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Is This How The Government Thinks The Housing Market Should Work?

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1. House prices rise.

2. Those that own, grow richer.

3. Those that don't, grow poorer by comparison.

4. Those that own, lend money borrowed against their overvalued houses to their children.

5. The children now own but owe so much money that they are cash poor.

6. The parents who, on paper, are growing richer still, lend more money to their children, again borrowed against their house.

7. House prices stop rising and interest rates go up.

8. The children can't pay their mortgage.

9. The parents can't help because their house is now worth less than they owe.

10. The children lose their houses but still owe the outstanding mortgage amount, so claim benefits.

11. The parents retire and the state pays their outstanding mortgage.

12. Everyone is dependant on the state which borrows more money to pay benefits.

Have I missed something? What happens next?

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1. House prices rise.

2. Those that own, grow richer.

3. Those that don't, grow poorer by comparison.

4. Those that own, lend money borrowed against their overvalued houses to their children.

5. The children now own but owe so much money that they are cash poor.

6. The parents who, on paper, are growing richer still, lend more money to their children, again borrowed against their house.

7. House prices stop rising and interest rates go up.

8. The children can't pay their mortgage.

9. The parents can't help because their house is now worth less than they owe.

10. The children lose their houses but still owe the outstanding mortgage amount, so claim benefits.

11. The parents retire and the state pays their outstanding mortgage.

12. Everyone is dependant on the state which borrows more money to pay benefits.

Have I missed something? What happens next?

According to the government no. 7 is impossible and will not be allowed under any circumstances, meaning that they are incapable of comprehending that steps 8-12 could ever occur.

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In all honesty I don't think any government has ever considered any further than stages 1 & 2 in your list.

As long as those two are in place, they get richer, and they get re-elected. The rest of it is not important, as long as any consequences are avoided until someone else's watch. The only thing that I think might have changed over the years is that "someone else's watch" used to mean the opposition. Now I don't think they care who it is, as long as it's not actually them.

edit for clarity.

Edited by Fully Detached

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Meanwhile what actually happened outside London........

1. House prices peaked between 2004 and 2007 after tripling over the previous decade. A tripling that had occurred every decade since 1967, but finally the market had over reached itself.

2. The economy, wages and house prices have now been stuck for nearly a decade.

3. Another lost decade of stagnation to come, because boomers couldn't face market discovery.

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they are not concerned with housing per se.

they are very concerned with the economy and the feel good factor

There is no doubt there is a warm feeling about owning, specially when values go up.

That is a side benefit of all the credit generation the housing market produces.

or in other words, printy printy equates to housy housy

Edited by Bloo Loo

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The problem is: housing is the economy.

What a mess.

The problem is: there can be no such thing. It's a thirty year Ponzi scheme, plain and simple. When it collapses it will bankrupt the country.

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Government thinks? There's your main error.

You've listend to Cameron, Osborne, Milliband, Clegg and Farage I take it?

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The points above are a very UK centric view of the world. Most the cash that is used to buy housing most probably originates from outside the UK either in the form of inter-bank lending for mortgages or cash rich buyers worried about their own currency turning down.

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I own and I never got why I should feel good about my houses value going up.

Mainly because it meant I was stuck where I am. Moving anywhere larger would cost the Earth in tax and fees. Why is that feel good?

I now have to borrow loads because the housing ladder rungs have stretched so far apart an extra bedroom in a slightly larger home costs hundreds of thousands instead of tens of thousands. How is that feel good?

It's an artificial high and frankly you have to be an idiot to enjoy it. Sadly most people are.

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I own and I never got why I should feel good about my houses value going up.

Mainly because it meant I was stuck where I am. Moving anywhere larger would cost the Earth in tax and fees. Why is that feel good?

I now have to borrow loads because the housing ladder rungs have stretched so far apart an extra bedroom in a slightly larger home costs hundreds of thousands instead of tens of thousands. How is that feel good?

It's an artificial high and frankly you have to be an idiot to enjoy it. Sadly most people are.

This.....but they don't want people repaying, they want people to use the growing value as a supplement to income, use it as a cash cow, leaverage against it at low interest rate.....never actually own it, only ever repay it when sold it.....how rich will you feel then?......what could you buy with what is left over then?.....not a lot.....because prices are all relevant, not what it is worth, but what that wad of widgets will buy you when come to need them.

Whatever you owe....you need a job that at least covers it. ;)

Edited by winkie

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This is the way our politicians think the housing market should work


STORTFORD'S MP stands accused of working "part-time" for his constituents after taking a second job earning more than £1,000 a day for a private property developer.

Conservative Mark Prisk, who was formerly a housing minister in the coalition Government, has been appointed to give strategic advice on housing policy to Essential Living, a developer and operator of private rental homes.

He will be paid £15,000 to £20,000 annually for one day's work a month.

Read more: http://www.hertsandessexobserver.co.uk/Stortford-MP-Mark-Prisk-taking-second-job-earning/story-22782593-detail/story.html

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I own and I never got why I should feel good about my houses value going up.

Mainly because it meant I was stuck where I am. Moving anywhere larger would cost the Earth in tax and fees. Why is that feel good?

I now have to borrow loads because the housing ladder rungs have stretched so far apart an extra bedroom in a slightly larger home costs hundreds of thousands instead of tens of thousands. How is that feel good?

It's an artificial high and frankly you have to be an idiot to enjoy it. Sadly most people are.

Far too logical. But this is the truth. How anyone sane celebrates the HPI we've had is beyond me - maybe because they aren't. It is pure manipulation and delusion. The trigger I'm afraid was the council house sell off. Never undone.

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