House Price Increases-what for?

wintersunshine

I don't particularly want massive HPI. I just don't want massive HP drops which will damage the construction industry, damage the banking industry and damage the economy.

abaxas

It's a weird one, I guess most people like S&M and want recessions, pain, etc.

IveSeenTheLight

I'm happy for HPI to follow inflation.
If you look at the Nationwide graph, it appears it is now on a 30 year long term trend of 2.9% increases.
Not unsustainable in essence to have a 2.9% yearly increase.

I have two BTL's and while HPI is not part of the business plan, it will become a bonus when I choose to sell off the assets.

You may think this is selfish and maybe it is, however I have become sceptical on pensions and am using the BTL's as a pension provider.

Elaine_Wilson

This is a really good question.

On the face of it I would benefit from high HPI. I am effectively mortgage free. (a small balance ofset by greater funds in premium bonds. The mortgage is kept open to give me access to borrowing at a reasonable rate should I need it)

But, I am approaching 60 and realise that at some time in the future I will probably need to downsize as I will be physically unable to look after this house and garden. So at the point I sell I would like prices to be as high as possible.

The house value, and the money released from downsizing, is only one aspect, though. I should also consider the effect of HPI on other areas of my life. And here I have to confess a lack of understanding. What effect will it have on general inflation? Or perhaps inflation related to food and basics? I have no idea.

Of secondary importance I should also consider the effect of high HPI on society in general. How will it affect my quality of life? Again, I can't work it out. My knowledge of macro economics is almost non-existent.

So I end up just keeping my eye on what happens and hope I make the right decisions.

starbump

Really2 wrote: »

I would say in most cases people have purchased and do not want a house worth less than they purchased it for.

In real terms that means it has to inflate by the same as inflation each year...

This is an excellent point and the only kind of inflation I am interested in. I hope that all my assets will keep pace with all inflation (retail, housing, etc) so that one pound today will be worth one pound tomorrow. Judging by my grocery bills over the last year or so, this has clearly not been the case.

Thrugelmir

Elaine_Wilson wrote: »

This is a really good question.

On the face of it I would benefit from high HPI. I am effectively mortgage free. (a small balance ofset by greater funds in premium bonds. The mortgage is kept open to give me access to borrowing at a reasonable rate should I need it)

But, I am approaching 60 and realise that at some time in the future I will probably need to downsize as I will be physically unable to look after this house and garden. So at the point I sell I would like prices to be as high as possible.


So I end up just keeping my eye on what happens and hope I make the right decisions.

If you are more or less debt free? Why borrow?

Would make more sense to realise the capital gain and diversify your portfolio over tax efficent investments ISA's , pension etc. To produce an income that would let you enjoy your retirements years.

SingleSue

Well I don't own but my parents do....for them, I suppose they would opt for the prices to be increasing sensibly so that their grandchildren have a chance to buy when they are old enough.

Buying when they did worked for them, their mortgage only ran for less than 4 years (think it may have been closer to 3) so no huge interest paid on top and they have seen an increase in the value from £3,200 to around £160k (peak about £210k).

They also want to see us ok when they pass away, although none of their children own a property....that is of no importance to me, I want them to enjoy their retirement/be able to pay for their own care rather than relying on the state.

treliac

SingleSue wrote: »

Well I don't own but my parents do....for them, I suppose they would opt for the prices to be increasing sensibly so that their grandchildren have a chance to buy when they are old enough.

Wouldn't that be self-negating? The properties sought would be correspondingly increasing in price.

Plus there's every possibility that the older generation will need to use their funds to pay for their care needs.

Harry_Powell

I'd be happy for HPI to increase my LTV level so that I could get a better mortgage deal when my current one has run its course. The greater the HPI the greater the percentage of the property I own.

treliac

Harry_Powell wrote: »

I'd be happy for HPI to increase my LTV level so that I could get a better mortgage deal when my current one has run its course. The greater the HPI the greater the percentage of the property I own.

I still can't see why HPI are desirable (at least not for the majority) or sustainable.

People take out mortgages during downturns. There are other ways to gauge creditworthiness.