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Bruce Banner

New housing market props imminent?

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It's a good theory.  No way can prices be allowed to fall.  Maybe they will repeal all the BTL tax changes? That could be on the cards - "in the name of cheaper rents for the renters". 

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How would they get them through parliament, especially when a more moral priority is paying to de-incendurise (literally) flammable high rise social housing?

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Can't help wondering whether rumblings of an imminent crash were partly responsible for May's surprising decision to call an early election. Which, if true, would be a good thing - an indication that they're planning to ride it out rather than trying to hold it up.

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That's my concern when reading HPC articles in the MSM... I think I'd rather any crash/correction happen nice and quietly under the radar.

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28 minutes ago, Bruce Banner said:

There have been so many newspaper articles forecasting a house price crash, in the last few days, that I suspect new government props are just around the corner.

I suspect the governments know what is going on and have decided to put a damper on HPI.....because when only the few end up holding ownership of limited resources doesn't bode for a cohesive society.....pushes people further apart.;)

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6 minutes ago, Captain Tightwad said:

Can't help wondering whether rumblings of an imminent crash were partly responsible for May's surprising decision to call an early election. Which, if true, would be a good thing - an indication that they're planning to ride it out rather than trying to hold it up.

I thought the same - not just housing though, the whole economy appears to be teetering on the brink. I suppose now it depends on how much longer they think they can hold onto power.. I suspect that expecting to last the full five years off the back of the last election would push them towards riding it out as keeping the plates spinning for another five years (plus a bit more ramping before the next election just for good measure) would be a tall order.

Conversely if they see another election in the near future props might be on the cards.. however bear in mind that they took such a pounding last time because of the youth vote, and more ramping is likely to be extremely unpopular with this demographic (the power of spin notwithstanding).

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Maybe the Tories will work out that long term the decline in homeownership is going to deprive them of votes and any chance of government.

If you have no investment in the system why would you vote to sustain it?

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The only way to get the economy back on track is to crash the cost of housing. The question is what is stronger the selfish urge to maintain the wealth in the property they own or the selfish urge to get elected. High house prices and high rents are no longer a plus if you want to get elected. The balance has switched and it's about time.

I will still only believe it when it happens though.

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45 minutes ago, ftb_fml said:

I thought the same - not just housing though, the whole economy appears to be teetering on the brink. I suppose now it depends on how much longer they think they can hold onto power.. I suspect that expecting to last the full five years off the back of the last election would push them towards riding it out as keeping the plates spinning for another five years (plus a bit more ramping before the next election just for good measure) would be a tall order.

Conversely if they see another election in the near future props might be on the cards.. however bear in mind that they took such a pounding last time because of the youth vote, and more ramping is likely to be extremely unpopular with this demographic (the power of spin notwithstanding).

The whole thing does appear to be teetering, some balance needs to be brought in, a very chunky correction is needed to allow huge numbers of young and early middle aged people to get their own home 

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if the banks start to feel a squeeze from qe reduction they'll start to call in mortgages and government won't have any ammunition to help unlucky house speculators/genuine homeowners

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6 minutes ago, frederico said:

The only way to get the economy back on track is to crash the cost of housing. The question is what is stronger the selfish urge to maintain the wealth in the property they own or the selfish urge to get elected. High house prices and high rents are no longer a plus if you want to get elected. The balance has switched and it's about time.

I will still only believe it when it happens though.

Torn between serving the interests of their constituents and serving the interests of their paymasters. Saying no to the wealth extractors? Hasn't happened in the UK for nearly four decades.

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If the tories thinkthey have 5 years of government ahead,  they shoild incentivise a crash right now. This way they might have a chance of avoiding annihilation next time around

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1 hour ago, winkie said:

I suspect the governments know what is going on and have decided to put a damper on HPI.....because when only the few end up holding ownership of limited resources doesn't bode for a cohesive society.....pushes people further apart.;)

its never bothered them before...why would they suddenly acquire a conscience?

