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Donald Trump

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  1. I just read this post and it made my blood boil. NuBrit has nailed it, by calling it out as "basically a transfer of wealth from the the young persons retirement savings to the large vested property interests in this country" This is a disgusting proposal aimed only at desperately trying to find a new way to stoke the fire of the property gravy train. The idea of encouraging young people to plunder their pensions just to tap new funds to fuel the property market is one of the most repugnant suggestions I've ever heard. Is there's no end to the greed of these people? Shame on you Guy Opperman, you really have plumbed new depths of depravity.
  2. Markets are driven by fear and greed. Greed has had the upper hand for a very long time, so long that people have forgotten what fear brings. If we disregard the blip in house prices in 2008 -2010, when there really needed to be a very steep correction, house prices have risen or stayed buoyant enough to keep fear at bay for nearly 30 years. This has mostly been possible due to a persistent policy of reducing base rates to promote borrowing (part of the very cause of the 2008 crash). A sustained period of belief that prices only ever go up, backed up by 24 hour property porn on TV and monetary policy designed to catch house prices every time they stutter, has left people in denial over the prospect of collapse. It is going to take quite a sustained period of price falls and a lot of negative press before fear takes hold in people who have never experienced it or simply forgotten it. These very same people are the least likely to have the confidence to sit tight and most likely to panic if the tide turns. There's nowhere left to go with base rates now. Negative base rates won't be passed on to mortgage borrowers (contrary to what some seem to think), and central banks have ultimately backed themselves into a corner. If a sustained period of falling house prices does take hold (signs are it already has in London), then fear will start to challenge greed for supremacy. If fear gets on top then we could see the biggest bloodbath in living history, big enough to make the Red Wedding look like a skirmish. Central banks and governments have played all their cards and nobody's likely to be able to catch the housing market if it falls this time. The effects could be devastating so we shouldn't wish for it. What we have needed is prolonged stagnation coupled with moderate wage inflation in order to avoid the panic of negative equity and inflate away excessive house prices but successive governments have only wanted growth and greed to promote the illusion of prosperity. Bubbles don't pop slowly but they can sometimes endure a long slow puncture before they're either patched or burst. If real negative sentiment takes hold then I'm not sure that there's a patch big enough this time.
  3. If it wasn't so true it wouldn't be so funny! I've even had to bite my lip while I listened to someone once complain, "It's unfair that there's no council houses left for my son to buy like I did. How can anyone expect him to ever afford to buy his own house at these prices? The council need to build more houses."
  4. A message to boomers (like myself). Its time to stop salivating over the increased value of your house and think about giving back to the younger generation. Several years ago I predicted a shift in the political landscape, unless our spoilt, greedy generation stopped thinking only of themselves and focused more on creating opportunity for the young. The new generation need to be able to get decent jobs, buy houses and start families like we did. They need to have the opportunity to enjoy what generations before considered to be their right, and soon that demand will work its way to the ballot box to reshape politics. Today I find myself reading an article on BBC news, talking of a political shift in the USA (https://www.bbc.co.uk/news/election-us-2020-54471388) and it made me want to have my say. The article talks of a generation of young people, priced out of the housing market and paying the price for the financial crash (which they had no part in). It hints at the beginnings of a rebellion, by young people, who increasingly reject more conservative political policies and even capitalism as a whole. This is happening here too and what we’re going to see is the inevitable kickback from a disenfranchised generation who are on the verge of being excluded from owning homes and joining a club, now increasingly seen as being exclusive to an older generation. What’s more, they have to be continually reminded of it every time they turn on the TV and see a property program or overhear a conversation between middle aged couples, gloating about how much their house would sell for and how little they paid for it. When did we become so disgustingly obsessed about property values and why do we celebrate every time they increase without concern for young people trying to get onto the housing market? No doubt, some older people reading this will disagree and think that they worked hard for what they’ve got and spin some story about how they struggled in the early years. Well in many cases that’s probably true, but dragging up old anecdotes about sitting on packing crates while you saved for a sofa won’t really win you any sympathy from today's 30 somethings who can't afford their first home. The truth is that millions of home owners born in the early post-war years, enjoyed jobs for life, generous pension schemes and free university education for themselves and their children. Most households based their income on a single wage and housing was still affordable. There was a abundance of social housing bridging the gap between the public/private rented sector with private ownership seen as just an option which many didn’t want the responsibility of. There was empty property and spare land for building on in almost every street and nobody obsessed over the value of their houses. Absolutely nobody would have tuned in to watch a television show devoted to buying and selling property because they weren’t all that interested. They’d rather turn on the TV and watch quality entertainment like an episode of Love thy Neighbour 😳. My generation (born in the mid 60’s) have enjoyed most of this too. We might have endured entry into the property market during the the 80’s property boom, lived with negative equity, seen our defined benefits pension schemes closed mid term and our children might not have qualified for free university education, but we still had most of the