sections of the press view the 'problem' differently. They still see lack of affordability as a lack of access to mortgage finance. The spate of recent articles about bubbles are still the exception rather than the rule - it is rare to get a politician who says, without caveat, "houses are too expensive and the prices need to come down". Relying on market forces to bring prices down has not worked out very well over the past 5 years - with all the various props, the market is rigged. Will the props be knocked away? I think not, at least not 12 months before an election. HTB phase II may well be reined in slightly, but the Tories and the BOE are each trying to offload responsibility onto the other to call time on HTB.
  17. Yep - the connection between 1.) working hard and being productive and 2.) financial security, never mind wealth, has been severred by the disfunctional housing market. An ex-colleague of mine mortgaged herself up to the hilt to buy an £800k 2-bed house Islington in 2010. She will be sitting on a £400k tax-free profit by now. To have accumulated the same amount through working, she would have had to earn an extra £200k per year. By the same token, if interest rates had been normalised in the meantime, she could easily have lost £200k. The unpredictability is the real killer, which has big knock-on effects in the wider economy.
  18. The point was in response to earlier points that FTBers would not lose money they had earned/worked for. Nothing more. Track back through the thread if you like.
  19. This is my current favourite offering: http://www.rightmove.co.uk/property-for-sale/property-45895424.html One for a canny investor. Although that's an extreme example, this is fairly typical: http://www.rightmove.co.uk/property-for-sale/property-44463814.html This is round the corner from where my g/f (now wife's) downstairs neighbour sold her place for £380k in early 2009. At the time I was adamant that whoever bought that was place was a total mug. They are now sitting on £250-300k profit. It's fair to say that I wouldn't touch those places with a barge pole. I still think £380k is too much to pay for a flat like that, but someone is buying at these prices. I would genuinely like to ask these buyers why they are buying, as the gross rental yield must be about 2.5%. I'd also like to know what would put them off buying.
  20. Do you really believe that the banks want a 50% crash? Why would they? Their balance sheets wouldn't be as badly destroyed as some commentators would have you believe, but it's still in their interests to avoid losses on existing loans. In the last 18 months both lending volumes and prices have increased, which means more interest, which is what they want.
  21. But in most cases FTBers will have worked for the deposit - very few will rely purely on BOMAD - which is the part that they lose when prices fall. The leverage part is the bit that remains after the deposit they have worked for has been wiped out, which in this country without non-recourse loans, gives a further punch to the stomach - you lose more than your original stake.
  22. It's all part of the mix - a 50% crash is possible, sure, but is it likely? I spent years believing that prices would revert to realistic levels, and that because the alternative would be a neo-Victorian social divide between an ever-decreasing pool of property owners and everyone else, a significant crash had to happen. The problem is that the 'reset' that should have happened after the securitisation bubble burst never really affected London and SE prices. We might actually have to accept a neo-Victorian reality, and that the period from 1945 to the 1980s was the anomaly, and not the current situation. There are loads of things that could cause a crash - higher interest rates, CGT on main residence, LVT, a bond market strike, etc, etc. They haven't happened yet, and they still might, but you have to make an assessment of the probabilities and vote with your feet and the decision is binary - to buy or not to buy. I remember ridiculing people on this forum in 2009 for saying that they were going to rent out their place rather than sell, waiting for the market to improve. Turns out they made the right call and that I was wrong. I knew all the historical price to earnings ratios, I'd read loads of papers about the aftermath of banking crises etc, etc. Thing is, I was wrong. Everyone I thought was 'stupid' or 'ignorant' for buying a house made money, while I didn't. I've given up recommending what other people do because I've made too many bad calls in the past - I expect to lose notional amounts on my house in the short term, but won't be celebrating if prices keep rising - but I try to be less dogmatic these days - I don't want to end up like Jonathan Davis.
  23. I think most FTBers these days will be relying on a combination of the first two, i.e. they saved up a deposit and used a bit of BOMAD money whilst still taking out a big mortgage. A reduction in prices wipes out their deposit equity first. Nothing controversial there, surely?
  24. Sure, as I've already said, but they can keep rates at zero, and a correction of even 20% from today's South London asking prices will only bring them back to Summer 2013 prices. Depressing, but in most cases true.
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