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House Prices And Voting Demographics

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Stumbled upon this interesting article:

http://secretsurveyor.blogspot.co.uk/2015/10/generation-spent.html?m=1

The following struck me as interesting:

So Cameron is very keen on keeping house prices elevated, whilst pretending to do something about it, but doing very little other than sleight of hand.

QED: other impediments to keeping the credit bubble on the road? Worry no. 1 was the fact that the people that own all the housing wealth - ie baby boomers - are just coming up to retirement, and were going to start putting all their impossibly expensive houses on the market. Result: vastly increased supply, house prices dropping rapidly, panic, all is lost....

...action by the Tories: increase inheritance tax on everything, but exclude the main home up to a £1,000,000.

Result: houses no longer coming onto the market en masse, as they are the only asset that the moderately wealthy will hang on to at all costs, liquidating pensions etc.

Conclusion: credit bubble rumbles on...

And this:

My only conclusion is that Cameron isn’t interested in actually helping Generation Rent, but he has now grasped that he needs to use smoke and mirrors to convince Generation Rent’s worried parents that he is doing something for their 20 and 30-something children, but without actually affecting the house of cards that constitutes the housing equity wealth of the over-55 demographic, who are his main voting block.

Got me thinking. This credit bubble obviously exists with the permission (and through the active interference) of the government. For this to change either the voting demographics have to change (to favour non owners or at least start to take into account their interests) and/or a financial crisis must occur.

Depressingly, the conclusion the author of this article comes to is the latter.

But then, I remembered a recent YouGov poll Bland had posted:

You don't need joined up thinking. You just need an appetite to try something new. The motivation might be desperation, ;) .

30 September YouGov poll with Corbyn's Labour at 31 to Cameron's Conservatives at 37%. The age breakdown is striking. Only for the 60+ cohort do the Tories lead Labour by more than the margin of error on the poll. The thing about a big enough housing bubble is that it impacts everything.

Anyway, no intention to light a blue touchpaper on the politics front. Simply pointing out that we have been way off the map for a long time and hence the kind of radical measures northshore discusses, whilst still not on the cards, are no longer unimaginable, by any manner of means.

Given the market is a political construct. I just wondered if a thread on this topic would be useful. I'd certainly like to understand this area more fully.

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It seems a widespread assumption that it is politically impossible to threaten the housing wealth of the over 55s (or homeowners more generally), but I'm not sure this is true.

I think the number of people who understand the property market and want to the government to engineer HPI forever isn't very big. I think a much bigger section of owners is fairly ignorant and stupid. When you put together the anecdotes of boomers complaining that the young today can't buy property because they spend on ipdas instead with the observation that many are innumerate (can't understand percentages etc.) and have limited awareness of finance, economics and politics, it is possible to be hopeful that if you could explain to them how the world works some would change thier opinions.

I also think there are a significant number of property owners who oppose government engineered HPI (because they worry specifically about their own children and grandchildren, or just people generally. Social breakdown, economic problems resulting from misallocation etc.)

There are challenges in persuading the first group. Firstly, it is easy to educate ignorant people, but hard if they are also stupid. Secondly, it is difficult to make the arguments, because at some point you have to make the jump from "the impersonal political and economic forces led your house to go from a few thousand decades ago to hundreds of thousand today" to "the resulting outcomes aren't fair, efficient... you don't deserve" or something along those lines. But I think if you can encourage people to think about these forces you will at least be able to see if people are stupid or selfish!

Who knows how many property owners are worried about HPI? They may already be a big enough group to sway the political case for HPI. But this just isn't perceived by politicians. If they became more vocal it could change things.

In any case the best thing to do is keep talking to everyone. Appeal to reason and appeal to empathy when appropriate. Pick your battles and pick your arguments.

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But then, I remembered a recent YouGov poll Bland had posted:

2llg75w.jpg

I wonder what the break down is for the 60+ cohort? It looks to still be quite close between the Conservatives and Labour for 40-59 year olds so I'm just wondering how far into 60+ the strong swing to the Conservatives starts?

