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If Potential Ftb's Banded Together, Could We Crash The Market?


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+1000 to that Alfie, the need for robust public discourse on this subject is very much needed, I think you have just articulated my feeling on the subject much better than I can :)

I agree that an easy and positive action is for increasing numbers of us to get our (admittedly very varied) views out there, readers comments (both writing and rating), forum participation, Facebook comments, tweets etc.

I also agree it has a potential snowball effect, increasingly the media are likely to have opinion pieces and articles on the social and economic harm of high house prices, it is happening already and the more we publicly debate the more momentum it can build.

Who knows, perhaps we could actually reach a point where there is very high level and open public discourse on how housing wealth is spread increasingly disproportionally, how it saps our economic potential as a country, how our 30 year model of house prices ever increasing in real term (though a bit bumpy) places ever increasing hardship on the new entrants, i.e. the young and otherwise new to the housing market.

Perhaps through robust public discourse we could actually see the public in general coming to understand how broken our current economic system is in this regard. And one day, maybe, when my children, who are now 3, are adults I will hear them say "House prices can only ever increase in line with wages over the long term, any other way would be economically unstable and socially unfair.", or "House prices always stay the same (in real terms).", rather than "I've made £50k from my house in the last year alone, you can't go wrong with bricks and mortar, everyone knows they double every 7 years.", and when they say this they would not be seen as pariah, they would not be the black sheep of the flock, or the heretic who dares speak against the God of House Price Wealth, but rather someone with common sense who speaks a well known truth.

On a side note, housepricecrash.co.uk currently ranks 6/10 on Google page rank, doing a couple of searches now, HPC appears 7th in the search results of "House Price" in Google, that is pretty good. Using "House Cost" and Wikipedia entry on affordable housing is first and then PricedOut.

Including a link to a relevant thread (or the main page) on various online sources where appropriate can assist in getting that up there somewhat. Also it generally scores well on various Social Bookmarking sites (Delicious, XMarks etc), I would recommend bookmarking, tagging and rating HPC there too.

Attracting more people to HPC for it's wealth of information and opinions can only a good thing in my opinion.

Thanks ozbear I really appreciate your comments.

If people aren't enthused by the idea of an ongoing Readers Comments Campaign, we could, as an alternative (or as well), aim to have a specified week in which as many HPC'ers participate in adding Readers Comments on National and Local Newspaper websites. Perhaps the last week of March in order to undermine any potential 'Spring Bounce'?

Personally I think we should be pursuing as many of our ideas as possible. There is a great deal of untapped potential here!

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Thoughts?

I doubt it. It is already happening that buyers are fewer, but sellers are fewer having already bound together to stop the market crashing by not selling.

Buyers not buying is just going to put estate agents and property developers out of business. The former is a good thing, but the latter we need.

Even if there was a movement to stop buying, when do you stop?

Ultimately sellers have the upper hand as they have something buyers want. The buyers just want to pay less.

I think that all FTBs banding together would create is more paralysis in the market. As a buyer and a seller, I want more property available.

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what i mean is if we had an actual movement setup, like a petition of would be FTBs who'd signup to a pledge not to buy, and should sufficient numbers (talking tens of thousands) be obtained, then take this petition to the government?

They are not buying anyway for the simple reason that they can't afford to, so this can't really reduce it any further.

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Ultimately sellers have the upper hand as they have something buyers want. The buyers just want to pay less.

Only up to a point. Traditionally the market has moved through forced sales, before speculation ruined it. A seller's life is stuck if they can't sell. If buyers aren't buying then the seller either has to put up with less than they want or put their life on hold (which may not even be possible if moving due to a job change, or selling an inherited house). The people who'll stick the market are probably those in NE who simply can't move however much they want to. I don't know whether or not there's enough of them to gum things up.

As well as convincing FTBers a successful campaign needs to be two-pronged. Sellers need to be shown that falling prices makes it easier for them to move on or up too. Once they get that message then hopefully one point giving in one chain should be hole in the dam that starts the flood. The hole is needed, though. To use a different analogy it starts waiting for the first person to blink.

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OK, for those that think it is all about economic fundamentals (up to date economic theory does not agree!!) why do the VI's (Estate Agents, Mortgage lenders, Building companies, Developers, etc., etc.) invest so much into creating, shaping and informing the discourse environment for the property market via advertising, reports fed to the media, slogans, TV Property programmes, etc., etc.? Why don't they keep absolutely silent? After all the economic fundamentals will do all the work for them won't they?

