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Wurzel Of Highbridge

Interest Rates Are About To Rise - Homeowners Being Softened Up.

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Something that's be milling away in the subconscious since last week is the widely promoted propaganda statement from George Osborne.

Osborne says demand for homes will continue to outstrip supply for years

My link

Now, it doesn't take a genius to recognize that with some small changed to planning regulation self and small builders could supply the market with hundreds of thousands of new home per year on top of the Barrat box estates currently being built. In effect there is no good reason that "demand for homes will continue to outstrip supply for years", that is unless it was deliberate agenda amongst various policital parties.

Just think what you could achieve in 10 years - hell I am sure I could build a good few myself in that time if I were 'allowed' to.

So, it can be reasoned that this statement is complete and utter tosh. The question I ask is why throw this out into the media? Why this statement and why now?

One way of looking at this statement is showing that the government are deliberately going to be complacent over building homes in the next 10 years, deliberately choke the supply of new homes and lower living standards further. I don't believe this was the reason for the statement though.

Looking at turmoil in emerging markets, interest rate rises and currency crisis - I believe this and more statements like it are being target at property owners in anticipation of rate rises.

The statement should have really read: "Interest rates are about to rocket, but don't worry as will ensure that demand for homes will continue to outstrip supply for years to come"

It will be interesting keeping an ear to the ground for more propaganda directed this way.

One more thing: We have the 'not enough building land brigade' out there. Where does Osborne think the land will come from over the next 10 years? Is he admitting that there is plenty of land out there that can and will be built on?

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Don't overthink what Osborne says, he is a simple soul. His comments are aimed squarely at that part of the electorate who want to believe that house price rises are a good thing. They want to believe that the home they bought will go up in value forever and 10 years is a nice safe period of time for a simple soul. It's about votes not economics.

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Don't overthink what Osborne says, he is a simple soul. His comments are aimed squarely at that part of the electorate who want to believe that house price rises are a good thing. They want to believe that the home they bought will go up in value forever and 10 years is a nice safe period of time for a simple soul. It's about votes not economics.

That would be my reading.

Simply a statement to keep Joe-public's confidence that buying is OK - "so chaps, keep fueling my economy now with your future earning potential - Ta very much"

The statement can also be true.

It doesn't necessarily mean anything with respect to the future value of the asset if purchased at an unsustainable price.

I would not entertain buying into the market now or trading up. Moving within the market at the same level is, of course, OK, although STR is probably better.

Edited by LiveinHope

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I think if anything employers are being softened up to pay higher wages. Quite clearly employers need to do their thing and at least keep wages rising sufficient to keep up with house prices, or they risk the whole ponzi scheme coming undone.

Quite clearly using the State to prop up employers and house prices is no longer sustainable via, tax credits, housing benefit moola for landlords etc etc.

Of course this could lead to higher unemployment and a loss of international competitiveness but that is a small price to pay for ever rising house prices!

Reading in the Telegraph I think, three generations under one roof, that is the problem when you price up a basic commodity like housing. Probably have to introduce new laws to stop owner occupiers 'overcrowding' thus defeating the huge UK housing ponzi. :lol:

Edited by aSecureTenant

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I think if anything employers are being softened up to pay higher wages. Quite clearly employers need to do their thing and at least keep wages rising sufficient to keep up with house prices, or they risk the whole ponzi scheme coming undone.

Quite clearly using the State to prop up employers and house prices is no longer sustainable via, tax credits, housing benefit moola for landlords etc etc.

Of course this could lead to higher unemployment and a loss of international competitiveness but that is a small price to pay for ever rising house prices!

Reading in the Telegraph I think, three generations under one roof, that is the problem when you price up a basic commodity like housing. Probably have to introduce new laws to stop owner occupiers 'overcrowding' thus defeating the huge UK housing ponzi. :lol:

This.^^^^^^. ;)

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This.^^^^^^. ;)

In which case, is the plan to trigger inflation ?

But I don't see many with any spare cash to spend at the moment, or anyone with cash who is prepared to spend frivolously; employers or employees.

So where is the cash for wages going to come from, unless it is fewer employees or self-employed each earning more but being pushed ever harder.

I haven't a clue.

And I want to get off the bus

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The low productively levels have been highlighted and other surveys suggest in some sectors the labour market slack is not there. If companies start dishing out wage increases across the board and jack up product prices it will be interesting to see the MPC reaction.

It maybe that for some it is a golden age with large wage rises and cheap credit but for others low or no wage rises and wonga loans.

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The low productively levels have been highlighted and other surveys suggest in some sectors the labour market slack is not there. If companies start dishing out wage increases across the board and jack up product prices it will be interesting to see the MPC reaction.