That said it's a poll of just over 2,000 people so I'm not sure how much weight we should lend to it exactly, especially given how notoriously off base the polling was on the last election.

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Houses staying in the family don`t create wealth for banks, Cameron`s masters, the bankers, need debt churn (people buying and selling houses) to thrive. Rich people pass houses from generation to generation, but they have widely diversified portfolios as well, they are not "all in" on BTL (and the houses tend to be in better nick and locations than some of the shite that the sheeple buy on Rightmove :lol:) much of the seed money for this diversified inter-generational wealth came from banking in the first place, and the banking class are unlikely to be happy with the Zombie market for debt/houses we have now. It is obvious that the PTB are not going to let the banking system fail, but for it to thrive we need a HPC, the banks will also have their fingers in the pies of commercial rents and loans when it all takes off again, BUT they need a reset for it to take off in the style they want. UK HPC is a matter of when not if now, IMO. BTL tinkering is the start, and they will obviously be taking their cues from other central banks, especially the U.S, but I think they may get the EU vote out of the way and then pull the plug. Thoughts? :P

Edited by dances with sheeple

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2llg75w.jpg

I wonder what the break down is for the 60+ cohort? It looks to still be quite close between the Conservatives and Labour for 40-59 year olds so I'm just wondering how far into 60+ the strong swing to the Conservatives starts?

That said it's a poll of just over 2,000 people so I'm not sure how much weight we should lend to it exactly, especially given how notoriously off base the polling was on the last election.

Yes the 60+ breakdown would be interesting. My gut feel is that people in the 60's (my parents just entering) will be accutely aware of the house situation because their kids are getting screwed over.

Agreed 2,000 is a small sample size.

Are there any polls that specifically ask 'do you think house prices are too high?'. I'm pretty sure I have seen rankings before: What are the top issues that concern you at the moment e.g. economy, imigration, housing. Would be useful to layer that onto the above analysis and see if housing is the driver of the Cons loosing out to Labour.

Just found this one for London (Page 4). Housing is single biggest issue in London apparently:

https://d25d2506sfb94s.cloudfront.net/cumulus_uploads/document/4f1kank0fq/YG-Trackers-London.pdf

Sadly, it is much furthe down the list of the rest of the UK:

https://d25d2506sfb94s.cloudfront.net/cumulus_uploads/document/0g3zhv6y3h/YG-Archives-Pol-Trackers-Issues%282%29-Most-important-issues-260515.pdf

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As I said in another thread, boomers can have their subsidised house price winnings at the expense of funding for the NHS in their twilight years, they will breath their last forgotten about on a waiting trolley in a draughty corridor of an overstretched hospital as underpaid medical staff living in poor quality rented accommodation give little thought or empathy to their plight, and their own offspring fight over inheritance.

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Venger posted this Daily Mail article on the BTL Regrouping thread yesterday:

Four in five Europeans say it is becoming 'too difficult' to buy first home and 72% believe property price falls would 'benefit society'

  • ING poll finds 89% Britons worried about first-time buyers
  • Across Europe, majority believe house price falls would 'benefit society'
  • Comes as David Cameron pledges to build 200k 'affordable' homes

The majority of Europeans are pessimistic about first-time buyers stepping onto the property ladder with many believing the housing crisis is becoming more acute and that society would benefit if prices fell.

A survey of 15,000 people across Europe found that 79 per cent said it has become increasingly difficult to obtain a first home, largely because of runaway house prices.

Nearly six in ten are bullish about property prices rising in the next 12 months, the poll commissioned by ING found, which could exacerbate the problem further.

[. . .]

A strong housing market can be seen as a sign of a nation's economic prosperity. However, the affordability gap has widened so much that 72 per cent now believe that society would benefit if house prices fell.

This is felt most sharply by renters. In Spain 93 per cent of tenants believe that expensive housing blocks their path to home ownership. This is followed by 75 per cent of British and 74 per cent of French respondents.

And it's not just renters who feel this way. More than two-thirds of European homeowners even agree a fall in house prices would benefit society.

Here is ING's own article (and infographic at the link) on the survey covered in the article:

Would a fall in house prices be good for society?