All the arguments for us doing nothing, because it's all down to economic fundamentals, gives the VI's the discourse environment on a plate. They are left unchallenged in their dominance. Their 'truth' and 'common sense' about the property market/house prices will prevail simply because there is no challenge. Indeed part of their dominant discourse environment is the discourse of - 'there is nothing you can do, its all down to economic fundamentals'. Meanwhile they are very active in shaping and informing the discourse environment, precisely because of the impact that the discourse environment has in the market.

There are plenty of journal articles/books about discourse and economics.

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Only up to a point. Traditionally the market has moved through forced sales, before speculation ruined it. A seller's life is stuck if they can't sell. If buyers aren't buying then the seller either has to put up with less than they want or put their life on hold (which may not even be possible if moving due to a job change, or selling an inherited house). The people who'll stick the market are probably those in NE who simply can't move however much they want to. I don't know whether or not there's enough of them to gum things up.

Sellers need to be shown that falling prices makes it easier for them to move on or up too.

It ain't necessaily so. People don't have to sell, and many have become reluctant landlords using the rental they receive to rent in a more suitable location. We know a familiy who have moved to Ireland, but still own a property in London that funds the rental over there and a bit more. We also know a lot of other families who have let and rent to be in school catchment areas. The high cost of purchase with stamp duty at 4% means this can be a financially wise decision.

Abolishing stamp duty and removing tax relief from BTL would accomodate (rather than force) more sales. As things stand with low interest rates, owners can just sit on their assets.

As a seller/buyer, I am near neutral in terms of rising/falling prices. Obviously if my house falls 10% and I am trading up it is slightly cheaper to buy, but the difference is less than the stamp duty I would incur.

Edited by arrgee1991
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They are not buying anyway for the simple reason that they can't afford to, so this can't really reduce it any further.

this may be true, but what you and everyone else doesn't see is the exact reason why potential FTBs are not buying, straight from the horses mouth.

Its more about raising awareness. For example, I was very suprised when listening to that radio phone-in earlier this week when you hear that there are quite a few people with significant deposits (one 25%, one 50%!!) who called in saying they still couldn't buy or refused to because houses were still overpriced!

Its all about exposure!

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It ain't necessaily so. People don't have to sell, and many have become reluctant landlords using the rental they receive to rent in a more suitable location. We know a familiy who have moved to Ireland, but still own a property in London that funds the rental over there and a bit more. We also know a lot of other families who have let and rent to be in school catchment areas. The high cost of purchase with stamp duty at 4% means this can be a financially wise decision.

Most people I hear about becoming reluctant landlords only want to do so short-term, and in any case that relies on them being able to find somewhere to buy themselves. When reluctant landlordism really takes off rents drop.

As a seller/buyer, I am near neutral in terms of rising/falling prices. Obviously if my house falls 10% and I am trading up it is slightly cheaper to buy, but the difference is less than the stamp duty I would incur.

The stamp duty is irrelevent in this case because you would be paying it anyway, but if prices drop it'll shift some sells into a lower bracket / out of it altogether, which is to your benefit. And overall lower prices means it'll be easier to make that move, even if you're moving sideways and not really losing much, because there's a better chance of the entire chain completing.

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I see this as the housing market. FTB's are the ball. The Elephant is the rest. Much of the Elephant does not think the beach ball is important. When the beach ball bursts they will probably re-consider.

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Some good ideas coming through!

One idea I had ages ago for a poster/leaflet was to use a photo of a typical house/property that 3 times the average income bought when house prices were at their long term, non-boom, trend levels Vs a photo of a typical property that 3 times the average income would buy now. The visual images, and reality of just how out of kilter house prices are would be stark and obvious from the 2 photos. There could also be a line or two indicating that house prices, after a boom, always end up falling back to their long term trend levels again and that the time to (re)-enter the property market will be when 3 times the average income buys you something like the house you see representing what 3 times the average income bought before the boom time prices.

So, what would it be? A 3 bed semi Vs a studio flat?

That sounds like a fair comparison. Can anybody lay their hands on the info? The problem would be determining when houses actually were fair value bearing in mind interest rates and other factors.

Alternatively, select the same type of house, again a 3 bed semi, and compare then to now. This could also include area of a house built in, say, the 70's and now whilst also comparing price to average earnings, just to show how out of whack things are.

Does anyone know where this information could be found?

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If people aren't enthused by the idea of an ongoing Readers Comments Campaign, we could, as an alternative (or as well), aim to have a specified week in which as many HPC'ers participate in adding Readers Comments on National and Local Newspaper websites. Perhaps the last week of March in order to undermine any potential 'Spring Bounce'?

I agree completely with what you're proposing. The economic fundamentals are heading in our favour, but sentiment doesn't yet. We can't influence economic fundamentals, hell the government can't even do that for any great length of time, but we can try to influence sentiment.

