Jump to content
House Price Crash Forum
Sign in to follow this  
pipllman

Would It Be Good For Society If House Prices Feel?

Recommended Posts

An article in the FT today - with free access

http://www.ft.com/cms/s/0/cd310978-522d-11e5-8642-453585f2cfcd.html#axzz3lEgeaJS8

First-time buyers across Europe are pessimistic about their chances of getting on to the property ladder and believe society would benefit if house prices fell.

some 89 per cent of people surveyed questioned how first-time buyers would ever buy a property in the UK.

93 per cent of Spanish, 75 per cent of British and 74 per cent of French tenants citing expensive housing as a block on their path to home ownership.

Share this post


Link to post
Share on other sites

Thus goes the mainstream press. Over ten years on from the big HPI that did the damage. Whereas at the time (at least until 2004) it seemed the entire meeja were cheerleading it.

Share this post


Link to post
Share on other sites

93 per cent of Spanish, 75 per cent of British and 74 per cent of French tenants citing expensive housing as a block on their path to home ownership.

Which would suggest that a large proportion of tenants would like to own their own homes and so a contraction of the size of the private rental sector would be good for society too. Widespread long term renting significantly limits disposable income as, unlike with homeownership, there never comes a point when the rent is completely paid off and the tenant's income is wholly their own to spend into the productive economy. The issue with excessively high house prices is largely that it forces many people to rent when they would prefer not to - with all the insecurity of tenure that involves in the UK - and it means that those who do manage to buy have significantly less disposable income in the here and now, and carry signficantly more risk, neither of which is good for the wider economy.

Share this post


Link to post
Share on other sites

feel.... :wacko:

Don't worry, it happens to everyone from time to time, and at least it was midly amusing!

Edit: As if to prove my point. Obviously I meant mildly ;)

Edited by Neverwhere

Share this post


Link to post
Share on other sites

Better still if they had never risen so much. What happen to an end to bomb and bust.

Same thing that happened to politicians standing for an ideal and telling the truth I suspect.

Edited by TheCountOfNowhere

Share this post


Link to post
Share on other sites

An article in the FT today - with free access

http://www.ft.com/cms/s/0/cd310978-522d-11e5-8642-453585f2cfcd.html#axzz3lEgeaJS8

First-time buyers across Europe are pessimistic about their chances of getting on to the property ladder and believe society would benefit if house prices fell.

some 89 per cent of people surveyed questioned how first-time buyers would ever buy a property in the UK.

93 per cent of Spanish, 75 per cent of British and 74 per cent of French tenants citing expensive housing as a block on their path to home ownership.

They've completely broken the system. Houses in the UK aren't accommodation, they're a state sponsored savings plan. If prices fell then everyone with a house would have lower savings*. They could have avoided this with intelligent policy, but instead they fuelled it. Now we've got a situation where there is no solution - 1/2 (say) of people want lower prices, 1/2 need them to be higher, and they try to invent policy to make everybody happy. Can't be done. I've no idea how things will pan out, but we'll probably end up with a compromise 'worse for everybody'** - that is what usually happens when intervention goes mad

*this is a bad thing for the economy even if you don't like wealthy boomers having all the assets.

**well, maybe a few people might be better off. Not likely to be you or me though.

Share this post


Link to post
Share on other sites

They've completely broken the system. Houses in the UK aren't accommodation, they're a state sponsored savings plan. If prices fell then everyone with a house would have lower savings*. They could have avoided this with intelligent policy, but instead they fuelled it. Now we've got a situation where there is no solution - 1/2 (say) of people want lower prices, 1/2 need them to be higher, and they try to invent policy to make everybody happy. Can't be done. I've no idea how things will pan out, but we'll probably end up with a compromise 'worse for everybody'** - that is what usually happens when intervention goes mad

*this is a bad thing for the economy even if you don't like wealthy boomers having all the assets.

**well, maybe a few people might be better off. Not likely to be you or me though.

In the lower prices scenario, surely the loss of 'savings' experienced by homeowners would be balanced out by the gains experienced by the renting half of the population? Existing homeowners might have less equity, but there would be a big influx of new homeowners who might spend their weekends in B&Q or Homebase rather than staying in and watching Netflix.

