Monday, April 19, 2010

How hard is it for a politician to give a yes/no answer?

Should house prices rise or fall?

Avg' property 9x avg' salary. Nothing wrong there then! Q. Would it be a good idea for house prices to fall? A. 'That would cause a great deal of aggravation amongst certain people' !!!... Hmmm. I wonder who that could be? I wonder if they haev any influence? We can't be having price falls, it just wouldn't do. And pay rises are out of the question. Maybe the banks should lend more money. What do you think?

Posted by markj69 str05 @ 11:52 PM (2640 views)
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21 thoughts on “How hard is it for a politician to give a yes/no answer?

  • Unfortunately it’s not the devine right of every Brit to own a house.

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  • Really Tom101? Surely it is the right of anyone who works reasonably hard to afford to own their own shelter? Or would you also agree with the statement that: it’s not the divine right of every Brit to be able to afford food?

    Shelter, security, food – all pretty basic and a society is broken if your average individual cannot obtain possession of these things without grave risk or toiling until the end of their days. The cost of building a house in man years labour is not so great and with proper application of technology could be reduced further. Houses are expensive because access to land and capital is restricted. This is a problem with social organisation and arbitrary control by vested interests.

    Unless you are one of the tiny minority of the landed gentry who control the vast majority of the land in the UK, then you are suffering from Stockholm syndrome when you repeat such drivel as “it is not the devine[sic] right of every Brit to own a home/have a piece of land on which to build shelter.”

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  • bidin'matime says:

    Guys, it’s nothing to do with rights – if people cant afford to buy houses, then they are too expensive.

    When you look at the bigger picture, houses are bought by the people who live in them, whether they rent or buy – the buyer rents the money from the bank, the tenant rents the house from the owner – unless the landlord is going to subsidise the cost of the property, it has to be passed on to the tenant.

    Of course, if you assume inflation, then rents will rise in the future, so it does seem to make sense to subsidise tenants in the short run, hence the recent BTL boom. But if inflation is to be controlled, eventually interest rates have to rise – and the effects of this will be to wipe out a whole load of over-borrowed people – and drive house prices back down to sensible levels.

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  • It’s not every politician’s divine right to flip homes, but that’s the only justification they seem to need to craft policies to maintain house prices high ‘in order to ensure a recovery’.

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  • Extra low interest rates are supporting high prices – didn’t hear that mentioned. Raise the mortgage rates and house prices will drop.

    Unfortunately, a lot of homeowners on variable rates will come under pressure as rates rise. IMHO anyone who budgets for a mortgage (SVR) rate to stay at/around 4% for another year is an extreme optimist!

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  • they also didn’t mention that around 70-80% of mortgages are interest only!

    History will show its the greatest financial disaster ever and I predict it will take lloyds down with it

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  • fallingbuzzard says:

    The magical question that we won’t see asked or answered at any of the prime ministerial “debates”

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  • It’s the nettle that politicians fear to grasp..

    Tom101 – you’re repeating a popular mantra that doesn’t stack up..

    ..housing is not optional, and renting is not the affordable option unless it is subsidised by the taxpayer; a subsidy that is bound to be in the firing line, whoever wins the election, as the need to balance the UK public finances becomes critical.

    The real need now is to dismantle the bureaucratic machine that so inhibits new build – especially on brownfield sites – and get people out of unemployment, and into residential construction.

    Beyond that, the trick that the politicians are missing is the concept of taxing empty houses. It would be very easy to raise £500m or more that way, without upsetting many voters..

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  • another myth is that home ownership has increased……wrong its actually gone down

    the number of privately owned properties has gone up,but many people own more than one and some 10+

    when in history has this ever been the case

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  • Unfortunately, due to mismanagement by Brown and his ilk (who not only didn’t see it coming, but actually praised the banks for their innovation) we are now in a situation where a collapse of houseprices will trash the economy. Some people believe that a short, sharp correction would be the best way forward, but our government has decided instead to borrow money from current and future generations of taxpayers to maintain asset prices. To support this policy they have chosen to transfer money from savers to the profligate and indebted by an unprecedented reduction in interest rates. This has the dual function of ‘improving’ affordability of houses (in the short term), and reducing the number of repossessions – both of which are intended to maintain high prices. Savers have been hung out to dry through loss of interest but owners of multiple property (which ‘coincidentally’ includes many politicians) are laughing.
    In an attempt to divert blame, Brown insists that the problem was a global one which could not be forseen. Well it was largely global, but Goldman Sachs apparently saw it coming when politicians globally evidently wanted to look the other way. It seems that the government’s idea is nothing more elaborate than to keep the plates spinning until the global economy recovers, in the hope that this will drag the UK with it: They will then claim the credit. Of course, if the future withdrawing of monetary support results in a return of the downward trend then this will be blamed on a ‘double dip’ recession which nobody could foresee. By that time the election will be a distant memory.

