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Property Prices "at An All Time Low"

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From the Scotsman: The flat that dad bought may pay for children's education.

This is an article by an accountant telling you how to avoid paying tax on a flat you've bought for your student son or daughter. It begins

EDUCATING children is an expensive business, especially if they decide to go to university. Between fees, books, travel expenses, pocket money and, particularly, accommodation, the costs add up quickly.

For many parents these expenses have to be met out of after-tax income, which can be particularly painful if you are a 40 per cent tax payer.

Property prices are at an all time low and so many parents may be thinking about purchasing a property for their student son or daughter to live in whilst at the same time generating additional income by letting out spare rooms in the property to other students.

[continues]

I'm no expert, but I have a suspicion that the assertion about prices being at an all time low may not be entirely true.

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From the Scotsman: The flat that dad bought may pay for children's education.

This is an article by an accountant telling you how to avoid paying tax on a flat you've bought for your student son or daughter. It begins

I'm no expert, but I have a suspicion that the assertion about prices being at an all time low may not be entirely true.

they are if you are a goldfish.

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From the Scotsman: The flat that dad bought may pay for children's education.

This is an article by an accountant telling you how to avoid paying tax on a flat you've bought for your student son or daughter. It begins

I'm no expert, but I have a suspicion that the assertion about prices being at an all time low may not be entirely true.

Perhaps it was supposed to be at an all time WOL - that is somewhere between an W Or L shaped recovery ? I don't know but that is what OWL told the bear of little brain ;)

Edited by Sybil13

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I'm no expert, but I have a suspicion that the assertion about prices being at an all time low may not be entirely true.

Scottish logic and honesty. Aren't you glad you've got so much of it in the Cabinet, too?

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my oh my, breathtaking that really is,

are there any entry standards to business/economic journalism these days? does anyone edit submissions any more?

is it all old pals act at oxbridge more than ever?

flabbergasted

Edited by loginandtonic

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my oh my, breathtaking that really is,

are there any entry standards to business/economic journalism these days? does anyone edit submissions any more?

is it all old pals act at oxbridge more than ever?

flabbergasted

I'd recommend you read 'Flat Earth News'. Simplistically it says local journalists are so over stretched that they often bang out press releases and publicity frrom companies but under their own name because they haven't got the time to check the story or to do any research themselves.

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The VI's have the Scottish press on a string. They may as well distribute the papers from estate agent offices.

I've only read one sensible article all year and cannot understand how it slipped through:

Rejoice, rejoice - house prices are rising once again. The market has recovered, confidence has returned and there is light at the end of the property tunnel - or so we're told by the economic cheerleaders who believe house price inflation is wonderful. It isn't. The rise in house prices is extremely bad news - not just for the millions who are locked out of home ownership, but for the economy as a whole.

Rejoice, rejoice - house prices are rising once again. The market has recovered, confidence has returned and there is light at the end of the property tunnel - or so we're told by the economic cheerleaders who believe house price inflation is wonderful. It isn't. The rise in house prices is extremely bad news - not just for the millions who are locked out of home ownership, but for the economy as a whole.

It's incredible how short people's memories are. We were supposed to have learned a grim lesson last year - that we couldn't continue to live beyond our means, taking on debts we couldn't afford. Housing is for nesting not investing, we were told.

Everyone accepted that the UK economy had been deformed by the relentless rise in house prices which underpinned the credit bubble that finally burst in 2007.

The collapse started in the sub-prime property market in the United States, but the same phenomenon existed here, too. Bradford and Bingley, Northern Rock and HBOS collapsed because they had loaned too much on the basis of inflated property values. Those 125% mortgages, buy-to-let schemes and micro-loft developments in city centres all pushed property values to excessive multiples of earnings, creating an unstable pyramid of debt.

But now it seems to be happening all over again. It almost defies reason. In the middle of the worst recession since the 1940s, and with unemployment climbing towards three million, house prices have just registered their biggest increase in five years. In Edinburgh, which is leading the "recovery" in Scotland, August house prices are 6% up on last year. The average cost of a home in the capital - which means a two-bedroom flat - is back to nearly £220,000 in a city where average earnings are only around £23,000. House prices at nearly 10 times earnings is economic insanity.

How can this be? History tells us that house prices fall when credit is tight, the economy is in recession and unemployment is rising. All the economic forecasters were saying that house prices would continue to fall this year by about 10%. To get down to historic multiples of earnings, UK prices should have another 20% to drop. Yet here we are with house prices rising faster than they were at the very top of the market two years ago. Nationwide has even announced the return of the 125% mortgage.

