Jump to content
House Price Crash Forum
moonriver

Uk Homeowners Shouldn't Count On Capital Gains

Recommended Posts

http://www.bloomberg.com/news/2011-09-07/u-k-homeowners-shouldn-t-count-on-capital-gains-minister-says.html

U.K. Homeowners Shouldn’t Count on Capital Gains

U.K. homeowners shouldn’t count on making money from their property as the pace of price gains slows, according to Housing Minister Grant Shapps.

“Gone are the days where you buy a house for capital appreciation,” Shapps, a member of Prime Minister David Cameron’s Conservative Party, said in a Sept. 6 interview. “House prices can still go up, but they need to go up in line with or less than increases in average earnings for the long term.”

On average, house prices rose 147 percent from 2000 to the market’s peak in October 2007, according to Nationwide Building Society, a Swindon, England-based lender. That was 11 times faster than consumer-price inflation of 13.2 percent. Values then slumped 21 percent through February 2009, though they’ve since increased 12 percent.

A shortage of homes, which may reach 1 million by 2015, is helping to support prices, according to London-based property broker Savills Plc. (SVS) Record-low Bank of England interest rates have also bolstered demand, and prices.

The government is trying to address the shortage by freeing up public land, offering municipalities incentives to approve more housing plans and encouraging banks to increase lending to prospective buyers.

‘Unacceptable Situation’

“We need a greater supply of homes in this country,” Shapps said by phone. “We have an unacceptable situation where people cannot afford to have a roof over their head.”

The number of homes built in England and Wales last year was the lowest during peacetime since 1924, according to the Department of Communities and Local Government. Homebuilders such as Barratt Developments Plc (BDEV), the U.K.’s largest by volume, are trying to increase profits by building more houses than apartments.

The U.K. housing market has failed to gain momentum as banks curtail lending and inflation erodes spending power. Home ownership in England will fall to less than two-thirds over the next decade amid the scarcity of property and banks’ demands for larger down payments, the National Housing Federation said Aug. 30.

“People can’t afford to buy the product because they can’t get the mortgages,” Shapps said. “They can’t get the mortgages because the multipliers are so high for how much they require compared with their salary.”

Less Bureaucracy

The government is trying to speed up the planning process to boost real-estate development and spur economic growth. The Draft National Planning Policy Framework has streamlined more than 1,000 pages of regulations to 52 pages.

“Decision-takers at every level should assume that the default answer to development proposals is ‘yes’,” except where it may compromise sustainable development, the government said in the document.

“You cannot have a marketplace whereby the single most important commodity in peoples’ lives is simply unobtainable for much of the population,” Shapps said. “We need a long-term period of house-price stability in order to allow the majority of the population to afford homes again.”

U.K. house prices fell for the first time in four months in August as Britons grew more pessimistic about the economy, Halifax said yesterday. Prices dropped 1.2 percent from July, the mortgage unit of Lloyds Banking Group Plc (LLOY) said in a statement. From a year earlier, prices declined 3.9 percent to an average of 161,743 pounds ($258,500).

So if he is saying they can't get mortgages because the multipliers are too high compared to salary, why do we need "stabilty", surely we need price falls instead Grant?

I wonder if all those Homes Under the Hammer fans are taking note that they should no longer "count on making money from their property"?

Share this post


Link to post
Share on other sites

http://www.bloomberg.com/news/2011-09-07/u-k-homeowners-shouldn-t-count-on-capital-gains-minister-says.html

U.K. Homeowners Shouldn’t Count on Capital Gains

So if he is saying they can't get mortgages because the multipliers are too high compared to salary, why do we need "stabilty", surely we need price falls instead Grant?

I wonder if all those Homes Under the Hammer fans are taking note that they should no longer "count on making money from their property"?

This would be the same Grant Shapps who suggested the housing crisis could be solved by:

- "mates mortgages" where a bunch of friends got together to buy a crappy flat

- living on houseboats

etc

His next job should be on the muppet show, but he'll probably get promoted...

sigh..

Share this post


Link to post
Share on other sites

"Homeowners be assured, we will do all

we can to ensure the nominal value of your home doesn't fall"

Conalition doublespeak

Edited by jaspers

Share this post


Link to post
Share on other sites

“Gone are the days where you buy a house for capital appreciation,” Shapps, a member of Prime Minister David Cameron’s Conservative Party, said in a Sept. 6 interview. “House prices can still go up, but they need to go up in line with or less than increases in average earnings for the long term.”

