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Is The Housing Market Headed For A Profound Change?


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It ain't exactly rocket science or a big departure from before, pointing out that houses are homes not speculative investment.

I disagree. In the past governments of all flavors have been very quick to take the credit for the free money that people are getting from HPI. As I said before there is no way they can come out and overtly support a crash, but this distancing themselves from the "house as an investment" concept is very significant IMO.

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Yep - all the pieces of the jigsaw fit...and was trailed on this forum long ago. It's just becoming a little nearer and a little clearer.

Cementing bubble level prices into place is fracturing society.

Agreed ,a blind man can see there is know way forward for this country with house prices as they are ,but can they play on both sides of the fence whilst standing on it, with out falling of ? and to me the gravity on the HPC side looks a lot stronger than that of the keep the over indebted heads above water with low interest rates side,its a very fine line they have to walk on

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It seems to me that government intervention (heaven help us) will be needed.

The main thing that is needed now is a big housebuilding program with houses being built specifically for FTBs - and no poxy flats either. Minimum 2 or 3 bed terraces with a decent size garden.

I can't agree

3 bed houses with decent sized gardens are NOT FTB fodder, they are second or third houses (as in consecutive, not concurrent)!

tim

Edited by tim123
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Solution:

Stop LIAR LOANS. This includes ALL stupid & unsustainable mortgages over 3.5 x REAL non-liar salaries, interest only mortgages, 100/125% mortgages. Maximum 85% LTV.

Force EA's to pass qualifications, including those in ethics & honesty. Long prison sentences for ANY fraudulent activity.

Change the City [& Wall Street] from being a casino to a utility providing pure value financial services - i.e. no rip-offs & fraud.

Build more houses - i.e. end the planning scam.

Just some of the changes that NEED to happen.

I agree with Eric P!

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Correct

Prices will always move , they will move up or down but never remain stable.

I've met this assertion before and I just don't get it. It seems to me that prices are currently stable. We have a market where there are few buyers and few forced sales leading to low activity and stable prices.

In the area I watch prices have been pretty stable for over a year. A number of houses that have been put up for sale and have been on the market for a year or so without seeing any activity have been removed again without any indication that they've sold. In effect a sellers strike.

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I think the bit about a period of stability means he'd like house prices to stagnate for a decade or so, against a background of say 3% inflation, so that most of the required correction happens in real but not nominal terms.

The trouble is that the correction that needs to happen is house prices versus wages, not house prices versus general prices. They can print money and crank RPI along at 4-5%, but wages are going up by 1-2%. If house prices are currently twice what they should be relative to wages, and the gap is to be closed by 1.5% per year, that implies a 47 year long HPC. People born after 1980 are already priced out of housing. Another 47 years to the bottom means that the next generation to be buying at reasonable income multiples hasn't even been born yet, and their parents are in primary school. A half-century-wide lost generation in order to save a few banksters and BTL landlords? I don't think it would be overstating it to say that would be the end of British society as we know it.

Edit: maths error

Edited by Dorkins
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I can't agree

3 bed houses with decent sized gardens are NOT FTB fodder, they are second or third houses (as in consecutive, not concurrent)!

tim

Depends on the FTB to be honest - i know a lot of highly professional (doctors/architects/lawyers) struggling to buy even a two bed flat in areas of London they are less likely to be mugged in - people on double or triple the national average should be able to FTB into larger properties and right now they can't, that's a sign of a housing market out of control.

I can see the point that they are second or third homes for the majority of average income families - but... and this is important, that is only in a static market condition. If the market rises dramatically as it did 2002-2007 then the rungs become so wide that the equity on the first property isn't enough to move up to the next level. If the market falls dramatically then you get a negative equity trap.

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Your average first time buyer is late 30s often with a family, the days of early 20s FTB looking for a 1 bed apartment are long gone.

+1

We're ftbs, mid 30's, baby on the way, second planned to follow shortly after. If the average age of the unsupported ftb is 37, they are likely to be just like me and the husband. Why would we buy a 1/2 bed flat? We need 2 beds with room to extend or 3 beds (if you have a boy and a girl they legally have to be in separate bedrooms by the age of 12), with a garden (modest), in the SE...which is why we're still renting. Where we live a 2/3 bed terrace is £325k minimum. With interest rates only likely to go up in future it would be madness for us to stretch to buy now. Not that we could anyway...we saved 60k for a deposit and it's nowhere near enough! :blink:

With baby on the way, that sum is not going to get any bigger any time soon!

