Guardian - Some might pray for a house price crash, but be careful what you wish for

[Bland Unsight]

2 minutes ago, willie said:

In Northern Ireland I witnessed them falling 50% and many have still not recovered in any way.  Young people who were rushed into buying before the boat sailed in 2006/7 are now sitting in massive negative equity and have no escape apart from going bankrupt and hoping for a way out.

Another thing Collinson could have given prominence to. Savings are a means to handle the bumps in the road that life throws up. Some people will get hit by these crises. It's just a numbers game. The state of the present market leaves many young people to throw all their savings into a deposit (as well as some of their parents' savings too in many case) and on top of that they are leveraging up with mortgages and even equity loans from the government. Throwing off your insurance to go gambling, sounds like a really great plan doesn't it?

The fact that younger households face this choice is a crisis in and of itself. Handing over all your savings and getting in at these prices with lots of leverage should scare the sh!t out of people. One perfectly reasonable response is  to ask "Why does it have to be like this?" The answer is that it doesn't have to be like this, hasn't always been like this here in the UK and isn't presently like this everywhere else also. When you add in the crappy security of tenure in the UK private rental sector people's choices are easier to understand, but once again, it does not have to be like that. It is all a political choice.

[Arpeggio]

35 minutes ago, Bland Unsight said:

Collinson is suggesting both a sequence and a causation. House price crash causes "the whole economy" to come "crashing down". I don't buy it. It's much more likely that the causation will run the other way. Broader problems in the economy lead us into recession and then when the recession hits the housing market starts to fall.

"The “priced out” generation believe a crash would return prices to sanity. But they are pitted against those who say the whole economy will come crashing down with the property market."

Someone should ask Collinson how are the priced out generation's jobs linked to house prices?

1 hour ago, newgi said:

Interesting point in this fascinating debate.  How far can they decline without causing any hardship to anyone who hasn't gambled irresponsibly?  What if they fell 75%?

80% fall would take us to 1995 inflation adjusted prices. Really the fall wouldn't be the root problem, the fact they rose so much based on nothing would be.

[Neverwhere]

59 minutes ago, newgi said:

Interesting point in this fascinating debate.  How far can they decline without causing any hardship to anyone who hasn't gambled irresponsibly?  What if they fell 75%?

If people have borrowed responsibly against their wages purely for a home to live in then the current valuation of the house doesn't really change all that much.

We have recourse lending in the UK, which means that borrowers have to pay the bank back in full regardless of the price they manage to sell at. As long as they have the income to keep paying their debts then they are not insolvent and so they can't easily declare bankruptcy (which in any case can involve income payment orders) and will have to pay one way or another, so may as well just keep on doing what they expected to do anyway: pay the mortgage and live in the house.

House price declines by themselves neither change borrowers' ability to pay nor do they change the utility value of what they are paying for.

If they bought a home to live in at a price that they were comfortable paying, then they will still have the same home to live in at the same price that they were comfortable paying, and all of these other people who were completely excluded from homeownership beforehand now have an opportunity to do the same thing also.

[GreenDevil]

On 30/08/2017 at 6:54 PM, Bland Unsight said:

This 'you won't be able to get a mortgage' argument is the biggest load of crap. When the market turns sharply the banks pull the really risky products (e.g. 95% LTV self-cert interest only last time around). 

At any time the banking sector (which walks and talks like a cartel) is moving around the line between the most marginal borrower who will be granted a mortgage and the most marginal borrower who won't. The dodgiest of the dodgy borrowers are not reading and posting on HPC. When the lenders get nervous it helps prudent borrowers because it removes competition at auction. The herbert who will borrow themselves bankrupt is excluded from the auction because the bank won't lend them the money to bid. Take the example of tighter lending standards in the BTL sector (e.g. higher interest cover ratios). This is great for other borrowers who can still borrow.

Even when prices were falling at an annualised rate of 20% in 2009-ish people were taking out mortgages and buying houses.

The other reason why this argument is a total load of crap is that it doesn't separate cause from effect. Whilst the banks do set internal lending targets they don't publicise them so none of us can know how much they wished to lend. A collapse in lending volumes can also be explained by the unwillingness of borrowers to borrow because prices are falling, so why buy today if you are prepared to wait?

If lending practices tighten up and lenders want deposits that is great news for people who've saved deposits.

+1.

But that would favour the conservative over the profligate, which aint gonna happen. 

Debt forgiveness is more likely.

