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canbuywontbuy

The Multi-Decade Housing Crisis is Not a C*ck-up, it's Deliberate Policy (Duh!)

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Some people still seem to cut successive governments slack and think they have our best interests at heart, but they've merely fumbled and that's why we have the housing crisis we have.  Hundreds and thousands of fumbles have seemingly lead to the current situation. 

Nonsense.

Look at other western countries around the world.  Same policies, same results.  High house prices in Canada, Aus, NZ.  Carbon copy policies.  Not fumbles, not c*ck-ups.  Deliberate policy. 

When you have a problem, you need to really understand the nature of the problem.  That's why I emigrated.  I don't trust the government to do what's best for its citizens.  I don't think they're good-hearted bungling baffoons.  I think their intentions are far more Machiavellian.  They know what they are doing.  And it doesn't matter what party is in power. 

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Yep.  It saddens me when people cut so much slack to the government.  They are not looking out for our best interests.  They have ulterior motives.  Common sense that I thought most people would grasp by the time they get to about 20 years old. 

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The vast majority of people simply do not care as they have never bothered to give any thought to some of the major things that govern their lives.  

It is also amazing how willing people are to accept the word of someone they perceive to be in authority without question. 

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Who are the biggest funders of the Tory party and who offers politicians the best jobs post politics - bankers, hedge funds and developers.

Thats all you need to know - we have the best politicians money can buy.

Edited by MARTINX9

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1 minute ago, MARTINX9 said:

Who are the biggest funders of the Tory party and who offers politicians the best jobs post politics - bankers, hedge funds and developers.

Thats all you need to know - we have the best politicians money can buy.

Who are the biggest funders of the Tory party incumbent party and who offers politicians the best jobs post politics - bankers, hedge funds and developers.

Thats all you need to know - we have the best politicians money can buy.

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I think most people on here know that but the general public still seem to be ignorant. In the UK specifically Buy to Let has been the biggest fuel for the housing bubble. With their tax advantages BTL landlords replaced first time buyers ~15 years ago. It's taken until now for anyone to do anything about it.

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4 minutes ago, assetrichcashpoor said:

I think most people on here know that but the general public still seem to be ignorant. In the UK specifically Buy to Let has been the biggest fuel for the housing bubble. With their tax advantages BTL landlords replaced first time buyers ~15 years ago. It's taken until now for anyone to do anything about it.

But something is being done about it. The question is, why now and not earlier? I think the answer is incompetence. Not in the sense of "oh dear we've failed to keep house prices low" but in the sense of "oh dear we've let it get so out of control that it's getting to the point where our wealth is at serious risk". 

Take the PRA, for example. It was created in 2012, in response to the GFC, and it's job is to help prevent a rerun of the GFC. You only have to listen to the Treasury Committee meetings involving the PRA to know that - there is constant reference to "the crisis" in those meetings. No qualification of which crisis needed. It's the one they are there to prevent again.

The "crisis", despite what some conspiracists might claim, was clearly not part of the plan. It was caused by the housing market, in particular by "irresponsible" practices within the housing market - practices provoked by the pro-HPI policies of the day. 

But I put "irresponsible" in quotes because I do not think the responsibility lies with those accused of it. Illegality was involved, but the only irresponsible people involved were the policy makers. So I see the role of the PRA as being as much about regulation of policy as about regulation of the financial services sector. It is an interface between the two, and thus will inform policy, as it is now beginning to. 

So yes, HPI has been deliberate policy around the world, but that policy, without feedback on the effects, led to the crisis which led to the opposite of the policy objective. Therefore, if pro-HPI policies foster an environment where an HPC becomes a threat, then provided this is fed back soon enough, then - to coin a phrase, HPD - house price deflation, must become policy.

This is the point we have reached, imo. Deflation is now policy because the only alternative is crash. When you're trying to increase prices, the hazard is businesses introducing systemic threats by assuming policy will not change. When you're trying to decrease prices, the hazard is anyone cottoning on to that.

The government could easily crash prices. It'd be good for the economy. They probably wouldn't get reelected for a generation. So they try to dampen inflation with very gentle pushes. It won't work, and the longer it doesn't work, the more problematic it becomes.

