Is the housing market being protected??

StevieJ

ThyKingdomCome wrote: »

I have no motivation to write any post other than trying to make sense of what situation we (the country) are in. I watch the news and I saw some programmes about the creditcrunch and was just engaging in pillow talk with the other half. We can't really get our heads around things

The market would benefit from stability (here and in the US), not pushing new FTB into negative equity and allowing potential buyers to raise deposits. This would also put a line under potential bank losses and lead to increased lending to large and small companies.

Surely it would be better that your house price falls significantly and then we have a better basis for economic recovery. The market would be stimulated and people could afford to buy at a fair price

You made the statement above, would you be happy for the 'good of the economy' for your house to lose 80k :rolleyes:

Thrugelmir

ThyKingdomCome wrote: »

this is something that I was talking to my DH about the other day...
Please excuse my ignorance on financial matters. I got a C in my GCSE maths!!!

bear with me... is there a reason why house prices haven't fallen more than they have. My area despite being heavily affected by the downturn jobs-wise. Honda anyone? has seen quite modest falls, with prices starting to rise again recently.

Is the government, or some other agency trying its best for real price falls not to happen??

Surely it would be better that your house price falls significantly and then we have a better basis for economic recovery. The market would be stimulated and people could afford to buy at a fair price.

Is there a reason why this could or should not happen?

Please could someone explain this to me. I don't seem to have an understanding as to what is going on

A combination of low interest rates, government intiatives to assist homeowners in arrears, and QE is enabling the market to remain steady.

People who already own houses don't have to sell if they can meet their current mortgage committments. The value of the house and the outstanding mortgage is irrelevant.

Prices are increasing as the number of properties on the market are fairly limited. People with secure incomes can still afford to move and interest rates are attractive.

There is no historical precedent for the situation we are in. The BOE admits that debt levels need to be reduced, but squeezing the banks at the moment will do little more than push the economy further into a recession. So its conceivable that we'll have a period of running no where. As taxes and debt repayments absorb a high proportion of generated cash. Everyone will need to tighten their belts and learn to save before buying.

Lower house prices (in real terms) do make sense. Reasonable regulation of the mortgage market will steady the ship. Though the indications are that lenders are already addressing the situation. Without making waves.


Honda (and BMW) had an impact on our local economy. The loss of Woolworths was a major blow plus Tyco Electronics moving to eastern Europe. With 1,000 people employed at the Post Office a prolonged strike will impact on the local smaller businesses which do seem to be struggling. Other larger employers such as the council, JP Morgan, Zurich, Nationwide, MAN, WH Smith and the NHS haven't made significant cuts yet. The major job losses so far are predominantly in manufacturing industries and the deceased retailers. Though it appears both the Council and NHS are considering their options in light of reduced budgets in the years ahead.

CloudCuckooLand

Strange, how damaging a severe drop in prices would be to the economy, but its acknowledged that the economy is not (or should not be) founded on house prices...

And that somehow its ok to seek stability as prices are now, but no-one seemed to try very hard to get stability 5-10 years ago.

Thrugelmir

CloudCuckooLand wrote: »

Strange, how damaging a severe drop in prices would be to the economy, but its acknowledged that the economy is not (or should not be) founded on house prices...

Its not house prices, its the underlying debt level. Prices could up 10% tomorrow then fall 11% on Thursday. But the UK still owes around £1,200 billion on mortgages. A high % of this debt is owed abroad so its not that the interest paid even makes a contribution to the profitability of UK banks or the capital is reinvested (relent) in the UK.

The money that is earnt to pay the mortgage debt off is going East.

kabayiri

Ok, hmm, stay with me OP, this is going to get a bit technical to explain...

The UK housing market is like one big magnet. You have the 2 poles of the magnet; one obviously centred in London and one in Aberdonia.

Now the metal strips in the bank notes act a bit like iron filings, flowing from anywhere else to these 2 poles. The wealth in effect gets pulled to these poles, affecting house prices and everything else with it.

