And house prices coming back down again...

nearlynew

HAMISH_MCTAVISH wrote: »

..............The artificial, sudden and savage withdrawal of mortgage funding crashed the market. ........................

What more can I add to this gem?








Oh, I've thought of something...........


Debt is not wealth.




Nice one McTittish.

You silly boy.

HAMISH_MCTAVISH

nearlynew wrote: »

Debt is not wealth.

No, but debt can create wealth.

carolt

Can't you two just take it outside?

Thrugelmir

HAMISH_MCTAVISH wrote: »

No, but debt can create wealth.

How? In the context of the property market.

StevieJ

Thrugelmir wrote: »

How? In the context of the property market.

Many people have gained from leveraged house purchases over the years, just check out someone who bought in 1995.

Thrugelmir

StevieJ wrote: »

Many people have gained from leveraged house purchases over the years, just check out someone who bought in 1995.

They've made a profit if bought property back then. However their profit now requires a new purchaser to borrow a huge sum of money in order to realise their gain into cash. So little wealth real wealth has actually been created.

HAMISH_MCTAVISH

Thrugelmir wrote: »

They've made a profit if bought property back then. However their profit now requires a new purchaser to borrow a huge sum of money in order to realise their gain into cash. So little wealth real wealth has actually been created.

HPI benefits can be realised in numerous ways.

Things like downsizing, leaving money to children, or buying a second property to further leverage up and provide income/capital gain are obvious.

However it is also possible for people to use the equity gained through HPI as security to raise borrowed money for other ventures, such as starting a small business or investing in other asset classes.

It is an often repeated, but wholly innacurate, statement that money tied up in the housing market is somehow not "real wealth", or that it generates no productive societal impact.

The housing ladder is actually more like a housing ferris wheel. People get on (FTB) move upwards (2TB) cross the top (family house) and start to come down again (downsize) before getting off (death).

At each of those stages, money is either put into, or removed from, the housing market. At some point, almost all the money put into housing also comes back out again.

Housing also generates productive economic spin-offs, far more so than less productive investments such as gold bullion. (which unless converted into jewellry or industrial use, etc, is truly unproductive)

Mortgage interest is converted into other investments, pays wages for bank employees, etc. Houses require maintenance, and initial construction. Houses have to be furnished, and re-decorated. House sales provide tax revenue to pay for services. etc, etc, etc.

Housing and house price inflation are both significant contributors to the "real economy", and can generate "real wealth".

StevieJ

Thrugelmir wrote: »

They've made a profit if bought property back then. However their profit now requires a new purchaser to borrow a huge sum of money in order to realise their gain into cash. So little wealth real wealth has actually been created.

I bought before 1997 (not far off peak) and I have effectively no mortgage now, my future mortgage savings are certainly real wealth to me especially compared to the price I would have to pay in current rents or a mortgage on that 'huge sum' you mentioned

penguine

carolt wrote: »

Have fun with mouseprice.com - just found this earlier today - if you input your area, it will give you hours (well, minutes, anyway) of amusement, under the House Price Trends button on the left - esp the Recent Market Activity - flops section at the bottom of the page.

Also try:

http://news.bbc.co.uk/1/shared/spl/hi/in_depth/uk_house_prices/html/houses.stm

for fun on your area. Discovered that 2 areas I'm watching are down by 17% and 20% annually. So I'm not imagining it.

Thanks, Carol -- this was really illuminating. Prices are 13% down in my area.

chucky

carolt wrote: »

Also try:

http://news.bbc.co.uk/1/shared/spl/hi/in_depth/uk_house_prices/html/houses.stm

for fun on your area. Discovered that 2 areas I'm watching are down by 17% and 20% annually. So I'm not imagining it.

penguine wrote: »

Thanks, Carol -- this was really illuminating. Prices are 13% down in my area.

they use LR quartely data that only goes up to June - i'd look at more up to date data to see what's really hapening

Land Registry of England and Wales, Crown copyright. The information above is based on figures provided by the Land Registry of England and Wales. Figures for England and Wales are for the period April to June 2009.