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FrozenOut

Why Why Why Support House Prices?

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I just can not understand why house prices should be supported? At the moment, as the economy collapses around us - this ONE aspect of life holds back any kind of economic recovery!

If we had NORMAL house prices, then you wouldn't have such high wage demands required to put a roof over your head - SOME people on benefits, seeing that a place of their own is reach, might stop sitting on the dole and actually aspire to better then they are.

They might sit on benefits, but I'm sure they're not all thick - they look at the cost of housing, private rented or to buy - then look at the wages required to run and live a decent existance as NOT WORTH IT!

As per somones signature on here, high house prices poison everything!

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A large % of voters have indebted themselves. Crash house prices lose their votes.

Oh and the bank balance sheets get messed up, default etc.

Also high house values make people feel richer, those with houses (And jumbo mortgages to go with them).

Those without houses votes do not matter. Its why politicos don't chase Chinese people's votes. There are only about 500,000 votes in it so not worth the time to chase these. While there are 10s of millions of Liar loans and stretched.

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It is 2 things.

1. The British are obsessed with owning property - many people, especially the rich and powerful, probably own more than one house. They are vested interests IMPO.

2. The banks are bust already. If house prices collapse then the banks would not be to lend, they would have to write off massive debts owed to them. They would effectively be more bankrupt than they are.

There is a huge illusion going on with UK banking at the moment - that it is struggling but getting better. If house prices crash then the banks crash then the UK is fecked.

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It's all the perfect trap, keep the house prices high with your policies, then the debt slaves will be forced to vote for you or sink, keep as many as you can in this spiral and you will have power indefinately.

You can bet that if the majority of voters rented or rejected home ownership then the reverse would be true, the government is not run to govern, it exists to give a veneer of government, but in reality is a lobbying group for vested interest and big business in order to keep hold of the wealth of the productive and distribute it to the elite, so to look further into it, at least as far as a sane housing policy, is worthless.

But Im mad so who cares what I think. B)

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I just can not understand why house prices should be supported? At the moment, as the economy collapses around us - this ONE aspect of life holds back any kind of economic recovery!

If we had NORMAL house prices, then you wouldn't have such high wage demands required to put a roof over your head - SOME people on benefits, seeing that a place of their own is reach, might stop sitting on the dole and actually aspire to better then they are.

They might sit on benefits, but I'm sure they're not all thick - they look at the cost of housing, private rented or to buy - then look at the wages required to run and live a decent existance as NOT WORTH IT!

As per somones signature on here, high house prices poison everything!

100% agree with you. Unfortunately TMT's points show why your logical idea must be stopped, at all costs.

Surely this can't go on forever? I'm starting to think that even if interest rates rise, prices could just remain static, while the cost of servicing a mortgage increases, so property is even more expensive to buy and the government will devise a whole new set of bail out schemes to keep prices nice and high. (I've been having problems with my flatmates recently so excuse the negativity/exasperation).

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The simple answer is that a crash 0f 20% to 60% within the space of a few months would decimate the balance sheets of the banks, and as there is no money left for bailouts. They would become too big to save.

All the other points about voters and property VI's IMHO is nonsense.

Edited by Mr. Miyagi

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100% agree with you. Unfortunately TMT's points show why your logical idea must be stopped, at all costs.

Surely this can't go on forever? I'm starting to think that even if interest rates rise, prices could just remain static, while the cost of servicing a mortgage increases, so property is even more expensive to buy and the government will devise a whole new set of bail out schemes to keep prices nice and high. (I've been having problems with my flatmates recently so excuse the negativity/exasperation).

i think they will do all they can to keep prices as high as possible, moderate fall of a few % per year , but on the whole houses are at least 50% over priced, i have the fear that there will be no dramatic falls like there have been in other countries,

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It's because it makes everyone happy.