Sooner or later they will push too hard and I think they have.

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Its clearly a mix of deliberate policy and a number of factors which cause policy behaviours.

having a political system based on re-election every few years means short term thinking. Who cares if our children are screwed, voters now are more wealthy temporarily.

 

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Yes, the slow wave pump and dump of the British property market, helped along by the unholy alliance of banks and big builders is slowly but surely destroying communities and neighbourhoods. The madness has to stop but the question is when will the majority realise they've been manipulated on an industrial scale and rebel?

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8 hours ago, Digsby said:

But something is being done about it. The question is, why now and not earlier? I think the answer is incompetence. Not in the sense of "oh dear we've failed to keep house prices low" but in the sense of "oh dear we've let it get so out of control that it's getting to the point where our wealth is at serious risk". 

Take the PRA, for example. It was created in 2012, in response to the GFC, and it's job is to help prevent a rerun of the GFC. You only have to listen to the Treasury Committee meetings involving the PRA to know that - there is constant reference to "the crisis" in those meetings. No qualification of which crisis needed. It's the one they are there to prevent again.

The "crisis", despite what some conspiracists might claim, was clearly not part of the plan. It was caused by the housing market, in particular by "irresponsible" practices within the housing market - practices provoked by the pro-HPI policies of the day. 

But I put "irresponsible" in quotes because I do not think the responsibility lies with those accused of it. Illegality was involved, but the only irresponsible people involved were the policy makers. So I see the role of the PRA as being as much about regulation of policy as about regulation of the financial services sector. It is an interface between the two, and thus will inform policy, as it is now beginning to. 

So yes, HPI has been deliberate policy around the world, but that policy, without feedback on the effects, led to the crisis which led to the opposite of the policy objective. Therefore, if pro-HPI policies foster an environment where an HPC becomes a threat, then provided this is fed back soon enough, then - to coin a phrase, HPD - house price deflation, must become policy.

This is the point we have reached, imo. Deflation is now policy because the only alternative is crash. When you're trying to increase prices, the hazard is businesses introducing systemic threats by assuming policy will not change. When you're trying to decrease prices, the hazard is anyone cottoning on to that.

The government could easily crash prices. It'd be good for the economy. They probably wouldn't get reelected for a generation. So they try to dampen inflation with very gentle pushes. It won't work, and the longer it doesn't work, the more problematic it becomes.

Sooner or later they will push too hard and I think they have.

The reason governments around the world aren't clear on whether they want HPI or HPD is that they simply want property to require as much debt as possible.  Affordable = not as much as debt as unaffordable.  Maybe they don't want it "too unaffordable" to kill off volumes altogether, but they seem to be happy with lowish volume and very high debt required. 

The bottom line is this: governments around the world have a deliberate policy to make housing very unaffordable to the point you have to go as deep into debt as the banks will allow you (probably on 2 salaries too!) to "afford" one.  If the policy then seeks to reduce house prices slightly to increase volumes, they will do that.

My prediction is that house prices will remain unaffordable for years to come, regardless of reductions.  Developed countries are creating a new kind of neoslavery. You will never get "there".  "There" is moved further and further away from you via artificially high costs just to pur a roof over your head, to heat it, to get to and from work. 

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8 minutes ago, canbuywontbuy said:

The bottom line is this: governments around the world have a deliberate policy to make housing very unaffordable to the point you have to go as deep into debt as the banks will allow you (probably on 2 salaries too!) to "afford" one.  If the policy then seeks to reduce house prices slightly to increase volumes, they will do that.

My prediction is that house prices will remain unaffordable for years to come, regardless of reductions.  Developed countries are creating a new kind of neoslavery. You will never get "there".  "There" is moved further and further away from you via artificially high costs just to pur a roof over your head, to heat it, to get to and from work. 

Can see your prediction, but what tools will be used to assist such fine grained policy making (enforcing a HPD and not creating a HPC) ?

Did anyone write up the difference between HPD and HPC ?  Where does 4.5 x gross single income fit into that, and how does the market get there ?  This would be near current policy.

