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Guardian: Face It, Home Owners Must Take A Hit To Sort Out Housing

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http://www.theguardian.com/commentisfree/2015/nov/28/housing-crisis-homeowners-must-accept-falling-prices

The housing crisis we’re seeing unfold in the south is a political, not a policy, problem. The only way to achieve greater housing affordability is to slow house price growth – or flatten prices altogether. But this would mean a lot of pain for home owners in the south who have bet on their house providing a retirement nest egg. It would spell an end to the free money that comes from nothing more than buying a house in a high-demand area and sitting tight, a gain achieved directly at the expense of those who have not yet got on the housing ladder, who are hit not just by rising prices but increasing rents.

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Good.

Interesting to read some of the arguments against a HPC, namely the "damage" politically for the government at the helm of a HPC would be too great, therefore HPC will not happen, in the comments; Anything valid?

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Sentiment about a decade late, but better late than never

But the sooner we get shot of idea we can simply build our way out of this the better. Epic misdirection.

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Agreed. Scottish house prices still rose - even when their population was decreasing. I'd suggest that house prices are mostly a function of available credit - even if there are local shortages in some areas. If there was no credit, my strong suspicion is that the average price would likely be closer to £20K - or what an average couple might reasonably be able to save in a decade. What we don't have is enough houses for everyone to have one to live in, and another to speculate with.

As a home owner (rather than a mortgage payer) I care not for what happens to the price of my house. If I ever have to move, it would be best for me if house prices across the country were lower than they currently are. I cannot simply cash it in as a pension without moving and paying for some form of shelter.

Edited by StainlessSteelCat

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"The only way to achieve greater housing affordability is to slow house price growth – or flatten prices altogether."

Uh huh. Obviously those are the only two options; rise more slowly, or stay flat. I mean, what else could ludicrously inflated prices possibly do?

FFS. Even now they can't bring themselves to say it.

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Its not so much the houses, but the land they stand on. Really a house should depreciate like any other good like a car, unless substantially renovated or improved.

What needs tackling is the unearned economic rent of the land they stand on, of 'land' owners capturing the product of wages and profits, from the locational value of their land without lifting a finger to earn it.

We need a land value tax.

For capitalism to actually work we need to:

1. Tax work and profits as little as possible

2. Tax land rents as much as possible.

To those that think its politically impossible to implement land tax's I'd say that little to no income tax was a rather massive carrot.

This is not extremist leftism either. Its the economics of Adam Smith, Ricardo, etc which the neofeudalists in the Tory party and the cheerleaders in the Rentiergraph and CityAM that are turning on its head

Edited by RentierParadisio

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Plenty of pathetic 'pull up the drawbridge' comments there from overstretched idiots, who made their own decision to borrow/spunk money that they hadn't yet earned, or were gifted to finance (probably) a 350k 1 bed flat.

Sorry about that, but you made the promise based on nothing other than blind faith in HPI. You maybe should have learnt the concept of compound interest, diversification in investment and just had some plain good old common sense before doing it.

Theres one guy who says he's sunk every spare penny into his home over the years, and has no pension. Are we meant to feel sorry for this idiot? Did he expect to sell 50 bricks every week to pay for his sunday roast in retirement?

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Theres one guy who says he's sunk every spare penny into his home over the years, and has no pension. Are we meant to feel sorry for this idiot? Did he expect to sell 50 bricks every week to pay for his sunday roast in retirement?

He obviously hasn't seen that Channel 4 programme "Diversification, Diversification, Diversification" then.

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Isn't C4 HUTH and Location, Location, Location territory ?

DDD is a series I'm pitching to C4. It's hosted by a Sloaney, overweight, mustachioed woman and a dimwitted, balding man with a speech impediment. They will help youngsters invest their pension into a wide range of ventures including cupcake manufacturing, nail bars, and Prince George memorabilia, now that BTL is no longer an option.

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The housing crisis we’re seeing unfold in the south is a political, not a policy, problem. The only way to achieve greater housing affordability is to slow house price growth allow the collpase of house prices from 2007 to continue –

They already know this though

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Its not so much the houses, but the land they stand on. Really a house should depreciate like any other good like a car, unless substantially renovated or improved.

What needs tackling is the unearned economic rent of the land they stand on, of 'land' owners capturing the product of wages and profits, from the locational value of their land without lifting a finger to earn it.

We need a land value tax.

For capitalism to actually work we need to:

1. Tax work and profits as little as possible

2. Tax land rents as much as possible.

To those that think its politically impossible to implement land tax's I'd say that little to no income tax was a rather massive carrot.

This is not extremist leftism either. Its the economics of Adam Smith, Ricardo, etc which the neofeudalists in the Tory party and the cheerleaders in the Rentiergraph and CityAM that are turning on its head

A key requirement for capitalism to work as advertised is that you pay your own costs.