At 6% on a 25 year mortgage the interest is 92p per £1 borrowed. Average house price going from £60k in 1997 to £160k+ now, means an extra £92k in interest for banks, on just an average priced house = bankers happy.

The rise in prices means lots of women now have to work because the higher mortgage needs a second income. Two lots of income tax = government happy.

People's houses are worth a lot more so they are wealthy = people happy.

DON'T tell the people it's just the same house but costs a lot more because they are slaves to banks and the government.

DON'T tell the people that when they sell the house in the future the money they get will look more but it will buy a lot less due to the credit expansion necessary to inflate house prices.

If you told the people the truth, that all they have achieved is a worse standard of living dominated by work to pay their larger debts, they won't be happy.

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I just can not understand why house prices should be supported? At the moment, as the economy collapses around us - this ONE aspect of life holds back any kind of economic recovery!

If we had NORMAL house prices, then you wouldn't have such high wage demands required to put a roof over your head - SOME people on benefits, seeing that a place of their own is reach, might stop sitting on the dole and actually aspire to better then they are.

They might sit on benefits, but I'm sure they're not all thick - they look at the cost of housing, private rented or to buy - then look at the wages required to run and live a decent existance as NOT WORTH IT!

As per somones signature on here, high house prices poison everything!

Marginal voters live in shoebox houses with large mortgages

Marginal voters decide elections

If only all questions were that easy...

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The simple answer is that a crash 0f 20% to 60% within the space of a few months would decimate the balance sheets of the banks, and as there is no money left for bailouts. They would become too big to save.

All the other points about voters and property VI's IMHO is nonsense.

100% agree - I think most on this site overestimate 'VIs' (unless the VI is the bank's balance sheet).

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100% agree - I think most on this site overestimate 'VIs' (unless the VI is the bank's balance sheet).

Exactly. If property prices were allowed to fall to their true market values (as they are doing in the USA, Eire, Spain et al), the ratio of assets to liabilities would be exposed for what it truly is.

That can't be allowed to happen. So absolutely everything is thrown at the issue: brainwashing (think those recent Express headlines), Housing Benefit, QE, bail outs, etc.

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If it is not possible for house prices to drop in an orderly fashion why have prices in Northern Ireland fallen 50% and the world has not ended?

AS long as people pay the crazy prices then the house prices will never drop. In NI people just stopped paying crazy prices and gravity won.

Would be great

But if house prices dropped 50% in mainland UK, there would be:

- millions in negative equity

- RBS/Lloyds, maybe Barclays and a few building socities would need another bailout

= electoral suicide for coalition

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Maybe they could support the car industry....or the coal industry....or the electronics industry...or the.....The question is why they didn;t support these but were happy to support the housing market...perhaps them at the top all own lots of land/houses!!!! The world is a corrupt and sh**t place. All you can do is try and get the best deal for you and your family.

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Maybe they could support the car industry....or the coal industry....or the electronics industry...or the.....The question is why they didn;t support these but were happy to support the housing market...perhaps them at the top all own lots of land/houses!!!! The world is a corrupt and sh**t place. All you can do is try and get the best deal for you and your family.

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- RBS/Lloyds, maybe Barclays and a few building socities would need another bailout

ANOTHER bailout?

they're already recipients of a rolling bailout - however it is true that the govt will not allow such large nominal falls

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Total value of British residential property: £3.92 Trillion

Total Money on Deposit in UK: £2 Trillion

Total Value of FTSE: £1.8 Trillion

The UK has more 'wealth' tied up in property than it has in bank accounts and the stock market combined.

Banks are also leveraged up to the eyeballs on that very basis.

For some reason the favourite British past time is pumping 50% of our resources in an essentially unproductive asset.

But it makes us feel wealthy, so....

Edited by libspero

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If it is not possible for house prices to drop in an orderly fashion why have prices in Northern Ireland fallen 50% and the world has not ended?

