MSE News: Halifax: house prices up for third successive month

Lotus-eater

Really2 wrote: »

They may have but the personal debt still needs to be paid back and it will have a slowing effect on growth.
The government can not force the availability of credit either (QE ended up on balance sheets)

I guess you weren't one of the ones advocating that there really isn't a problem with personal debt on here then?
That's true actually about government not being able to force the availability of credit, they tried after all the bailouts IIRC, but the banks ignored them, that news story has died a quiet death.

I would have loved to know exactly what was (and is) going on behind all the puppetry shown to us the public

Thrugelmir

julieq wrote: »

That's a very narrow view though. You miss the other side of the issues which is the extreme difficulty of building new homes in this UK because of the planning process, and the desirability of living here because it's an English speaking country in the first world with a temperate climate. That's what feeds demand. There wasn't really excessive lending, I believe 3.5 salary was the maximum loan at any time during the boom.

And to be honest we're not badly placed to ride out the global downturn, because we have a floating currency. This may have been a nasty recession, but it's hardly been devastating.

Its a narrow view only in summary, the detail goes on for pages. If you read FSA published reports there are specific areas which even they admit the wrong decisions and lack of a decision was missing. BTL and remortgaging are high up the list together with regulatory liquidity requirements, changes to which were announced last week.

Excessive lending was fuelled by the borrowing from the wholesale money markets. £0 in 2001 to over £600 billion in £2007. A high percentage of this related to NR who at the peak securitised £127 billion through Granite ( and indirectly Lehmans). With higher liquidity requirements NR would never been able to lend the money it did. The natural consequence would have been a capping of HPI. As credit is finite.

The one area that has been hit by the housing crash the most is new builds. Not just flats but houses. Prices of under 2 year old houses in many areas has collapsed. Whilst older properties have retained demand and price. An 18 month house in Sittingourne was sold at auction in March of this year at £161,500, new it sold for £227.5k The developement is even complete yet. So whilst demand is high so buyers are being very choosy. Prefering more spacious living than crammed in , badly built new housing.

Really2

Cannon_Fodder wrote: »

Aren't most markets driven by the extremes - "pushing the envelope", so if 5% to 10% higher demand/financing is created, than used to exist in the market, it would probably be enough to create HPI..?

Throw in the other expansionist elements, buy-with-a-friend, 100% LTV, have-a-guarantor, 110% LTV, buy-with-two-mates, 125% LTV, buy with strangers, etc etc...and that adds up to reckless lending which fuelled HPI.

Indeed but you forget there are always 2 extremes (a high and a low)
To be equal.
So for every FTB buying at 125% LTV there was one buying at 50%LTV. (=87.5%LTV very near 06/07 levels

Otherwise your average would be, well above average

the_ash_and_the_oak

Really2 wrote: »

Indeed but you forget there are always 2 extremes (a high and a low)
To be equal.
So for every FTB buying at 125% LTV there was one buying at 50%LTV. (=87.5%LTV very near 06/07 levels

Otherwise your average would be, well above average

I think the high extreme is important in itself rather than as an upward drag on an average (ie the availability of loans at high LTV acts as an upward influence on prices but the availbility of loans at low LTV doesn't act as a downward influence)

Graham_Devon

Really2 wrote: »

Otherwise your average would be, well above average

Your average would still be average.

Really2

Graham_Devon wrote: »

Your average would still be average.

Not if you exclude the low extremes it would not Graham (Like CF did, not one example was a low extreme).

You have to have numbers above and below the average to make an average graham. They are the 2 extremes, highs and lows.
You don't understand do you, just say if you don't it will save pages and pages.

Cannon_Fodder

Really2 wrote: »

Indeed but you forget there are always 2 extremes (a high and a low)
To be equal.
So for every FTB buying at 125% LTV there was one buying at 50%LTV. (=87.5%LTV very near 06/07 levels
Otherwise your average would be, well above average

I had forgot no such thing. But I don't believe the 'low' end altered much. Which leaves the high end to carry the market. (Until the crash).

Please demonstrate how the low end/extreme changed, if you think it did, although I don't think you meant it like that.


I'm not saying the average remained the same. But that it's gradual, mathematical alteration does not reflect the real market shifts.

If the top 10%, as an example, pushed for higher salary multiple - choosing non-High St lenders for 6x etc - they would do so for a reason. To spend it. They pushed out the more cautious punter. They fuelled HPI.

