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hemichromis

If You Were Chancellor How Would You Deal With House Prices?

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I know what i want to see from house prices and that is stagnation for at least 10 years.

This would lessen any shocks to those with big mortgages as well as allowing more and more people to afford them as there prices fall in real terms.

I just don't know how to do it safely, without too many repossessions or affecting GDP too much.

So I want to know what you would like to see and how you believe it could be achieved.

(I'm sure it's been asked before but it would be nice to see all the ideas together)

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If interest rates were to rise, the blow could be softened by some kind of subsidy for those who are hard pressed, much as used to be the case with the old 'option mortgage' back in the 1970s and early 1980s.

I know that won't go down well with some on here, but it would mean the higher earnings would be proportionatly hit harder.

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I know what i want to see from house prices and that is stagnation for at least 10 years.

This would lessen any shocks to those with big mortgages as well as allowing more and more people to afford them as there prices fall in real terms.

I just don't know how to do it safely, without too many repossessions or affecting GDP too much.

So I want to know what you would like to see and how you believe it could be achieved.

(I'm sure it's been asked before but it would be nice to see all the ideas together)

Yoy are Ed Balls, I claim my £10.

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There is no pain free exit. Just what are they going to do to replace the GDP generated by house prices. All you need are muppets willing to bid up house prices and the UK it seems is full of muppets seeking easy profit.

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Protecting people with big mortgages = a rentier's charter.

Keeping prices stable at bubble levels = a rentier's charter.

Risible aims. Tory policy too when Shapps was housing minister, unsurprisingly.

I am not suggesting protecting people with big mortgages, just the more vulnerable ones. Otherwise tehy need to eb rehoused and that will bbenefit teh BTL brigade with big mortgages.

I don't think a rate rise with protection for the vulnerable would keep prices stable at bubble levels.

But as for your remarks about Shapps, that is really hurtful. :(

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I would like to see HB limited to two years and then you get moved to a council flat where you can live for free if you are unemployed. This maybe like student halls with shared facility’s There would have to be some incentive so people will move out as soon as they can stand on their own two feet. So in answer to your question build more council accommodation.

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Nominal graduate wages are falling. If house prices remain constant in nominal terms over the next 10 years they will be even further out of reach for FTBs.

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It was aimed at the OP! Can't seem to reply direct anymore from a smartphone, apologies for confusion.

Sorry - damik has made me a tad sensitive.

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1) Cap mortgage lending at 3x main earner 4x joint income.

2) Remove housing benefit.

3) 100% CGT on property held by non British nationals.

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If i was Gidiot for the day id start off by apologising for being a banksters/property developers shill .... then i'd raise interest rates to 5% which is still below property/food/fuel/transport inflation ... then i'd admit help to buy and funding for lending were scams to prop up the property market and get me re-elected as the ony thing i am useful for is towel folding ....Then in the evening id blow my head off when realising even towel folding is beyond my talents, and my only positive traits are being an arrogant prik and being well connected to fellow arrogant pr7ks.

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1) Cap mortgage lending at 3x main earner 4x joint income.

2) Remove housing benefit.

3) 100% CGT on property held by non British nationals.

I half agree with 1. I 100% agree with 3. But why 2?

It will only hurt those families in the rented sector - unless you are suggesting it as a kind of shock therapy to put families out on the streets and reduce rents.

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I think all benefits that are going to be given to people should go to them. Set a minimum income what people need to live on and let market forces dictate rents.

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I think all benefits that are going to be given to people should go to them. Set a minimum income what people need to live on and let market forces dictate rents.

Thats about to happen isnt it?

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Universal credit does include this but is unlikely to be rolled out in full, but not giving benefits direct to landlords is something I support.

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The honourable thing to do would be resign. The dishonourable thing would be to continue borrowing and printing on the same scale and keep calling it recovery. No prizes for guessing which one Arseborne will choose.

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Make it illegal to hold a mortgage on a property that you are renting out.

Relax planning permission or release land specifically for self build.

Build lots more good quality council houses (and reform the system).

Higher taxes for second, third etc residential properties.

Start to increase rates gradually.

Stop bailing out the banks (requires lots of other reforms).

Bring in a land tax.

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You need to establish a direction of travel.

