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Timak

Why I Hope House Prices Fall

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http://www.huffingtonpost.co.uk/melinda-rogers/why-a-house-price-crash-w_b_889620.html?ir=UK

Readers of the Daily Express are treated to regular front pages on the fact that there's only one way house prices can go and it is upwards, and that is always news to be celebrated. Hooray!

Yet it's not just the knee-jerk tabloids that consistently pursue this view. The mainstream quality media is often as guilty of doing little more than writing up the latest press release from organisations, usually with a vested interest in talking the market up. Consistently, the line from all sections of the media is that a rise in the price of houses is a 'good' thing and a fall is a 'bad' thing.

But there are many of us out there who couldn't disagree more and think a downturn would be a very good thing indeed: the ever-diminishing group of first-time buyers (FTBs).

Firstly, I should get my own personal circumstances out of the way. I'm a renter in my thirties who whom has been hoping since 2004 that the mad boom in house prices would subside and be followed by a bust, so my husband and I could make that leap on to the bottom rung of the housing ladder without indebting ourselves for years to come to a ridiculous level. But I don't want prices to drop for purely(!) selfish reasons. The ramifications for society as whole are pernicious and not often understood.

Halifax released data earlier this year which showed house prices rose by 91% from 2000, but the average salary increased only by 40%. Ouch.

The thing that bothers me is that people don't seem to understand what this kind of house price inflation means for the future. It reduces the standard of living of people because they have to find more to pay for a home. Instead of being able to buy other goods and services money is diverted into mortgage payments which dents demand in the wider economy. Businesses and people of the future and the country as a whole will be poorer for it.

In his book The Pinch: How the babyboomers took their children's future - and why they should give it back David Willetts analyses the massive generational shift in wealth from young to old in recent years, driven largely by the boom in house prices (well it's the price of land really) and compares is to former times "It would not matter so much if this was a repeat of the usual pattern with the younger generation always owning less; but the younger generation have much worse prospects of building up their property in the same way. This is the real injustice."

There are so many issues that need to be addressed yet nobody in government seems to be listening - from buy-to-let to a perverse tax system in urgent need of reform, some of the worst tenants' rights in Europe, a million empty residential properties in the country, planning laws etc etc.

And yet I find myself as a childless married woman approaching her 34th birthday, hearing a vague ticking in the background and finding the nesting instinct hard to ignore. My patience is wearing thin. My husband and I could move from our rented two bed flat to a rented three bed house but I don't think I could take the opprobrium from family and friends and the look of pity in their eyes. The peculiarly British conceit pushed by governments in the last 30 years of all flavours that owning means success and renting means failure is impossible to argue with. It seems we have no choice, the next step must be to buy.

In some ways I'm one of the lucky ones as I avoided having to pay university tuition fees by a year, and although it will be a stretch hopefully we might get a mortgage in a year or two. A recent survey by the National Centre for Social Research showed that many young people are giving up on the dream of home ownership entirely as an unobtainable goal.

It's not that I don't want to buy my own home but I just don't want to pay, by historical standards, a vastly inflated price for it, but I feel I'll be left with little choice. I've waited long enough for prices to fall to the kind of levels they used to be in the late 90s but even I may have to capitulate soon... if I can.

Let them fall, let them fall.

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Good article thank you Timak, left a comment in support.

Added

Melinda Rogers

headshot.jpg

Melinda Rogers has worked as a (mostly production) journalist at the Financial Times, The Daily Telegraph and AOL UK. She has been obsessed with the matter of house prices since 2004 and has bored many friends about the issue at dinner parties and BBQs ever since.

Edited by timebandit

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She must lurk on here even if she doesn't post.

Unfortuantely she's a plastic bear.

Hmm, well if she is a lurker on HPC, then come on down and join the party Ms Rogers. All grist to the mill imo. Article ain't bad. Does anyone read the HP btw? First time I've viewed an article.

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Hmm, well if she is a lurker on HPC, then come on down and join the party Ms Rogers. All grist to the mill imo. Article ain't bad. Does anyone read the HP btw? First time I've viewed an article.

Me neither but I shall add it to my Zite/Flipboard feeds :)

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Thanks for posting, good article and no doubt articulates the thoughts of many of the under-35's like myself. Shame it's not in a more mainstream paper.

There are so many issues that need to be addressed yet nobody in government seems to be listening

Absolutely - who have we (the under-35 priced out demographic) got in Westminster who puts our case across within any great thrust? Vince and Dave Willets perhaps? They don't seem to be speaking up as much as they used to now they're in government though... I guess the problem is that there are more homeowners than renters in the voting public, so they will always be the ones catered for in a FPTP voting system.

[HPI] reduces the standard of living of people because they have to find more to pay for a home. Instead of being able to buy other goods and services money is diverted into mortgage payments which dents demand in the wider economy

Who needs to have any other sector to the UK economy when we have people willing to pay such high prices for property? We are the hive of worker bees creating honey for our bankster overlords. The whole economy is so dependent on the financial sector, which is in turn almost totally dependent on property asset prices, that pricking the bubble and having a fast collapse would bring down the whole banking sector with it. In that respect, I almost sympathise with the Government's position - I guess they have no choice but to keep house prices propped up with low interest rates. So it does look like the policy is a slow nominal HPC drawn out over, probably, a decade. Whether they manage to pull that policy off remains to be seen, as another shock to the financial system such as a sovereign default could push it all over the edge a lot faster.

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I'll chip in with my reason; "so I can afford a decent house for my family". I have one older brother (by 7 years), who bought a house before the meteoric rise in prices, mortgage paid off - current value >£250,000. Mortgage paid off, low average earnings in reciept of WFTC, reasonable disposable income. One sister who is a single mum, works part time in fast food restaurant, house provided current price of equivalents IRO £300,000; two children; reasonable disposable income. Me; two children, reasonably high earnings, decided to go to Uni (graduated 2003), child benefit only, low disposable income (all goes on rent).

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The David Willets quoted in the article would not be the same David Willets who wants to bury all new University graduates under a mountain of debt before they even get a sniff of buying a house ?

Any way I see the article still perpetuates the meme that boomers deliberately bid up prices to rip off the young in some vast generational conspiracy when the reality is simply that they were a big demographic bulge who competed against each other for a limited supply of property. They are also going to be the losers in the bust because the tide of age demographics is flowing against them despite Labours insane attempts to plug the gap with uncontrolled immigration. This is one of the reasons sellers outnumbering buyers is going to be the norm for a generation. In fact in most of Europe all the young (and I mean under 25) have to do is avoid debt and wait for the tide to flow fully in their favour. God knows even those whining generation X people who at least benefitted from the job opportunities prior to the credit bust should make out if the have saved some of their earnings though I doubt that will stop them complaining all the way to the grave.

Edited by stormymonday_2011

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needs more comments!

I left a nice, supportive comment that was awaiting Mods approval, just found out my new account been suspended.

Edited by timebandit

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I left a nice, supportive comment that was awaiting Mods approval, just found out my new account been suspended.

awww.... what did you say?

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Really nothing, good article and its about time our views are read by a wider mainstream audience.

I do use mailinator, when companies ask for an email, maybe thats it, usually works with newspapers.

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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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