Is there going to be a scramble for properties????

Fergie73

The interesting thing is this: if the OP is correct, and people with savings decide en masse that their savings would be better off used to buy property, then that's a vast amount of savings removed from banks and effectively vanished.

Given that banks can only lend money based on how much capital they have, that means that less savings mean even less ability to lend.

So for a period of a few months, or a couple of years, those with savings gradually get rid of them into property that's 20% cheaper than it was at the height of the biggest property bubble in history. That perhaps keeps the market from falling as low as it might otherwise fall (although it'll still fall, since there aren't that many savers with big enough amounts to keep it up), but then what? As bank lending reduces even further due to less savings, where are the FTBers going to come from?

What you end up with is far less savings, destruction of wealth as property prices are still falling, and a sudden plunge when those with savings who want to do this dry up and there's even less mortgage funding around due to the vast sums that have disappeared from savings.

socrates

Fergie73 wrote: »

The interesting thing is this: if the OP is correct, and people with savings decide en masse that their savings would be better off used to buy property, then that's a vast amount of savings removed from banks and effectively vanished.

Given that banks can only lend money based on how much capital they have, that means that less savings mean even less ability to lend.

So for a period of a few months, or a couple of years, those with savings gradually get rid of them into property that's 20% cheaper than it was at the height of the biggest property bubble in history. That perhaps keeps the market from falling as low as it might otherwise fall (although it'll still fall, since there aren't that many savers with big enough amounts to keep it up), but then what? As bank lending reduces even further due to less savings, where are the FTBers going to come from?

What you end up with is far less savings, destruction of wealth as property prices are still falling, and a sudden plunge when those with savings who want to do this dry up and there's even less mortgage funding around due to the vast sums that have disappeared from savings.

Please dont start this one again - how many savers who have never BTL in their life are going to throw large lumps of their savings into property - even if prices are not going down or up or stable. They just do not - its in their nature to be savers not gamblers.

silvercar

socrates wrote: »

Please dont start this one again - how many savers who have never BTL in their life are going to throw large lumps of their savings into property - even if prices are not going down or up or stable. They just do not - its in their nature to be savers not gamblers.

If the interest on their savings is peanuts they may well invest some of it in property. As you say they are savers not gamblers, but what is a better investment, bricks & mortor or a plasma TV and a Porsche? If BTL is not attractive they could well move up the property ladder.

socrates

silvercar wrote: »

If the interest on their savings is peanuts they may well invest some of it in property. As you say they are savers not gamblers, but what is a better investment, bricks & mortor or a plasma TV and a Porsche? If BTL is not attractive they could well move up the property ladder.

Silvercar read from the beginning - this was about buying cash - no mortgage - that is not going to happen much if at all