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The Masked Tulip

Why Do We Celebrate Rising Home Prices?

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....because people that are unable to earn money in the normal way see rising house prices as making money form doing nothing......even those that can earn money working see rising house prices as a bonus using money they can borrow but have never earned.

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....because people that are unable to earn money in the normal way see rising house prices as making money form doing nothing......even those that can earn money working see rising house prices as a bonus using money they can borrow but have never earned.

I agree, but I think for many there's a really strong dependency on HPI - it's become a fixture in their lives. They've probably made many financial decisions based on HPI being a reality for years to come - their expenditure relies upon this. I think a lot of people have a very distorted and unrealistic view of their true wealth.

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I do hate this sort of 'we', as if whatever it is is universal.

More common from the more vacuous sort of journalist, though, e.g. 'Let's' face it, we're all obsessed with celebrities.'

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First up if, in the relatively recent buyers, you have a bunch of people who've effectively signed away a material portion of their lifetime earned income to secure economic control of a house* then they live in holy terror of falling prices - and they are desperate to be told, and to believe, that they are on the right side of a one-way bet.

Further once the absurd belief that your private residence could be your pension settled upon so many UK households, be it via the belief that they'd mint it by downsizing or alternatively extract income from the supposed asset wealth using an equity withdrawal product, you end up with a great slew of free and clear owner occupiers also determined to believe in forever HPI

Also it's an artefact of changes in the structure of the media. With the newsroom of the broadcasters following an agenda set by the editors of the print media and the business model of the print media changing so that a lot of the filler copy in the property and personal finance sections is just regurgitation of vested interest PR desks you end up giving to the mortgage lenders and estate agents a pulpit from which to preach, unchallenged, their forever HPI gospel. Lots of people are just wanting to be told what to think; these vested interest tell them to think about forever HPI, so they think it.

Finally, apropos of the financial crisis and the Treasury's resulting entanglement in the financial fortunes of the big mortgage lenders you end up in a situation where people know what they want to believe, the media is constructed to tell them the same thing and the government has a vested interest in having them believe it.

Happy days are here again.

*I'd say 'buy a house' but with the amount of IO in the UK mortgage market, it seems a stretch to call it buying

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....because people that are unable to earn money in the normal way see rising house prices as making money form doing nothing......even those that can earn money working see rising house prices as a bonus using money they can borrow but have never earned.

"What is the difference between a man and a parasite? A man builds. A parasite asks 'Where is my share?' A man creates. A parasite says, 'What will the neighbors think?' A man invents. A parasite says, 'Watch out, or you might tread on the toes of God... '"

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HPI is basically a version of "helicopter money" that is acceptable to neo-liberal economists.

The increased house prices lead to consumers (well home owning consumers anyway) having a perception that their wealth is increasing resulting in increased spending; often funded by debt. This drives growth in the economy and a "feel good factor" among the home owning population.

If you were Prime Minister and your sole objective was to be re-elected in five years time you'd be in favour of HPI. Someone else can clear up the mess.....

The only time I can see this changing is when renters out-number owners; or when the social consequences of HPI become so blindingly obvious that a significant number of property owners decide that the games not worth the candle.

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Apparently my ways of thinking are that of a stone aged human. I see a house, I see the price, I work out if I can pay it every month and still live, I decide if I am happy to pay the price asked.

Then you go buy the house.

Whatever happens after that is immaterial, I've worked out my sums and decided I *would* want to live there at the AGREED X/month price. If the house goes down in price I shouldnt care less, my payment which I was happy to make is the same.

Oh wait...now I see..They couldnt actually afford it in the first place unless some parachute appeared out of nowhere to push the price up, and get them out of the shit.

If the system resets and those who did bad maths sums end up renting (WHERE THEY WERE ORIGINALLY) why the fsck should I care?

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"What is the difference between a man and a parasite? A man builds.

Sadly, in this degenerated world we live in you can't build anything without getting permission first and in many/most cases you have no chance of getting permission.

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It is therefore not surprising that people see property as the only way that they will become rich ...

I agree with your post, but does anyone truly believe house prices can still march onwards and upwards? The lenders can't do much more other than give money away interest free / actually pay you to take a loan for that to happen.