It maybe that for some it is a golden age with large wage rises and cheap credit but for others low or no wage rises and wonga loans.

Imo....that looks like the direction we are going, the gap can only grow wider, depending on what side of the fence you are on or were born on how well you can get on, the fence is getting higher and more difficult to climb over. ;)

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In which case, is the plan to trigger inflation ?

But I don't see many with any spare cash to spend at the moment, or anyone with cash who is prepared to spend frivolously; employers or employees.

So where is the cash for wages going to come from, unless it is fewer employees or self-employed each earning more but being pushed ever harder.

I haven't a clue.

And I want to get off the bus

The big clue was the highly publicided policy of protecting pensioners pensions from future inflational pressures, knowing that their life savings are quickly being evaporated and the cost of living will after a brief period of relative deflation will kick off, due to so much new money sloshing about in the economy. ;)

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Imo....that looks like the direction we are going, the gap can only grow wider, depending on what side of the fence you are on or were born on how well you can get on, the fence is getting higher and more difficult to climb over. ;)

The fence is topped with those cemented in upturned broken bottles.

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The big clue was the highly publicided policy of protecting pensioners pensions from future inflational pressures, knowing that their life savings are quickly being evaporated and the cost of living will after a brief period of relative deflation will kick off, due to so much new money sloshing about in the economy. ;)

Yes I saw/heard that .. but but

I don't see anything they say as relevant to a time frame past May 2015 - everything at the moment is a soundbite to assure various groups of voters. Every promise is meaningless in the long-term - although it may influence the long-term by altering people's spending (and voting) behaviours NOW.

Tragedy

BTW, I'd certainly want to get off THIS bus (strong language).

Edited by LiveinHope

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The fence is topped with those cemented in upturned broken bottles.

Painful for those of us sitting on the fence looking out in all directions....and a long drop to the bottom. ;)

Yes I saw/heard that .. but but

Tragedy

BTW, I'd certainly want to get off THIS bus (strong language).

Looks like it is going to be a bumpy ride. ;)

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Don't overthink what Osborne says, he is a simple soul. His comments are aimed squarely at that part of the electorate who want to believe that house price rises are a good thing. They want to believe that the home they bought will go up in value forever and 10 years is a nice safe period of time for a simple soul. It's about votes not economics.

Actually I don't even think it's that.

I think he's just making an excuse for not building enough houses. He's trying to make it sound like a shortage of housing is just an inevitable law of nature, and that he couldn't reasonably be expected to do anything about it. He might even believe that himself, his understanding of the world has been shown to be negligible.

He thinks, because they've told him, that building requires the large building companies, and that they can only build so many thousand houses a year.

In fact, the housing shortage is really only a shortage of planning permission, so could be dealt with in minutes. He won't do it because he won't tackle the NIMBYs and BANANAs.

I've seen the same thing many times before, usually at work. 'Oh, everyone always complains about X, and they always will' (so don't blame me for not fixing it).

Edited by (Blizzard)

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The statement should have really read: "Interest rates are about to rocket, but don't worry as will ensure that demand for homes will continue to outstrip supply for years to come"

It will be interesting keeping an ear to the ground for more propaganda directed this way.

One more thing: We have the 'not enough building land brigade' out there. Where does Osborne think the land will come from over the next 10 years? Is he admitting that there is plenty of land out there that can and will be built on?

Or as many are suggesting on HPC that we are #TurningJapanese and rates will hit rock bottom and stay there for 1 or decades. Then HPs will collapse in a deflationary depression.

The evidence is building for that. Look at 10 and 30 yr Gilt rates.

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I think he's just making an excuse for not building enough houses. He's trying to make it sound like a shortage of housing is just an inevitable law of nature, and that he couldn't reasonably be expected to do anything about it. He might even believe that himself, his understanding of the world has been shown to be negligible.

He thinks, because they've told him, that building requires the large building companies, and that they can only build so many thousand houses a year.

In fact, the housing shortage is really only a shortage of planning permission, so could be dealt with in minutes. He won't do it because he won't tackle the NIMBYs and BANANAs.

Yet there are stories that loads of planning permissions have been issued for housing, and frustration that builders are just sitting on the landbanks. There's even some (admittedly jawboning) words about issuing penalties for those sitting on landbanks and not building.

I think the truth of things here, for minimal house building, is closer to DrHousingBubble's reading of what's happening in California.

Build just enough to lure in HTB fools, and leave us frustrated, as they sit on those landbanks, and prevent correction. Artificially kept up in value for the land holders/developers or banks maybe.