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I've met this assertion before and I just don't get it. It seems to me that prices are currently stable. We have a market where there are few buyers and few forced sales leading to low activity and stable prices.

In the area I watch prices have been pretty stable for over a year. A number of houses that have been put up for sale and have been on the market for a year or so without seeing any activity have been removed again without any indication that they've sold. In effect a sellers strike.

Don't look at the prices advertised , look at the sold prices as they are the prices. You cannot give a price for a house untill someone has exchanged contracts to buy it that is then the price.

In the area you watch you say prices for unsold stock have remained the same for over a year , that indicates that those prices are old prices and not the new lower saleable price. If they were at the correct price they would not have been removed from the market but would have sold. Keeping an unsold house on the market and then removing it from the market shows that the price was wrong.

A friend of mine had to sell a flat priced at £525 k in a hurry two years ago. After a few months he told the agent to get rid of it for anything with a 4 at the front , the agent sold it for £420k . A few months back that same friend was as sick as a pig as he saw same flat same development on sale for £745 . But then he looked on net house prices the govenment site that shows actuall sold prices and dates of sales. Since he sold for £420 only a few flats have sold on that development and were all close to the price that he got. The £745k is not a price that has been acheived but an over optomistic vendor. Untill a flat sells for that price the price still remains the £420k my friend got for his.

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Come off it, it's a complete change of tone.

People used to be ridiculed on this site for saying "The Govt won't let it happen [a crash]" - but they were right. The current administration at least has the sense to get out of the way of the inevitable and to position themselves to gain political capital by saying "This is what needed to happen and we think it is necessary for the long term health of the economy."

Sooner or later the swing votes are tipped in favour of the FTBs, and so the cycle turns.

(Time for a more cheerful avatar, HAM?)

spot on. cannot believe that some hpc'ers did not see this when shapps was on c4 news on monday. for the govt to come out and directly address the market is a step forward in itself.

the govt simply knows the money aint there to support business and housing whilst slashing public expenditure. we have seen from the money marketing article wich point to a clear sentiment shift towards business support at the expense of housing.

come now people they have seen the bleedin obvious as we have.

AND TALK OF 47YEARS TO THE BOTTOM IS FANCIFUL, the drops are happening now across big and small properties alike it my area - affluent northern region.

as jacko once said, this is it.........................and we are not even in 2011 when this shit gets real.

typed with broken arm

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"But it went too far. If children have a problem, it is society that is at fault. There is no such thing as society. There is living tapestry of men and women and people and the beauty of that tapestry and the quality of our lives will depend upon how much each of us is prepared to take responsibility for ourselves and each of us prepared to turn round and help by our own efforts those who are unfortunate. And the worst things we have in life, in my view, are where children who are a great privilege and a trust—they are the fundamental great trust, but they do not ask to come into the world, we bring them into the world, they are a miracle, there is nothing like the miracle of life—we have these little innocents and the worst crime in life is when those children, who would naturally have the right to look to their parents for help, for comfort, not only just for the food and shelter but for the time, for the understanding, turn round and not only is that help not forthcoming, but they get either neglect or worse than that, cruelty."

.....

"This is why my foremost charity has always been the National Society for the Prevention of Cruelty to Children, because over a century ago when it was started, it was hoped that the need for it would dwindle to nothing and over a hundred years later the need for it is greater, because we now realise that the great problems in life are not those of housing and food and standard of living. When we have[fo 3] got all of those, when we have got reasonable housing when you compare us with other countries, when you have got a reasonable standard of living and you have got no-one who is hungry or need be hungry, when you have got an education system that teaches everyone—not as good as we would wish—you are left with what? You are left with the problems of human nature, and a child who has not had what we and many of your readers would regard as their birthright—a good home—it is those that we have to get out and help, and you know, it is not only a question of money as everyone will tell you; not your background in society. It is a question of human nature and for those children it is difficult to say:"You are responsible for your behaviour!" because they just have not had a chance and so I think that is one of the biggest problems and I think it is the greatest sin."

Sounds like a right bitch eh?

I'm pretty sure they don't send children down mines in Chile.

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I can't agree

3 bed houses with decent sized gardens are NOT FTB fodder, they are second or third houses (as in consecutive, not concurrent)!

tim

Wrong!

This is precisely what I brought in 1985 as a first time buyer.