Findings of a new ING survey suggest concern that the next generation is locked out of owning.

Generation Rent is the name given to the growing group who, unlike previous generations, cannot afford to buy a home. The ING International Survey on Homes and Mortgages 2015 asked almost 15,000 in 15 countries about how they finance their home and why they live where they do.

The below infographic captures insights including:

79% in Europe agree first time buyers are facing increasingly difficult conditions. The view is held by most age groups – 25-year-olds are as likely as over-50s to agree.

72% in Europe agree it would be good for society if house prices fell. Agreement is even high among owners, with 69% agreeing.

52% aged 25-to-34 think of owning a house purely as an investment. Despite – or perhaps because of – the financial challenges facing first time buyers, this age group is the most likely to hold the view.

44% in Europe agree buying a home is no longer an attractive way to build up wealth – but 45% disagree. Opinion appears spilt on whether “climbing the property ladder” is still possible for Generation Rent.

You can download the full report here.

Of those surveyed 57% of UK homeowners and 75% of UK renters said that they either agree or strongly agree that "It would be good for society if house prices fell."

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If it is all about the sentiment of having "wealth" and at the moment this is wrapped up in high house prices, wouldn't it be better to transfer this wealth making machine into the stock market? What I mean is, instead of people seeing housing as the only way to make and maintain their wealth if the government was to "prop up" the stock market and make investing in stocks and shares very attractive then a lot of money would be diverted to that and they could move the focus away from house prices. It would also, in theory, encourage business and investing in real companies. Of course propping up any market artificially is ridiculous but if they are going to prop up a market wouldn't it be better to prop one up that is less socially and economically destructive? After all, people need places to live and homes should never have become assets.

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The government doesn't need to prop up the stock market. The returns speak for themselves. It's clear that property won't be able to double or treble in the next decade or so. But equities can be expected to revert to the mean and give decent returns. I've just been trying to explain that on the Here we go - the 40 year mortgage thread (can't post the link), but it seems most HPCers share the the HPIers the focus on property and cash to the exclusion of other asset classes.

I'd say treating homes as assets isn't so bad as long as treat other assets as assets. If people realise they can get good returns elsewhere they wouldn't focus exclusively on property hoarding.

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The government doesn't need to prop up the stock market. The returns speak for themselves. It's clear that property won't be able to double or treble in the next decade or so. But equities can be expected to revert to the mean and give decent returns. I've just been trying to explain that on the Here we go - the 40 year mortgage thread (can't post the link), but it seems most HPCers share the the HPIers the focus on property and cash to the exclusion of other asset classes.

I'd say treating homes as assets isn't so bad as long as treat other assets as assets. If people realise they can get good returns elsewhere they wouldn't focus exclusively on property hoarding.

Excellent point and one worth emphasising.

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But equities can be expected to revert to the mean and give decent returns.

FTSE back to where it was 15 years ago...but if you factor in dividends then equities haven't been so bad during that time. You don't need much capital appreciation on top of the current yield to turn equities into a property killer.

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The government doesn't need to prop up the stock market. The returns speak for themselves. It's clear that property won't be able to double or treble in the next decade or so. But equities can be expected to revert to the mean and give decent returns. I've just been trying to explain that on the Here we go - the 40 year mortgage thread (can't post the link), but it seems most HPCers share the the HPIers the focus on property and cash to the exclusion of other asset classes.

I'd say treating homes as assets isn't so bad as long as treat other assets as assets. If people realise they can get good returns elsewhere they wouldn't focus exclusively on property hoarding.

I mean more in terms of sentiment. There are a lot of reasons why property is not a safe bet. However, we have had 15 or so years of HPI and property porn, BTL etc and it is very much ingrained in the national psyche (not just HPI but also that the government will basically do anything to prop up property prices). It's a tactic which has not just been bad for the economy but has been socially disastrous. Switching from the holy cow of property to almost any other target would at least be less socially destructive than the property one.