There is the argument that no one has savings right now (not enough to kick start a healthy FTB driven buyers market).  People are now going to need 10% deposit and a recession is on the way, so yes a HPD that results in a 125k average UK price for average home still remains unaffordable when you don't have the 10% deposit and you are unemployed now.  But the market cycle has always been like this; that is why when the price bottoms out there isn't some huge money pot waiting for the "right price" to suddenly deciding to buy back in.

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It's just too easy to blame 'the banks' - way too simple.

Bubble 1.0 was bankers and people (home-buyers / BTLers/ older homeonwers) getting very carried away, with what it is worth, bubble mentality.  Bankers are just people - and quite a few met with changed circumstances in last few years.   

Where was/is the alarm from the older homeowners / BTLers who love up their mad-gainz in bubble 1.0 and into the extreme HPI reflation over last few years in many areas?

Still there... BTLelegraph the other day, some old (82 years) ex-media presenter apparently claiming "Houses Best Ever Investment" - (according to the headline - but seen it many times with other older homeowners) with his £600,000 mad-gainz smug (although I only read the opening part). 

They are not innocents in all of this, and there are millions of them.  Same with millions of BTLers who have embraced prospect of farming 'Generation Rent' and many of who have doubled down into it in recent years.   Unregulated BTL, with the BTLs, capital gains tax, and own homes to sell to make whole their debts in a turn.

Quote

Richard Whitmore: 'I made £600k on my home. You can't lose with property'
1 JANUARY 2017 • 7:03AM

http://www.telegraph.co.uk/money/fame-fortune/richard-whitmore-made-600k-home-cant-lose-property/

 

On 9/19/2015 at 8:47 AM, BuyToLeech said:

A lot of bankers did benefit, it's just that plenty of other people also benefited and benefited more in many cases.

There are plenty of people who have made more through the housing bubble than they have ever earned in their lives. For landlords and London homeowners or anyone with an inheritance the amounts are similar to lottery wins - hundreds of thousands or millions - largely untaxed.

Those people wanted the banks to inflate the bubble, and they wanted the bailout. They may even be the reason there was a bailout, but none ever holds them responsible.

People love to blame banks for what happened, but millions of people were complicit. Most obviously the banks didn't get any criticism when the damage was actually happening. They only get blamed for stopping it.

Even now the British middle aged middle classes are clamouring to go back to the days when the crisis was still looming, so they can play at being property developers.

Quote

The idea that older people don't see their homes as investments is a ridiculous self-serving platitude.

Things have been changing behind the scenes.  There was always going to be HPIers/BTLers escaping with mad-gainz.    BTLers doubled down into Section 24 - something many HPCers claimed into the BTLer double down years... scoffed at on the BTL forums.  Now reeling from S24 and more.

Everything is in place for change.  And a whole series of measures to be excited about for the turn on the HPIers - perhaps not enough for real HPC yet - but definate and targeted measures.  A house price bubble doesn't pop until it just about brings in all those who will participate.  And where are we now... £ mad-gainz locked in housing.  Values are found at the margin, and it doesn't take too many transactions at lower prices to bring markets down.

Up the banks for HPC and fresh lending on crashed house prices to younger people for decades to come.  Down with the HPI-heads.  If the young can be served up such gruel for housing at preposterous values, then there can be a shock to the HPI and BTL heads.

If you believe no HPC and continuation for years - buy into it (in big HPI areas).  Tell others to if so sure, and join the oldies with 'Can't lose with property' which has in some part powered the HPI forever mindset.  Not banks - culture - and older owners selling their own stock to get more HPI.  More they can encourage people to believe foreverHPI, more they can get them to pay higher prices, more the higher end homes are worth.   

Own market choices.  Just don't expect bailout next time and take your medicine if it comes.   Renter savers and younger people coming through were not born to protect BTL families, HPI heads.

On 1/13/2015 at 3:40 PM, hans kammler said:

Anecdotally, every boomer colleague I work with, has said, once the topic of the housing market comes up that the 'government will not not let prices drop' I've heard that sentence dozens upon dozens if times.

There is definitely an expectation of intervention. They're right so far.

Quote

There are a fair proportion of boomers in the professional classes who have have been shielded from the vicissitudes of the world for two generations or more

They are about to find out how the world works.