I think that we should have a situation where we intend that, say 30% of a median wage over 25 years will buy good enough housing, full stop, the end. Then the power of the government to raise taxes could be deployed in the interests of the people rather than in the interest of vested interests, so to speak. For example, alloyed to the way that government supports the private banks as a lender of last resort, it could defend the interests of private households against the cartel builder and financial sector rentiers by being a builder and landlord or last resort, i.e. we would have a consensus political commitment to the idea that if the private sector cannot find a way to build enough, then the government will. You could make this private sector friendly - it shouldn't be one against the other, it should just embody a political commitment to the idea that if the market can't find a solution then the government changes the game so that the government can build a house and break even. If you constructed the mechanism to allow the private sector to jump in to the extent of its appetite for risk, once the game was changed, the actual building needn't even involve the government actually building anything. In my imagination you'd use a market signal (excessive above wage inflation HPI) as a signal to change the game to redress the balance between private households who need housing and vested interests who can exploit the structure of the existing game to extract a greater share of the future income streams of private households.

Rather than let the tail wag the dog and cry about the fact that earnings are falling behind house prices we should have an explicit political commitment to make decent housing affordable always.

I'm more and more convinced of the parallels between the 'facts on the ground' from the early 1970s onwards which eventually led to a radical Conservative government, who changed the game, and the facts on the ground today.

In the 1970s orthodox economic policy which had once been hailed as transformative was recast a wrong and reinterpreted as the cause of all our problems. Likewise today we are seeing the back end of that Neoliberal revolution as an increasing number of people in younger cohorts perceive that regardless of whether or not the economy is larger because of supply side reforms, they are getting screwed. A smaller share of a larger pie does not always favour all interested parties - if your share gets smaller to a greater extent than the pie gets larger, it is not all good!

They were Conservatives, but what mattered was their radicalism. Thatcher's government changed the game. Blair/Brown continued in the same direction of travel. We are basically waiting on our next radicals who will change the game in the interest of the private households who elect the government. (I'd argue that the game change was to produce a multi-generational Ponzi, but that's a different argument for a different thread - certainly that's not what they set out to do and it was certainly not the organising narrative...)

I don't think this the necessary radicalism is necessarily right around the corner. For many households, financial security depends on bubble equity. The UK is a house divided. Many households have essentially thrown in their lot with the banks. If you are edging towards retirement with a small mortgage on a house with a massive price tag, your home really is your pension. Equity release requires equity. I think that it's all going to come down to the numbers, but a political visionary will see that they have the power to influence the numbers. But you can't redistribute wealth through ending the UK housing Ponzi and defend the solvency of our crap banks, so for me if the radicalism ever turns up, from either the Red Team or the Blue Team, you'll know it when you see it because it will conspicuously set the interests of private households above private banks and it will be informed by a belief that perceptions of government solvency can survive carnage carving through the various zombie CML lenders, one crappy RMBS stuffed full of crappy BTL and self-cert at a time.

What is certain is that if we try to honour these debt commitments produced on an industrial scale by nothing to lose bent mortgage brokers and everything to gain idiots, it's going to be all the way ugly until something turns up to end the charade and make it all obviously ugly and over.

If you ever doubt the mess that's hiding, then look at the fact that with 3% growth, sub 7% unemployment and sub 2% CPI the Bank of England aren't even thinking about raising the policy rate. They know we're f****d - obviously we're totally f****d! If the Fed decides that the US can take normal rates, then our rates will follow and the charade will end. In the meantime it's just monetary policy papering over the cracks whilst the Bank technocrats wait for the political class to make up their minds and decide how to change the game. The game will change. No political class can stay on a road to nowhere indefinitely as gradually more and more of the electorate realise the enormous redistribution that results from backing up the zombie banks and failing to change anything is guaranteeing that they will never enjoy the wealth their parents enjoyed.

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Do exactly what was done post 1929 and post 1945 - when we were also close to bankruptcy.

Borrow money - and build more homes including social housing - and abolish every stupid scheme that has been thought up to prop up prices. It did work rather well - and those homes are still standing and of good quality - I doubt the same will be said of today's shoeboxes in 50 years.

For those who say how can we afford it - well we cannot afford £25bn a year on housing benefit and rising.

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If I were chancellor I would:

  • Remove stamp duty from all property sales so long as it was the buyers sole property. Buying an additional property I would set stamp duty at 5% with no get-out for businesses.
  • Cancel Help To Buy
  • Make a law that people need a minimum 10% deposit towards a house to obtain a maximum 90% loan and so ban any bank form lending more than 90% the value of a property.
  • I would make it the law that all money the council obtains from the sale of council houses it must use to build more housing stock.
Edited by JonathanR

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I know what i want to see from house prices and that is stagnation for at least 10 years.

This would lessen any shocks to those with big mortgages as well as allowing more and more people to afford them as there prices fall in real terms.

