Your Home Is A Place To Live, Not A Pension: Tory Minister Vows To End Era Of House Price Booms

[interestrateripoff]

http://www.dailymail.co.uk/news/article-1319943/Your-home-place-live-pension-Tory-minister-vows-end-era-house-price-booms.html

Middle-class families were warned yesterday they should not rely on their homes to fund their retirement.

Housing Minister Grant Shapps said the Government would try to ensure property prices rise more slowly than incomes to prevent a repeat of the boom that has made it impossible for a generation to get on the housing ladder.

Mr Shapps issued a stark warning to the better-off, saying they will no longer be able to use rising property prices as a retirement nest egg.

Calling for an end to the ‘lottery’ of the housing market, he said: ‘People should think of homes as a place to live rather than a pension.

‘What is required now is a period of stability. House price booms keep people out of the market. And house price busts mean people’s homes are worth less than they paid for them.’

Mr Shapps’s message is unlikely to appeal to many Tory voters who have relied on regularly rising house prices to help provide a comfortable retirement.

It also leaves him open to accusations of the ‘I’m all right, Jack’ syndrome.

He has already pocketed an estimated £250,000 from a previous house sale, and could make a similar amount if he sold his five-bedroom detached house in Hertfordshire, which is currently worth more than £1million.

But Mr Shapps is convinced there is widespread support for his policy. ‘The exact same people in Middle England who want a retirement nest egg will say their child can’t leave home because they can’t afford it,’ he said.

Is he wanting stability at current price levels? Clearly that would help the banks with mark to fantasy accounting.

[Mikhail Liebenstein]

 Heresy. Burn the heretic.

[hedgefunded]

"Property prices rise slower than incomes..."

If he's referring to disposable incomes then we all know what that means don't we?

[57percent]

Might be a good sign. As long as they don't do anything stupid to support house prices, then I'll be happy.

.... not sure it's a vote winner

[Realistbear]

No more boom and bust eh?

Funny, I am sure I have heard that promise somewhere else.

In a corrupt market dominated by a culture of banksterism boom and bust is here to stay. Politicians are here today, maybe gone tomorrow but the bankster culture will live on and on.

Best you can do is buy at the bottom, hang on and DO NOT get involved in property as an investment.

[Toto deVeer]

Sadly, this kind of talk is just talk.

The UK housing bubble was just a side effect of the policies of the US Federal Reserve. The temporary recovery in housing has been a result of the US Federal Reserve.

Basing your national economic welfare entirely on monetary policy will cause the boom and bust happen over and over again. This is a sure bet, with probability 1.

Unfortunately in present times monetary policies can destroy a country in minutes, whereas appropriate fiscal policies may take years to put in place (if ever).

[richc]

Sadly, this kind of talk is just talk.

The UK housing bubble was just a side effect of the policies of the US Federal Reserve. The temporary recovery in housing has been a result of the US Federal Reserve.

Basing your national economic welfare entirely on monetary policy will cause the boom and bust happen over and over again. This is a sure bet, with probability 1.

Unfortunately in present times monetary policies can destroy a country in minutes, whereas appropriate fiscal policies may take years to put in place (if ever).

If you compare the UK vs Germany in the 1960's and 70's, the UK consistently ran negative real interest rates (official rates below the rate of inflation), while the Germans maintained positive real rates. Given that situation, it makes much more sense to make speculative investments in property and financial markets in the UK -- the government is giving you free money by borrowing money and sitting on it -- though the resulting inflation makes it very hard to run a real business. The results of this policy were obvious over the long run -- the British real economy withered while the German economy took off. Unfortunately, the Bank of England and the British government are still playing this game. Easy monetary policy has never in history saved a country from being over indebted, but the BoE keeps trying.

[pablopatito]

"Mr Shapps admitted the Government could not ‘dictate’ house prices, but said it would help stabilise the housing market by using economic policy to ‘keep interest rates low’."

Me no understand. What does he mean by this?

[Rain'ard]

Is this the Coilition government telling us gently they are going to f**** up over house prices and just in case the crash happens under their watch?

[Papa Serf]

He is saying he wants stable house prices and is being moaned at by the older generation, he can't call for a anything resembling a crash, he wouldn't be able to walk the streets safely. Hopefully this is the thin end of the wedge.

Do they finally get it and if so do they have the balls, probably not.

I guess in politics its all about managing people expectations, there is alot of work to do.

[Dorkins]

"Mr Shapps admitted the Government could not ‘dictate’ house prices, but said it would help stabilise the housing market by using economic policy to ‘keep interest rates low’."

Me no understand. What does he mean by this?

The line they keep spinning is that lower deficits mean lower interest rates, and low interest rates are good for the economy, so if people want low interest rates they should support deficit reduction (i.e. public spending cuts). The economic logic seems a bit tenuous to me, but there you go.

The Tories are sounding like just another bunch of easy money addicts, but at least they want fiscal responsibility. I guess that's a small step up from the last lot.

[pablopatito]

Ah I see, thanks. So he's really just flogging spending cuts, rather than indicating any actual government strategy to control long term house price inflation. Bit of a non-story then.