If every visitor to this site took time out when they could to add comments to the relevant articles on the media websites then we really could have an impact. If you're too busy for that, why not click the green arrows, or 'recommend', to make the comments of those that have taken the time stand out more. If you can add a comment, try to make it short and to the point, and not too ranty though there is a lot of emotion around housing from both viewpoints.

The idea of an arranged readers comments action week is a good one, I'll approach the site admin and see if they can put some sort of notice up on the site, if enough people think it's a good idea.

We can make a difference!

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Whilst I have not had a chance to read any of the thread yet. To add my My own two'penneth. From the title.

Yes. Most Certainly. But some co-ordination is needed. A representative voice. Priced Out is the best. HPC is a great forum. But do not know if they have an agenda? I would have assumed as its owned by a private company FUBRA, it makes more sense for them to be impartial, and not take sides?

[Which my gut tells me is mistake long term for them, but that another issue. They should be capitalising on their majority]

Many things we could do, outside of the most satisfactory things, like burning down the houses of our local MPS. Which morally speaking would be entirely justifiable.

Or firing a bazooka at the BOE

Will read this thread later. Give it the attention it deserves.

Edited by Dan1
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I agree completely with what you're proposing. The economic fundamentals are heading in our favour, but sentiment doesn't yet. We can't influence economic fundamentals, hell the government can't even do that for any great length of time, but we can try to influence sentiment.

I wouldn't be quite so pessimistic. These days we're hearing the "wisdom" of the past decade questioned on the TV and radio and in the papers, and that was extremely rare even as recently as last year. Sentiment is slowly changing in our favour; the economic fundamentals did some time ago. Sentiment always lags behind reality.

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I agree completely with what you're proposing. The economic fundamentals are heading in our favour, but sentiment doesn't yet. We can't influence economic fundamentals, hell the government can't even do that for any great length of time, but we can try to influence sentiment.

(...)

We can make a difference!

Yes, we can help push things towards the fundamentals, or "down river" like.

But besides sentiment, there is another vital area needing support:

There are some members of this government that knew HPrices were unsustainable. First, years ago, it was only Vince Cable. Then, just before the election, Clegg went public about HPrices being too high. And finally, a few weeks ago, Cameron and Osborne also mentioned HPrice "boom".

BUT the government is scared of the unpopular aspect of a HPC. We can help them a little here, with the "other side", FTBers, youngsters, etc. The government NEED some political counterbalance to the HPI VIs.

And regulations are essential - mortgage and planning. They can prevent a full correction. And regulations will depend on politics.

Like I wrote before;

IMO, only via political pressure, aiming at more mortgage restrictions and less planning restrictions. That would bring us lower average prices, sustainably.

In general I agree with the posters who argued that market forces are too strong. Even governments can't "buck the market", financially, forever - they wouldn't be able to afford it, for instance to keep this bubble inflated at this current level.

HOWEVER, government regulations can influence the market, for a long time - years, decades, and for as long as they have political support for it. For instance, if we keep allowing 100%mortgages, self-certs, etc., and on the other hand if we also keep current planning restrictions, the market will keep oscillating around a high price to earnings ratio.

BUT, if we regulate mortgages more tightly, with minimum 10% - 25% deposits, no self-certs, etc., and we allow millions of new (better and bigger) houses to be built, then after a few years the market average prices will be oscillating around a lower price to earnings ratio.

That is what Germany has done. And that is why house prices (and rents) are almost half of ours. And their houses are also of better quality, and bigger.

The (political) problem we have nowadays is that the majority of the population favours high house prices, wants more finance, and are NIMBYs. A recipe for (this current) disaster.

http://www.housepricecrash.co.uk/forum/index.php?showtopic=159581&view=findpost&p=2896744

Edited by Tired of Waiting
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No need to. Prices will fall anyway, just a matter of time before vendors adjust their price expectations to what buyers can afford and are able to borrow.

Credit availability drove prices up and will now push them down.

Sure, but only up to a point. In the longer term, regulations will be decisive:

(...)

HOWEVER, government regulations can influence the market, for a long time - years, decades, and for as long as they have political support for it. For instance, if we keep allowing 100%mortgages, self-certs, etc., and on the other hand if we also keep current planning restrictions, the market will keep oscillating around a high price to earnings ratio.

BUT, if we regulate mortgages more tightly, with minimum 10% - 25% deposits, no self-certs, etc., and we allow millions of new (better and bigger) houses to be built, then after a few years the market average prices will be oscillating around a lower price to earnings ratio.

Full post: http://www.housepricecrash.co.uk/forum/index.php?showtopic=159581&view=findpost&p=2896744

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