It will hit very fast and very hard; the HPIers will find themselves in the grip of something adamantinely hard and utterly unforgiving.

 

Edited by Venger

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1 hour ago, canbuywontbuy said:

The reason governments around the world aren't clear on whether they want HPI or HPD is that they simply want property to require as much debt as possible.  Affordable = not as much as debt as unaffordable.  Maybe they don't want it "too unaffordable" to kill off volumes altogether, but they seem to be happy with lowish volume and very high debt required. 

The bottom line is this: governments around the world have a deliberate policy to make housing very unaffordable to the point you have to go as deep into debt as the banks will allow you (probably on 2 salaries too!) to "afford" one.  If the policy then seeks to reduce house prices slightly to increase volumes, they will do that.

My prediction is that house prices will remain unaffordable for years to come, regardless of reductions.  Developed countries are creating a new kind of neoslavery. You will never get "there".  "There" is moved further and further away from you via artificially high costs just to pur a roof over your head, to heat it, to get to and from work. 

I disagree.

As an analogy, I don't think the government is killing people. I do, however, think that they've taken off the warning labels off dangerous equipments and are just letting nature take its course.

Perhaps that's not such a bad thing - long-term? Short term, of course, we all get to "suffer" by paying more for a roof, whether renting or buying. But long-term, it might have a positive effect after what I refer to as "the culling". 

Edited by flb

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1 hour ago, flb said:

I disagree.

As an analogy, I don't think the government is killing people. I do, however, think that they've taken off the warning labels off dangerous equipments and are just letting nature take its course.

Perhaps that's not such a bad thing - long-term? Short term, of course, we all get to "suffer" by paying more for a roof, whether renting or buying. But long-term, it might have a positive effect after what I refer to as "the culling". 

Governments do lots of things.  Not everything they do has to fit the outlined behaviour I've described.  The behaviour I've described has been facsimilied across many western countries.  I'm outlining a particular set of behaviours that are deliberate. We can assume they are deliberate based on their similarity across 5 or 6 countries, and their longevity.  A number of countries aren't c*cking up in the very same way over decades.  This is deliberate policy.  If people want to think "awww, governments do the darndest things! Look how cute they are when they mess up! Never mind, because they have our best interests at heart, we'll just wait it out - we waited 15 years, so what's another 10 years for the government to eventually get it right?".  Good luck with that attitude. 

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2 minutes ago, canbuywontbuy said:

Governments do lots of things.  Not everything they do has to fit the outlined behaviour I've described.  The behaviour I've described has been facsimilied across many western countries.  I'm outlining a particular set of behaviours that are deliberate. We can assume they are deliberate based on their similarity across 5 or 6 countries, and their longevity.  A number of countries aren't c*cking up in the very same way over decades.  This is deliberate policy.  If people want to think "awww, governments do the darndest things! Look how cute they are when they mess up! Never mind, because they have our best interests at heart, we'll just wait it out - we waited 15 years, so what's another 10 years for the government to eventually get it right?".  Good luck with that attitude. 

You misunderstood what I was saying.

What I'm saying is that the government removed some safety labels (for example, a while ago, you had to have a serious deposit and banks would only lend you 3-4 times your income, I forgot how much that was). 

Once those regulations were removed...well, you know what happened. Houses started going for 10 times your income and people were able to buy homes with 5% deposit, 1-2% interest...or the infamous "interest-only" mortgages etc. Some people made a lot of money off that. Some people MIGHT lose a lot of money because of that (if the bubble pops). 

I'm saying that IF it does pop, it MIGHT be beneficial, as it would be similar to weeding out destructive (and extremely greedy) elements of the society (what I called a "culling").

I never said that I believe the government has my best interest in heart. In fact, as an immigrant, I KNOW FOR A FACT that the government is the enemy (along with possibly 52% of the voters that tend to show up at the booths, but that's a different story). 

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1 hour ago, flb said:

You misunderstood what I was saying.

What I'm saying is that the government removed some safety labels (for example, a while ago, you had to have a serious deposit and banks would only lend you 3-4 times your income, I forgot how much that was). 