I just don't know how to do it safely, without too many repossessions or affecting GDP too much.

So I want to know what you would like to see and how you believe it could be achieved.

(I'm sure it's been asked before but it would be nice to see all the ideas together)

Why do you give a fart about GDP? Do you think it actually has any material bearing on your wellbeing?

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You need to establish a direction of travel.

I think that we should have a situation where we intend that, say 30% of a median wage over 25 years will buy good enough housing, full stop, the end. Then the power of the government to raise taxes could be deployed in the interests of the people rather than in the interest of vested interests, so to speak. For example, alloyed to the way that government supports the private banks as a lender of last resort, it could defend the interests of private households against the cartel builder and financial sector rentiers by being a builder and landlord or last resort, i.e. we would have a consensus political commitment to the idea that if the private sector cannot find a way to build enough, then the government will. You could make this private sector friendly - it shouldn't be one against the other, it should just embody a political commitment to the idea that if the market can't find a solution then the government changes the game so that the government can build a house and break even. If you constructed the mechanism to allow the private sector to jump in to the extent of its appetite for risk, once the game was changed, the actual building needn't even involve the government actually building anything. In my imagination you'd use a market signal (excessive above wage inflation HPI) as a signal to change the game to redress the balance between private households who need housing and vested interests who can exploit the structure of the existing game to extract a greater share of the future income streams of private households.

Rather than let the tail wag the dog and cry about the fact that earnings are falling behind house prices we should have an explicit political commitment to make decent housing affordable always.

I'm more and more convinced of the parallels between the 'facts on the ground' from the early 1970s onwards which eventually led to a radical Conservative government, who changed the game, and the facts on the ground today.

In the 1970s orthodox economic policy which had once been hailed as transformative was recast a wrong and reinterpreted as the cause of all our problems. Likewise today we are seeing the back end of that Neoliberal revolution as an increasing number of people in younger cohorts perceive that regardless of whether or not the economy is larger because of supply side reforms, they are getting screwed. A smaller share of a larger pie does not always favour all interested parties - if your share gets smaller to a greater extent than the pie gets larger, it is not all good!

They were Conservatives, but what mattered was their radicalism. Thatcher's government changed the game. Blair/Brown continued in the same direction of travel. We are basically waiting on our next radicals who will change the game in the interest of the private households who elect the government. (I'd argue that the game change was to produce a multi-generational Ponzi, but that's a different argument for a different thread - certainly that's not what they set out to do and it was certainly not the organising narrative...)

I don't think this the necessary radicalism is necessarily right around the corner. For many households, financial security depends on bubble equity. The UK is a house divided. Many households have essentially thrown in their lot with the banks. If you are edging towards retirement with a small mortgage on a house with a massive price tag, your home really is your pension. Equity release requires equity. I think that it's all going to come down to the numbers, but a political visionary will see that they have the power to influence the numbers. But you can't redistribute wealth through ending the UK housing Ponzi and defend the solvency of our crap banks, so for me if the radicalism ever turns up, from either the Red Team or the Blue Team, you'll know it when you see it because it will conspicuously set the interests of private households above private banks and it will be informed by a belief that perceptions of government solvency can survive carnage carving through the various zombie CML lenders, one crappy RMBS stuffed full of crappy BTL and self-cert at a time.

What is certain is that if we try to honour these debt commitments produced on an industrial scale by nothing to lose bent mortgage brokers and everything to gain idiots, it's going to be all the way ugly until something turns up to end the charade and make it all obviously ugly and over.

If you ever doubt the mess that's hiding, then look at the fact that with 3% growth, sub 7% unemployment and sub 2% CPI the Bank of England aren't even thinking about raising the policy rate. They know we're f****d - obviously we're totally f****d! If the Fed decides that the US can take normal rates, then our rates will follow and the charade will end. In the meantime it's just monetary policy papering over the cracks whilst the Bank technocrats wait for the political class to make up their minds and decide how to change the game. The game will change. No political class can stay on a road to nowhere indefinitely as gradually more and more of the electorate realise the enormous redistribution that results from backing up the zombie banks and failing to change anything is guaranteeing that they will never enjoy the wealth their parents enjoyed.

A very nice analysis. I don't think we are quite there yet. Reality will bite when the US recovers which is probably in about a year.

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A very nice analysis. I don't think we are quite there yet. Reality will bite when the US recovers which is probably in about a year.

+1

If you had to have a government what could you expect as a minimum?

Law and order.

Food and energy security.

F**king homes allowed to be built for the people that pay your F**king wages!

That's about it...I think. :D

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