privilege of the generation before us. Our tales of tough days when starting out don’t compare to youngsters today who are often only able to earn minimum wage and face average house-prices of over £300,000 (that’s nearly 20 times salary for someone on minimum wage). Remember also, we had MIRAS (some people choose to forget this), and of course we had the biggest public giveaway in our nation’s history with the right to buy scheme. How different the country would look today if millions of council house tenants hadn’t been offered the total “no brainer” decision to buy their homes at prices massively below market value and become the home owners that they would never otherwise have been. I remember all too well, the feeling of exclusion I felt when I left school in 1982 and we were in the middle of a phase of high unemployment. It was very hard for a young working class lad with no work experience, to get a properly paid job with any prospects. I remember the bitterness I felt from seeing that people as little as 2 or three years older than me had opportunity that I felt I would never have. They simply benefited by accident of timing and were already through the turn-style before the gates were closed. Fortunately for me and people like me, this was relatively short lived. A period of realignment and social economic change, brought growth again and opportunities followed. I prospered from this but I’ve never allowed myself to forget that feeling of desolation and lack of hope for the future. What I experienced, is nothing compared to the bleak future that's being forged for young people right now. Today we have a generation who have been punished by an unprecedented global financial collapse, brought about by the greed and irresponsibility of the generations before them. This has already had a profound impact on many of their lives and it could continue to do so for decades to come. They are the best educated generation in our nation’s history and, regardless of what some think, they’ve generally worked a lot harder at their study than we ever did. In spite of this, swathes of young people are unable to find secure gainful employment. A greater number than ever before live with parents due to their inability to afford their own homes. Rented accommodation has been out-priced, partly due to the lack of social housing and the greed of the buy-to-let sector. Any notion of being able to take the next steps toward adult life must feel totally out of reach to them. Then, just when it must feel that it can’t get worse, we’re hit with the worst public health pandemic in living memory. Worst affected by this has been lower paid workers, many of whom are younger people who’ve been unable to get the proper apprenticeships or get onto a secure career path which was so easy for older generations to do. All of this must already be hard to endure by people, looking at getting onto the property market. Things can’t get much worse surely? Then, the government goes into panic mode. Massive financial decisions are being hurriedly taken without proper due diligence. Decisions that will affect the economy and the prospects of young people for decades to come. Billions of pounds of public money being thrown at people to fill their faces with cheap restaurant food at the cost of the tax payer, a poorly policed furlough scheme (open to fraudsters everywhere) and a surprise reduction in stamp duty. The latter might be seen as something which finally helps young people but look closer, and that’s not really the case. Before the 8th of July 2020, first time buyers were already exempt from stamp duty up to the value of £300,000. Raising this level of stamp duty relief to £500,000 is only going to affect first time buyers purchasing a home for over £300,000. This probably doesn’t account for a very high percentage of first time buyers and any saving for those it does affect is only on the cost above £300K and below £500K. So probably fair to say that the help this offers to young first time buyers is probably negligible. However, and here’s the rub, what it does do, is cause a new property buying frenzy. People who already have homes, wrestle each other to try to take advantage of a short term opportunity to save some stamp duty on moving house. Suddenly, just like the hoards of people queuing to get into every third rate restaurant to scoff food on the “eat out to help out” scheme, they now all wrestle to take advantage of a stamp duty concession. The result of all this, is a reignited buying frenzy and a spike in asking prices for property, way in excess of the tax saving that as made. So who really wins from this? Probably, virtually nobody (except the estate agents). However, of the gains that are made by buyers, the biggest are all taken up by the older generations who already own property and are just swapping houses. In reality, this is nothing more than a poorly thought through, reflex reaction to try to buoy the housing market. Just like "eat out to scoff out" it's doing more harm than good. The longer term effect of it is will only be to further inflate an already massively overpriced housing market. Prices are being pushed even higher and further out of reach of the young. Well done Rishi, give yourself a big round of applause! If you’ve read this far then you might be asking “if he thinks he’s so clever then what does he think the answer is?”. So always willing to give my opinion on such matters, here it is…… Firstly, governments have to be brave enough to face an electorate living with falling or stagnant property prices. Perpetual property price inflation, above wage inflation, should be seen as toxic and the public need educating to comprehend this. Successive governments have believed that you can’t win an election on falling house prices. Well, wake up and smell the coffee is what I’d tell them. A whole generation of young voters are coming your way and you need to think again. A slow, sustained drop in property prices should be desirable and if the public find that hard to swallow then at least a long period of stagnation coupled with moderate inflation. While governments and central banks continue with monetary policy which distorts normal market forces in order to protect property prices, they will only continue to go in one direction. Lowering of interest rates leading to low mortgage rates, is a short sighted policy and you’re just building the most enormous house of cards. People always borrow to the maximum or above when taking on mortgages because they’ve been conditioned into believing that it’s a safe bet, house prices only ever go up. Low interest rates only mean people borrow more and market