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4 minutes ago, btd1981 said:

What then? Is it possible that balances in savings accounts might actually be worth something to banks again?

That is my hope, and if so, it will make buy-to-let even less attractive to those buying one as a "pension".

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It is now becoming clear that as many posted on here the tightening phase has begun.  Inflation due to "ending austerity" will be the final nail in the coffin as inflation will kick off.

The first victim of this will be the housing market as the biggest bubble around.

As I posted before I put myself in the position of the conservatives and they have to find a way of bringing the sucker down whilst avoiding Armageddon.

My solution change HTB to a max 4 x joint salary mortgage with a 10% deposit required earnings up to 100k joint with rates fixed for 25 years

The idea being that house prices fall to where there are affordable (get some third party to advise what is affordable) and state that ability to pay rent will be taken as proof of affordability.

Its not fair but....

  • Makes it look like falling house prices are desired (competence)
  • renters have a clear path to ownership (thank you conservatives)
  • Sellers know what they can sell for locally 
  • banks will keep lending as prices fall

They will fiddle I cannot see how they will let free markets do the necessary unless a Mogg type becomes conservative leader.

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1 hour ago, Captain Tightwad said:

Can't help wondering whether rumblings of an imminent crash were partly responsible for May's surprising decision to call an early election. Which, if true, would be a good thing - an indication that they're planning to ride it out rather than trying to hold it up.

It's my guess too that this was a significant part of the calculation: at least that they saw a big recession coming, and 5 years is enough to get through that and into the "tough but hopeful" phase of recovery. If she was also thinking about house prices, then I believe you may be right, and there is a posibility they would contemplate letting that market run its natural course, and hoping a recovery there also starts within the same time-frame.

Sorry, just musing here, but if one's strategy were to hang on through the white-knuckle phase for the general economy, then of course one possible mitigating strategy would be to try to pump house proces as a counter-weight to that. However, the risk is that one keeps housing propped up just long enough for it to collapse during the next election campaign, ruining the whole Machiavellian scheme. If I were a gambling man, I'd go the route of "let it rip" and catch the start of the up-wave in 2022.

How that works out with a hung parliament though is anyone's guess: I don't think the Conservatives have the balls now for the rollercoaster ride, as there's bound to be a GE as soon as things get rough. The corollary of course is that they have much less power to dictate events, so it should be pretty exciting, pretty soon.

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2 hours ago, Bruce Banner said:

There have been so many newspaper articles forecasting a house price crash, in the last few days, that I suspect new government props are just around the corner.

And surely only a matter of time before someone in the MSM begins talking about the dangers of a 'self-fulfilling prophecy', as they did the last time there were decent falls. Because as we all know, fundamentals don't matter, only 'confidence'.

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I'm sure the Tories and their donors would like nothing better than more and more props, and May herself has only ever said the answer to more affordable housing is more props (rather than cheaper housing), but the Tories are being squeezed by all sides.

Economic growth is slowing, inflation is increasing, Corbyn is riding high in the polls. The Tories are coming out against austerity and in favour of public sector wage increases. Tory voters are literally dying out and Corbyn would have had a landslide if only under 50s voted. And then we have Brexit, of course.

Basically the Tories are looking increasingly clueless and desperate so it's increasingly hard to predict whether they'll be able to muster any more effective housing market props in the near future.

I reckon they'll try, but don't count on it being effective.

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19 minutes ago, Fromage Frais said:

My solution change HTB to a max 4 x joint salary mortgage with a 10% deposit required earnings up to 100k joint with rates fixed for 25 years

[...]

Its not fair but....

Your proposal assumes this is enough to keep the market and prices bouyant. If, however, the forces of deflation (within and beyond the housing market) are too great for the government to control, then you've just created a cohort of bitter negative-equity owners who have a very clear line of sight to blame the government for tricking them into buying. In other words, even the people you've "helped" will hate you.

With such a tower of leverage and froth and false promises in the system today, there is a significant chance deflation will be (at least initially) unstoppable.

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