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Venger

Housing Is In Need Of Some Shock Therapy

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Can't see this posted anywhere on the forums, even though the Telegraph story was published yesterday evening.

Telegraph

Housing is in need of some shock therapy

Everyone agrees that the root of the crisis was borrowing too much and saving too little. To respond by forcing savers to offer a negative rate of interest to distressed borrowers just seems perverse. When you consider that most households in Britain are actually net savers, the policy looks more debatable still. The thrifty majority is being forced to pay for the sins of the profligate minority.

http://www.telegraph.co.uk/finance/comment/jeremy-warner/8314423/Housing-is-in-need-of-some-shock-therapy.html

And as said in Warner's article, the spectacle of the Government pressuring the banks to lend more to first time buyers. Everything being done to prevent those who over-borrowed and are now in difficult financial situation, see values fall. I didn't save up for years to massively overpay for a house and bail out the reckless. Not when I've already delayed buying for years when others were buying at ever more crazy prices year after year. Allow the consequences play out.

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Guest The Relaxation Suite

Can't see this posted anywhere on the forums, even though the Telegraph story was published yesterday evening.

Telegraph

Housing is in need of some shock therapy

http://www.telegraph.co.uk/finance/comment/jeremy-warner/8314423/Housing-is-in-need-of-some-shock-therapy.html

And as said in Warner's article, the spectacle of the Government pressuring the banks to lend more to first time buyers. Everything being done to prevent those who over-borrowed and are now in difficult financial situation, see values fall. I didn't save up for years to massively overpay for a house and bail out the reckless. Not when I've already delayed buying for years when others were buying at ever more crazy prices year after year. Allow the consequences play out.

They will not allow the consequences to play out. The only way the consequences play out is if the consequences become less frightening than something even worse happening.

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Never, ever forget.... all this happenned under New Labour government. I am not anti-labour, but what they have done to the working class (much of which has still to play out) puts them a million mies away from anything resembling a labour party. Disgusting. All of them. Disgusting.

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Guest The Relaxation Suite

Never, ever forget.... all this happenned under New Labour government. I am not anti-labour, but what they have done to the working class (much of which has still to play out) puts them a million mies away from anything resembling a labour party. Disgusting. All of them. Disgusting.

I am no socialist, having transcended party politics years ago and understood it as the Vaudeville it really is, but I do have certain sympathies with some of the concepts. However, my reading of the New Labour years is not good. I see it that they knew they could not run an economy, but that they had to stay in power as long as possible to bring about social reform (that has nothing to do with old labout values), so they inflated housing knowing this would give them the time to make those reforms. They knew the effect on the economy would be disastrous, but when the Tories were sweeping it up with cuts, they would still have their reforms, plus they could exploit the unpopularity that comes with massive cuts.

And round we go again.

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Never, ever forget.... all this happenned under New Labour government. I am not anti-labour, but what they have done to the working class (much of which has still to play out) puts them a million mies away from anything resembling a labour party. Disgusting. All of them. Disgusting.

I agree.

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Nice find, Venger.

As it is, substantial numbers of homeowners look set to be plunged into negative equity. We've already seen a roughly 18pc nationwide fall in house prices since the peak. Market derivatives indicate that in nominal terms, house prices will be the same in six years time as they are now, which implies a real terms peak to trough correction of well in excess of 30pc. That's much bigger than occurred in the early 1990s, when millions found themselves in negative equity. Rising unemployment would deliver the final coup de grace.

...

The politics are easy enough to understand, but the economics are indefensible. By supporting housing investment, the effect of negative real interest rates is to perpetuate a fundamental misallocation of capital at the heart of the UK economy – housing.

...

As things stand, there is no mechanism for proper price discovery in the UK housing market, with potential borrowers holding off in the expectation of lower prices and sellers trying to hold onto to inflated pre-crisis prices. Transactions are at a standstill. The whole housing market needs to be rebased at affordable levels. Until that happens, you won't see any durable recovery in household finances.

There are better ways of supporting over borrowed householders, if that's what the Government wants to do, than through interest rates. Banks could much more usefully be lent on to provide mortgage payment holidays than to load up SMEs with loans. Stamp duty could be suspended, or Miras reintroduced. Whatever the solution, deliberate destruction of savings is no way to run an economy.

It's been a very long time coming (of course, because there's no more profit to be flogged from the dead horse) but the more I hear the MSM reporting like this the more I like it.

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It was all going so well until the final paragraph:

There are better ways of supporting over borrowed householders, if that's what the Government wants to do, than through interest rates. Banks could much more usefully be lent on to provide mortgage payment holidays than to load up SMEs with loans. Stamp duty could be suspended, or Miras reintroduced. Whatever the solution, deliberate destruction of savings is no way to run an economy.

Which seems to pretty much contradict the spirit of the rest of the article. How can he possibly expect housing to correct to a more affordable level if he advocates government props for over-borrowed households and/or measures to tempt buyers back into an overvalued market? Ridiculous.

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JW seems to sum up the issue very well and then he pisses outside the pot in the last sentence.

Still, this is a night/day change from the usual tripe.

I am happy this article is out. Especially the bit about buyers holding off for cheaper prices and vendors in denial.

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The squeals of anguish from VIs when anyone suggests that IRs might "soar" to 1.5% just goes to show what a basket case we are. In my view the BOE are fast losing all credibility.

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Never, ever forget.... all this happenned under New Labour government. I am not anti-labour, but what they have done to the working class (much of which has still to play out) puts them a million mies away from anything resembling a labour party. Disgusting. All of them. Disgusting.

+1.

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For the Banksters and their government a HPC of enormous proprotions is the sum of all fears.

The banks will not allow it to happen, Merv is a bankster, the government and the opposition parties have heavy VIs in property...

But it is happening and it ain't going to be pretty.

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Never, ever forget.... all this happenned under New Labour government. I am not anti-labour, but what they have done to the working class (much of which has still to play out) puts them a million mies away from anything resembling a labour party. Disgusting. All of them. Disgusting.

aw, yeah, you know, a pwoperdee bubble wins plenty of votes.

ireland had a bigger one than us under a [broadly speaking] centrist to right wing government, the US had a similar one under a very right wing government...

even when prices are 'soaring' [copyright Daily Express] by 20%+ p.a. you never know how long it'll go on for, there's always a doomsayer or two who will tell you that it's going to calm down soon on its own without the need for intervention...

i mean, it's unforgivable, but not un-understandable.

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  • 284 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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