January 31st, 2014

California builders not taking the chance

The difference between the massive run-up in price from 2013 versus say that which occurred in 2005, 2006, and 2007 is that builders are betting on this price rise as an anomaly. For example during the boom days we were seeing privately owned housing start permits hitting a range of 12,000 to 14,000 as measured by the US Department of Commerce. Today it is near the 3,000 range. This is a big difference. If these price increases were organic, as in regular families buying homes based on incomes you would see more builders building out in places like Riverside and San Bernardino. Yet they are not.

Take a look at permits being issued on privately owned 1-unit structures:

california-housing-starts.png

Privately owned housing starts have fallen 78 percent since 2005. Are we not adding more people? Didn’t home prices surge by 20 to 30 percent in California in various markets? The problem with the current boom is that it is based on manipulated supply, artificially low rates, and massive demand from investors. Take one or two of these items away and the market slows down. It has and we have proof with the modest rise in interest rates from last summer. Now we are seeing what happens when some investors begin to pullback.

2014 is likely to be the year of a tipping point. You still see delusional SoCal sellers thinking peak prices are back once again. Some are getting fools to bite but it seems like the supply of fools is shrinking as well. The fact that builders are not out building also tells you something in spite of the big spike in home prices.

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Yet there are stories that loads of planning permissions have been issued for housing, and frustration that builders are just sitting on the landbanks. There's even some (admittedly jawboning) words about issuing penalties for those sitting on landbanks and not building.

I think the truth of things here, for minimal house building, is closer to DrHousingBubble's reading of what's happening in California.

Build just enough to lure in HTB fools, and leave us frustrated, as they sit on those landbanks, and prevent correction. Artificially kept up in value for the land holders/developers or banks maybe.

....so sitting on land banks with planning permissions that are increasing in value is only helping making the holders money (repaying the debt used to purchase the land) without ever putting the investment into building then selling to another thus transferring the increasing asset to someone else to gain from......

Once the cost of building is added, it has to be worth selling..... someone has to want the property, can afford to buy the property ie obtain the debt to buy the property......and of course have a job good enough that can pay for the property, factoring in higher interest rates. ;)

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BTW, I'd certainly want to get off THIS bus (strong language).

How stupid are people for posting this sort of stuff to the internet?! I wonder how long it will be before transport for London find it and possiblly sack him. We all do stupid things from time to time, (esp when we are young!) the trick is not to tell everyone about it! :P

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Something that's be milling away in the subconscious since last week is the widely promoted propaganda statement from George Osborne.

Osborne says demand for homes will continue to outstrip supply for years

My link

Now, it doesn't take a genius to recognize that with some small changed to planning regulation self and small builders could supply the market with hundreds of thousands of new home per year on top of the Barrat box estates currently being built. In effect there is no good reason that "demand for homes will continue to outstrip supply for years", that is unless it was deliberate agenda amongst various policital parties.

Just think what you could achieve in 10 years - hell I am sure I could build a good few myself in that time if I were 'allowed' to.

So, it can be reasoned that this statement is complete and utter tosh. The question I ask is why throw this out into the media? Why this statement and why now?

One way of looking at this statement is showing that the government are deliberately going to be complacent over building homes in the next 10 years, deliberately choke the supply of new homes and lower living standards further. I don't believe this was the reason for the statement though.

Looking at turmoil in emerging markets, interest rate rises and currency crisis - I believe this and more statements like it are being target at property owners in anticipation of rate rises.

The statement should have really read: "Interest rates are about to rocket, but don't worry as will ensure that demand for homes will continue to outstrip supply for years to come"

It will be interesting keeping an ear to the ground for more propaganda directed this way.

One more thing: We have the 'not enough building land brigade' out there. Where does Osborne think the land will come from over the next 10 years? Is he admitting that there is plenty of land out there that can and will be built on?

I am just going to keep asking this - we have been hearing that we need "hundreds of thousands" of new homes every year, well for years. Where are all the homeless?

Oh, I agree that rates are going to go up big time :P

Edited by dances with sheeple

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Yet there are stories that loads of planning permissions have been issued for housing, and frustration that builders are just sitting on the landbanks. There's even some (admittedly jawboning) words about issuing penalties for those sitting on landbanks and not building.

I think the truth of things here, for minimal house building, is closer to DrHousingBubble's reading of what's happening in California.

Build just enough to lure in HTB fools, and leave us frustrated, as they sit on those landbanks, and prevent correction. Artificially kept up in value for the land holders/developers or banks maybe.

Large scale builders can get planning permission. Can anyone else? At what cost?

As it happens, I think we have a speculative bubble, which has led to government price fixing, which has led to a housing shortage.

There probably is now a real shortage of housing, but not nearly on the scale suggested, and it isn't the primary issue.

(It manifests as households growing and houses shrinking rather than homelessness).

Still, the housing shortage narrative fits the world view of Osbrown and his chums. Can you imagine how it would be if it really was about feudalism and state supported land hoarding? That would make him and his friends monsters or worse, 'socialists', so that can't be right.

