Monday, Jun 12, 2006

Bishop attacks house price god

In2Perspective: Bishop attacks house price god

The Bishop of Norwich has warned that Britain has "bowed down before the [housing] market as a great god. Criticising housing culture, he condemned spiralling prices for wrecking first-time buyers' chances of getting on the property ladder.

Posted by bufferbear @ 12:31 AM (707 views)
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1. Supert3d said...

I couldn't agree with this more. For the last few months I've watched houses price's continue to spiral, pricing me completely out of the market. I live in Northamptonshire and earn 30k p/yr ( a salary I consider not to shabby ). Yet to live in my area ( if you want to avoid the "smaller than a shoebox" properties ) you're looking to spend nearly 120k + on your first property. That's 4x my salary and would mean borrowing to my absolute limit.

Personally I think so many people are borrowing to their limits these days just to afford to live, that day to day living is getting increasingly harder, hence the up surge in debt consolidation companies. I think they are the scum of the earth, they know there is going to be a huge market for debt consildation, because they KNOW more and more people are borrowing waaaaaay to much to afford to just live. And like seagull's to a group of fish, there will be a frenzy as people take on long period loans to equalise their situations.

There really has to be something done about the housing market. There is absolutely no way a single-guy ( or girl ) can afford a place on his own. The ONLY realistic way to afford a place is to couple up with friends. I personally can't wait for a rise in Interest Rate's, and would avidly campaign for the thousands of people out their like me who just simply cannot afford to buy a place.

Monday, June 12, 2006 08:18AM Report Comment

2. Dadm said...

- "I personally can't wait for a rise in Interest Rate's, and would avidly campaign for the thousands of people out their like me who just simply cannot afford to buy a place. "

I'd back you all the way.

Why don't we actually start a campaign to raise interest rates?

That way we would have a true correction in the market as all the people who have overstretched themselves would be at the mercy of their lenders.

As a wise person once said, "you can have today and go without tomorrow, but tomorrow YOU WILL GO WITHOUT...AND YOU WILL PAY".

Monday, June 12, 2006 08:45AM Report Comment

3. tyrellcorporation said...

My friends have just sold their two-up-two-down in Ealing for 355k - to some first time buyers!!!

It was on the market for 2 weeks...

This just proves there are still loonies queueing up to saddle themselves with a lifetime of debt...a sad situation really.

Monday, June 12, 2006 08:47AM Report Comment

4. harold said...

...and a lifetime of negative equity.

Monday, June 12, 2006 09:56AM Report Comment

5. Inbreda said...

Everyone should start putting offers on houses WAY WAY below asking price. Insist it's a serious offer. It will act like a wake up slap to vendors.

Monday, June 12, 2006 10:14AM Report Comment

6. denzil said...

>>I personally can't wait for a rise in Interest Rate's, and would avidly campaign for the thousands of people out their like me who just simply cannot afford to buy a place.

I wonder how strong the resistance to a rate rise will be. The housing market was poised on the brink when rates were just .25% higher than today. Gordon Brown wants the top job and if people notice that house prices start to fall his chances of being the next PM will decrease significantly. Gordon's Brown economic miracle cannot function without HPI.

The ONS data that provides the inflation rate that the BoE must work within is easy to manipulate.

Sadly the Bishops words will probably have little bearing on anything.
The only thing keeping the market afloat at present is BTL investor* and the lenders who are constantly increasing the multiples of salary they are prepares to lend.

*BTL followed by the word investor is common but it's probably fair to say that in most cases dropping the word investor and replacing it with idiot would be more appropriate.

Monday, June 12, 2006 10:18AM Report Comment

7. harold said...

"I wonder how strong the resistance to a rate rise will be. "

Denzil in a word, huge. As I think I've said before, it cannot be understated just what a hot political issue interest rates are in this country, much more so than on the continent, for example. I wont repeat the arguments here as theyre pretty obvious/tedious, but it has to do with the UK nearing a critical mass of debt and therefore ANY increase is likely to induce panic, especially in the BTL sector. The big con was to make IR 'independent' of government and therefore absolve ministers from fiscal incompetence when things go badly wrong. Typical New labour spin. In fact you could liken the BoE MP committee to mushrooms: kept in the dark and fed on... fiddled data.

Monday, June 12, 2006 10:39AM Report Comment

8. denzil said...

I agree with you what a huge issue IR's are. What is interesting is that the MPC remit is to keep inflation under control but with rates rising worldwide and the Fed indication the 17th consecutive IR rise the pound will eventually start to become less attractive. I think there is a tipping point that the pound will fall and I think it may be after one more Fed hike. I'm not sure how the MPC would respond should that scenario arise because the inflation figures may still be on target (according to figures from ONS at least).

Should the pound start to fall is it the BoE remit to raise rates, anybody know?