[TheCountOfNowhere]

46 minutes ago, Bland Unsight said:

HPC charm school back in session!

Seriously though, new posters should just get stuck in. It can be a bit rough and tumble but most of us old gits (post count wise) mean no harm, you just get a bit ornery after the first thousand posts or so.

I blocked that """" weeks ago and only saw it because I was lurking from France. Almost spilled my lobster bisque when I saw that s###e

Anyways, went round a French agente today and they said that they can't give le Maisons away at the mo. Had a 6 bedder with a pool the owners want rid of so out holiday might get intetesting.

 

 

 

Edited September 2, 2017 by TheCountOfNowhere

[Neverwhere]

1 hour ago, Bland Unsight said:

Collinson is suggesting both a sequence and a causation. House price crash causes "the whole economy" to come "crashing down". I don't buy it. It's much more likely that the causation will run the other way. Broader problems in the economy lead us into recession and then when the recession hits the housing market starts to fall.

This seems likely to me also.

A HPC doesn't have to involve a recession, but if we have a recession while the housing market is still significantly inflated then that will very probably trigger a HPC.

This is potentially a good argument for why immediate and steep declines in house prices could actually be the most desirable and least harmful outcome for the wider economy:

If the housing market successfully deflated before the next economic shock hit then we could deal with the HPC and the recession separately, rather than having them both going on at the same time and feeding back on each other.

(Though that that might be desirable doesn't make it any more likely.)

[Will!]

On 01/09/2017 at 3:20 PM, Venger said:

Can't recall everything you posted

I only have one question:  do you keep some record of other posters' posts or do you just have a very good memory?

[Bland Unsight]

14 hours ago, spyguy said:

Treading on a bit of Lego left on the floor by one of my kids is an unintentional  accident.

Borrowing several 100k to buy one or more BTL requires a bit more coordination and choice.

As far as the poster and his good BTL deals ... is he/she fcking nuts? Does he/she not understand S24 and taxes?? The only answer can be No.

 

This is a cracking post. And not a typo in sight! ;-)

[Darby Ram]

4 hours ago, Bland Unsight said:

This is actually a really cool thread IMO. I'd argue that Venger is setting out pretty clearly the things that koj believes but is unwilling to acknowledge that they believe. Venger is showing koj his/her shadow self (in the Jungian sense) and koj reacts with predictable hostility.

However that merely apes the underlying dynamic  of the Collinson piece. Collinson's theme is basically "You lot are pretty awful for wanting something for yourself because if you get what you want others may suffer". However, this is what many Guardian readers who have benefited from the run up of house prices would have to say to their shadow self if they could bear to acknowledge it. Their capital gains are the fruit of others having to carry larger debts to own smaller houses and others still having to pay rent to investors (including overseas investors).

If Collinson could only individuate then he'd be in a position to write a more interesting piece.

Totally agree with this. I often do a bit of push back below the line on the Guardian and the two areas I like to go for are:

1. Why is there such a focus, among article writers and commenters, on foreign investors? Sure they are a part of the market but, in all likelihood, they are the dumb money: late to the game and, even then, only a big force in a few areas. The obvious answer is that Guardian readers and writers can't bear to look at themselves, and the mess that we as a country have created over an extended period of time. British capital gains good, foreign capital gains bad etc etc.
2. When people say "what about the negative equity, we need to protect the FTBers!", were they also asking for protections against price rises to protect non-homeowners? If the answer is no - and it always is - then the negative equity gambit is just a ploy to privatise the profits and socialise the losses. If the supply of greater fools/mug taxpayers runs out one day, then this strategy fails, so making that subsidy explicit is the Lord's work.

There is another odd theme that runs through a lot of the Guardian's coverage of housing, which is "this is awful, there is nothing we can do about it; even if prices fell, that would only benefit the rich, or foreign buyers". Again, I think this is a bit of self-preservation from the "good guys" who read that paper. In theory, they can see that really high house prices are bad. But, also, asset bubbles are really seductive so, at the same time, they clearly want to believe that London is exceptional, that safety deposit boxes in the sky are the new international reserve currency and that they'll get to keep that free money.

It's a strange phenomenon - and it's always worth poking away at the uncertainties.   

Edited September 2, 2017 by Darby Ram

[Princekie]

49 minutes ago, TheCountOfNowhere said:

I blocked that """" weeks ago and only saw it because I was lurking from France. Almost spilled my lobster bisque when I saw that s###e

Anyways, went round a French agente today and they said that they can't give le Maisons away at the mo. Had a 6 bedder with a pool the owners want rid of so out holiday might get interesting.