Sadly, a little known consequence is that this phenomenon has all but killed the compass industry in the midlands.

mewbie_2

StevieJ wrote: »

You made the statement above, would you be happy for the 'good of the economy' for your house to lose 80k :rolleyes:

It's only paper 'profit' Stevie - means f'ck all. Only hurts those thinking of trading down. For the majority - cheaper house prices means good news. Smaller steps on the ladder.

But we've been through all this, as you and the other bulls know. The prices will settle, eventually, where people can afford them. No FTB's for last 7 years, market supported by BTL madness - now the obvious crash is still to play out fully.

The housing market needs turnover, it needs FTB's borrowing normal sums of money at normal interest rates on normal multiples. We are not there yet.

To answer the OP. The government / BOE / US / rest of world slashed interest rates to their lowest levels EVER in order to fight off a very bad recession turnign to a depression. They accidentally (maybe) have set of some mini bubbles in shares, property, and other assets. These bubbles, and the almighty one that was the house market will tumble because we (the West) have run out of money.

ThyKingdomCome

StevieJ wrote: »

The market would benefit from stability (here and in the US), not pushing new FTB into negative equity and allowing potential buyers to raise deposits. This would also put a line under potential bank losses and lead to increased lending to large and small companies.

Surely it would be better that your house price falls significantly and then we have a better basis for economic recovery. The market would be stimulated and people could afford to buy at a fair price

You made the statement above, would you be happy for the 'good of the economy' for your house to lose 80k :rolleyes:

well no, I would not be happy if my house lost 80k of 'value'. i would get on with it though as best I could, because all homeowners would be in the same situation.I was expecting something like this to happen around 2008, so I guess, I sort of accepted the idea in my mind that i would 'lose' money. at least in the short term. (5-10 yrs). I would still pay my mortgage and remain happy in my home.

I am not saying that it wouldn't cause me hardship (possibly effect me in ways i don't yet understand) but i thought the result of the CCrunch would be a sharp shock to the system, which would hurt but then we could learn from our mistakes and start again.

I guess I am being naive in that regard; but at the moment I hear about the govt. borrowing more and more and yet in real terms (house prices being one of the only sectors of the economy that directly effects me) we are sort of in a no-mans land, and to me it feels like we are being cushioned from the discomfort of inevitability.

i am rambling really. just wanted to air my thoughts on it.

ThyKingdomCome

kabayiri wrote: »

Ok, hmm, stay with me OP, this is going to get a bit technical to explain...

The UK housing market is like one big magnet. You have the 2 poles of the magnet; one obviously centred in London and one in Aberdonia.

Now the metal strips in the bank notes act a bit like iron filings, flowing from anywhere else to these 2 poles. The wealth in effect gets pulled to these poles, affecting house prices and everything else with it.

Sadly, a little known consequence is that this phenomenon has all but killed the compass industry in the midlands.

lol! :rotfl:

StevieJ

mewbie wrote: »

It's only paper 'profit' Stevie - means f'ck all. Only hurts those thinking of trading down. For the majority - cheaper house prices means good news. Smaller steps on the ladder.

y.

You mean paper loss to a fairly new buyer, yes it would mean something as it would affect the deals available to the person, what ladder would they be on with a mortgage almost twice the value of the property?

Thrugelmir

kabayiri wrote: »

Ok, hmm, stay with me OP, this is going to get a bit technical to explain...

The UK housing market is like one big magnet. You have the 2 poles of the magnet; one obviously centred in London and one in Aberdonia.

Now the metal strips in the bank notes act a bit like iron filings, flowing from anywhere else to these 2 poles. The wealth in effect gets pulled to these poles, affecting house prices and everything else with it.

Sadly, a little known consequence is that this phenomenon has all but killed the compass industry in the midlands.

You are not far wrong!

Though the poles have appeared all over the place but don't seem to have any magnetic effect.