[exiges]

Your Home Is A Place To Live, Not A Pension

Then give us pensions worth investing in then.

[eric pebble]

 Heresy. Burn the heretic.

[Toto deVeer]

If you compare the UK vs Germany in the 1960's and 70's, the UK consistently ran negative real interest rates (official rates below the rate of inflation), while the Germans maintained positive real rates. Given that situation, it makes much more sense to make speculative investments in property and financial markets in the UK -- the government is giving you free money by borrowing money and sitting on it -- though the resulting inflation makes it very hard to run a real business. The results of this policy were obvious over the long run -- the British real economy withered while the German economy took off. Unfortunately, the Bank of England and the British government are still playing this game. Easy monetary policy has never in history saved a country from being over indebted, but the BoE keeps trying.

I'm not an expert in this by any means, but the German post-war economy (the so-called German economic miracle) as I understand was liberalized under the concept of a Social Market Economy, where capitalism was rapidly restored after the centralized system of the Nazis had failed.

The social market economy seeks a market economic system rejecting both socialism and laissez-faire capitalism, combining private enterprise with measures of government regulation in an attempt to establish fair competition, low inflation, low levels of unemployment, a standard of working conditions, and social welfare. Erhard once told Friedrich Hayek that the free market economy did not need to be made social but was social in its origin. The term "social" was chosen rather than "socialist" to distinguish the social market economy from a system in which the state directed economic activity and/or owned the means of production, which are privately-owned in the social market model.

In a social market economy, collective bargaining is often done on a national level not between one corporation and one union, but national employers' organizations and national trade unions.

Important figures in the development of the concept include Franz Oppenheimer, Walter Eucken, Wilhelm Röpke, Franz Böhm and Alfred Müller-Armack, who originally coined the term Soziale Marktwirtschaft.

This was the re-establishment of a capitalist system that was really closer to the origins of that of the United States Constitution, that was a fiscal/legal framework with monetary system support, rather than a monetary system with no fiscal/legal framework, which seems to the the case in the UK and USA today.

In Germany a term like 'Social Market Economy' is perhaps most politically palatable. It actually illustrates the point that Sir James Goldsmith made against the WTO agreements in the early 1990's, in that economics should be geared towards the needs of society first and foremost. Another term for this system could also be 'Fair Market Capitalism', as compared to 'Free Market Capitalism' that is often used.

In fact the era of Franklin Roosevelt from purely an economic perspective could be considered just as fascist as that of the Nazis in Germany. Unfortunately the US has still not realized this yet. I would say that Fair Market Capitalism has not really existed in the USA since the early 1900's.

Anyway, as the UK economy is so heavily dependent on monetary policy, the ponzinomics of the Federal Reserve inevitably will spill over into the UK economy too, most evident in property bubbles.

Edited October 13, 2010 by Toto deVeer

[LiveAndLetBuy]

Then give us pensions worth investing in then.

Precisely. Given that state pensions and private pension funds are complete rip-offs and cannot be trusted to provide for your retirement, many people will continue to use property as a pension until they are presented with a reasonable alternative.

[Toto deVeer]

Then give us pensions worth investing in then.

They have. It's called housing, the best tax avoidance scheme in the land.

Oh. That's a circular argument.

[the flying pig]

It's horrendous foolish for people to imagine that, just because pension schemes aren't magic money trees of the 'put a little in, get a lot out' variety that, just through wanting it to be so, pwoperdee can fulfil this function.

[erranta]

"Property prices rise slower than incomes..."

If he's referring to disposable incomes then we all know what that means don't we?

With all the wage freezes for the proles and even salary cuts people are down 20%+ due to cost of living inflation rises of the basics.

Where are similar house price drops - they only seem more expensive artificially held up, which is why buyer market his imploded!

The vi's in Govt, by tinkering with taxpayers money in their pathetic games to protect their BTL empire/multiple house owning wealth - are setting the market up for a sharp fall when the log jam breaks!

The first spout has burst thru a fissure at 3.5% pressure last month.

[erranta]

Precisely. Given that state pensions and private pension funds are complete rip-offs and cannot be trusted to provide for your retirement, many people will continue to use property as a pension until they are presented with a reasonable alternative.

Yep successive Govts have Tinkered with the rules and moved the goalpost with no warning or consultation. Those involved are Traitors to the UK peoples.

The City then finishes off the rest with high charges - upfront fees,

FAKE market collapses like the Dot.com bust to frighten them into different markets set up for the next rip-off.

[erranta]

It's horrendous foolish for people to imagine that, just because pension schemes aren't magic money trees of the 'put a little in, get a lot out' variety that, just through wanting it to be so, pwoperdee can fulfil this function.

Which is why anyone with more than one main residence - should be taxed to hell on it.

That would help the hotel/pub accommodation in rural/seaside areas and free-up cheaper LOCAL homes for LOCAL people.

The tax take on 2+ properties should be high enough to put people off even contemplating a second (or more) house.

More than one named main residence should also be confiscated by the State 100% thru death duties - that'll have the rats scampering off.

Edited October 13, 2010 by erranta