Fine, let them think that. As I've said before, fixing the housing crisis, and ending the poverty it causes, is easy. There are many possible solutions. Although the correct solution is a serious LVT and planning reform, and the other solutions mostly have some negative economic consequences, almost any of them would be an improvement.

Building isn't the ideal solution, but it does have a number of things going for it.

Firstly, building boosts the economy, particularly if you prioritise small building companies and self-build. Some of this is malinvestment, but the government has already chosen Keynsian stimulus as it's policy, and this is probably the least wasteful investment. Better than PPI claim call centres anyway.

Secondly, planning permission on a single site is worth tens of thousands of pounds and is created by the government at the stroke of a pen. This is a real stimulus, and very Good news if you're trying to reduce a deficit.

Mostly though, the advantage is political.

Tories spent centuries painting rent and land reform as a tax, or something to do with property rights. They spent one hundred years arguing for a 'home owning democracy'. It's much more difficult now to argue against a building program.

Of course, that's why osbrown has to make building seem difficult, expensive and slow, it's the only tactic he has available.

Putting it all together, it really is astounding that we aren't building houses. The only explanation is that they don't want to solve the problem.

Edited by (Blizzard)

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How stupid are people for posting this sort of stuff to the internet?! I wonder how long it will be before transport for London find it and possiblly sack him. We all do stupid things from time to time, (esp when we are young!) the trick is not to tell everyone about it! :P

Already been removed by you tube. Can we have a brief synopsis?

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Large scale builders can get planning permission. Can anyone else? At what cost?

I have spent some timre recently looking for a single building plot - nothing excessive just about 0.2 acres on the edge of a village/town south of Bristol or 34 mins max into Somerset.

There is one viable site available, its £110k and it's crap! It's a beer garden from a pub which inmy opinion would have been best left as an asset of the pub.

Back in Ireland I could have picked from at least 50 plots within 20 mile of the city and most of them are 0.5 acres and no more than €75k (£60k).

There is a SERIOUS shortage of permissions for self builders - I did hear the fat controller (Pickles) harping on about waiting lists for self builders. I must check out that hot air and see if any magical list has been setup for Mendip/Glastonbury area.

In principal most boomers and nimbys have no objection to well designed one off housing, it's the high density estates built in quiet low density areas that everyone object to. Again this is down to the inflexible government building density which makes little distinction between inner city/town areas and small villages in the middle of nowhere, where the density is not required.

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Large scale builders can get planning permission. Can anyone else? At what cost?

As it happens, I think we have a speculative bubble, which has led to government price fixing, which has led to a housing shortage.

There probably is now a real shortage of housing, but not nearly on the scale suggested, and it isn't the primary issue.

(It manifests as households growing and houses shrinking rather than homelessness).

Still, the housing shortage narrative fits the world view of Osbrown and his chums. Can you imagine how it would be if it really was about feudalism and state supported land hoarding? That would make him and his friends monsters or worse, 'socialists', so that can't be right.

Fine, let them think that. As I've said before, fixing the housing crisis, and ending the poverty it causes, is easy. There are many possible solutions. Although the correct solution is a serious LVT and planning reform, and the other solutions mostly have some negative economic consequences, almost any of them would be an improvement.

Building isn't the ideal solution, but it does have a number of things going for it.

Firstly, building boosts the economy, particularly if you prioritise small building companies and self-build. Some of this is malinvestment, but the government has already chosen Keynsian stimulus as it's policy, and this is probably the least wasteful investment. Better than PPI claim call centres anyway.

Secondly, planning permission on a single site is worth tens of thousands of pounds and is created by the government at the stroke of a pen. This is a real stimulus, and very Good news if you're trying to reduce a deficit.

Mostly though, the advantage is political.

Tories spent centuries painting rent and land reform as a tax, or something to do with property rights. They spent one hundred years arguing for a 'home owning democracy'. It's much more difficult now to argue against a building program.

Of course, that's why osbrown has to make building seem difficult, expensive and slow, it's the only tactic he has available.

Putting it all together, it really is astounding that we aren't building houses. The only explanation is that they don't want to solve the problem.

We are not building houses because there isn`t a shortage of houses, it is quite simple. The government would be out of power overnight if the numbers of people we are led to believe need houses built for them really existed.

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We are not building houses because there isn`t a shortage of houses, it is quite simple. The government would be out of power overnight if the numbers of people we are led to believe need houses built for them really existed.

Well our population has increased 2 or 3 million over recent years.....have we built enough housing to accommodate this increase?......we may have built some units and split other units into smaller units.....also there are far more people living alone, more family break-ups.......do the maths. ;)

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