Mr Yogi

But that's the whole point I'm making. Desire = willing to pay. Demand = willing and able to pay! Without the necessary funds, demand does not exist - it is merely desire. Hence when credit is increased, demand increases. This is basic 'O' level economics...

You can disagree all you want - you're still wrong on the technicalities. Availability of credit affects demand. Supply and demand affect prices. There is no short-cut. This is just a simple fact.

Yes, but the more money you had access to, the more you'd be able to pay for it. And the more you'd have to pay for it if you still wanted to buy it. That is the effect on demand of more availability of credit.

An excellent piece; however he makes a mistake in the first line. This is just plain wrong. House prices are completely set by supply and demand - just like all other prices. Easy availability of credit simply increases demand by placing more money in peoples' hands with which to buy a house. Restricted availability of credit reduces demand. Assuming supply remains more or less constant this in itself will go a long way to setting prices. Supply and demand is still the key however. It is important to understand the mechanism. Anyone who argues that the law of supply and demand does not control house prices does not understand what 'demand' is in economic terms.

From the Sun article; A lot of absolute rubbish here. The OR doesn't take all your income after bankruptcy - you are allowed to keep enough to cover all your reasonable living expenses plus £100 per month for luxuries. A proportion of the remainder (if any) goes to creditors. That's a better deal than a lot of perfectly solvent people get by on. Bankrupts are allowed to have a bank account - but not an overdraft facility or a credit card. I am puzzled as to why the journalist thinks that this woman's job is at risk because she is going bankrupt. Unless you are in one of a very few specific professions there is no reason why she should lose her job. All that said, if she thinks that she will be able to continue with her current lifestyle she is in for a big shock. She will get no further credit for at least six years. Most bankrupts see it as an opportunity to draw a line under previous mistakes or misfortune and to start afresh living within their means.

True. By any normal standards, all banks are permenantly insolvent. If any other business carried on trading while insolvent they would have to answer to the Serious Fraud Office.

But that's not how it's done... ...you pay the bankruptcy fees out of your wages or benefits and use your overdraft/credit card to buy food for your family. No-one is ever going to be prosecuted for buying food on their credit card - even if they know they can't pay it back!

Surely the possibility of such a rogue trader going bonkers is a well-known and constant threat; the bank's systems should provide the neccessary checks and balances to ensure that this cannot happen. The bank's board is ultimately responsible for this failure. They should be fired and it is they who should be facing financial ruin. I have no knowledge of French law but won't he simply go bankrupt and start again with a clean slate? This sounds like one of those silly sentances they have in the USA - 900 years jail with no parole...

I'm in the Manchester area and have not been affected personally by the recession at all. My cabinetmaking business is busier than ever and there is no shortage of people spending thousands on custom-made furniture - possibly the ultimate discretionary spend. A strange thing is that the age profile of my clients is decreasing - five years ago it was mainly middle aged or elderly people; now the majority are in their thirties and forties. I get the distinct impression that they are spending their own money, too - not borrowed. An answer to this conundrum is probably that a lot of these clients have moved into the area recently from down south, thereby freeing up dollops of dosh from the sale of their previous house. Roll on the BBC move to Salford Quays! The recession is real however. I have recently taken up golf again after a 30 year lay-off and am looking around for a club to join. Almost without exception all golf clubs are desperate to attract members - I have had membership secretaries on the phone begging me to come and have a complementary round to try out their course. It's great! At this rate I won't have to pay for a round of golf until next year! As for 'joining fees' - they seem to be a thing of the past. £50 a month will now buy me full membership of a club with a world-class course.

Quite right too. I've yet to hear a coherent argument against the principle of nursing home care having to be funded from the sale of the person's house, if they have one. After all, if you go into a nursing home, you don't need a house. As to the article... Wrong way round, surely. Downsizing from a large family home to a bungalow or flat in Eastbourne or Lytham St Annes is an obvious and well established move upon retirement. I remember my grandparents doing just that in the early 1970s. Releasing equity Borrowing money while retaining the expenses of a large home seems a far more dramatic option to me. Meanwhile, I'm working on a far more imaginative solution to exactly this problem. I'm in the process of extending and remodelling our 3-bed semi so that we will end up with a large ground floor with a nice garden for Mrs Yogi and I to live out our days in, and 3 en suite bedrooms, a living room, and kitchen on the two upper floors. These we can rent out to any of our 4 kids who may need somewhere to live when they are older, or more interestingly to young buxom nurses from the local hospital a quarter of a mile away. At current levels I should clear a grand a month easy. Now that's a pension! I will then change my user name to Mr Rigsby...

Particularly Exgremont...