He's an idiot. Does he realise that 1% on an average house price of £160k requires an average wage increase of over 5% (on the £25,000 average) in order to preserve the affordability of one relative to the other.

He says that prices can still rise, but the leveraged wage settlements to allow this seem unlikely to happen(when they do I guess that's when rates will rise in any case)- he's deluded/thick/incompetent. Time for a promotion!

Edited by cheeznbreed

Share this post


Link to post
Share on other sites

U.K. homeowners shouldn’t count on making money from their property as the pace of price gains slows, according to Housing Minister Grant Shapps.

So does that mean the UK Govt. shouldn't count on homeowners MEW'ing their gains to keep the UK ponzi economy going?

It'll be a first if so...

This pillock should be holding my targets at the bottom of the firing range.

Share this post


Link to post
Share on other sites

Don't be so dismissive and negative all the time.

The government (Osborne and now Schaps) is trying to change the public's economic expectations downwards. How can you think this is bad? They are starting to see that falls in property prices (and GDP growth) are inevitable, so we should be cheering.

Expectations are key. Its the difference between "I'll wait til prices recover" and "f* this I'm selling asap".

Share this post


Link to post
Share on other sites

Don't be so dismissive and negative all the time.

The government (Osborne and now Schaps) is trying to change the public's economic expectations downwards. How can you think this is bad? They are starting to see that falls in property prices (and GDP growth) are inevitable, so we should be cheering.

Expectations are key. Its the difference between "I'll wait til prices recover" and "f* this I'm selling asap".

Well, there is that. Perhaps just frustration at politicians' unwillingness to state the bleedin' obvious and stand up to VIs. Although his prior pronouncements on mates mortgages etc, and liberal hosing of taxpayers money onto the balance sheets of building firms is pretty reprehensible. His bear/bull balance needs sharpening up imo.

Share this post


Link to post
Share on other sites

Well, there is that. Perhaps just frustration at politicians' unwillingness to state the bleedin' obvious and stand up to VIs. Although his prior pronouncements on mates mortgages etc, and liberal hosing of taxpayers money onto the balance sheets of building firms is pretty reprehensible. His bear/bull balance needs sharpening up imo.

Well we all know this, but to expect a politician to go all bearish like us is hardly going to happen. Its all about managing expectations.

Also, the planning changes are a huge deal imho, in terms of downward pressure on house prices, and I'm surprised there is little mention of them on a house price website. This governemnt isn't as stupid as folk think, they just know their necks are on the line if they are too candid about reality - hardly surprising.

Share this post


Link to post
Share on other sites

Well we all know this, but to expect a politician to go all bearish like us is hardly going to happen. Its all about managing expectations.

Also, the planning changes are a huge deal imho, in terms of downward pressure on house prices, and I'm surprised there is little mention of them on a house price website. This governemnt isn't as stupid as folk think, they just know their necks are on the line if they are too candid about reality - hardly surprising.

Was talking to a local auctioneer the other day (he also does a little as a EA but mostly agricultural stuff). He tells me that the housing market is dead in the water (OK pretty obvious) but that ag land is rocketing. This is in N Wales/Cheshire border region. Velly interesting and maybe supports the "relaxing planning laws" theory. Personally I agree with your call on this and we might have a narrowing of the huge spread between ag land and land with existing PP.

Share this post


Link to post
Share on other sites

The minister is sowing the seeds for some sort of controlled HPC...

Lets examine key parts of his statement closely.....

U.K. homeowners shouldn’t count on making money from their property

We have an unacceptable situation where people cannot afford to have a roof over their head.

They can’t get the mortgages because the multipliers are so high for how much they require compared with their salary.

We need a long-term period of house-price stability in order to allow the majority of the population to afford homes again

It will be interesting to see how the BBC and other MSM pick up on this.....

Anyone want to predict tomorrows Express headline?

Share this post


Link to post
Share on other sites

Was talking to a local auctioneer the other day (he also does a little as a EA but mostly agricultural stuff). He tells me that the housing market is dead in the water (OK pretty obvious) but that ag land is rocketing. This is in N Wales/Cheshire border region. Velly interesting and maybe supports the "relaxing planning laws" theory. Personally I agree with your call on this and we might have a narrowing of the huge spread between ag land and land with existing PP.

The 'dead in the water' info is useful.

I think everyone is buying up land now as they know the tories are about to allow building willy nilly.

Share this post


Link to post
Share on other sites

The minister is sowing the seeds for some sort of controlled HPC...

Lets examine key parts of his statement closely.....