Three bedroom semi with integral garage and a decent sized garden in a nice location.

The mortgage was less than 3x my income, which was below average.

I saved up and put down more than 10% of the purchase price as a deposit.

The price of the house (after haggling) was £32,500

The average house price at the time, according to our HPC Nation wide graph was just over £77,000. Which was spot on the graph trend line.

The location was Cheltenham.

Edit to add: Which was spot on the graph trend line.

Edited by trekking
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Wrong!

This is precisely what I brought in 1985 as a first time buyer.

Three bedroom semi with integral garage and a decent sized garden in a nice location.

The mortgage was less than 3x my income, which was below average.

I saved up and put down more than 10% of the purchase price as a deposit.

The price of the house (after haggling) was £32,500

The average house price at the time, according to our HPC Nation wide graph was just over £77,000. Which was spot on the graph trend line.

The location was Cheltenham.

Edit to add: Which was spot on the graph trend line.

my FTB was an extended 3 bed semi. Bought in 98 for 70k, five year fixed morgtage think it was around 6 or 7 % with 5% cashback, 95% ltv. repayment of course. Payment was about £100 per month cheaper than the 2 bed house i was renting. No ftb would buy a flat at that time, flats are for rentimg while you are still moving around. Your first purchase should be your family size house. buying flats to live in makes no sense.

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Your first purchase should be your family size house. buying flats to live in makes no sense.

Depends, nothing wrong with FTBing a flat provided you're 25 years old and paying a sensible price for it that means 3-5 years down the line you'll have a nice lump of capital ready to move to a proper home.

What is a bit stupid is paying 5 times income for a flat once you're into your thirties and planning to spend the next 25 years paying for it.

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The comments in the DM story on this are an eye opener. Lots of boomers seem to think Schapps is going to steal their pension, but its ok for him.. la la la!

http://www.dailymail.co.uk/news/article-1319943/Homes-pensions-Tory-mnister-Grant-Shapps-vows-end-house-price-booms.html

Perhaps Grant Shapps could tell us how to fund our retirement then ?

Penion Funds have been robbed

Annuities are at an all time low

State Pension is a basic of £97.65 per week for a single person

Ah, but then I'm not the Rt. Hon. Grant Shapps, Housing Minister who has no need to worry about his pension as I will be paying for it.

- TerryM, Newport Pagnell, 12/10/2010 23:52

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The comments in the DM story on this are an eye opener. Lots of boomers seem to think Schapps is going to steal their pension, but its ok for him.. la la la!

http://www.dailymail.co.uk/news/article-1319943/Homes-pensions-Tory-mnister-Grant-Shapps-vows-end-house-price-booms.html

Perhaps Grant Shapps could tell us how to fund our retirement then ?

Penion Funds have been robbed

Annuities are at an all time low

State Pension is a basic of £97.65 per week for a single person

Ah, but then I'm not the Rt. Hon. Grant Shapps, Housing Minister who has no need to worry about his pension as I will be paying for it.

- TerryM, Newport Pagnell, 12/10/2010 23:52

They're worried about their pensions? They should try wearing the shoes of the young - many aren't evening considering saving for a pension, when they can't even afford to buy a house!

Some of these boomers don't know how good they've had or got it.

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I think people are reading all sorts of things into a speech that said absolutely nothing. And certainly no hints as to policy.

Just as likely to support price levels at the boom levels of today in my opinion.

EDIT: My guess for instance is they will add house prices into cpi so that they can keep rates low and support hard working homeowners. There I've said it.

It fits with his 'avoid increases' and 'avoid falls' by supporting the market with low rates today and will rise when house prices start to lift off again, dampening any increase.

Exactly what I thought when this was suggested. The Tories would have done exactly as Labour did, the coalition will be no different.

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Depends, nothing wrong with FTBing a flat provided you're 25 years old and paying a sensible price for it that means 3-5 years down the line you'll have a nice lump of capital ready to move to a proper home.

What is a bit stupid is paying 5 times income for a flat once you're into your thirties and planning to spend the next 25 years paying for it.

diffent strokes i guess. When i had flats i knew they were temporary which suited me. I also remeber seeing all the people on tv last crash, wishing they'd never bought a flat. buuying a flat you intend to sell in a few years shouldn't make financial sense. only in bubble times will that work and i really hope we wil have learned our collective lesson by the time this is all over.