 

 

 

Get in now! 

I was watching Maisons under le Hammer just yesterday, where I saw a retired chap from Burnley buying a small property in Normandy, which needed some tlc. After parting with €35,000 he bought a couple of "home is where the heart is"  wall thingies, put a vase in the living room with some decorative dried thingies, quick coat of Poundstretchers finest emulsion and the Agents reckon it should sell four at least €250,000. 

Massive gainz!!!☺☺☺

[Thorn]

2 hours ago, GreenDevil said:

+1.

But that would favour the conservative over the profligate, which aint gonna happen. 

Debt forgiveness is more likely.

No I don't think it is. Over here in Ireland North and South there has been no "debt forgiveness"- none that is for the ordinary man- but loads for the banks, obviously.

So there's  just ongoing servitude for those who lost out when things dropped and the debt overhang continues for many who lost out in the massive crash here. Debt forgiveness is a dream that doesn't happen for the ordinary man. (Or woman!) 

Those with the means profited from buying low after the crash. 

Get the means. 

[Venger]

4 hours ago, Will! said:

I only have one question:  do you keep some record of other posters' posts or do you just have a very good memory?

Will!..... that ability came to me in my dreams.

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Samson and His Hair / Delilah - to discover the secret of Samson's strength.... Three times she asked Samson for the secret of his strength, and all three times he gave her a false answer.   ...She betrayed him, and, what is worse, she did it for money.

There's many other warnings from history/cultural tales/fables and fairytales for why it's best to keep a few things of advantage to yourself... without revealing all.  

You have to earn trust.

So my answer to you... Learned In My Dreams... 

Journey To The West...

 

And it's just about the only edge I have in this housing financialisation.  To help make sense of things... finding wisdom in other HPCers/people's super posts, and a memory to re-source those wisdoms.   (Sometimes I really do struggle to remember..... "Who made that excellent post/point?... When/Where was it...?).  All to keep focus and clarity on the issues.  

Many top-level minds on the forum.  Also sparks of genius and imagination by so many HPCers down the years.   I lack a lot of that so my special ability is trying to soak it up, and when necessary, to re-use it, especially against those who would fog and misdirect and twist the reality of the situation for their own very selfish ends.

 

Quite pleased that quite a few posters were fully able to read-into the discussion on this thread yesterday.  

That they understood the issues (those framing it that me/non-owners wanting widespread ruin/misery' if prices fall etc) and the misdirection going on.  

And the very unfair and low personal positioning, and pushed back against some very low positioning that really was unpleasant.  He lost his cool.  Took it away from the issues (already one of protecting 'society HPI' - is he an example of the 'innocent' homeowning society' he wants to protect from 'suffering' some house price falls, where there are millions of very priced out renters in housing financialisation / BTLer double down???..... Not very innocent at all!!!) and made it very personal.

A few HPCers chose to step in and pushed back... including longtermrenter and honeybadger and some other solid HPCers.  Thank you.  

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Longtermrenter:   an idiot to resort to such low balling comments.

Don't usually feel shaky on the forum, but that was some very rough and low positioning.  If no one had stepped in, to push back in those circumstances, I would have backed out for good.  Thank you.  Conduct ourselves with the good grace and civility which represents the forum at its best.   (Questioning of weak positioning is permitted... indeed necessary....  where the truth lies matters... fun to question/learn/challenge).

Thank you.

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It's easy to confuse 'What Is' -with- 'What Ought To Be' - especially when 'What Is' has worked in your favour.
-GoT. (Tyrion)

Quote

Neverwhere:  “It is difficult to get a man to understand something, when his ego depends on his not understanding it.”

 

Edited September 3, 2017 by Venger

[Venger]

5 hours ago, willie said:

In Northern Ireland I witnessed them falling 50% and many have still not recovered in any way.  Young people who were rushed into buying before the boat sailed in 2006/7 are now sitting in massive negative equity and have no escape apart from going bankrupt and hoping for a way out.

Surely there are many good outcomes from their HPC as well, including those who were painfully priced out, able to buy.  Or others able to upsize.

I keep reading about NI investment (although Brexit complicates things).

Each time I read Belfast Telegraph, it's full of happy young people in Nightlife Section.  (Although I realise that is no measure of prosperity at all... just a snapshot of some younger people, not all younger people.).

Look; they made their choices.  In the process they outbid other people.  They got what they wanted.  And rates were lowered.