The land market exists, and is profitable, only because state power allows people to be excluded from land at no cost to the landowner.

The state stops you from providing your own accommodation, on behalf of its clients, and doesn't even charge for the service.

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Good.

Interesting to read some of the arguments against a HPC, namely the "damage" politically for the government at the helm of a HPC would be too great, therefore HPC will not happen, in the comments; Anything valid?

It is complacency and ego. Needs to be found out hard. People believing that paying ever higher prices, or refusing to sell up into big bubble, make their own financial decisions.

Somehow millions of renter-savers aren't any political damage for the government, but if any owner spills some of their previous HPI it's a vote disaster?

Their just the opposite of the 'breakdown squad' who worry about other owners losing equity. Pick something else to worry about. Go to a country where population is held down and hungy as a missionary or something, instead of having a breakdown for someone who has recently upsized to a £750K house with Merc and BMW on the drive fgs. It's all I ever hear from the breakdown squad - if it came to it I doubt they'd even help someone out with smallest charity in an emergency irl (use of phone etc)

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As we all said on here years ago: as the priced out generation starts taking up positions of influence, the call for hpc will only grow louder. Welcome to the club Guardian journo!

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Those comments are quite illuminating of the thought processes of home owners.

Being the Guardian, I assumed most would support lowering of prices.

What I find seriously amusing is how people argue for prices should not go down for any real reason other than 'I do not want it to go down'.

If you own a house to live in and you're not in negative equity, it really should not matter to you what the price is. A price going down does not force you to sell.

It is like pensions or stocks, just because the value has gone down does not mean anything to you unless you're going to make a market action.

These people seem to want permanent locked-in guaranteed profits in addition to a place to live. To have their cake and eat it too. 'I'm alright Jack, I've got a house so it is unfair if prices go down even if it does not affect me in the slightest. Other people are just jealous.'

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There is one important aspect in which people who are not on the housing ladder are being subsidized by people who are on the housing ladder : in meeting care expenses, for those with Alzheimer etc. Not only that this confiscation of property by the Government means that, in case one loses his/her home to this confiscation, that one did exactly the same job as those who are not on the housing ladder but paid a much higher income tax on it, but also one's quality of life is reduced by the permanent worry about the risk that one's house may be basically confiscated to pay for care, while those who are not on the housing ladder have the same care for free.

In any case, the Government (=the taxpayer) needs house prices rising to pay for care through this process of forcing sale of houses of people taken into care. The higher the price of houses, the more money there is for the Government (remember: this confiscation does not need to be done through official physical confiscation, but also just through forcing the family itself to sell and pay for care with the proceeds of the sale).

People who require care in old age and forced to sell their home to pay for their care are subsidising other people who need care? This does not even follow. If you did not sell the house but passed it on as inheritance, other people would subsidise your care.

So all those people that have struggled to save and put a deposit down I. The last few years should be ******ed over because some other people have not managed to do the same? How will this proposal magically produce more houses?

How would it be '******ing over'? An object has a value or a price that it is worth. If it is worth less than you think it is, tough. If you bought at X and now it is worth X + 20% and it now drops by 16.66%, how are you really losing anything? Greedy.

A fall in the value of houses would only benefit those who were marginally unable to afford houses right now - and it would do so to the severe detriment of those who are marginally able to own them now (generally recent house buyers - especially first time buyers). I.e. it would be an arbitrary redistribution of wealth. It would not improve the availability of housing overall, and therefore, on average, it would not improve affordability either. More worryingly, widespread negative equity would have devastating consequences to thousands of families, which would be reflected in the economy as a whole.

There is, of course, a completely painless solution, and that is to decrease the cost of housing relative to average incomes through modest inflation (whilst suppressing house price inflation to a lower level by increasing supply). That way, the value of housing would still fall in real terms; however, crucially, so would the value of people's existing mortgages. In other words, the general affordability of housing could still increase without anyone ending up in negative equity.

So essentially the feckless and irresponsible who bought at inflated prices or with help to buy should be bailed out by me. I am not sure why the need to avoid negative equity. You're just distributing the suffering across more people.

Edited by phantominvestor

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Look, what home owner relies on their home, the home they live in as a pension?.....nobody in their right mind who owns the only home they live in, who over many years has seen that the capital/principle has been repaid gradually month by month.....until free from the claws of the lenders, those who have sacrificed good living, who have not been reliant on income from HPI or tenants or capital growth......your house is your home....and YOUR home is a paid for home....or a secured tenancy that offers regulated rents and protection.....yes you can decorate and improve a good long-term rented home.

