Disaster for Britain as housing becomes more affordable

beingjdc

stephen163 wrote: »

Increasing house prices make people feel secure and more ready to splash their cash. This is surely a good thing for economic growth, and the economy as a whole. What good is wealth to an economy if it is tied up in a theoretical house price valuation? At the very least, people who MEWed and spent were doing a service for the economy. Everyone benefits from consumer spending.

In the long term, we can all spend what we earn. Not a penny more, not a penny less.

If I borrow £100 I have not earned to spend today at 10% interest rates, I have to spend £110 less next year. I have not helped the economy, I have harmed it.

Spending based on unsustainable rises in the price of unsellable (en masse) assets is not 'good for the economy', it's a pyramid scam.

geoffky

stephen163 wrote: »

Increasing house prices make people feel secure and more ready to splash their cash. This is surely a good thing for economic growth, and the economy as a whole. What good is wealth to an economy if it is tied up in a theoretical house price valuation? At the very least, people who MEWed and spent were doing a service for the economy. Everyone benefits from consumer spending.

I might be naive in believing this, but increasing house prices resulting in increased consumer confidence and therefore spending is overall a good thing for an economy? The vast majority of people who do this do it in a controlled manner and do not overstretch and it is ultimately up to the individual to regulate their own spending but I do believe that the benefits of increased spending outweigh the negative aspects resulting from overstretching.

AND what happens when the music stops ????:rotfl:

mr.broderick

geoffky wrote: »

AND what happens when the music stops ????:rotfl:

Don't you normally sit on a chair geoff?:rolleyes:

Really2

beingjdc wrote: »

If I borrow £100 I have not earned to spend today at 10% interest rates, I have to spend £110 less next year. I have not helped the economy, I have harmed it.

So where does that money go then?
You are only £10 worse off not £110.
So £100 goes to XYZ company £10 goes to bank that goes back in to the economy as lending, wages, etc.


Are falling house prices bad? Not for enyone looking to buy!

For the economy you bet look at every economy with falling house prices and look at how they are doing.

It is obvious falling house prices are not a good thing in terms of the economy.

geoffky

mr.broderick wrote: »

Don't you normally sit on a chair geoff?:rolleyes:

Not if all the the players have bought them all and will only rent me one.;)

drc

Generali wrote: »

"Onion Prices Fall, Tears to Follow for French Stereotype"

I guess the French taxpayer is glad that (s)he didn't guarantee to lend money against ever rising prices of stripey jumpers, berets and onions on strings.

Off topic but there is a French guy who comes to Muswell Hill on an old bicycle in a stripey jumper with a beret and he sells onions from his bicycle on the pavement. He always seems to be quite busy whenever I have seen him.

stephen163

geoffky wrote: »

stephan has been brainwashed by the system and fell for it...prices up good--prices down bad...

Some people take too simplistic a view. Economics is complex - there are good effects and bad effects to every action. House price increases are a good example of this. They are just a natural consequence of home ownership, after all, how do you abolish HPI? The point I made was that as house prices increase, the 70% of the population who own property tend to spend more and this helps the economy.

Selfishly, I want house prices to go down as much as you do, but you also need to appreciate the extra benefit house price increases bring to an economy overall.

Really2

stephen163 wrote: »

Some people take too simplistic a view. Economics is complex - there are good effects and bad effects to every action. House price increases are a good example of this. They are just a natural consequence of home ownership, after all, how do you abolish HPI? The point I made was that as house prices increase, the 70% of the population who own property tend to spend more and this helps the economy.

Selfishly, I want house prices to go down as much as you do, but you also need to appreciate the extra benefit house price increases bring to an economy overall.

I thought your posts were good.

No one can get past the fact on how damadging house price falls are to the economy. Also that HPI is a sign of a thriving economy.
It is in the economys history in black and white (or should that be black and red)

Wookster

stephen163 wrote: »

Some people take too simplistic a view. Economics is complex - there are good effects and bad effects to every action. House price increases are a good example of this. They are just a natural consequence of home ownership, after all, how do you abolish HPI? The point I made was that as house prices increase, the 70% of the population who own property tend to spend more and this helps the economy.

Selfishly, I want house prices to go down as much as you do, but you also need to appreciate the extra benefit house price increases bring to an economy overall.

With regard to house prices, there is no complexity. It is simply a ponzi scheme. You'll be able to read much more at http://en.wikipedia.org/wiki/Ponzi_scheme

Do you not see any resemblence between the housing market bubble and a ponzi scheme?

longtimelurker_2

stephen163 wrote: »

Some people take too simplistic a view. Economics is complex - there are good effects and bad effects to every action. House price increases are a good example of this. They are just a natural consequence of home ownership, after all, how do you abolish HPI? The point I made was that as house prices increase, the 70% of the population who own property tend to spend more and this helps the economy.

Selfishly, I want house prices to go down as much as you do, but you also need to appreciate the extra benefit house price increases bring to an economy overall.

Care to back this up?

And remember, around 60% of people are mortgage holders not property owners.