What about all those who were finally in position to buy homes?

No one dragged them into paying the prices they did.  My family were not born to protect the HPI++ /life choices of others.   Example of example of buyers telling renters they are the dumb money in recent times (and way before that).   Suffered many more years of HPI after the crunch (almost immediate policy measures).  A BTLer double down. Already been a decades of why owners are the victims.... despite so many owners sat on fortunes of equity and able to handle some price rebalancing.

If you want to start a crowdfunding for them, you are free to do so.  There is competition for homes.  I should know... my landlord owns 5 or 6 of them.   Family homes.  In England.  Each with a value of £300,000 upward.

http://www.belfasttelegraph.co.uk/news/northern-ireland/fixerupper-home-with-15k-price-tag-has-northern-ireland-buyers-queueing-up-36092978.html

 

Edited September 3, 2017 by Venger

[Venger]

Also there was no 'tone' in my reply to you willie.

Simply genuine 'What is the alternative' for people making free-will decisions when/if they go against them.

Especially from these very expensive prices in many parts of England.

Also about memory...  

Quote

willie; May 2017

For example the Northern Ireland forum was once an extremely busy forum - we had the 50% crash we needed and many members were able to buy so it is less well used now. 

 

'the 50% crash we needed'   (NI).

Many HPC Members went on to buy homes.  (NI)

So you will be able to explain more 'good things' re HPC.

That already sounds good to me.  HPCers NI  refused or were unable to pay the really really expensive prices that others were prepared to pay, prior to a 50% HPC.  I also used to pop in that subforum when it was busy, but it was harder to follow as not familiar with all the areas.

Hopefully many of them bought homes in NI without high-levels of debt, so they have more money to spend from their earnings on their families / saving for future.

I will still be here after HPC (England) though. Keeping it HPC.  No more BTL/Housing Financialisation.

(If it ever happens.  Too many years of minds telling me I'm bad for wanting HPC, and human shielding it... BTLers/Rich Housing VI......and more and more HPI++++++ years.)

 

Edited September 3, 2017 by Venger

[spyguy]

7 hours ago, Bland Unsight said:

This is a cracking post. And not a typo in sight! ;-)

Hmmmm... Got on the computer, with a proper keyboard.

 

[MrXxx]

Venger, I think you missed my point YET made it beautifully at the same time...my post was in support of the good points/insights that you occasionally make but that can get lost or overlooked due to their verbosity; a point admitted by several others who said they skim read your posts now...in this latest example you `spent` 33 lines to cover my 3!....if this were a court of law and you were a barrister then it may be acceptable but the last time I `looked` it was a forum for discussion not the `trial` of an opinion...have you ever thought of tweeting?! :-)

[Will!]

9 hours ago, Venger said:

Will!..... that ability came to me in my dreams.

 

Fair enough.

[Bland Unsight]

3 hours ago, MrXxx said:

Venger, I think you missed my point YET made it beautifully at the same time...my post was in support of the good points/insights that you occasionally make but that can get lost or overlooked due to their verbosity; a point admitted by several others who said they skim read your posts now...in this latest example you `spent` 33 lines to cover my 3!....if this were a court of law and you were a barrister then it may be acceptable but the last time I `looked` it was a forum for discussion not the `trial` of an opinion...have you ever thought of tweeting?! :-)

Delete your account.

[Si1]

15 hours ago, TheCountOfNowhere said:

You don't know how a UK mortgage works do you? It's not like going bankrupt. Those evil ####s have a hold over you for 12 years. The can demand payment any time till that point. You will not escape.

Give up posting, you're clearly a f####wit

 

Back to my tasty pinot noir and cheese.

I didn't think there was any time limit, they could chase you forever? And besides,. If you managed to default and get away with it it's unlikely you'd get offered another mortgage easily.

[locky82]

35 minutes ago, Si1 said:

I didn't think there was any time limit, they could chase you forever? And besides,. If you managed to default and get away with it it's unlikely you'd get offered another mortgage easily.

Limitations acts states 12 years, but if your lender has signed up to mcob it will be 6 years. And if there were 75% bankruptcies and debt relief orders would be wide spread. Banks won't want to kill off  millions of 'customers' they could milk again a few years down the line. 

[Si1]

31 minutes ago, locky82 said:

Limitations acts states 12 years, but if your lender has signed up to mcob it will be 6 years. And if there were 75% bankruptcies and debt relief orders would be wide spread. Banks won't want to kill off  millions of 'customers' they could milk again a few years down the line. 