driven house prices just rise relative to affordability governed by the ability to borrow more. It's a viscous circle, an increase in how much money can be borrowed doesn't make homes more affordable. It is cancelled out by an equal increase in average property prices as market forces take up the slack of the new money. The net result is that property is no more affordable (in real terms) due to low mortgage rates, but the sums borrowed grow ever greater. The more indebted we become, the harder it is to bear even the smallest rise in interest rates and the more the hands of central banks are tied in the future. We’re now down to practically zero percent base rate and talking of a adopting a negative base rate. I can see the incentive for low rates in order to inspire growth and investment in the wider economy but it’s having the most dangerous effect on household mortgage debt and governments know it but do nothing to rein it in. In my most humble opinion, the best way to start to address this problem is by totally scrapping stamp duty. Treat private property in exactly the same way as any other asset and make it eligible for capital gains tax. Set a fixed start date for this to be calculated from, let's say 1st January 2000, and establish an indexing scale to calculate the market value of a property on that date (based on average annual house price inflation worked backwards to January 2000). Upon sale of a property bough after 1st January 2000, the purchase price is simply deducted from the sale price and an adjustment made for inflation, giving the capital gain. In the case of a property bought before 1st January 2000 the index scale is used to calculate the market value, backdated to 1st Jan 2000. This calculation is deducted from the sale price and an adjustment made for inflation to produce the capital gain. CGT is levied at the standard rate on any profit that was made. This will instantly change the entire mindset of the country and totally remove the totally absurd burden of stamp duty chargeable to the buyer, shifting it instead onto the seller (but by way of CGT). The beauty of this is that the amount of tax payable is directly proportional to the gain in price (damping down the vulgar enthusiasm for property speculation). The cheaper the property sells for, the lower the tax burden so there's less incentive to make profit. Also, first time buyers will always be totally exempt because no profit is ever made. Additionally, people will fear house price falls a little less as they will pay no CGT on a lower sale price and could even qualify for GCT relief for future years. Finally, it closes any tax loopholes on second properties because they're all treated the same. It is essential that we, as a nation, get over our short term greed and make way for a more sustainable future. A future that doesn’t leave some gorging on the proceeds of property speculation, only to exclude the young from home ownership and build up a massive burden for them in the future. We can either start to face it and address it now or we can sit back and wait for the youth revolution. It will come and who can blame them?
  5. This isn't about feminism FGS. Any trend or change in social habits, earnings, legislation, lending practices etc etc needs to be monitored and the effects considered and predicted. This is why we have armies of civil servants, government employed economists a chancellor of the exchequer, a head of the BOE and the FSA. Feminism (or I think we should be using the term gender equality in this context), is one of the greatest modern day causes. Everything about equal opportunities and equal pay in the employment sector is GOOD and should not be being sneered at. The problem or unwelcome effect of the rise of women taking to the workplace (and earning proper wages), has been the unsettling of average earnings of families, couples and people buying houses together. The relative affluence brought about by the influx of a second income only gave people advantage when it wasn't the norm. Once we reached the stage where two incomes became the norm, we were back to a level playing field (or for couples at least). House prices are almost unique in the sense that they are totally out of the reach of most to buy in cash and are totally market driven. The only way most people can buy a house is with a mortgage or loan and the only limit on what most people will borrow is how much the banks will lend them (especially when home ownership is so persistently regarded as the best and safest investment anyone could make). So, what I'm saying here, is that if we raised everybody's income by 20% today, then they would have 20% more income by which to assess their lending capacity or loan-to-income ratio. Consequently they will seek to get a mortgage 20% greater than they could achieve yesterday and average house prices will rise by that 20% (because everyone is doing the same). The controlling factors in order to prevent greed and speculation in the housing market start with control over the loan-to-value and loan-to-income ratios (as we learned from 100% and above mortgages). Further to this, there are actions which could be taken directly by government, as well as controlling reckless lending, they can control taxation. When I say this, I'm not referring to the abominable land tax or stamp duty I'm talking about the tax benefits! Simply by applying index linking to the capital gains made on primary residence residential property (for the purpose of taxation), it could be made far less attractive to force up property prices and speculate in residential property. If every penny made in capital gain on residential property (after applying inflation through index linking) was subject to CGT then there would be far less appetite for forcing up house prices and stamp duty could be abolished (shifting the burden onto those profiting from a sale and not the buyer). This would also draw a line under the nonsense of declaring a primary dwelling for tax purposes. So, anyone on here sniping at gender equality and making any veiled sexist comment should be ashamed. Women's right to work and earn the same as any man doing the same job is a basic human right and as we've seen recently, there's still work to be done in enforcing this. The distortion of the housing market (as a consequence of the rise of the second income family) is apparent but blame lies fully in the hands of those paid by us to predict and manage such social changes. If you want to blame any one single, modern day, change which had an unprecedented effect on distorting the UK housing market then I think the "right to buy" legislation should be in your sights.