U.K. homeowners shouldn’t count on making money from their property

We have an unacceptable situation where people cannot afford to have a roof over their head.

They can’t get the mortgages because the multipliers are so high for how much they require compared with their salary.

We need a long-term period of house-price stability in order to allow the majority of the population to afford homes again

Spot on. He has to say 'stability' rather than 'falls' because stability is a word that sounds like it's a Good Thing and it's not politically acceptable to say 'fall': if he admitted that was what was needed, lots of Tory-voting homeowners would think he wanted to take their money (ie the value of their house) away and get all upset. Even if actual falls are inevitable, he can't be seen to have wished for them. This is as good a statement as it realistically can be.

Share this post


Link to post
Share on other sites

Spot on. He has to say 'stability' rather than 'falls' because stability is a word that sounds like it's a Good Thing and it's not politically acceptable to say 'fall': if he admitted that was what was needed, lots of Tory-voting homeowners would think he wanted to take their money (ie the value of their house) away and get all upset. Even if actual falls are inevitable, he can't be seen to have wished for them. This is as good a statement as it realistically can be.

yes

Share this post


Link to post
Share on other sites

He's an idiot. Does he realise that 1% on an average house price of £160k requires an average wage increase of over 5% (on the £25,000 average) in order to preserve the affordability of one relative to the other.

Using £25k gross.

1% HPI = £1,600

5% RPI = £1,250

£2,850/£25,000 = 11.4% rise required just to stand still.

Share this post


Link to post
Share on other sites

What shapps is saying is that wages need to go up faster than house prices, which we all know.

He's had a real roller coaster ride since coming in, in the first few months he spoke sense, prices are too high etc. Theni don't know if he got a bollocking or something, but he then began talking up the Market like labours finest rampers! The article above makes good reading, they want to build more houses, he states that it's insane that people can afford a roof over their head and priced need to come down!

May the this be the return to sanity the uk needs!!

Share this post


Link to post
Share on other sites

What shapps is saying is that wages need to go up faster than house prices, which we all know.

He's had a real roller coaster ride since coming in, in the first few months he spoke sense, prices are too high etc. Theni don't know if he got a bollocking or something, but he then began talking up the Market like labours finest rampers! The article above makes good reading, they want to build more houses, he states that it's insane that people can afford a roof over their head and priced need to come down!

May the this be the return to sanity the uk needs!!

Maybe he is just talking the talk now becuase of flack from elsewhere.

Nothig will be done, there will be an even bigger collapse as a result, society and economy.

Share this post


Link to post
Share on other sites

I think if you buy a house and it falls in value then you are obviously a loser and should be taxed on this loss very severely, problem solved, house pirces will only ever go up :D

Share this post


Link to post
Share on other sites

What shapps is saying is that wages need to go up faster than house prices, which we all know.

He's had a real roller coaster ride since coming in, in the first few months he spoke sense, prices are too high etc. Theni don't know if he got a bollocking or something, but he then began talking up the Market like labours finest rampers! The article above makes good reading, they want to build more houses, he states that it's insane that people can afford a roof over their head and priced need to come down!

May the this be the return to sanity the uk needs!!

But all his policies do not encourage more house building.

Scams such as mates mortgages, shared equity and our council tax funding FTB deposits just make more profits for house builders by keeping prices higher than they would be in a free market with proper lending.

Look at the builder financial reports recently. Profits up on low building figures. We need them to have lower margins so they have to build more houses to make the same profit. They should be licenced with a building target set and fined if they don't reach it.

Share this post


Link to post
Share on other sites

But all his policies do not encourage more house building.

Scams such as mates mortgages, shared equity and our council tax funding FTB deposits just make more profits for house builders by keeping prices higher than they would be in a free market with proper lending.

Look at the builder financial reports recently. Profits up on low building figures. We need them to have lower margins so they have to build more houses to make the same profit. They should be licenced with a building target set and fined if they don't reach it.

Dude, you not seen the planning changes they wanna do? Its epic.

Share this post


Link to post
Share on other sites

Dude, you not seen the planning changes they wanna do? Its epic.

Dude, you not seen the gap between what the Coalition promises and what it delivers? Its epic.

Seriously, "conservatives" - the clue is in the name - they want to preserve the status quo at all costs

Share this post


Link to post
Share on other sites

Dude, you not seen the gap between what the Coalition promises and what it delivers? Its epic.

Seriously, "conservatives" - the clue is in the name - they want to preserve the status quo at all costs

If this was the case, why would they even propose such changes?

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 335 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.