That's interesting. I thought there was a case in the early 2000s where a lender (nationwide iirc) managed to legally get someone to cough up over one of these limits from the early 90s crash. I'm not a legal person hence my poor jargon

[locky82]

5 minutes ago, Si1 said:

That's interesting. I thought there was a case in the early 2000s where a lender (nationwide iirc) managed to legally get someone to cough up over one of these limits from the early 90s crash. I'm not a legal person hence my poor jargon

A quick google shows mortgage code of business was introduced by the fsa in 2004. Probably for the reasons you mention. 

[BorrowToLeech]

Obviously, the long term impact of cheaper land can only be good. 

Land is an input into the economy, it's always good when input prices fall.

Articles like this read like articles about oil written by the Saudi royal family. 

Or, if you prefer, 'we've got to keep this war going, imagine the impact on the arms industry if we stopped!'

Negative equity isn't a problem, in itself if mortgages are made transferable. 

Got a 200k mortgage on a 100k house?  The Bank should allow you (under the appropriate circumstances) to move to another 100k house, keeping your 200k mortgage.

 

[Si1]

13 minutes ago, locky82 said:

A quick google shows mortgage code of business was introduced by the fsa in 2004. Probably for the reasons you mention. 

Thanks. I didn't even know what to Google for, tbh.

[Venger]

6 hours ago, MrXxx said:

Venger, I think you missed my point YET made it beautifully at the same time...my post was in support of the good points/insights that you occasionally make but that can get lost or overlooked due to their verbosity; a point admitted by several others who said they skim read your posts now...in this latest example you `spent` 33 lines to cover my 3!....if this were a court of law and you were a barrister then it may be acceptable but the last time I `looked` it was a forum for discussion not the `trial` of an opinion...have you ever thought of tweeting?! :-)

 

 

 

Your own 3 lines were telling me How To Post.   And you've just followed up on it again.

Do you have any thoughts of your own to add about the matters involved, for one could argue your own short posts are just wasteful resource burn in being critical of me.

Do you even notice the actual issues involved? 

The housing market is not just about "Nationwide +0.5%" - it's about spirits in the housing market.  How people are.  Individuals make up the housing market.  Their beliefs and actions, including all the BTLers who have doubled down in recent years, and so many HPIers very protective of 'what it is worth' sat on fortunes of housing wealth, in housing financialisation.

My reply to you was basically this.

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Look for yourself here;  are we to accept HPC = ruin for millions of people?   / wishing ruin for millions of people.

You know what I would like... to see you and others pushback against it for once. 

Do it please.

Very few are willing to put the effort in to do it.  If you're not going to do so, then you shouldn't really have a go at those of us who pushback.  

I don't even want to do it, but my concern is that if no-one does, then their short-post bullsh1t-upon-bullsh1t becomes generally accepted warped reality. 

 What followed on from there was split off to someone else.

We have so many examples of the very property wealthy (including those in £750K+ valued outright owned houses in London) telling the property-priced out that they are horribly entitled for wanting a HPC.  

 

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Still waiting for any of the three posters, earlier so keen to tell everyone how the board should be, to step out of the limelight of the main board and work the trenches arguing for something them believed in, marshalling reason and evidence and not honouring ignorant prejudice for the sake of a nice "beach community".

If you test those posters (outright owners claiming ruin if ever HPC), and it is of interest to see how they twist and project matters to their own ends - and at times witness their reaction for those daring to hope house prices become more affordable.

So many of these minds are on the wide homeowning and BTL side of the market.  Look at the journalist's positioning.

We have a market full of BTLers/Landlords, including the landlord I pay rent to, who bought up 5 houses back in 1999-2002.  Creating the demand he pretends to service. 

All these people who claim HPC = ruin/suffering reflect a wider belief of many owners.   It reveals their very strong self-interest.  

They try and fog honest-objectivity.  They frequently refuse to accept that many are suffering from the high prices, in their quest to protect their own extreme housing wealth (where a HPC would be nothing but an ego) and still leave them with a house owned outright worth a lot of money.   Where most renters still have the burden of a mortgage to take after a HPC.

It's good to challenge them.   It's good to push back to dishonest perspectives, or better find the truth of matters.   Do you not see that?  Does it all just pass you by on forum?  Would like to see you get involved in such matters.

And for the few who have got into too much debt in outbidding others, NE is not end of the world.  At worse they may need to become renters themselves, and the fate that 

Also; thanks to happily renting.