Monday, June 12, 2006 10:52AM Report Comment

9. The Capitalist said...

Hi Denzil and others on this forum. I've been reading it for several months without making comment until now. BTW BoE is tasked with inflation (exempting HPI).

I work PT for an EA in the Thames Valley. It's work for pin money, I don't get commission and work weekends. I therefore tell it like it is to FTBs: don't get fooled by the hype, prices will go down (you should see their faces - they were only 6 when there the last correction).

Yesterday the phone did not ring at all...there's nothing coming on, lots on our books that's been around for months and several big sales have fallen through well down the contract route.

My 23 year old colleague (i'm nearing 40!) has never experienced a recession, a price correction or a bear market. It's all up up up...the silly squirt is in for a shock...he'll have to work very much harder over the coming months and believe me EAs do work very hard indeed, but they also talk up prices and lie to vendors about valuations. This makes me angry.

I recommend the wise commentary from James Ferguson at MoneyWeek - IRs are important, but he points out that during the great bear market of 1991-1997 IRs were falling. Markets in homes, gold, shares and anything/everything are controlled by fear and greed. We are now sailing down a river of hope and it's going to be very very nasty. IMHO.

Monday, June 12, 2006 11:35AM Report Comment

10. Geed said...

"My 23 year old colleague (i'm nearing 40!) has never experienced a recession"

Its a good point and one that made I've previously on this website. 16-17 years ago there was a huge house price crash (no really!!). At a guess the current average FTB age is roughly in the early 30's range. In 89-90 these people were in school! The majority would not have been interested in buying a house for another 10 yearsand therefore this event would have passed over their heads (even if mum and dad lost their house in the process). Some may have been ready to buy in the late 90's and others may have waited another 2-3 years before buying. The point is this, these people have seen the value of their houses rise year upon year, the friends that have cautiously restrained from buying have stood by and watched hoping that this crazy market could not continue, but it has. So now everyone in this age range believes wealth and financial success is simply achieved by purchasing a house and borrowing, if only. So....

1) we have people that have bought in the late 90's that have borrowed healvily against the home to fund their "I feel rich" lifestyles.
2) we now have some of their freinds that are panic buying thinking that they have mised the boat year upon year.
3) we have people like me that stick to their guns and wait patiently.
4) we have people that have bought in the late 90's and have quietly been paying of their mortgages whilst their income has increased over time. These people stand the best chance of surviving the crash.

Well this is the way i see my generation, as I've said before "What we need is a good recession".

Bearing in mind I am a relative layman when it comes to economics but if the share market collapses (which it appears to be doing), historically doesnt that mean the housing market will stay strong????

Monday, June 12, 2006 12:53PM Report Comment

11. tyrellcorporation said...

Interesting stuff Cap! It's always virtually impossible to get a straight assessment of the housing market. In Exeter there was definitely a wobble last year but after the July bombings Londerners have been jumping into their Cayennes and getting on the M4 - things have risen a bit. Having said that a house near me came on the market six months ago at 575k. I said then it was overpriced even by today's standards. It's now in the papers for 510k and I reckon it will finally go at around 450k... The EA on this one was definitely a chancer looking for 'The Golden Idiot!'

Monday, June 12, 2006 12:55PM Report Comment

12. Gregzki said...

In my neck of the woods you have to be a higher rate taxpayer to buy a one bed flat - starting at around 160K.
and 50K a year bags a 2 bed...just. People used to judge sucess by peoples jobs - now its when you bought property!

Monday, June 12, 2006 01:10PM Report Comment

13. Denzil said...

>>Hi Denzil and others on this forum. I've been reading it for several months without making comment until now.

Welcome Cap, your comments are very welcome.

Monday, June 12, 2006 01:13PM Report Comment

14. bidin'matime said...

Part of the problem is that many people (including many who should know better) confuse the slump in HPI over the past couple of years with a down-turn in the market. They think that the market is recovering and bouncing back, when it is in fact just pushing closer to the brink. As The Capitalist observes so many young people have not seen a recession they simply cannot contemplate it. Gordon Brown started with good intentions, but now only has one objective for the economy to fend off the inevitable down-swing at least until he is ensconced in No. 10.

Monday, June 12, 2006 01:33PM Report Comment

15. harold said...

Cap, in order to put the VI spin into perspective it's useful to have an inside view - do keep posting.

Bidin, good point about GB fending off the downswing until he is safely in No. 10; however, if that is his plan either way he'll be blamed when things turn sour. If I were him I would seriously consider doing a 'Lawson' and leave someone else to clear up the mess (he might be forced to do this anyway).

Denzil, "Should the pound start to fall is it the BoE remit to raise rates, anybody know? As the and inflation are inextricably linked (a phenomenon exaggerated in net-importing economies) I would have thought the BoE's remit was to raise - but don't know the official line on this, if indeed there is one.

Monday, June 12, 2006 02:26PM Report Comment

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