Once those regulations were removed...well, you know what happened. Houses started going for 10 times your income and people were able to buy homes with 5% deposit, 1-2% interest...or the infamous "interest-only" mortgages etc. Some people made a lot of money off that. Some people MIGHT lose a lot of money because of that (if the bubble pops). 

I'm saying that IF it does pop, it MIGHT be beneficial, as it would be similar to weeding out destructive (and extremely greedy) elements of the society (what I called a "culling").

I never said that I believe the government has my best interest in heart. In fact, as an immigrant, I KNOW FOR A FACT that the government is the enemy (along with possibly 52% of the voters that tend to show up at the booths, but that's a different story). 

We are simply disagreeing.  You say it's a case of a bumbling, Mr Bean-type government making one fumble after another (to canned laughter) making lending a lot looser, not knowing the consequences of that. They would have known the consequences of those policies - which are obvious, and they played out as anyone could have predicted.  They were betting on the housing market, as were the US, Australia, NZ and Canada.  They lost that bet in 2008, but rather than accepting that, they double-downed on it - they cut rates from 4.5% to 0.5% (lowest ever BoE rate between 1694 and 2008 was 2% by the way).  They doubled their stake.  They said "nope, we will win on the housing market".  HTB gave the game away.  Everything is deliberate to keep prices high. 

Anyway, feel free to believe it's just a clumsy government - but you might be in for a long, long wait for house prices ever to be affordable again.

By the way, are you an EU immigrant or non-EU immigrant? I (was) a non-EU immigrant for over 40 years in the UK.  I had to take the Home Office to tribunal who were going to kick me out of the UK (25 years as a tax-payer no less) through a "clerical error" (£6000 in legal fees to fight this nonsense, many have and are going through the same and can't afford that and give up and leave).  If you're non-EU, then watch your back.  If you're EU, you are at the top of the tree - your British passport is in the post, full rights - even if you arrived yesterday in the UK. 

 

Edited by canbuywontbuy

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Quote

I never said that I believe the government has my best interest in heart. In fact, as an immigrant, I KNOW FOR A FACT that the government is the enemy (along with possibly 52% of the voters that tend to show up at the booths, but that's a different story). 

You shouldn't think 52% of the UK population are against you.  They are against mass, unlimited immigration.  Two different things.

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5 hours ago, canbuywontbuy said:

We are simply disagreeing.  You say it's a case of a bumbling, Mr Bean-type government making one fumble after another (to canned laughter) making lending a lot looser, not knowing the consequences of that. They would have known the consequences of those policies - which are obvious, and they played out as anyone could have predicted.  They were betting on the housing market, as were the US, Australia, NZ and Canada.  They lost that bet in 2008, but rather than accepting that, they double-downed on it - they cut rates from 4.5% to 0.5% (lowest ever BoE rate between 1694 and 2008 was 2% by the way).  They doubled their stake.  They said "nope, we will win on the housing market".  HTB gave the game away.  Everything is deliberate to keep prices high. 

Anyway, feel free to believe it's just a clumsy government - but you might be in for a long, long wait for house prices ever to be affordable again.

By the way, are you an EU immigrant or non-EU immigrant? I (was) a non-EU immigrant for over 40 years in the UK.  I had to take the Home Office to tribunal who were going to kick me out of the UK (25 years as a tax-payer no less) through a "clerical error" (£6000 in legal fees to fight this nonsense, many have and are going through the same and can't afford that and give up and leave).  If you're non-EU, then watch your back.  If you're EU, you are at the top of the tree - your British passport is in the post, full rights - even if you arrived yesterday in the UK. 

 

I think we're in agreement. I don't think they did it by mistake or out of stupidity either. I also think that they took off the safety labels on purpose.

Perhaps I should have been clear about that. I know it's intentional and I agree with you.

5 hours ago, canbuywontbuy said:

You shouldn't think 52% of the UK population are against you.  They are against mass, unlimited immigration.  Two different things.

That's a bit like putting up a sign that says "no blacks allowed" and then telling a black person "well, they're not against YOU, they're just against mass, unlimited black people. Two different things". Let's not discuss this here, it's not the right place for it. 

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Can you remember the care free days when our leaders weren't our worst enemies....?  I used to think they had our best interests at heart - laughable to think that now.

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