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@contradevian

Why Not Just Cut Prices?

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What a silly question to ask. As if builders can just cut prices and allow the market to clear.

.

http://blogs.channel...what-cost/18168

"Life's not that simple," Redfearn tells me. He mentions the impact on local existing homes if new home prices were cut. "I don't think it's very desirable for people who have already bought from us, and people in the surrounding village. Everybody wants a certain stability in housing".

Stability = must always go up.

Edited by aSecureTenant

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stupid to ask a purveyor of homes where he thinks prices should go.

Good for him, I hope he enjoys living with his unsold stock until bankruptcy.

This is total utter complete madness.

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Grant Shapps wanting a period of 'house price stability' (cough, locking in not just 1997 + decades of gains, but decade before). Now the push for Htb1+2 to keep prices stable (not falling) for existing owners / massive debtors / landlords.

BoE price stability as a policy objective now including house prices, perhaps (?).

And obviously VI business interests needing to come first, without being exposed competition on build prices (inc executive pay + shareholder dividends and so on), thus all their land-bank prices kept stable, and not having to be broken up to competition at lower prices.

'Building houses is fine but the banks need to give people mortgages to buy them' - Persimmon boss hits out

By Hugo Duncan

PUBLISHED: 22:46, 25 July 2012 | UPDATED: 09:09, 26 July 2012

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This is total utter complete madness.

Yes

I have just removed myself as much as possible from caring about it. I have just completed moving all my own work to online so that I can do it from anywhere in the world if I choose. Helps my (in)sanity.

Edited by LiveinHope

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The house building market, with a few main players and restricted land supply is nothing more than a cartel with tiny amounts of housing bult on the periphery of it by other parties.

It is not like this throughout the rest of europe and the world..

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The house building market, with a few main players and restricted land supply is nothing more than a cartel with tiny amounts of housing bult on the periphery of it by other parties.

It is not like this throughout the rest of europe and the world..

Yes, but we get lovely, individualistic developments to aspire towards, like this

Edited by LiveinHope

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Yes

I have just removed myself as much as possible from caring about it. I have just completed moving all my own work to online so that I can do it from anywhere in the world if I choose. Helps my (in)sanity.

On occasion it makes me feel terror, wtf are we going to do when houses cost this much? It is destroying everything.

Not investment, not speculation, infanticide and suicide.

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On occasion it makes me feel terror, wtf are we going to do when houses cost this much? It is destroying everything.

Not investment, not speculation, infanticide and suicide.

I have had a bit of a dialogue with my Conservative MP over the last couple of months. It was going well. Short, to the point e-mails. Until I was told that:

Apparently, house prices have fallen 25% over the last 5 years and what we now need is price stability and to iron out 'supply and demand'.

In reply, I pointed out that in this MP's constituency (a 3-4 hr train ride from London) the average house is still valued at 8-10x average salary.

I mentioned the effect of this on cost of living, wages, employment , immigration etc.

I am still waiting for a reply to that observation two weeks later - I think I may have slipped into the 'lost cause' or 'nutter' category.

Edited by LiveinHope

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When the lenders are under water they can't afford to lose further bad debts via asset deflation.....they can't afford to lend more (our economy now centres around how much cheap debt there is available to spend) with growing capital demands (that is supposed to stop history repeating itself) and asset deflation.........so the thinking is, high prices will help stop the banks deterioration and enable them to continue lending....they get richer, land property and asset holders get richer therefore spend more, all this with no real productivity whatsoever....magic. ;)

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When the lenders are under water they can't afford to lose further bad debts via asset deflation.....they can't afford to lend more (our economy now centres around how much cheap debt there is available to spend) with growing capital demands (that is supposed to stop history repeating itself) and asset deflation.........so the thinking is, high prices will help stop the banks deterioration and enable them to continue lending....they get richer, land property and asset holders get richer therefore spend more, all this with no real productivity whatsoever....magic. ;)

It is so mad that I often think I've 'got it all wrong' and should just 'get out more'.

At the moment, 'getting out' is by ensuring I am on the sidelines.

Perhaps I should embrace the new paradigm, however.

Nope

Off out mushrooming ;)

Edited by LiveinHope

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It is so mad that I often think I've 'got it all wrong' and should just 'get out more'.

At the moment, 'getting out' is by ensuring I am on the sidelines.

Perhaps I should embrace the new paradigm, however.

Nope

Off out mushrooming ;)

Out to pick the last of the elderberries.....should be ready for Christmas. :)

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I deal with this by i) not staying in the UK; ii) reminding myself of the fundamentals compared to other countries nearby (e.g. ireland/france) on house value and iii) discussing with anyone how bad it makes the UK for it's people.