  6. I haven't read all the replies because I haven't got time (so this has probably already been said). Go to (http://www.moneysavingexpert.com/savings/premium-bonds) and use the winnings calculator. You will be astonished to see how poor an investment premium bonds are. I cashed in my holding long ago and wouldn't dream of going back unless the average returns increase significantly. Buying premium bonds is possibly the worst investment choice commonly made by people with a moderate capital sum to invest. If you need the money soon then just go for the best paying high street account. If not, then get it into shares (FTSE 100 blue chip). Not fashionable at the moment but just sit back and watch them grow when we do eventually get out of this god awful mess. If you're feeling bold then try a bit of armchair trading to exercise some or all of your CGT allowance!
  7. Thanks for your kind appraisal. I personally wouldn't know how to post this as a topic on the main board, but please feel free to do so if you wish.
  8. The point is (and I've been saying it for the past 15 years), that house prices are primarily controlled by availability of credit and not by supply and demand. You have had the gross misfortune of being at an age where you have been faced with buying your first property at the end of the most historically sustained and grotesque orgy of lending by banks and borrowing by individuals. Our own government should have taken steps to control it, but it's now plain for everyone to see that they reveled in the political success of the feelgood factor which it produced. A feelgood factor fueled by corrupt banking and morons committing to greater and greater levels of debt, thinking they were getting richer. Their stupidity, greed and outright corruption have denied you the chance, which you rightly assume you have, to buy a reasonable dwelling (within your perceived income bracket) and enjoy a lifestyle you deserve. You are absolutely correct in your evaluation that a decrease in availability of credit will proportionally affect the final sale value of property. Anybody who thinks otherwise is incapable of understanding the market. Houses are rarely bought for cash, they are purchases with loans. These loans must reflect the borrower's ability to repay them. This basic principle became so distorted and perverted, by everybody who jumped on (or steered) the gravy train, that house prices became entirely detached from average earnings. Now that the banks suddenly care about your ability to repay the loan, the disparity between earnings and asking prices for property has been exposed. You have been responsible and saved a deposit. You are offering up collateral and demonstrating your ability to repay your loan.You should be in a strong position to negotiate how much you can borrow and how much you are willing to pay. Don't be embarrassed into letting anyone think that you are trying to drive a hard bargain. How many estate agents had a conscience about driving up asking prices and taking higher commissions and how many potential sellers that you meet (never faced with your predicament) had a conscience about escalating house prices, the effect on the wider economy or the impact on young first time buyers. I can tell you, it will be very few. They were all down the pub celebrating rising house prices, oblivious and unconcerned with you or the social and economic consequences. Now your time is coming! MY only concern about your comments is your apparent willingness to borrow more if only the banks would lend it to you. That attitude is what got us here in the first place. You should borrow only as much as you can safely afford to repay. That was a difficult principle to stick to during a twelve year bull market in which we saw morons borrowing substantially more than they could afford, only to end up in profit (or so it looked). The feeling of missing out on a gold rush is all part of the psychology driving it. Things have changed now and reality is back upon us. Look at how much you and your friends earn and the multiples of earnings being offered against a mortgage. This is the yard stick you need to measure average house prices. When the gap between them closes then common sense will have been restored. I was in your position in the early nineties and bought at the top of the market only to face years of technical negative equity. Like you, I had saved up a huge deposit (almost 50%) but it didn't help me against runaway HPI. A few years later I could have bought a house with my deposit alone and this time the situation is worse. My only saving grace is that even though I was young, I was blessed with common sense and saw the potential dangers of endowment mortgages. I was the only person I knew who had a "no strings" repayment mortgage. Those instincts have set me in good stead since then and this is no exception. It takes an awful long time for the mentality of a nation to adjust to the idea that their house has a lower market value than it had at the peak of a property bubble, but it will happen. The same mass hysteria that got people on the property buying band wagon when house prices were rising will engulf people when they start falling uncontrollably. This government doesn't have the same commitment to saving them as the previous government (after all, it didn't preside over this mess) and doesn't have any room to maneuver even if it wanted to. House prices will fall further and you will be able to buy one without borrowing more than you can afford. You just need to be able to wait and certainly don't feel compassion for greedy buyers who borrowed huge 100% mortgages and laughed at people who saved. Their loss will be your gain (even if that's not what you seek). Good luck.
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