Edited by irrationalactor

Share this post


Link to post
Share on other sites

In the lower prices scenario, surely the loss of 'savings' experienced by homeowners would be balanced out by the gains experienced by the renting half of the population? Existing homeowners might have less equity, but there would be a big influx of new homeowners who might spend their weekends in B&Q or Homebase rather than staying in and watching Netflix.

They're not equal. People who have wealth and then lose it (through lowered house prices) are much much crosser than people who kind of just get some wealth (by house prices decreasing allowing greater disposable income). This results in different voting and saving behaviours.

Anyway, I think we've changed general behaviours/expectations so that the renters would spend buying houses - so propping up house prices. The only way forwards is for houses to cost less, people with houses to pay more (interest or tax) and people without houses to have less to spend on houses (interest or tax). Ie, We'd need to have a generation who can't buy even at low prices to kill the cycle.

Or a generation who can't buy because of high prices, taxes and/or interest while inflation gradually kills the value of houses. And while people who invested in a state sponsored savings plan (ie, housing) gradually lose value (without noticing). And also while renters are placated though silly schemes such as HTB which only make things worse for them.

I think TPTB have chosen the latter option.

The trouble is there are significant side-effects. I'm not sure how it'll all pan out.

Edited by dgul

Share this post


Link to post
Share on other sites

People forced to rent hovels even though their parents managed to buy spacious detached houses also end up very very cross.

I really don't get how 'TPTB' can sacrifice my generation on the altar of house prices without any consequences. Why is thwarting our life chances more acceptable than telling the previous generation that their houses are worth less? It's not like equity is real money you can actually spend - you have to find a buyer and downsize before you see a penny of it.

It's absolutely unbelievable that I've been forced into relative poverty just so that homeowners can keep believing they have an extra hundred thousand pounds of phantom money they can't see and can't spend.

But I fear you're probably right as it appears to be what is happening.

Share this post


Link to post
Share on other sites

Check out the ignorance project.

As wages rise globally the more well off will want to have the nice things that culturally have been ramped up.

So... globalization really is about to come and stuff us. Imagine only 1% of top 1% of China, Africa and the various Indian origin states wanting to get a crash pad in the uk.

Eventually we are going to have to bomb them all back a few generations. It is tragically inevitable.

Share this post


Link to post
Share on other sites

People forced to rent hovels even though their parents managed to buy spacious detached houses also end up very very cross.

I disagree with the current situation as much as you do, but it doesn't change facts. By and large people forced to 'rent hovels even though their parents managed to buy spacious detached houses'* don't end up cross, they stubbornly (stupidly) keep on aspiring for the stars, keep on believing that if they play straight and work hard then the rewards will come. But if you take something away from someone who has it (eg, housing wealth) they won't stop thinking that they've been cheated, won't stop being depressed about how life is unfair. This is why they've chosen this way - you don't lose votes for not giving somebody something they never had, but you do lose votes by taking away something that they have had. It is crazy and stupid and will result in problems down the line, but that is where we have gotten to.

* you might, but most people aren't you.

Share this post


Link to post
Share on other sites

Eventually we are going to have to bomb them all back a few generations. It is tragically inevitable.

And they'll bomb us. Ready?

Share this post


Link to post
Share on other sites

Check out the ignorance project.

As wages rise globally the more well off will want to have the nice things that culturally have been ramped up.

So... globalization really is about to come and stuff us. Imagine only 1% of top 1% of China, Africa and the various Indian origin states wanting to get a crash pad in the uk.......

....the only reason people buy crash pads in the UK is because our money laundering laws are pure posture without substance ...people who should enforce don't understand them (most are thick or can't be bothered ) ...and the illicit scheme London House Prices looks like a good gamble for many outsiders in (for the moment) a safe haven ..but with lights at amber in this respect ....time for this Government to govern .....or be thrown out by those who will ...and I don't mean those extreme lefties ...enemies of the state who will need watching by the secret services .. .... :rolleyes:

Share this post


Link to post
Share on other sites

Same thing that happened to politicians standing for an ideal and telling the truth I suspect.