    The solution? Well, to quote Devo’s oft used phrase – you’ll have to work that out for yourself – but it starts with an acceptance that the odds are stacked against you.

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  • @ uncle tom

    I think you’ve hit the nail firmly on the head “The real need now is to dismantle the bureaucratic machine that so inhibits new build – especially on brownfield sites – and get people out of unemployment, and into residential construction.”

    Why is it so incredibly difficult for us to use the old industrial sites that blight our cities and create affordable / public owned housing ? Where are the political parties that realise that high housing costs are causing an enormous strain on society, and may eventually break it when maintaining interest payments become impossible ?

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  • mark wadsworth says:

    @1 Tom101, you’ve missed the point. It is the ‘divine right’ of everybody who owned a house at some arbitrary cut-off date to own a house, get his mortgage subsidised, have his council tax frozen etc or own multiple houses. Those who hit first time buyer age after that cut off date can whistle for it.

    As Taffee says, the outcome of Nulab’s Home-Owner-Ist policies is that homeownership is going down slightly.

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  • mark wadsworth says:

    Anyways, that was a classic clip last night (repoduced above).

    As a PPC, I was invited to complete a survey by TheyWorkForYou asking about stuff like the EU, taxes, immigration and so on, yada, yada, there was no question asking “Are house prices too high?” so I pointed this out to them by email.

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  • mark wadsworth- how’s your personal campaign going?

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  • micasasucasa says:

    @tudorian: “Why is it so incredibly difficult for us to use the old industrial sites that blight our cities and create affordable / public owned housing ? ”

    Sometimes it comes down to infrastructure.
    Anecdotally, near to me developers have been trying to build on a large brownfield site for the last decade. Nimby protestors have blocked it so far, but somewhat justifiably on the grounds that the road infrastructure couldn’t cope. The site is a traffic blackspot as it is and neither developers, nor government would stump up the millions necessary to create bypass roads.

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  • mark wadsworth says:

    Jack C, it’s trundling along, ta for asking. Anways, all political careers end up in failure – or with the EU.

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  • mark wadsworth – looks to me like you could be the best Chancellor we never had ! – very best of luck all the same (I will definitely be looking out for your result on 7th May)

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  • The question is, “is it better for house prices to rise or fall”
    The answer is simply, “no”

    There is nothing to say it’s better for either to occur, what would be better would be for there to be an unadulterated free market in housing which would result in the correct price

    That is, I second bidin’matime (with the caveat that the market is distorted by the state) …if there are not enough houses then some wont be able to afford them and capital will be attracted to investing in housing; i.e. no divine right to shelter, just the supplies and demands of society. If this becomes impossible there would come a point where a new solution is found whether it be digging down, building up, shipping out, whatever.)

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  • tenyearstogetmymoneyback says:

    Re Brown field sites.

    For at least two years all that has remained of this pub in Christchurch (The New Inn)


    View Larger Map

    has been the front wall, after they demolished the rest for a Lie to Bet get rich quick scheme
    that has obviously collapsed.

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  • mark wadsworth says:

    666 nails it, but if you say “free markets” then at present you would say that prices have to fall. In a free market, the price the consumer pays levels out as cost of manufacture plus reasonable profit margin, in the case of a semi-detached house this would be somewhere between £50,000 and £100,000.

    It’s only because land is effectively a monopoly that prices get so out of kilter and the owners of the limiting, monopoly factor, i.e. land with planning, can push up prices to where they are now.

    Land Value Tax, that will sort them out. The only free-market way to deal with monopolies is not to try and regulate* or restrict prices, it is to tax away their super-profits (and use the proceeds to cut other taxes, of course).

    * Bearing in mind that most regulations reduce the amount of available building land, thus pushing up the monopoly prices even further for what little is available.

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  • Shelter and owning a house are different things. In the rest of Europe people happily live in rented accommodation, either until they can afford a deposit or because they find it more convenient to rent and be able to move whenever they want to regardless of the current house prices.

    Funny how the majority here say it’s insane that people should expect house prices to rise and use the investment in property as their pension, then in the next comment state that everybody should have a right to buy their own property to use as an investment to secure their pension…
    Again, this site used to be a valuable source of information and insight. Now it’s just a forum for perma bears who have short sold the property and or stock market.

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