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chewy22

First-time Buyers 'give Up Hope'

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It is important that those who currently do not have the overheads of property ownership, and those that have savings use the money to best effect. Struggling homeowners are not in a position to help bring the economy back to life.

FTB'ers offer the Government the opportunity of getting the banks recapitalised by paying lower rates on savings, and by getting the economy kick started by devaluing the value of money in order that people who have it go out and spend it.

Labour are of the opinion that saving is unpatriotic in this climate, and the wheels of the economy require the lubrication of FTB'ers and those without overheads to use their money to ensure Bankers dont leave our shores for better jobs overseas.

Its only by doing the right thing, and taking the tough decisions will Labour lead this proud nation to success and economic dominance in terms of debt and public spending, that has set Britain to be the envy of the world.

Like Churchill, Louis Pasteur, Florence Nightingale, Charles Babbage and many more great people Gordon Brown will shape the world...................to his liking.

Edited by laurejon

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First-time buyers 'give up hope'

Could not see any other thread on here.

Only 65% - how deluded are the remaining 35%?

This is fantastic news if you're in the 35% (though, if you are, and you're bright, I hope you answered the questionnaire dishonestly.)

I think that needs to be given context. There should be another question asking what proportion of would-be first-time-buyers believe that their gross income will top £250K gross within 5 years.

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Among the most pessimistic were first-time buyers in locations such as Brighton and Norwich.

I can definitely understand Norwich. Average wage here £16k, bog standard 2-up 2-downs (cheapest thing on the market) still floating around £100k. As for having a big family forget it, no decent 5-bedders for less than £250k... even someone on really good money here (£50k) can't get a mortgage for that much.

On the plus side, rents here are getting absolutely slaughtered right now. 20%+ down on pretty much everything. Loads of new BTL developments that only just got completed this year.

Edited by DementedTuna

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As for having a big family forget it, no decent 5-bedders for less than £250k... even someone on really good money here (£50k) can't get a mortgage for that much.

I'm as big a bear as anyone DT, but please keep some perspective.

People have never generally been able to buy 5-bedroom houses as first purchases. People start off in small houses and work up to big ones.

An average priced house has nearly always been beyond the reach of an average first time buyer. That's why average FTBers buy 2 up 2 downs and then aim to progress. Crashes notwithstanding they will generaly achieve an 'average house' on their second or third purchase.

Twas ever thus.

Edited by Mr Yogi

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People have never generally been able to buy 5-bedroom houses as first purchases. People start off in small houses and work up to big ones.

"Twas ever thus" - yes... This "ever" - how far back are you going? Are you thinking only about the UK, or are you considering other economies too?

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Housing minister Margaret Beckett is known to be concerned about the situation, particularly in London and the south-east. A spokesman for her department, Communities and Local Government, said: "We are determined to improve choice and opportunity for those who wish to buy in London, and improve the private rented sector for those who want to rent."

Meaningless government speak.

There are only two improvements worth the candle, and they are lower prices and rents.

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"Twas ever thus" - yes... This "ever" - how far back are you going? Are you thinking only about the UK, or are you considering other economies too?

I guess I'm thinking about the UK since the war, when home ownership became more universal.

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What I find worrying about that article is that it equates decent FTB opportunity with high LTV mortgage availability. Surely high LTV mortgage availability this is one of the main reasons why property is so overvalued in the first place. Which is the real problem for FTBs.

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What I find worrying about that article is that it equates decent FTB opportunity with high LTV mortgage availability. Surely high LTV mortgage availability this is one of the main reasons why property is so overvalued in the first place. Which is the real problem for FTBs.

The article rightly points out that the biggest barrier to entry for most FTB's is indeed deposit size.

A 25% deposit on a 50K flat, is still significantly further out of reach than a 5% deposit on a 100K flat. Contrary to the commonly held assumption on here, not all areas of the UK have rents cheaper than mortgage payments, therefore the ability to save is severely constrained for many young FTB's.

Low deposit requirements make home ownership more accessible, for more people. High deposit requirements act as a barrier to entry, and needlessly block many young and low income people out of the market, particularly in the many areas where rent is equivalent to a full repayment mortgage payment.

There is no doubt that even with 50% falls, the current excessive deposit requirements (particularly to get a half decent rate) will ensure that many people cannot take advantage of the lower prices.

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I'm as big a bear as anyone DT, but please keep some perspective.

People have never generally been able to buy 5-bedroom houses as first purchases. People start off in small houses and work up to big ones.

An average priced house has nearly always been beyond the reach of an average first time buyer. That's why average FTBers buy 2 up 2 downs and then aim to progress. Crashes notwithstanding they will generaly achieve an 'average house' on their second or third purchase.

Twas ever thus.