Councils are probably the wrong people to do it through, but if housing associations were given the ability to build unlimited homes via relaxed planning controls then we could solve this whole problem in a few years. If every town and city expanded by 50 yards all round then millions of homes could be built without any major impact on services or the countryside. Not to mention the boost to employment throughout the construction sector and corresponding rise in tax revenues...

I was born in 1960 so I guess I am a late boomer. This article rings true with me. My kids are now in their teens and my main reason for wanting sensible house prices is so that they get the same opportunity to buy homes in their twenties that my contempopraries and myself had in the 1980s. Our mortgage is nearly paid off and we have no intention of ever moving. The value of our house therefore, is totally irrelevent. I would far rather house prices collapse and my kids get a chance than they have to hang on for us to die - that cou;d be another 40 years! Not all boomers are obsessed with the value of their house.

Some interesting comments on there - I particularly liked this one. This pretty well sums up my thoughts. 'Retirement' was a brief phenominum which started in the seventies and has now ended. I expect to go from full-time work to part-time work to illness-enforced inactivity to death. Fortunately I work for myself so I have a little control over the process. My kids will have been given every opportunity and support that I can give them. That will be their inheritance. Unfortunately I don't think there will be much money left! Edited to add; I have come across several people recently whose life-plan appears to revolve around waiting for their parents to die. What sad-fooks! I sincerely hope in all these cases that their parents' entire wealth is consumed by nursing home fees!

I've been self-employed for thirty years and generally work between 60 and 70 hours a week. Pretty well everyone on PAYE is a part-timer in my book!

Wrong! The vast majority of the wealth caught by inheritance tax comes from the increase in the value of the deceased's home. THIS PROFIT HAS NEVER BEEN TAXED! Abolish IHT by all means. Tax the profits made on all house sales, though.

And when 'Mum & Dad' realize that the market is heading south just like it did in the early nineties I suspect that the bank vault door will slam shut... ...as ever, sentiment and peoples' perceptions of the way the market is heading are key to the way the market heads.

I've just spent £42k having a very nice extension built on our bog standard average price 3-bed semi. It has now given us a house that is big enough for our family and where Mrs Yogi and myself are happy to live out the rest of our days. It has probably added about ten grand to the value of the house! Extending to add value is total madness. As for people not accepting that their house is not worth what they expect, sellers understandably want to get the best price they can. They will only accept less when they have to. The sellers in the anecdotes are obviously not yet sufficiently motivated...

But why spend the £20k on her mum's nursing home fees? If her mum can't pay them herself then the local authority picks up the tab. There is no onus on children to use up their own capital paying fees. £20k will cover the fees for no more than a year anyway - so what happens then? With £20k in her pocket she doesn't need to go on the housing list.

Beautifully illustrated. IO mortgages are going to have HUGE repurcussions in a few years time...

My parents sold their 3-bed semi and moved into a very nice housing association flat. They love it - the rent is very low and their total outgoings are now tiny. They manage very nicely on only a basic state pension. They have a far better standard of living than if they had stayed in their house - and they are busy spending the capital on holidays etc. There seem to be plenty of these flats available - at least three are empty in the development my parents live in and the HA is having to advertise them. Best of all their old house is now occupied by a young family.

I too know someone who really needs to sell their house - they are getting divorced. Unfortunately it is very questionable whether they have any equity at all despite having put down a healthy deposit when they bought the place three nyears ago. Do I feel sorry for them? Not really. Life has its ups and downs - there are far worse things that can happen to you than going bankrupt and having to find somewhere else to live. When the going gets tough...

This quote should be studied by all those who still fail to understand that the housing market is just as governed by supply and demand as every other market. Supply and demand explains everything. You just need to understand what 'demand' is, though. Most people don't.

I've never had a proper job in my life. I've been self-employed since leaving university at the age of 21. I've had my ups and downs - including two company liquidations and a personal bankruptcy - but all in all I've done OK. Reading threads like this just remind me how right that decision was that I made 30 years ago. Why would anybody want to work for a big organisation?

£170k in 2001 sounds like a very high price. I looked at selling my house in 2001 following a relationship break-up and had it valued at £110k. I didn't go ahead at the time and sold it in 2004 for £180k. The house sold again in 2007 for £250k. Similar houses are selling now for around £200 - £220k On that basis the house you're looking at would be around £320k. However, I suspect some regional difference in play. I'm in Manchester, and in 2001 the market was only just picking up speed. In your area the bubble must already have had some air in it... £230k sounds a reasonable asking price. How much below that they accept depends on how much they want to sell, how big their mortgage is, and what other offers they get. There is no magic figure to tell you how much a house is "worth". Offer £200k.