Home Ownership Is At Lowest Level Since 1980S

[nmarks]

http://www.independent.co.uk/news/uk/home-news/home-ownership-sinks-to-25year-low-and-could-continue-shrinking-8517465.html

Could anyone here possibly offer any reasons as to why this is the case?

[Si1]

Fatcher's fault?

[Executive Sadman]

BBC look east told me the other week its because mortgages are too hard to get.

A cursory look at FTB vs BTL tells a different story. Theres just as much private stock, but FTB decline has been exactly mirrored by growth in BTL

Could it be the tories getting rid of MIRAS in the early '90s meaning Landlords can write off interest as an expense whereas FTB's cant?

Or snot gobbler brown getting rid of the Dividend tax credit and making stock market based pensions far less competitive?

Or the property porn programme after property porn programme encouraging every moron and his dog to become a landlord?

Or both parties guaranteeing returns by generous housing benefit payments to landlords?

You decide.

[nmarks]

I think it is prices, but don't quote me on that.

[kenzdawg]

Sounds like a buy signal.

[Executive Sadman]

I think it is prices, but don't quote me on that.

Sure, but private landlords/BTLers pay the same prices.

Its not why have house sales dropped, its why the composition of the market has changed. And while prices are a matter for everyone, its also become an unlevel playing field for BTL vs FTB.

[msi]

Sure, but private landlords/BTLers pay the same prices.

<rant>

A more interesting question is to ask are the sales done via lump sum cash or via mortgages. I suspect it still is mortgates; BTL being a lesser risk than FTB's. Cash purchases, I suspect, are done by those looking to hold/invest a cash pile, so again see BTL as an option.

The crash needs a money policy of high IRs and low money velocity to discourage this 'invest in brick' mentality.

It needs a finance policy to stop the tax reliefs, ofsetting of debts to reduce the tax bill. A land tax would do nicely!

For all those who think I have sh*t for brains, you are right, but it's more than the muppets in Downing and Threadneedle street.

</rant over>

[NorthamptonBear]

<rant>

A more interesting question is to ask are the sales done via lump sum cash or via mortgages. I suspect it still is mortgates; BTL being a lesser risk than FTB's. Cash purchases, I suspect, are done by those looking to hold/invest a cash pile, so again see BTL as an option.

The crash needs a money policy of high IRs and low money velocity to discourage this 'invest in brick' mentality.

It needs a finance policy to stop the tax reliefs, ofsetting of debts to reduce the tax bill. A land tax would do nicely!

For all those who think I have sh*t for brains, you are right, but it's more than the muppets in Downing and Threadneedle street.

</rant over>

BTL is a business, so business rates should be paid, just as a hotel would. They get the whole benefit of the law, state etc but pay no tax.

I think rates should be at around 40% of rental income.

[Lull]

...BTL being a lesser risk than FTB's....

Just throwing this idea out there as well - I haven't thought it through much - but I wonder how much the perceived risk by the potential owner affects things. An owner-occupier risks the very roofs over their heads if things go wrong, whereas an investor can afford to gamble more. The psychology of the two is very different, as are lenders attitude to both (investor likely has other income plus rent, plus other assets to secure against?)

I think all of Executive Sadmans ideas are highly relevant also. There is rarely only one cause of something - especially a general trend.

[plummet expert]

BBC look east told me the other week its because mortgages are too hard to get.

A cursory look at FTB vs BTL tells a different story. Theres just as much private stock, but FTB decline has been exactly mirrored by growth in BTL

Could it be the tories getting rid of MIRAS in the early '90s meaning Landlords can write off interest as an expense whereas FTB's cant?

Or snot gobbler brown getting rid of the Dividend tax credit and making stock market based pensions far less competitive?

Or the property porn programme after property porn programme encouraging every moron and his dog to become a landlord?

Or both parties guaranteeing returns by generous housing benefit payments to landlords?

You decide.

It's easier to answer than that! There has been a massive lending bubble brought about by lower than prudent interest rates since around 2000. Add to that the rediculous number of times salary, lenders have been willing AND ALLOWED by little or no regulation, to lend us poor idiots. Hey presto: people borrow more and more, pushing up prices at a lightening pace believing they can afford it! Speculators join in, after seeing heavy price movements. Capital flies away from actual wealth producing to just exchanging/buying homes and sometimes building boxes with a few bricks on some mud. The price of muddy fields rockets to over £1million per acre, where u are allowed to force in up to 25 homes/boxes or even 8 executive homes/boxes with 5 beds and double garage.

We then all experience over 15 years the largest house price hike in history, when compared with inflation. The 1970's bubble was nothing because inflation raged at up to 26% under Labour - yes, I said 26% inflation in 1975. Some of you may not have been here, but believe me, if houses rose 25% the same year, wages rose 25% and inflation was 26%, then there was no real HP rises. Just an appalling dent in our international competitiveness, followed by a flatlining economy...drone drone..oh, the same old story but with inflation/stagflation. They thought it marvellous to get inflation back under 10%pa with a Lib/Lab pact.

"When I were a lad.....it was 2.25 x income down building society with a 10% deposit or forget it. There were leaflets about saving up the deposit carefully at every branch. I remember thinking of going to work in a bank/BS because employess would get hugely discounted mortgages of about 5% instead of around 8% or more, like most people paid. Prices were broadly 3 x the average income. Now they are 5-10 depending where u live. The HPcrash of 1989-94 STARTED WHEN HOUSE PRICES REACHED AN ALL TIME HIGH OF 5.5 X AVERAGE INCOME. PUT THAT IN YOUR MODERN SPLIFF AND SMOKE IT. YEP. IT STINKS!"

Edited March 2, 2013 by plummet expert

[erranta]

<rant>

A more interesting question is to ask are the sales done via lump sum cash or via mortgages. I suspect it still is mortgates; BTL being a lesser risk than FTB's. Cash purchases, I suspect, are done by those looking to hold/invest a cash pile, so again see BTL as an option.

The crash needs a money policy of high IRs and low money velocity to discourage this 'invest in brick' mentality.

It needs a finance policy to stop the tax reliefs, ofsetting of debts to reduce the tax bill. A land tax would do nicely!

For all those who think I have sh*t for brains, you are right, but it's more than the muppets in Downing and Threadneedle street.

</rant over>

Why do you think the bankers are demanding 40-50 deposit to gain a part mortgage?

Cos thats the amount they expect them to fall without the bank being exposed to risk /neg equity at this point in time

- its gonna be a big one!