Hence why I didn't refer to the average wage when talking about the 5-bedders. Still strikes me as odd that someone on £50k still wouldn't have a chance. 8x salary at the low end of the market is ridiculous.

If we don't get a crash, we're headed right back to feudalism in this country. Property owner elite, renter serfs.

The cash injection that FTBs provide to keep the housing market going can easily be replaced by using tax money for ever-rising housing benefit payments to cover up the fact that no-one can afford to buy or rent. Poor people recieve it in addition to what they are physically capable of paying (market rate), average wage people pay for it, rich people get richer from it. End result is money transfer from middle class to (property owning) upper class.

As much as I'd love a crash, I don't buy the argument that FTBs are somehow essential and the absolute only manner in which the money can be provided to stop the housing market from crashing. Draconian government can replace that, and already is to a certain extent. Just wondering how bad this is going to get in the end, I have zero confidence in the tories to be remotely different to labour as far as housing policy goes, they may even be worse, just in a different way, with major tax benefits for homeowners, instead of the benefits approach that labour utilises to cover up what they're doing.

Same con from both parties, just in different ways and we will never vote in any party other than lab or con, the country's too thick to do that.

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(...)

There is no doubt that even with 50% falls, the current excessive deposit requirements (particularly to get a half decent rate) will ensure that many people cannot take advantage of the lower prices.

:)

Did you get out of the bear side of the bed this morning?

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There is no doubt that even with 50% falls, the current excessive deposit requirements (particularly to get a half decent rate) will ensure that many people cannot take advantage of the lower prices.

Yes I see your point. But I tend to think it would be in everyone's interest for credit availability to be less, house prices to be lower and more stable, and for FTBs to save up for longer before getting into the market.

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I guess I'm thinking about the UK since the war, when home ownership became more universal.

Quite... my next rhetorical question is this: when was Britain last affected by a global depression? (Here, I define depression as an economic downturn resulting from a banking crisis as opposed to a business cycle outside banking.)

In living memory the best way to preserve wealth in order to 'move up' the housing ladder has been to own a house. There is absolutely no doubt that this worked well for a very long time... there has even been a visible link between number of times an owner-occupier has moved home and their wealth relative to earnings. My rather serious question (slightly less rhetorical this time) is this: how can anyone have any confidence whatsoever that this will continue? The idea that real-estate holds its value better than any other class of wealth, to me, seems utterly arbitrary - and, from a societal perspective, pretty damaging. We've had sixty years of real-estate over-performing cash - why shouldn't we expect 60 years of cash out performing real-estate?

If we get anything like this in practice, I hope that the implications for the 'housing ladder' are obvious. Those who will be advantaged to move 'up' are those who do not own real-estate rather than those who do. We would see a situation where, apart from the wealthiest, or most financially successful, people would buy their first home and live in it for the rest of their lives. This would be the case if it were a studio flat or a flash 5-bed pad - to delay buying (or under-consuming) would be the path to wealth as opposed to over-consuming (on leverage.) Frankly, this seems remarkably more sensible... so I'm reluctant to rule it out. I'll understand those who are less convinced than I am - for example, those who'd argue that the scale of the implication of what's recently happened isn't so severe... I've two words: "systemic effects". In order for the housing ladder to invert for 60 years, no further change is necessary than an end to a belief in house price inflation as being natural. I think that psychological effect could be effected in about 3 years without average rises in price. Once established, the effect would be self-reinforcing. This sort of thing is difficult to predict... because it kind-of requires a measurement of public stupidity... but from my perspective, judging by the boom, the public is plenty stupid enough to allow prices to dictate prices.

If the housing ladder is to return, we will need to see wage growth of over at least 10-20% on average, and I don't forsee that... given our present geopolitical situation. If prices rise in the UK, emerging markets, like China - or India, for example, will take up the slack... and out-compete from a cheaper cost base... and arguments about currency manipulation won't help much here - China has a central bank and a strong government which isn't afraid to make trillion dollar investments in order to prevent its economic interests being undermined. If anything, barring a new global crisis, I expect to see wages fall.

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The article rightly points out that the biggest barrier to entry for most FTB's is indeed deposit size.

Low deposit requirements make home ownership more accessible, for more people. High deposit requirements act as a barrier to entry, and needlessly block many young and low income people out of the market, particularly in the many areas where rent is equivalent to a full repayment mortgage payment.

So, let`s get this right.

Low deposit = good. High deposit = bad.

Lower deposits mean larger mortgages = good ????

You also seem to want people on low incomes to be allowed into the market, yet you want them to take on larger mortgages (by requiring smaller deposits, and by your obvious support of higher prices) !

Confusing.

Edited by Prof

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Confusing.

Not really, Hamish is just focusing on 'buying' - not on owning.

Syntactically, there's nothing wrong with what he's saying... The slight of hand is that, in their subconscious, people associate buying with owning - and this is exploited ruthlessly by various vested interests.

