19 year mortgage 8itch Posted March 9, 2011 Share Posted March 9, 2011 So it comes down to the bank of mum and dad? So much for social mobility or a meritocracy. Know your place, peasants Quote Link to comment Share on other sites More sharing options...
Stars Posted March 9, 2011 Share Posted March 9, 2011 (edited) No it isn't. The housing market, like all other markets, is governed totally by supply and demand. Supply of the key component in housing is fixed and demand (buying) is legally enforced. I'm afraid the housing market isn't at all like other markets and treating it as if it is will lead you to incorrect conclusions. Demand however, is influenced by many factors - principal amongst them being the amount of money available to those with the desire to purchase. Does the price of apples shoot up if the people buying them have lots of money? Will the price rise until their surplus is absorbed by apple prices? See? you are inventing special market rules to try and explain the 'odd' behaviour of the real estate market. It would be simpler if you re-examined your base assumptions Edited March 9, 2011 by Stars Quote Link to comment Share on other sites More sharing options...
Mr Yogi Posted March 9, 2011 Share Posted March 9, 2011 Does the price of apples shoot up if the people buying them have lots of money? If supply remains constant, then yes! The housing market is no different to any other in that it is governed absolutely by the law of Supply and Demand. What makes it different are the unique influences upon the 'Supply' and the 'Demand' sides of the equation. I don't think you understand what 'Demand' really means... Quote Link to comment Share on other sites More sharing options...
tomandlu Posted March 9, 2011 Share Posted March 9, 2011 Does the price of apples shoot up if the people buying them have lots of money? Presumably, yes. To put it another way, what was the price of apples in 1850 when people had less money? I think it's worth distinguishing between high-volume (e.g. apples) and low-volume assets (e.g. houses, fine art), but they are both subject to most of the same considerations, just at a different scale. In general, high volume assets are more immune to asset-bubbles, for the simple reason that people can see that there is no prospect of scarcity. However, I spent a few years running a 2nd hand book and comic shop, and I can assure you that bubbles can occur even in products where no scarcity exists... Quote Link to comment Share on other sites More sharing options...
silver surfer Posted March 9, 2011 Share Posted March 9, 2011 The housing market is no different to any other in that it is governed absolutely by the law of Supply and Demand. What makes it different are the unique influences upon the 'Supply' and the 'Demand' sides of the equation. So is it different or isn't it different? Quote Link to comment Share on other sites More sharing options...
MinceBalls Posted March 9, 2011 Share Posted March 9, 2011 The wife was just watching a program where Kirsty Allsop said that 80% of young people who buy houses now are helped by their parents. I will go on record as saying that I will lend my children money to buy cars, give them money to spend at the pub, but I will absolutely not lend, or give, them money to buy a house. Can I just point out that if you lend / donate money to your grandchildren for cars, beer, food, whatever, you are indirectly funding their purchase of a house if they desire to buy one. They can simply borrow 5K off you to buy a car and then put the 5K they haven't had to fork out towards a deposit. So I don't really understand your point here. Quote Link to comment Share on other sites More sharing options...
tomandlu Posted March 9, 2011 Share Posted March 9, 2011 So is it different or isn't it different? I presume he means that supply and demand still govern the price, but there are specific factors influencing the supply and demand levels. To put it another way, seasonal veg and fruit doesn't have a constant supply (okay, not so true these days, but ykwim), but eggs do. However, both are still subject to the basic rules of S&D... Quote Link to comment Share on other sites More sharing options...
tomandlu Posted March 9, 2011 Share Posted March 9, 2011 They can simply borrow 5K off you to buy a car and then put the 5K they haven't had to fork out towards a deposit. "A long time ago in a galaxy far, far away..." Quote Link to comment Share on other sites More sharing options...
MinceBalls Posted March 9, 2011 Share Posted March 9, 2011 "A long time ago in a galaxy far, far away..." There were Ewoks? Quote Link to comment Share on other sites More sharing options...
W1zard Posted March 9, 2011 Share Posted March 9, 2011 (edited) Do we need a few burned bank of mum and dad cases to go mainsteam to highlight the risks in allowing your kids to buy overpriced assets at bubble prices. On the basis there are not enough banks of mum and dads to prop up this ponzi market I feel a few may eventually help our cause. Edited March 9, 2011 by W1zard Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted March 9, 2011 Author Share Posted March 9, 2011 Can I just point out that if you lend / donate money to your grandchildren for cars, beer, food, whatever, you are indirectly funding their purchase of a house if they desire to buy one. They can simply borrow 5K off you to buy a car and then put the 5K they haven't had to fork out towards a deposit. So I don't really understand your point here. Don't worry, I do. Quote Link to comment Share on other sites More sharing options...
tomandlu Posted March 9, 2011 Share Posted March 9, 2011 There were Ewoks? Heh - no, I was just suggesting that things don't quite work that way in this universe. i.e. if you buy your kid a car, they don't then save the same amount for a house (mainly 'cos if they've got the spare cash for that, wtf are you buying them a car in the first place?). Bottom line, they were probably not going to buy a car without your help, since they didn't have the dosh... Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted March 9, 2011 Author Share Posted March 9, 2011 Heh - no, I was just suggesting that things don't quite work that way in this universe. i.e. if you buy your kid a car, they don't then save the same amount for a house (mainly 'cos if they've got the spare cash for that, wtf are you buying them a car in the first place?). Bottom line, they were probably not going to buy a car without your help, since they didn't have the dosh... Exactly. I lent two of my children the money (interest free) to buy a car each and take advantage of the scrappage scheme. They had ten year old cars that were on their last legs, so the timing was good. They are paying me back by standing order and will have paid it all back this year. You could argue that if they weren't each paying me back £250 a month, they may have taken out a mortgage. Quote Link to comment Share on other sites More sharing options...
ralphmalph Posted March 9, 2011 Share Posted March 9, 2011 Exactly. I lent two of my children the money (interest free) to buy a car each and take advantage of the scrappage scheme. They had ten year old cars that were on their last legs, so the timing was good. They are paying me back by standing order and will have paid it all back this year. You could argue that if they weren't each paying me back £250 a month, they may have taken out a mortgage. I hope they were not liar loans or self cert. Eric would be most upset if you have turned into a bankster. Quote Link to comment Share on other sites More sharing options...
koala_bear Posted March 9, 2011 Share Posted March 9, 2011 Do we need a few burned bank of mum and dad cases to go mainsteam to highlight the risks in allowing your kids to buy overpriced assets at bubble prices. On the basis there are not enough banks of mum and dads to prop up this ponzi market I feel a few may eventually help our cause. It will take a while before the burnt BOMAD case start appearing unfortunately Quote Link to comment Share on other sites More sharing options...
porca misèria Posted March 9, 2011 Share Posted March 9, 2011 Does the price of apples shoot up if the people buying them have lots of money? Will the price rise until their surplus is absorbed by apple prices? See? you are inventing special market rules to try and explain the 'odd' behaviour of the real estate market. It would be simpler if you re-examined your base assumptions Apples would be a better analogy if apples were the only fruit on the market that most people would be happy to eat. Still more so if fruit was our staple diet and not largely interchangeable with other foodstuffs. Gold would be a slightly better analogy, but you have to imagine being taxed to give free gold to a bunch of lucky winners. Quote Link to comment Share on other sites More sharing options...
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