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In the school playground we would worship the kid with expensive Kicker's shoes - you know the ones where one sole is red and one sole is green, left and right differentiation. When you get a pair (finally), and they were £40 to £60 back in the late 80s, you were GOD. You had the power to look down on the peasants with brand-less shoes.

In today's world, with have the same with games consoles, PS4, Xbox One, and PC Gaming. The PC gamers call themselves the "PC Master Race" because their machines cost much more.

When you become an adult, that survival/peer/competitive instinct is still there, in home ownership.

Elitism is well and alive.

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Debt incumbent workers don't go on strike.

Politicians can just rely on the mortgage market, banks and joneses to pump up GDP with their HPI forever cult,without cameron or Blair having to think of a strategy for us to compete and make a living in competition with the world.

They're all just coasting and handing the bill to the younger generations.

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It's also intentionally playing on psychology. Loss aversion is quite a common tendency (in terms of taking a loss vs taking a profit). There's also the scarcity factor. When scarcity is imposed, people tend to borrow in that resource and make poor choices rather than work against it. Those with least are generally more attuned to short term value/not because their livelihoods depend on it. But not necessarily the long-term and make bad or worse decisions due to the cognitive and behavioural effects of being in that situation.

In my opinion when scarcity of an essential is feigned (land/houses) many people, not just the monetarily less well off, are captured by the same scarcity mentality. If the system is constructed around abusing rational focus and reasonable time preference choices into catching the population in an irrational scarcity and debt cycle (banks lending ever more credit to buy the same stuff) then that's what we get. Policy could end the mindset and exploitation. That they don't means they know exactly what they're doing. Until the next time it blows up.

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The luxury-loving English middle-class has always preferred not to work, or at the very least not be seen to work, which is why we ran an Empire. Now, instead, we have an Empire of Debt. Renters and European migrants perform the same function as the jungly blackamores and chai wallahs of yore. Even the colonial language is unchanged, see any speech by Boris Johnson.

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Guest UK Debt Slave

Elitism is well and alive.

Always has been, always will be.

Nowhere is this more apparent than with so called "left wing" or "socialist" politicians

It's only their hypocrisy that differentiates them from the tories

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Guest UK Debt Slave

Debt incumbent workers don't go on strike.

Clever isn't it?

Instead of terrorising people with totalitarian methods, imprisonment, torture etc, the modern political class keeps the people "on the straight and narrow" by more subtle means such as ensuring that the hoi pollio spend the greatest part of their lives servicing debt.

You own a house..........but only if you keep up the payments on your mortgage, keep your crappy underpaid job with the shrinking benefits and vanishing pension.

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In the last year the average house earned more money ie £27,000 (all untaxed) than the average worker whose wage ie £27,000 is taxed. Where we live a house bought for £185k in 2000 is now up for sale for £725k and so has earned £36,000 every year ... tax free for the last 15 years and right through the recession that required/still requires emergency interest rates.

This is not the same across the country but it is somewhat disturbing that the PM regards the fact that some prices are not above 2007 levels as his failure and only wishes he had introduced HtB earlier.

It is therefore not surprising that people see property as the only way that they will become rich ... that fact that is they liquidate the gains they will have no where to live escapes them. The people who really gain from HPI are of course the wealthy who have lots of properties and the banks who get paid interest on freshly created money.

+1. It's a self-fulfilling prophecy, until it isn't!

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The PC gamers call themselves the "PC Master Race" because their machines cost much more.

Elitism is well and alive.

Actually it is because the games on the PC are massively superior, the players are more involved in the intricate knowledge of their machines, and on the whole it is a far better experience for those that like that sort of thing. Consoles are a bit... well ... shit. Consoles sell well to the sort of folk who might want to rent a car, instead of buying an older, better model outright and fiddling a bit to keep it running.

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Because most people fail to understand that in reality only the banks win when house prices rise.

Absolutely, and the middle classes accept their resulting diminished living standards in the mistaken belief that they are buying an asset. It isn't it is a liability, unless you choosesat some stage to downsize and release that equity, something that very few do.

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