:)

IMHO it would be bad if prices fell as people would lose a lot of money, however the alternative people not being able to afford accomodation are even worse. All political parties apart from UKIP and the Greens are responsible for this but Labour most of all.

Share this post


Link to post
Share on other sites

I disagree with the current situation as much as you do, but it doesn't change facts. By and large people forced to 'rent hovels even though their parents managed to buy spacious detached houses'* don't end up cross, they stubbornly (stupidly) keep on aspiring for the stars, keep on believing that if they play straight and work hard then the rewards will come. But if you take something away from someone who has it (eg, housing wealth) they won't stop thinking that they've been cheated, won't stop being depressed about how life is unfair. This is why they've chosen this way - you don't lose votes for not giving somebody something they never had, but you do lose votes by taking away something that they have had. It is crazy and stupid and will result in problems down the line, but that is where we have gotten to.

* you might, but most people aren't you.

So what's stopping them giving those of us who are priced out a proper leg up? If they want to preserve the nominal value of houses and fix it with inflation, why aren't they offering people like me interest on savings that ensures our wealth keeps pace during the reset? Just giving people money is likely to lead to resentment but 'interest' is a different matter. And they have had no problem with targeted giveaways in the past - Right to Buy, for example, or the pensioner bonds.

Instead we get Help to Buy (just more debt), Shared Ownership (spend a lifetime paying for a secure tenancy), or Help to Buy ISA (closest, but 3k over five years is nothing when house prices are still rising 50k a year, and you sacrifice your much larger normal ISA allowance thus exposing your savings to future taxation).

Thinking about it the Government haven't even managed step #1 of a 'reset' - house prices in London are still rising.

I agree with much of what you're saying but it's not going to do me any good to fatalistically accept that my generation has been handed the (comparatively) short stick. It doesn't have to be this way.

Share this post


Link to post
Share on other sites

:)

IMHO it would be bad if prices fell as people would lose a lot of money,

A lot of unearned, untaxed, free equity you mean.

That's only bad for the individual, not the collective. It's probably not evern bad for them to loose what they never had or never earned, it might do them good in fact.

Paper gains are not real gains.

Edited by TheCountOfNowhere

Share this post


Link to post
Share on other sites

So what's stopping them giving those of us who are priced out a proper leg up? If they want to preserve the nominal value of houses and fix it with inflation, why aren't they offering people like me interest on savings that ensures our wealth keeps pace during the reset? Just giving people money is likely to lead to resentment but 'interest' is a different matter. And they have had no problem with targeted giveaways in the past - Right to Buy, for example, or the pensioner bonds.

I'd imagine that the next set of 'proper leg up' will happen just before the next election, or on the event of a financial crisis which threatens house prices - whichever comes sooner. Not sure that it is actually what you want, though.

I'd add that I think that there is a risk of a house price correction (at least) in the UK, and probably in the not too distant future - just that TPTB will try everything possible to keep prices elevated.

Edited by dgul

Share this post


Link to post
Share on other sites

If they could feel, they'd be as ego-filled, HPI forever as so many other home-owners/buyers.

http://www.thedailymash.co.uk/news/society/high-earning-houses-ban-humans-from-living-in-them-20150805100795

:lol::lol::lol::lol:

That's awesome! From your link:

HOUSES are now worth so much they do not want people living in them and lowering their tone, they have announced.

With property prices at another record high, most houses now have a much higher socio-economic status than the people who want to live in them.

Three-bedroomed semi Donna Sheridan said: “I’m worth £1.4 million, so I don’t want a load of apes stinking the place out with their heated food meals while they sit around that screen thing. And I’m definitely past allowing anyone to have sex in me.

Share this post


Link to post
Share on other sites

.....Thinking about it the Government haven't even managed step #1 of a 'reset' - house prices in London are still rising...........

..this will not happen until the overseas money laundering, feeding the rises ..is halted by Government action promised...unless VI pressure personal or otherwise has caused a change of mind to allow the corruption to continue.... :rolleyes:

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • Next General Election   92 members have voted

    1. 1. When do you predict the next general election will be held?


      • 2019
      • 2020
      • 2021
      • 2022

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.