I wonder how large the volumes were... also, worth bearing in mind that prices rose by over 35% in 2006 alone, which will limit the amount of NE even with big drops (assuming that not everyone bought a new house between 06 and 07)

AS long as people pay the crazy prices then the house prices will never drop. In NI people just stopped paying crazy prices and gravity won.

I think they stopped paying because they saw gravity winning, so to speak. The banks stopped lending silly money (although, ironically, they would love someone else to pay silly money), prices began to fall, and so on.

I'd be interested to know exactly and precisely what was different - I'm guessing more overbuild coupled with the Irish emigrating at the drop of hat (or is that only the republic?).

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In sensible countries, the wealth created by it's peoples real work efforts will help the economy to grow/flourish. Real efforts -Real work. You know, making stuff that people want/need. Sensible countries, providing they continue to make stuff that people want/need can carry on growing steadily with minimal risk and no end point. This takes control and wisdom from those in charge to maintain.

In the UK, the economy grew predominantly, (and therefore dangerously) via the access it's people had to their household equity - unreal wealth that has to have an end point (as we're seeing now). The main driving force behind the economy has been equity created by HPI, created by an utter failure (and greed/lust for maintaining power) from those in charge to forsee and control. Zero wisdom and insight from those in charge, depressingly.

A housing crash will clear household equity on such a scale that the economy loses it's major driving force, peoples access to 'wealth' from their own personal cash machine.

Hence TPTB's complete support of the housing market. i wouldn't mind sooo much if there was some kind of rebalancing going on - maybe a tax cut for small businesses (i have a VI here btw) but i see them doing nothing, just fiddling while Rome burns.

Edited by Reck B

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DON'T tell the people it's just the same house but costs a lot more because they are slaves to banks and the government.

DON'T tell the people that when they sell the house in the future the money they get will look more but it will buy a lot less due to the credit expansion necessary to inflate house prices.

DON'T tell people that their laminate flooring, kitchen cupboards and bathroom suite, magged walls and a vase full of sticks have done diddly-squat to the actual value of their home.

DON'T tell them that these things do not add any significant value. Most value is added or subtracted by circumstances beyond the house-holder's control.

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House prices are 10% off peak (nation average). Inflation over the last three years is maybe 10-15%. Prices are therefore 25% off peak in real terms. Another five years at 5% p.a. and they'll be 50% off peak in real terms, but without having killed the banks, the economy or the people.

If you wish for a 50% crash you won't be able to afford a house either. Or anything, in fact.

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House prices are 10% off peak (nation average). Inflation over the last three years is maybe 10-15%. Prices are therefore 25% off peak in real terms. Another five years at 5% p.a. and they'll be 50% off peak in real terms, but without having killed the banks, the economy or the people.

Wage inflation (required to service the debt) is currently around 2.2% pa. Total employment is down 0.5% since 2009.

I don't think we're down 25% from peak in any sort of affordability sense.

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i think they will do all they can to keep prices as high as possible, moderate fall of a few % per year , but on the whole houses are at least 50% over priced, i have the fear that there will be no dramatic falls like there have been in other countries,

Fear shared.

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Total value of British residential property: £3.92 Trillion

Total Money on Deposit in UK: £2 Trillion

Total Value of FTSE: £1.8 Trillion

The UK has more 'wealth' tied up in property than it has in bank accounts and the stock market combined.

Banks are also leveraged up to the eyeballs on that very basis.

For some reason the favourite British past time is pumping 50% of our resources in an essentially unproductive asset.

But it makes us feel wealthy, so....

its not unproductive in monetary terms, the tax advantage it profers at this moment in time (and for over a decade, 40 years if you include inflation tax) makes it far more productive than any other form of investment in the uk if bought at fair value, Brits are like any other people they will pay anything for the perception of a free lunch, no different to the the swiss or German where property ownership is deemed pointless, it is all about the behavioural impact of taxation

Edited by Mary Cassatt

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  • 343 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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