Apologies for apalling typing, am using a phone keyboard and my thumbs are too big for the stuppid little buttons!

Edited by Pytyr
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http://www.channel4....profound-change

Thursday 14 October 2010

The Conservative party is quietly redefining home ownership, writes Gaby Hinsliff, in a way which could help first time buyers but hit those relying on rising house prices to fund their lifestyles.

Margaret Thatcher revolutionised home ownership - are the Tories about to do it again? (Reuters)

The one big idea for which many Labour politicians secretly envy Margaret Thatcher is the right to buy for council tenants.

It defined her belief in aspiration, spawned a class of grateful new Tory voters and captured political imaginations - albeit while decimating the social housing stock.

So it's appropriate that, as she celebrated her 85th birthday this week, her party was once again quietly redefining home ownership. Grant Shapps, the housing minister, gave a speech to the Housing Market Intelligence conference urging a period of house price stability and of treating homes not as investments but as somewhere to live. More significantly, he sided decisively with first time buyers (who need prices to fall) over established homeowners (banking on prices rising).

That might not sound dramatic, but it has significant implications.

House prices are softening again, prompting fears of a property double dip as unemployment rises.

That forces all parties to confront a choice they ducked at the election: do they want to shore up prices, as the last government did with stamp duty holidays and moves to curb repossessions? Or do they not, which could mean letting the market correct itself while keeping interest rates low to ease mortgage-holders' pain?

We face a period of house price stagnation at least. That's toxic for those reliant on soaring home equity to fund comfortable middle class lifestyles. Gaby Hinsliff, former Political Editor of the Observer.

The coalition now seems to favour this second, less interventionist approach.

The concern for first time buyers however seems at odds with this week's main news, a reform of university funding which would see students graduating with bigger debts. David Willetts, now Universities Minister, has himself previously argued that one reason young people delay buying is that student loan repayments restrict their freedom to borrow.

One unexpected consequence of bigger student debt may therefore be fewer young buyers.

However this conflict is resolved, Shapps's call for an end to property booms and busts suggests we face a period of house price stagnation at least.

That's toxic for those reliant on soaring home equity to fund comfortable middle class lifestyles, or on property as a pension. But it helps what a recent report estimated were the 100,000 people a year priced out of buying between 2006-09, an aspirational constituency not unlike Thatcher's upwardly mobile council tenants. If Shapps really means it, a significant rebalancing could be coming.

You are pinning your hopes on Grant Shapps solving the housing problem? He doesn't understand what it is!!

This is what he actually said:

So it's really important that we keep interest rates low and improve credit availability for first time buyers, house movers, landlords and yes, housebuilders.

http://www.communities.gov.uk/speeches/newsroom/1737737

The problem is that prices are too high not that people cannot borrow enough to buy them - easy credit is why they are too high!

"Improve credit availability for landlords"!! FFS!!

We need to tax BTL empires not make it easier for them to buy more and price out FTBs. They more they own the higher the tax rate. Why should priced out renters see their income tax and council tax be used to help landlords price them out of the market?

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Remember your thread from July? http://www.housepricecrash.co.uk/forum/index.php?showtopic=147307&view=findpost&p=2624404

I think that news article ( http://www.moneymarketing.co.uk/mortgages/coalition-ready-to-let-property-values-fall/1015197.article ) has been quietly confirmed since. (That was a great find by the way. Well done, and thank you.)

I think the article is correct, and the coalition would like to see, during this parliament, a real price drop of around a quarter. Partially or mostly masked by inflation. Say, in the next 4 years: inflation of around 15%, and nominal falls of around 10%. Or vice versa.

Or, in my opinion, perhaps 15% each?

.

Edited by Tired of Waiting
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You are pinning your hopes on Grant Shapps solving the housing problem? He doesn't understand what it is!!

This is what he actually said:

The problem is that prices are too high not that people cannot borrow enough to buy them - easy credit is why they are too high!

"Improve credit availability for landlords"!! FFS!!

We need to tax BTL empires not make it easier for them to buy more and price out FTBs. They more they own the higher the tax rate. Why should priced out renters see their income tax and council tax be used to help landlords price them out of the market?

did schapps not mention on c4 news that it was wrong that btl was taking precedent over ftbs whilst also mentioning about the harm of using housing as a means to profit as opposed to a place to live.

the loss of so many btl mortgage products is doing the work of nutering btl. the watered down capital gains tax was a let down but it was still an increase.

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