Massive HPI has only so far been good for multiple indebted home owners payers and those who have put all their bad eggs in one basket case offereing interest only.....these people rely on those who the state helps or those who see renting as a temporary stance or a means to an end to keep the income rolling in.....earning money from borrowed money only has a temporary window.....that window of opportunity is closing fast. ;)

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"A fall in the value of houses would only benefit those who were marginally unable to afford houses right now - and it would do so to the severe detriment of those who are marginally able to own them now (generally recent house buyers - especially first time buyers). I.e. it would be an arbitrary redistribution of wealth. It would not improve the availability of housing overall, and therefore, on average, it would not improve affordability either. More worryingly, widespread negative equity would have devastating consequences to thousands of families, which would be reflected in the economy as a whole."

So essentially the feckless and irresponsible who bought at inflated prices or with help to buy should be bailed out by me. I am not sure why the need to avoid negative equity. You're just distributing the suffering across more people.

Hah. It's pure breakdown squad, but that's everywhere, including on here on hpc (2008 onwards... 'Think not what you can do to improve your own life such as save and wait for prices to correct, think more for the most recent buyers who outbid your by utter fortunes'). It can't be the first time you've encountered this special pleading to protect HPI for others. It is all I have ever known.

See the journo tells you as it is. You can get max mortgage out to afford some awful dive of a place and be a homeowner, and forget spending on your own family or getting together savings towards any pension. Much better you load up on mega debt, according to the owner side and victim squad, than accepting any semblance of a multi-trillion pound market where we all want a house but no one ever dragged a buyer into paying super high prices. Forbid entirely oldies should spill a drop of their long wave HPI.

Daily Mail

Average UK house price to hit £780,000 by 2040, says leading think tank

Kilo Charlie, My World, 9 hours ago

We purchased a property in 1983 for £72,000.........today it's worth £650,000 plus. It's certainly possible and quite likely.

Sam, Bucks, 3 hours ago

Bought house in ,74 for 16k added extention about £8k now valued at £480k you do the maths?

Throughout my career, I have had criminals sit in front of me and in most instances they offered attempted to rationalize their behavior. Often, they would use the same excuse the Ritters are using --- they would claim that their wrongful behavior was justified by someone else's wrongful behavior.

Yes, it's the bank's fault that these people had to commit fraud and to live in a million dollar house they're not paying for. It's a tough job, but someone has to do it.

Not one bank held a gun to anybody's head and forced him/her to take on a mortgage s/he could not afford.

I'm sick of people blaming the System for problems with their personal finances. May be if you bother to learn a little math and compounding interests, and read the fine lines a little more carefully before signing, you would be in a better shape. The One Percent didn't force you to sign in the dotted line.

How many people were FORCED go buy homes they couldn't afford? NONE.

How many WILLINGLY bought homes they couldn't afford? More than none.

- reader comment on Washington Post, March 2012

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^


There is, of course, a completely painless solution,

There's never a completely painless problem free solution. Concentrating solutions to the "housing crisis" on housing issues alone would mean continued problems/pain to the general economy.

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There has to be a balance......if there was no debt to pay or rent to pay very many more would not bother to work....no work, no growth, no tax take. gdp...etc......

the ideal solution would be....learn, earn, pay and repay.....sit back and enjoy the view, die and provide next of kin with a deposit for the next instalment of prosperity.... ;)

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There is, of course, a completely painless solution, and that is to decrease the cost of housing relative to average incomes through modest inflation (whilst suppressing house price inflation to a lower level by increasing supply). That way, the value of housing would still fall in real terms; however, crucially, so would the value of people's existing mortgages. In other words, the general affordability of housing could still increase without anyone ending up in negative equity.

and how many more years/decades do people who can't "afford" to buy have to further wait until the position of apparent balance is reached (assuming nothing unexpected happens to overturn the applecart). It sounds like more pain for buyers and an easy solution for mortgage holders.

Presumably savers would also have to continue to take the "modest " inflation hit to benefit the mortgage holders as well.

Edited by billybong

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Those comments are quite illuminating of the thought processes of home owners.

Being the Guardian, I assumed most would support lowering of prices.

What I find seriously amusing is how people argue for prices should not go down for any real reason other than 'I do not want it to go down'.

If you own a house to live in and you're not in negative equity, it really should not matter to you what the price is. A price going down does not force you to sell.

It is like pensions or stocks, just because the value has gone down does not mean anything to you unless you're going to make a market action.

These people seem to want permanent locked-in guaranteed profits in addition to a place to live. To have their cake and eat it too. 'I'm alright Jack, I've got a house so it is unfair if prices go down even if it does not affect me in the slightest. Other people are just jealous.'

Why are you surprised? Lefties, in my experience, tend to be the most hypocritical people I have ever met - constantly pontificating on their care for their fellow man, expecting people to do as they preach and not as they do especially if their solutions may involve them making a personal sacrifice.

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