Edited by fru-gal

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I mean more in terms of sentiment. There are a lot of reasons why property is not a safe bet. However, we have had 15 or so years of HPI and property porn, BTL etc and it is very much ingrained in the national psyche (not just HPI but also that the government will basically do anything to prop up property prices). It's a tactic which has not just been bad for the economy but has been socially disastrous. Switching from the holy cow of property to almost any other target would at least be less socially destructive than the property one.

Ordinary punters never did the stock market, never did never will, that is for toffs who wear funny braces and ties, property is something they think they understand, hence the scam was focused mainly on that asset class.

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I mean more in terms of sentiment. There are a lot of reasons why property is not a safe bet. However, we have had 15 or so years of HPI and property porn, BTL etc and it is very much ingrained in the national psyche (not just HPI but also that the government will basically do anything to prop up property prices). It's a tactic which has not just been bad for the economy but has been socially disastrous. Switching from the holy cow of property to almost any other target would at least be less socially destructive than the property one.

Ordinary punters never did the stock market, never did never will, that is for toffs who wear funny braces and ties, property is something they think they understand, hence the scam was focused mainly on that asset class. "Go Long Go Long Go Long" doesn`t have the same appeal as "Location Location Location"

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The government doesn't need to prop up the stock market. The returns speak for themselves. It's clear that property won't be able to double or treble in the next decade or so. But equities can be expected to revert to the mean and give decent returns. I've just been trying to explain that on the Here we go - the 40 year mortgage thread (can't post the link), but it seems most HPCers share the the HPIers the focus on property and cash to the exclusion of other asset classes.

I'd say treating homes as assets isn't so bad as long as treat other assets as assets. If people realise they can get good returns elsewhere they wouldn't focus exclusively on property hoarding.

Equities have been lifted and carried on the same 40+ yr credit bubble as property. On this basis there's no reason whatsoever to expect prices or yields to revert to the mean. Moreover, the time series data of financial prices are generally nonstationary. Nonstationary processes have variances and means which change continuously over time which make them difficult (or impossible) to de-trend. That is to say, there are no springs in markets to bring prices back to fair value and expectations of reversion by market participants are likely to be satisfied only by chance.

The Invisible Hand is an ideological fiction.

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FTSE back to where it was 15 years ago...but if you factor in dividends then equities haven't been so bad during that time. You don't need much capital appreciation on top of the current yield to turn equities into a property killer.

FTSE indices include reinvested dividends Edited by Si1

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"baby boomers - are just coming up to retirement, and were going to start putting all their impossibly expensive houses on the market."

They tend to stay put rather than downsize.

Especially now it's a special asset class immune from cgt

You c#nt Cameron

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"baby boomers - are just coming up to retirement, and were going to start putting all their impossibly expensive houses on the market."

They tend to stay put rather than downsize.

Always thought there is a risk of London boomers, pumping up house prices in the regions when they retire, as they sell up and buy Norfolk, Devon etc

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A quick google says otherwise. Are you sure?

Ah. Good question.

I was going on the fact that index funds are compared against the FTSE (or relevant) index they are tracking, and they include reinvested dividends, so their comparison must do likewise to be meaningful.

However, that may just mean that they compare against a version of the index that includes this addition. At the very least it's readily available.

Once you compare house prices including net profits (net rents after costs) to the same measure of the FTSE over very long periods they have the same return, as I'm sure you've assumed or guessed.

Edited by Si1

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Always thought there is a risk of London boomers, pumping up house prices in the regions when they retire, as they sell up and buy Norfolk, Devon etc

It's not a risk, it's exactly what happens. Compare house prices in West Dorset (average local wage <£20k) with commuter towns in SE England. They're identical. This is all down to retiree money.

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Equities have been lifted and carried on the same 40+ yr credit bubble as property. On this basis there's no reason whatsoever to expect prices or yields to revert to the mean. Moreover, the time series data of financial prices are generally nonstationary. Nonstationary processes have variances and means which change continuously over time which make them difficult (or impossible) to de-trend. That is to say, there are no springs in markets to bring prices back to fair value and expectations of reversion by market participants are likely to be satisfied only by chance.

The Invisible Hand is an ideological fiction.

There is nothing like the BTL bubble in the stock market. Nor help to buy equities, or funding to lend to people buying equities, and so on.

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