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Politicians Must Force A Fall In House Prices

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http://www.thisismoney.co.uk/mortgages-and-homes/house-prices/article.html?in_article_id=507427&in_page_id=57&ct=5

'Politicians must force a fall in house prices'

By Ben Laurance

29 June 2010

Ben Laurance, associate editor on the Daily Mail's City desk, explains why politicians must be brave enough to ***** Britain's house price bubble...

Evidence on the trajectory of house prices seems to point in the same direction.

True enough, there's no consensus on the speed of any slowdown; indeed, there's not much agreement on the amount by which prices have risen in the past 12 months.

But yesterday we saw figures from Hometrack which suggested that in June, prices have inched up by a negligible 0.1%. And the Land Registry reckons that prices actually fell in May. Back to a housing boom? Scarcely.

Hence the timing of the gentle suggestion about regulation of home loans from the Bank of International Settlements (BIS) might not seem entirely appropriate.

But the BIS's annual report yesterday put forward the thoroughly sensible idea that we should consider some cap on the size of loan that can be raised against a property.

Over the past four decades, controls on mortgages have become more lax. there was a bout of deregulation in the Seventies, followed by a boom and a bust.

The Thatcher government upped the ante after it came into power, the Eighties boom followed - and the inevitable bust after it.

And then, in the past decade, we saw banks come up with ever more 'innovative' devices such as the securitisation of mortgage books. Cue the invention of bizarre and dangerous financial products such as Northern Rock's 125% mortgage.

The big boom - and the mini-bust that came in its wake - are still fresh in our memories.

And so what is the BIS saying? Tucked away in yesterday's report, under the snappy title Macroprudential policy and addressing procyclicality, it points out that capping loans as a proportion of property value can be a useful way of damping down cyclicality in house prices.

The scope for speculators to indulge in highly-leveraged property investment is reduced. And lenders are less exposed when property values fall. Some countries such as Hong Kong, Korea, Malaysia and Singapore already impose these loan-to-value (LtV) limits.

And here in the UK, the idea has its high-profile supporters. In the spring, Lord turner, chairman of the Financial Services Authority, ruefully suggested that interest rates are little use in trying to control Britain's property market.

Old-fashioned as it may seem, we ought to consider the idea that people buying a property should be obliged to put down a chunky deposit to do so.

Sensible? It certainly seems so. And despite the fact that the idea is being floated again by the BIS at a time when British house prices are looking a bit wobbly, it should be given serious consideration.

But, of course, there is the small problem of mustering the political support for such a move. The British, at least those who already own their own homes, like house price increases. (They seem to be remarkably good at obliterating the busts from their collective memory).

A politician who suggested making it more difficult to buy a house - in a move that could actually bring a short-term fall in house prices - would be brave indeed.

But isn't courage just what the political class is meant to be demonstrating at the moment?

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They have too is the only option this country has left, if they want low unemployed nation.

If they fail to allow house prices to fall....they are brewing up huge problems for the future...I trust they will see the sense in this madness. ;)

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If they fail to allow house prices to fall....they are brewing up huge problems for the future...I trust they will see the sense in this madness. ;)

Aren't the huge problems already here ?

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If they fail to allow house prices to fall....they are brewing up huge problems for the future...I trust they will see the sense in this madness. ;)

But not within the lifetime of this government.

The problem is if they precipitate a fall that's still there in 5 years time, they wont get re-elected.

OTOH if they magically keep prices up for the next 5 years, all of the problems that creates will occur later, perhaps after they have retired.

tim

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But not within the lifetime of this government.

The problem is if they precipitate a fall that's still there in 5 years time, they wont get re-elected.

OTOH if they magically keep prices up for the next 5 years, all of the problems that creates will occur later, perhaps after they have retired.

tim

The rule of a new manager is simple.

Any problem that occurs within a year is the fault of your predeccesor. Any problem that occurs after that is your fault.

I think that there are enough astute people in Government who understand this rule to do anything that they can to expose as many problems as they can within 12 months.

The GDP reporting delay due to possible errors is a starting point. I am sure that they have a team going over the DMO's books with a fine toothcomb including the classification of on versus off balance sheet liabilities.

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But not within the lifetime of this government.

The problem is if they precipitate a fall that's still there in 5 years time, they wont get re-elected.

OTOH if they magically keep prices up for the next 5 years, all of the problems that creates will occur later, perhaps after they have retired.

tim

David Cameron June 2010 ...

The Prime Minister said many people are under the “delusion” that just because the UK has historically been one of the richest countries on earth, it will always remain so.

Only if we “reboot and rebuild” the UK economy can the country’s future prosperity be assured, he said.

I also read, but can't find it, that he is happy to make fundamental changes to the UK even if it only means he gets one term in government .... if he's genuine then watch this space!

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Can't believe it. Watching the mainstream media news tonight; "Ruthless" cuts in police, Cuts in NHS, Royal family funding cut in half.

Perhaps they want house prices to crash and burn after all.

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Damn right!

****** it good!

exactly what i thought!

**** it 'till its **** looks like a bisected blood orange

Edited by sbn

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But not within the lifetime of this government.

The problem is if they precipitate a fall that's still there in 5 years time, they wont get re-elected.

OTOH if they magically keep prices up for the next 5 years, all of the problems that creates will occur later, perhaps after they have retired.

tim

Growth less than inflation and bank credit interest rates.... plus falling rents must be the best outcome for all of us...stops all this property speculation and gives people who want to buy a chance to save for a deposit.

....you shit on the young, the young will rise up and spoil the party. ;)

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  • 145 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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