House Price Increases-what for?

Harry_Powell

HPI is desirable to those who are in negative equity, those close to being in negative equity, those who don't want their newly purchased house to depreciate in value, those who are working towards a particular LTV amount (be it 95%, 90%, etc. right down to 60% these days), those who are looking to downsize, those who are investing in property.

To turn aroudn the argument, the only people who really see HPC as desirable are tenants looking to become home owners. I know because I am a tenant and I become a OO next week.

No one, I repeat no one wants to see one of their largest assets depreciate in value, except those who are already sitting on massive gains and suddenly feel altruistic towards people just starting out. They'll state that they want reasonable house prices, but will be marching in the streets if they lost all of their equity.

treliac

Steadiness of house prices, without too much fluctuation in either direction would mitigate against NE in the first place.

I am a house owner with a fair amount of HPI equity. I don't believe big price rises are sustainable, they're all part of the mess we're now in.

I'm not greedy and I'm more concerned about fairness for the next generation.

Elaine_Wilson

Thrugelmir wrote: »

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.

I would only be borrowing for capital expenditure as I have recently spent all my savings on house improvements. (Well someone had to keep the consumer expenditure figures up, didn't they?)

I'd agree with your comments if the capital gain was not based on an asset in which I live. I would be reluctant to leave this property. It has been my home for over 26 years.

I consider the investment in my home to be only a small proportion of the market value. The house would probably sell for the best part of £300,000 but as far as I am concerned I could realistically only realise about £50,000 max. The rest would be needed to purchase another home.

Also ISAs and pensions in general are not ideal. The costs outweigh the benefits for the amounts I would be investing. I will try to make a further contribution to my pension plan this year as I am able to take advantage of the 98% tax relief but I think this may be stopped soon anyway.

My main point in my last post is that I suspect high HPI will affect me in other ways. If food inflation follows from HPI then I will lose out.

Whatever happens I will be able to adjust my lifestyle so I will not encounter the many problems others face. But I suspect I am in the minority.

nembot

I have my own house, and admittedly the original purpose for buying it was to live there.

Unfortunately, as my career demanded me to work further away thus making commuting a bit of a pain, I decided to rent it out and rent somewhere closer to work.

Most people buy a house to live in, only those who suffer with self esteem issues, are so against the possibility of dropping prices which would ultimately result in better standards of living for everyone.

This however goes against the "I made X amount this month" in the self absorbed wine parties, these people think is so important.

In short a 40/50% drop from peak 2007 prices would be fantastic for everyone, excluding the people mentioned above - but that's their problem, they really do need help.

Harry_Powell

nembot wrote: »

only those who suffer with self esteem issues, are so against the possibility of dropping prices which would ultimately result in better standards of living for everyone.

Or, as I stated in an earlier post, those who are in negative equity or those who wish to gain a better LTV position due to punative charges made by mortgage providers these days.

The world isn't as black and white as it is painted on this particular forum. There are no Black Hatted HPIers or white hatted HPCers, just people who have different vested interests.

SingleSue

treliac wrote: »

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.

I did ponder that when I posted....my sensible is probably a lot different to other peoples idea of sensible, my sensible would see at inflation increases in line with salaries.

Your second point I agree with completely, the funds of others (parents, grandparents etc) to help purchase actually never come into my thoughts as it is just not something which happens in this family, if we (or indeed my children) want to buy, we/they have to do it off our/their own backs with no assistance.

IveSeenTheLight

Harry_Powell wrote: »

HPI is desirable to those who are in negative equity, those close to being in negative equity, those who don't want their newly purchased house to depreciate in value, those who are working towards a particular LTV amount (be it 95%, 90%, etc. right down to 60% these days), those who are looking to downsize, those who are investing in property.

To turn aroudn the argument, the only people who really see HPC as desirable are tenants looking to become home owners. I know because I am a tenant and I become a OO next week.

No one, I repeat no one wants to see one of their largest assets depreciate in value, except those who are already sitting on massive gains and suddenly feel altruistic towards people just starting out. They'll state that they want reasonable house prices, but will be marching in the streets if they lost all of their equity.

Presumably once the tenant becomes an owner they move into your first paragraph group

Harry_Powell

IveSeenTheLight wrote: »

Presumably once the tenant becomes an owner they move into your first paragraph group

Absolutely. That was the whole point I was trying to make with the 'black hat/white hat' vested interest comment. No one, no matter how much they may crack on that they only care for the 'common man' and want house prices to fall 'for the good of humanity' will want to buy a house and then still see house price falls and their hard earned deposits eroded or find themselves in neg equity.

That's why the 'bears' on here are holding out for the bottom, no one wants to buy a depreciating asset. No one.

the_ash_and_the_oak

Harry_Powell wrote: »

Absolutely. That was the whole point I was trying to make with the 'black hat/white hat' vested interest comment. No one, no matter how much they may crack on that they only care for the 'common man' and want house prices to fall 'for the good of humanity' will want to buy a house and then still see house price falls and their hard earned deposits eroded or find themselves in neg equity.

That's why the 'bears' on here are holding out for the bottom, no one wants to buy a depreciating asset. No one.

kind of agree w this - but imo there are no vested interests here - just interests. VI is a term too loosely thrown around imo - an interest can only really be described as vested if the interest is coupled with power/influence

obv no one wants something they buy to suddenly be cheaper. Its kind of a double edge sword - on one hand if your flat gets cheaper the idea is that the house you will trade up to will also get cheaper bringing the rungs closer together - but otoh it doesnt really work like that as its your deposit/equity that entirely would take the brunt of any falls

DaddyBear

Its being deliberately generated by government policy and designed to make the idiots out there feel more wealthy. Then they will go out and buy more plasma TV's and 4x4's with the extra equity, feel happier that they can live the celebrity lifestyle for another year, and vote labour back in. Sadly most of them don't realise that their house gaining £x this month is a bad thing, especially if they just spend it, and if they intend on buying a larger house in the future.