The average did change over time. Your own links demonstrate that. http://www.mortgages.co.uk/mortgage-trends/year/average-loan-to-value-06-07.html mostly yellow/orange - high average LTVs.

http://www.mortgages.co.uk/mortgage-trends/2008/average-loan-to-value-q1-q2-2008.html became 'green' in 2008, as the crunch bought the averages back down.

On the way up the boom, the reverse undoubtedly happened. Can't find a 2003-2006 map.

I'm saying, possibly not very clearly, that if middle 80% do the same old thing, and the bottom 10% doesn't alter either, then the upper 10% increasing their funding will alter the average mathematically, but not as much as the reality of their actions out in the market.

Although, then of course, you get those who were outbid on a house becoming converts to higher salary multiple/LTV to try and improve their purchasing strength...

The map shows averages of 98%, 107%, 112%, 120% = not sure the map is totally accurate with those figures, but it appears there must have been some areas with enormous disparity between the lowest LTV, the average LTV and the peak LTV.

Cannon_Fodder

Really2 wrote: »

(not one example was a low extreme).

I couldn't think of how the low end had altered.

If you have ideas, please share them.

Obviously, post-crash, there will be repos, cash buyers perhaps...

But I was trying to stay on the subject of the effect of higher salary multiples.

Really2

Cannon_Fodder wrote: »

I had forgot no such thing. But I don't believe the 'low' end altered much. Which leaves the high end to carry the market. (Until the crash).

Please demonstrate how the low end/extreme changed, if you think it did, although I don't think you meant it like that.


I'm not saying the average remained the same. But that it's gradual, mathematical alteration does not reflect the real market shifts.

If the top 10%, as an example, pushed for higher salary multiple - choosing non-High St lenders for 6x etc - they would do so for a reason. To spend it. They pushed out the more cautious punter. They fuelled HPI.

The average did change over time. Your own links demonstrate that. http://www.mortgages.co.uk/mortgage-trends/year/average-loan-to-value-06-07.html mostly yellow/orange - high average LTVs.

http://www.mortgages.co.uk/mortgage-trends/2008/average-loan-to-value-q1-q2-2008.html became 'green' in 2008, as the crunch bought the averages back down.

On the way up the boom, the reverse undoubtedly happened. Can't find a 2003-2006 map.

I'm saying, possibly not very clearly, that if middle 80% do the same old thing, and the bottom 10% doesn't alter either, then the upper 10% increasing their funding will alter the average mathematically, but not as much as the reality of their actions out in the market.

Although, then of course, you get those who were outbid on a house becoming converts to higher salary multiple/LTV to try and improve their purchasing strength...

The map shows averages of 98%, 107%, 112%, 120% = not sure the map is totally accurate with those figures, but it appears there must have been some areas with enormous disparity between the lowest LTV, the average LTV and the peak LTV.

I knew you understood.:)
My point was basically that 100%+ was never the norm. (like some would have us believe the map just indicates we never got over an average 90%
LTV)

I think it was only ever a driving factor from late 05 - 06 anyway. So i think it may have added that extra little topping on the nationwide graph.

But you have to agree the maps are quiet a good way of understanding regional differences and affordability if you look at them closely.

IveSeenTheLight

Graham_Devon wrote: »

I don't know. The numbers are too low IMO to back up that theory.

I personally think that what has happened is the recession has now been forgotten. Like it never really existed. Remember crimbo last year? Everyone pretty much was feeling it, but since then the government has had stimulus going, maybe too much of it? Because it's created a boom in several indicators.

I wonder where house prices and markets, including personal debt etc will be by the time of an election?

I'm thinking a lot higher than now. But I'm sure you will agree, this is not in any way sustainable. It's less sustainable than last time round, and these rises just make it more and more precarious.

I have asked for explanations of how this is sustainable in the past, and got nothing. I don't deny it's happening, I don't deny I was wrong. But I do deny this is sustainable.

You've had a lot of explanations Graham, yet you continue to either a) not understand or b) ignore and keep on about how it is not sustainable.

Your'e after houses to be affordable to the median average, yet there is not suitable supply to sustain what you are looking for, hence properties are priced out from the median to those who can offer a bit more.

Answer is to : -
a) build more suitable properties such that the is a sustainable supply for the demand
or
b) lower the expectations and people buy the many properties that are empty but not quite the standard currently expected.