What seems to be happening is this. First, the collapse of the value of the pound meant that UK property prices for foreign buyers dropped, not by 20% but by nearer 40%. This made big houses in London look cheap to foreign investors. Also, the City of London has been paying itself mega salaries again. This has ignited a mini boom in houses worth more than £1m, sales of which rose by 234% in August.

The freeze on stamp duty hasn't done a great deal to help first-time buyers, but the cuts in interest rates have been an enormous boost to the relatively well-off. Anyone owning a large home with a large mortgage has been handed a windfall worth hundreds of pounds a month. This has encouraged a number of people to trade up while prices were down. There's also been a bounce in the sales of flats to cash buyers as people look to find areas to invest in, now that cash is earning practically nothing if left on deposit. The bank of mum and dad has been helping younger families pay their deposits.

The banks are not repossessing homes in the way they did in previous recessions and are allowing people in arrears to defer paying their mounting debt. The final factor is the chronic housing shortage. We're building fewer homes than ever, and the number of housing starts in Scotland fell this year by 26%. Scarcity means people bid up the prices of the homes that are available. This doesn't, of course, mean that the housing market has recovered to normal volumes. Far from it. Fewer than half as many houses were sold in August compared with two years ago. This is because first-time buyers are still locked out of the market if they can't raise the 25% deposit demanded by the banks which are actually tightening credit right now.

But where is the Bank of England? Surely, if another bubble is brewing, it should be raising interest rates. Where is the FSA? The government has repeatedly said that it wants avoid any return to the property-based credit bubble. But the governor of the Bank, Mervyn King, is holding rates at their lowest level in 300 years and continuing to print money through quantitative easing. This cash has to go somewhere, and since there is no incentive to save, a lot of it is finding its way into property.

But if this is allowed to go on, then we are simply preparing the ground for the next bubble and the next bust. We desperately need to create a savings culture in this country, not another round of mega debt - which is what high house prices inevitably lead to. The government appears to believe that a return to house price inflation will please the voters, but a large number of them are young families who can't afford to buy a house. The average age of the first-time buyer is approaching 40.

The government also hopes the high streets will start booming again as people borrow against the rising values of their homes, just as they did in the years until 2007. But housing wealth is an illusion, borne of scarcity. It distorts the economy by diverting investment into speculation instead of into making things and adding value. Worse, high house prices actually depress consumer demand because families are forced to spend their disposable income on rent and mortgages rather than on goods in the shops.

It is desperately worrying that no-one seems to be pointing this out. The silence from the politicians and regulators has been deafening. The media coverage is uniformly inflationary, celebrating high house prices when we should be demanding that the regulators do something to prevent another bubble mentality forming. We need a crash building programme, more social housing for rent, a curb on tax incentives for buy-to-let, a reversal of the cut in capital gains tax and restrictions on earnings multiples. The beast must not be let loose again.

http://www.heraldscotland.com/have-we-lear...crisis-1.917512

I can imagine the Herald tannoy system after that one.... Mr MacWHIRTER to the re-education centre....Mr MacWHIRTER to the re-education centre

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The VI's have the Scottish press on a string. They may as well distribute the papers from estate agent offices.

I've only read one sensible article all year and cannot understand how it slipped through:

I can imagine the Herald tannoy system after that one.... Mr MacWHIRTER to the re-education centre....Mr MacWHIRTER to the re-education centre

To be fair to the Herald, Ian MacWhirter publishes stuff like this week after week, and has been doing so for a long time. The Scotsman just keeps getting worse and worse though. It's owners are in trouble and there have been several stories that they're trying to get rid of it. There was a recent claim that a consortium of Scottish businessmen were trying to buy it (link). The group consists of two financiers and a property developer, so I don't see things improving any time soon.

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I am sure the assertion that "property prices are at an all time low" is an outright lie.

Therefore I have complained to press complaints commission:

http://www.pcc.org.uk/complaints/process.html

Perhaps others would like to do so also?

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Total and quite breathtaking lie.

Even as recently as the late 90s you could buy a flat in Edinburgh for £25-30K. You now see little for below £100K. In 2007 they were at the top of the most massive property bubble ever seen and, certainly in Edinburgh, they haven't come back down much since then.

It's equivalent to someone in 1929 saying, stocks are at an all time low following the very first falls after the bubble peaked

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For anyone who keeps an eye on the Scotsmans property stories - this is no great surprise.

This is the link to most of their mortgage and property 'stories'.

Scotsman

Fill yer boots.

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I tried the Press Complaints Commission.

Basically they have said there is nothing wrong with the article as the author was only expressing his opinion and it wasn't a scientific analysis of the property market.

I've asked them to point out where it said it was "In my opinion" and not as if a statement of fact and am waiting for another reply

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