Wednesday, July 30, 2014

à cause de Hollande

Market in France in ‘Meltdown’ After Hollande Rent Caps

Blague à part..."Hollande, who has been trying to revive an economy that has barely grown in two years, is grappling with a record 3.3 million jobless claims and an approval rating that’s at the lowest level ever for any French president".

Posted by alan @ 09:19 PM (4420 views)
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8 thoughts on “à cause de Hollande

  • So. We now know the cause of HPC. Vote labour if you want prices to collapse!

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  • Exactly what is wrong with protecting buyers and attempting to keep rents (and therfore house prices reasonable)? If private rents in the UK were capped BTL “investors” would not be able to push up prices to unsustainable levels.

    The extra paperwork is mostly to do with energy efficiency and build quality, obviously these are not needed for poorly built UK rabbit hutches.

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  • vinrouge, you are obviously economically illiterate. Price and rent controls ALWAYS and everywhere cause shortages by destroying incentive to supply and eliminating the ability of buyers to bid. This is economics 101. That is why this proposal has destroyed not only the housing market but also the construction industry in France.

    It also does not deal with the fundamental cause, which would persist with these so called “solutions”

    The main reason houses are expensive is because mortgage debt should be treated and traded as a liability, but with exotic mortgage backed derivatives, they were converted into a new asset class. That accounting trick would have been considered fraud in previous times but is now business as usual.

    When debt can be traded as an asset, there is peverse incentive to sell debt to consumers. Hence the crazy selling of mortgages to sub-prime. Who cares if they pay back when you can leverage the sub-prime debt and bolster your balance sheet ten fold?

    All the government needs to do is return slowly to sound accounting practices and BAN the practice of treating mortgage backed derivatives as an asset class. That process will require a triage. Britain went part of the way by seperating retail from commercial banking but this final step is required to re-balance the housing market, and no price or rent controls are required.

    When the incentive to pile on sub-prime debt goes, banks will finally have incentives shift towards having more houses built and will put more cash into building new properties.

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  • Bonds aren’t assets?

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  • letthemfall says:

    libertas
    I think you must have your blinkers on. There are no controls here at all, yet there is (apparently) a housing shortage. As for prices collapsing under Labour, have you lost your memory?

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  • Rents and house prices must be controlled just like the price of essential foods, water, healthcare or education. Actually, house prices are already heavily controlled, only in favour of the asset rich, chasing safe returns. This is what must change. We will all benefit if the cost of housing is cut by 50% across the line. The only people who are hurt by this are those who live off the rents paid by others. I find it hard to understand that tenants accept to pay ever increasing rents at times when the cost of capital is so low. Especially if they have lived in a place for a number of years. Logically speaking, rents should stay constant regardless of lenght of tenancy. Rents should be a construct of market value at the time of the tenancy start date plus one variable, the return of capital made on the local gilt market. The market value that establishes the initial rent should actually decrease given wear and tear, unless new investment has been made in upkeeping a property. And tenancies should be open ended. If you want to sell then sell with a sitting tenant. If you want to use the place for your own purposes, you must pay compensation. It’s only fair. We are told that the market establishes the value of rent. But it’s not true. It is not a free market. It is a heavily controlled market in favour of owners. This is why rents remain high. So let’s stop referring to market forces until these markets are truely liberated. And lets be clear. We have never ever sonsidered liberating the housing market but instead we are going from one extreme to the other, across the decades. This has the consequence we see in France. The problem is not falling property prices. The problem is that if ROI on BTL is reduced capital will flow elswhere, reducing house stock. This is what needs to be addressed. Tax incentives are the way to go, but this would mean hurting the asset rich classes. Fat chance of this happening. Unless there is a revolution. Time is ripe.

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  • price hikes are purely down to greed, here is an example of what I overheard in Karl Tatler estate agents

    Member of staff on phone to vender, the member of staff says to vender “just add 10K on price and it will panic buyers to purchase ” there was no mention of that will make me extra commission and I don’t care about anything but my extra commission

    estate agents should be highly regulated for the most expensive purchase people will make in their lives not run like a happy go lucky market stall

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  • Mark @ Friday, August 1, 2014 10:15AM – totally agree infact if I get my way you will be in charge of regulating the [email protected]$tards

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