Edited by A.steve

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It is in the interests of sellers to make it as hard as possible for first-time-buyers to get onto the property ladder.

Why? On the contrary, sellers are dependent on FTBs more than ever to be able to move on up. Anyone currently in a starter home and who doesn't want to be there for the rest of his/her days has a VI in it getting easier for FTBs to climb onto the bottom rung.

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so high deposits are going to deny the FTBs the opportunity to take advantage of the new low prices.

again, backward thinking....if you cant sell at x, and need the cash, you price at x-y%, repeat the drop until the market bites, OR you go bust.

next, for those willing to sit it out and hoping to cash in on high credit scores, they find the same barriers for lending against security as do FTBs, and if secured lending is hard, unsecured becomes even harder..

just look at Credit card rates at the mo. not many @ 1% non promotional rates.

as I say in the sig, we have had the credit feast, now its time for the hangover.

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Not really, Hamish is just focusing on 'buying' - not on owning.

Syntactically, there's nothing wrong with what he's saying... The slight of hand is that, in their subconscious, people associate buying with owning - and this is exploited ruthlessly by various vested interests.

Yes, the VI`s simply want more people to support the pyramid. If that means people on low incomes taking on larger debts, so be it. Nothing wrong with that, what can possibly go wrong ?

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Housing minister Margaret Beckett is known to be concerned about the situation, particularly in London and the south-east. A spokesman for her department, Communities and Local Government, said: "We are determined to improve choice and opportunity for those who wish to buy in London, and improve the private rented sector for those who want to rent."

One has to wonder if this was all she said, as she seems to have forgotten the standard line about "getting the banks lending again". In fact, there seems to have been a distinct lack of that sort of language recently generally. It may well just be me, but one's got to wonder whether the relative silence compared to six months ago carries a certain meaning.

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One has to wonder if this was all she said, as she seems to have forgotten the standard line about "getting the banks lending again". In fact, there seems to have been a distinct lack of that sort of language recently generally. It may well just be me, but one's got to wonder whether the relative silence compared to six months ago carries a certain meaning.

That's a fantastic observation... relevant, too - I think.

This is the sort of thing that I imagine could be analysed with some google tool and indexed news... I'd definitely be interested in objective stats to back up our perceptions.

Getting the banks lending again never struck me as a sensible thing to say. Ignoring, for the moment, the serious practical question about whether banks should be lending - the sound bite failed to be explicit... What lending was important? Inter-bank lending? (Obviously not critical - since the central bank offers a workable alternative...) Lending to businesses? (Would make sense - sort-of, in previous recessions restrictions here exacerbated problems - but the problem this time is that collateral values can't be trusted, not that the supply of credit has disappeared...) Lending to individuals? Give me a break... Not even our MPs could expect us to swallow that Joe-public needed an opportunity to take on more debt.

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Quite... my next rhetorical question is this: when was Britain last affected by a global depression? (Here, I define depression as an economic downturn resulting from a banking crisis as opposed to a business cycle outside banking.)

In living memory the best way to preserve wealth in order to 'move up' the housing ladder has been to own a house. There is absolutely no doubt that this worked well for a very long time... there has even been a visible link between number of times an owner-occupier has moved home and their wealth relative to earnings. My rather serious question (slightly less rhetorical this time) is this: how can anyone have any confidence whatsoever that this will continue? The idea that real-estate holds its value better than any other class of wealth, to me, seems utterly arbitrary - and, from a societal perspective, pretty damaging. We've had sixty years of real-estate over-performing cash - why shouldn't we expect 60 years of cash out performing real-estate?

.

.

.

Yes there is much in what you say. On the other hand it assumes that the sole motivation in owning a house is to preserve wealth - and to trade up as one accumultes more cash over time (perhaps as career develops and income increase).

I think even if property does not gain in value in the future there is the motivation of the basic life cycle of the family. Economically it might make sense to rent until you have saved enough to purchase a 5 bedroom house as a first time buy. But will the majority of people with a number of children desire to rent? Assuming the current system this might involve a number of moves of the family, the restriction of remaining near children's schools, and the substantial expense of moving a family.

People may be more willing to spend money for the benefit/convenience of their family than you suggest - and so may well be willing to forego the advantage of holding cash over property.

As an illustration of this - my parents, and parents in law, bought houses in an era when house prices were not a way of preserving wealth. (We're talking early 50's) They first bought when they got married. Both moved to a larger house when they felt they needed the space for the family. They didn't move again for any other reason. The idea of holding off buying until they could afford the 'full sized' family house would not have occurred to them. Moving up to match house with size of family was natural behaviour.

Therefore I think there will still be a property ladder, one that operates at a slower speed than we have seen in recent decades, and for more sensible reasons.

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