If you talk to:

  • OAPs - point out how high house prices drive young people away and force them to work such long hours they wont have grand/greatgrankids
  • to middle age boomers with property - tell them how it pushes their kids overseas etc AND mention the foriegn ownership thing AND how rising prices increases the gaps between 'the rungs' (even if the ladder is a broken meme, they still believe it)
  • for middle agers without property - remind them of where their parents generation were at their age
  • for the young - have some examples of what their parents/grandparents had in terms of low house prices, high employment, etc etc

always wrap up with a few good facts on i) lack of housebuilding and ii) how immigration volume does not help

in short, tailor your message to your audience

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Driving back to my nice rental from mushrooming (post 13) I drove past a new build estate in my village still being completed ~ 60 - 70 houses.

Built by Taylor Wimpey.

Prices 3 bed - 5 bed - £320k to 420k - these are actually 2 bed and 3 bed houses to a normal person (the 5 bed has no attic).

The median gross annual pay in the county is £22.5k

Similar second hand properties in the village fetch around £300-400k

It is madness.

HTB flags flying proudly at the entrance.

But what winds me up even more is that given land for building is so impossible for the individual to obtain, it is a travesty and abomination the sh1t that gets built upon this rare land by the main builders. I've been round the properties and they are sh1t; the development layout is, the internal layout of the properties is, the build quality is, and the price is - and if you want some down-lighters in the bedrooms to give you that 'superior' feeling - that's an extra £200 quid a room :lol:

I should say those are the unaffordable homes.

There are some 2 bed affordable homes as part of the development.

Yet to be completed, these affordable homes will sell for 10x median gross annual pay, as opposed to 15-20 times.

Edited by LiveinHope

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What a silly question to ask. As if builders can just cut prices and allow the market to clear.

.

Exactly. As bad as Kirsty Wark the other night. OK nothing's as bad as that

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The house building market, with a few main players and restricted land supply is nothing more than a cartel with tiny amounts of housing bult on the periphery of it by other parties.

It is not like this throughout the rest of europe and the world..

Most of the world where housing is for housing not purely for politics and speculation. Australia and New Zealand are in fact worse than the UK, Australia has a huge amount of land but it is deliberately restricted in use by politicians and their cronies the land bankers and speculators who are more catered to by the tax system and government than any genuine home buyer. The plots of land for building are around 1/3 of the size they were 20 years ago and this is in a country with infinite land . We still have bankers in Aus who are so gung ho as to be handing out probably the biggest mortgages in the world now (prove me wrong someone!) Prices over here have had one scheme after the other to keep prices not just high but rising exponentialy, First home buyer grant up to $21,000, now trimmed down a bit but the newest and best on is that sellers are now targeting 'Self managed superanuation funds' ie pension funds managed by yourself and those who have enough in their funds are borrowing up big via the fund to go mad buying anything with 4 walls, in fact the banks have gotten into this in such a big way that they do it via non-recourse loans on account that pension funds cannot normaly gear up like this. Totaly amazing. Me and the wifey are so p*ssed off on account that the only 2 countries in the world we can live in or desire to live in are the only two places that are still on planet ponzi. I would say on balance Australia is somewhat worse than the UK. Melbourne has a median price of around $500K which is about 300k GDP and as our money is still in UK pounds this is obscene considering what it and much less could buy in the uk.

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Most of the world where housing is for housing not purely for politics and speculation. Australia and New Zealand are in fact worse than the UK, Australia has a huge amount of land but it is deliberately restricted in use by politicians and their cronies the land bankers and speculators who are more catered to by the tax system and government than any genuine home buyer. The plots of land for building are around 1/3 of the size they were 20 years ago and this is in a country with infinite land . We still have bankers in Aus who are so gung ho as to be handing out probably the biggest mortgages in the world now (prove me wrong someone!) Prices over here have had one scheme after the other to keep prices not just high but rising exponentialy, First home buyer grant up to $21,000, now trimmed down a bit but the newest and best on is that sellers are now targeting 'Self managed superanuation funds' ie pension funds managed by yourself and those who have enough in their funds are borrowing up big via the fund to go mad buying anything with 4 walls, in fact the banks have gotten into this in such a big way that they do it via non-recourse loans on account that pension funds cannot normaly gear up like this. Totaly amazing. Me and the wifey are so p*ssed off on account that the only 2 countries in the world we can live in or desire to live in are the only two places that are still on planet ponzi. I would say on balance Australia is somewhat worse than the UK. Melbourne has a median price of around $500K which is about 300k GDP and as our money is still in UK pounds this is obscene considering what it and much less could buy in the uk.

Yes, knowing the Oz housing market very well I would agree it is still in madness land. However, Australia is more at the mercy of international winds of change, which gives me hope of an external shock creating a crash.

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