Monday, Oct 30, 2006

These figures are damning...

Firstrung: First rung out of reach for 17 million first time buyers

At least 17 million people in the UK are unable to get on the property ladder, according to research released from Abbey today. Abbey estimates that 17.3 million people are excluded from the housing market, with approximately 7.4 million blaming prices as one of the main reasons.

Posted by converted lurker @ 09:57 AM (609 views)
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8 Comments

1. geed said...

Not the ideal ingredients for a bubbling house market, but yet according to the VI reports bubble it does. The FTBers have been replaced by MEWing BTLers, the market has changed.

The FTBer is now irrelevent in this crazy market....long live the Debt, long live the bubble.

Monday, October 30, 2006 10:40AM Report Comment
 

2. george monsoon said...

37.4 million people are of working age (most of the people who are in a position to buy or sell)
17.3 million people are priced out - thats over 40% of the working population who cannot afford to buy.

Interesting....

Monday, October 30, 2006 12:29PM Report Comment
 

3. Gav said...

I think to some extent this is true. Some years ago I did not know many people with more than one house, now I know quite a few and even more that are seriously thinking about BTL. The problem is there are plenty of tenents to fill these houses with the FTB's not being able to afford properties themselves, certainly where I live anyway. Thing that amuses me is the number of people I know complaining that they cannot afford a house, but they are happy wasting money renting a property a mile away from their parents where they could live for next to nothing and save up a decent deposit.

Gav

Monday, October 30, 2006 12:33PM Report Comment
 

4. Talman said...

I admit I am not very well versed in all this but can somebody explain this to me. If we have a shortage of housing stock and have 17 million people chomping at the bit to get on ladder - but can't - what happens if there 'is' a crash that brings a limited quantity of typically FTB stock into the reach of these 17million people? Doesn't that mean that if prices do temporarily plummet they'll just bounce straight back up again because of supply and demand. And doesn't this phenomenon equally mean that you'll also have lots of closet property investors hiding away in the side-lines (who missed out first time around) waiting for the drop only to steam in and buy up all of the stock at a knock down price in the knowlege that this bounce will occur and exacerbate the effect and make good on their investment almost instantly? I just can't believe that any crash will live long enough to make any lasting difference because of the instant demand from FTB's and investors. Rather than demonstrating the risks of bricks and mortar investment and stifling a repeat clamber for the proerty gravy-train I think we have now become a nation so conditioned to the fact that property prices have "rocketed once and could do it again" it will mean that no lessons are learned and that it's still worth a punt. I think there has been a cultural shift in the UK psychology which means that we'll never see a lasting adjustment because of the publicity and number overnight proprty developer/millionaires we hear about. We'd all like a piece of that action.

Monday, October 30, 2006 05:52PM Report Comment
 

5. sirgoogle said...

If it happens like in the late 80s/early 90s, the pattern will be that once the drop starts very very few will want to buy on the downward trend. Everyone who can afford to wait out a couple more years will do so in the hope of catching the bottom of the market. The down turn can be as damaging as the inflation of the bubble. In past busts the bottom of the market has always gone below the average trend line (currently about 40% below where we are now). So once it starts this will be a bumpy ride as "sheeple" will jump into and out of the market rapidly as all try to guess where the bottom is. Therefore there will be small recoveries (usually in the summers) - but these will be very temporary.

What is different this time is the massive increase in the information available. My thoughts are that the crash will be compressed compared to last time simply due to the fact that we have so many house price websites and indexes. So the crash may happen over 2 years rather than 5-6 years.

In addition I believe that the media (who thrive on really bad news) will love the crash and may through their over enthusiastic doom mongering (and note that this turn occured around Easter this year) actually help to push the market over the edge. This is ironic as many media outlets are funded by VIs in the housing market.

Monday, October 30, 2006 09:05PM Report Comment
 

6. Taman said...

Thanks sirgoogle. My only concern is that the bottom of the market may appeal to those looking for the best time to invest but the FTBs are only looking for the affordability threshold. With a reported 17 million FTB backlog, when the plug finally pops there will presumably be one almighty bun-fight. I hope that the release of pressure will be a gradual one as the thirty somethings have a bit more behind them than the twenty somethings and can aim at the relevant tier in the market, but with borrowing rules being constantly relaxed you'll have looney, financially suicidal twenty somethings chasing the same properties as the sensible thirty somethings.

Monday, October 30, 2006 10:20PM Report Comment
 

7. indiablue19 said...

Talman....
The other issue in a "bubble" is that, when the property market comes unstuck, many who were waiting to buy STILL will need a substantial mortgage, having saved a downpayment. But the banks are in chaos and can no longer offer the mortgages they were shoveling out the door during the bubble. Hence even anxious buyers are once again out of the market until conditions stabilize. The only real players after the bubble bursts are generally those who have full cash price in hand, or a substantial repayment capability that is a no-brainer for the banks that are left in the mortgage market. I remember this scenario from the crash in the USA early 1990s. It put many banks under.

Wednesday, November 1, 2006 10:06PM Report Comment
 

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