Home Buying has Peaked.

[Deleted User]

Emy1501 wrote: »

But the the above is Hamish's great argument? 30% home ownership? Only the rich will be able to buy in the future and the rest will have to rent? If you don't believe that then his argument falls down straight away?

I can't comment on Hamish's arguments - or your interpretation of them.

What I can tell you is how I see it.

In recent years both Tory and Labour governments have been keen for people to buy their own homes and have taken measures to encourage it.

I suspect that one of the reasons for this is that those that own their own homes (and have pensions and savings which is also encouraged) are less of a burden on the tax payer (i.e. future generations) when they retire. Those that own their own homes :

a) live more cheaply once the mortgage is payed off (no rent to pay) thus a pension goes further.
b) have equity to pay for nursing homes
c) can release equity from their homes to assist with living costs
d) have more chance of building up savings/pensions as living costs are lower in later working life (i.e. no/low mortgage payments and no rent).

Baby-boomers are now reaching retirement age. People are living longer. We're reaching a point in time where a relatively small workforce (tax payers) are going to have to support a massive retired population. And this at a time when the country is already in debt.

I think it's a harsh fact of life that if you can't afford a mortgage you can't afford rent either (unless rents are subsidised by the tax payer). My guess is that any future government will have a vested interest in finding ways to help people get on the property ladder (e.g. shared ownership schemes) rather than throwing money down the drain by subsidising rents. Generally speaking, ownership allows people to be less of a drain on society. This is no doubt one of the reasons why those that are struggling with mortgages are being bailed out. They'd cost the tax payer more in the long run if they spend their lives (including retirement) in rented accomodation.

HAMISH_MCTAVISH

The survey, by unbiased.co.uk, the body that represents Britain's independent financial advisers,

Hmmm, I wonder what motivation an industry body that represents it's members, who sell pension products, equities, etc, for a living would have for making such a statement?

found that in 2010 as many as 2 million homeowners might sell their homes and rent instead – creating a new generation of "sell to renters".

:rotfl:

That would be roughly twice the total number of house sales expected for 2010.

And these people represent IFA's????? Wow....:rolleyes:

julieq

carolt wrote: »

Well, the houses are not going to just sit there empty indefinitely. Not many homeowners can afford that or would countenance that.

If no landlords want to buy them, and no homeowners want to buy them, their price will fall until they are attractive to one or the other or both.

And so the STL people will be living where exactly while this happens? In tents?

In terms of yield on outlay, houses are a decent investment even at the price levels they're at now (still more at the levels they were at earlier in the year when I was roundly chastised for explaining BTL had become a good investment).

What this leads to is essentially as BS says. Institutions or cash rich individuals buy the houses, and they are operated for income, rented or leased to other people. Gradually the control of housing stock passes from the many to the few.

That's a perfectly viable situation, housing operates like that elsewhere and worked like that here too historically. But costs for renting or buying for that matter won't reduce. Imagine competing with Tescos to buy a plot of land.

bernard_shaw

Deleted_User wrote: »

I suspect that one of the reasons for this is that those that own their own homes (and have pensions and savings which is also encouraged) are less of a burden on the tax payer (i.e. future generations) when they retire. Those that own their own homes :

a) live more cheaply once the mortgage is payed off (no rent to pay) thus a pension goes further.
b) have equity to pay for nursing homes
c) can release equity from their homes to assist with living costs
d) have more chance of building up savings/pensions as living costs are lower in later working life (i.e. no/low mortgage payments and no rent).

As it turns out, all those benefits have been funded by mortgage finance which was transferring value from the future all along. Now that those promises have been nationalised by the bank bail-outs, it falls to all economically active citizens to pay for the benefits you have trotted out so glibly. Haven't you been watching the news?

Deleted_User wrote: »

I think it's a harsh fact of life that if you can't afford a mortgage you can't afford rent either.

Really? Where are all the homeless people, then?

Deleted_User wrote: »

My guess is that any future government will have a vested interest in finding ways to help people get on the property ladder (i.e. shared ownership schemes) rather than throwing money down the drain by subsidising rents. Generally speaking, ownership allows people to be less of a drain on society.

!! See above.

Emy1501

Deleted_User wrote: »

I can't comment on Hamish's arguments - or your interpretation of them.

What I can tell you how I see it.

In recent years both Tory and Labour governments have been keen for people to buy their own homes and have taken measures to encourage it.

I suspect that one of the reasons for this is that those that own their own homes (and have pensions and savings which is also encouraged) are less of a burden on the tax payer (i.e. future generations) when they retire. Those that own their own homes :

a) live more cheaply once the mortgage is payed off (no rent to pay) thus a pension goes further.
b) have equity to pay for nursing homes
c) can release equity from their homes to assist with living costs
d) have more chance of building up savings/pensions as living costs are lower in later working life (i.e. no/low mortgage payments and no rent).

Baby-boomers are now reaching retirement age. People are living longer. We're reaching a point in time where a relatively small workforce (tax payers) are going to have to support a massive retired population. And this at a time when the country is already in debt.

I think it's a harsh fact of life that if you can't afford a mortgage you can't afford rent either. My guess is that any future government will have a vested interest in finding ways to help people get on the property ladder (i.e. shared ownership schemes) rather than throwing money down the drain by subsidising rents. Generally speaking, ownership allows people to be less of a drain on society. This is no doubt one of the reasons why those that are struggling with mortgages are being bailed out. They'd cost the tax payer more in the long run if they spend their lives (including retirement) in rented accomodation.

You cant comment on Hamish's arguments even though you agree with most of what he says and his opinions? Do you not realise that bailing out homeowners shared ownership etc costs money that the government does not really have? Do you not realise that homeonwers are only being bailed out to save the economy and also to try and get Labour re-elected?

Also you need to do a bit more research on your new party of choice especially when the housing minster says that the reduction in homeownership may not be a bad thing.

The simple facts are that it does not matter how many want to buy in the UK, there will come a time when people can no longer afford to buy. Prices have only gone up as much as they have in recent years as in years gone by you could only borrow 2.5X joint earnings. Up till 2007 you could borrow up to 5.5X and you could always get a blank cheque through self cert if you did not hit the criteria.

We reached the max for house prices in 2004-2005. Prices only rose after that due to 125% mortgages, 5x joint earning, blank self certs etc. With normal lending criteria back. House prices are unlikely to rise more than inflation in the future especially when QE/SMI etc finishs in a few months.

StevieJ

treliac wrote: »

If you don't have a good level of equity/capital at retirement, it's better to have next to/nothing. Benefits will keep the latter in their rented homes.

At the moment.

carolt

julieq wrote: »

And so the STL people will be living where exactly while this happens? In tents?

In terms of yield on outlay, houses are a decent investment even at the price levels they're at now (still more at the levels they were at earlier in the year when I was roundly chastised for explaining BTL had become a good investment).

What this leads to is essentially as BS says. Institutions or cash rich individuals buy the houses, and they are operated for income, rented or leased to other people. Gradually the control of housing stock passes from the many to the few.

That's a perfectly viable situation, housing operates like that elsewhere and worked like that here too historically. But costs for renting or buying for that matter won't reduce. Imagine competing with Tescos to buy a plot of land.

Do all the STRs sell on 1 day then? :rolleyes: And hang around and wait for somewhere to rent?

Hardly, if they can't sell their houses because, according to you, no-one wants to buy them to rent out (or live in), then I imagine those would-be STRs will continue living in them, rather than living in a tent on a point of principle.


In countries like Germany where large institutions own much of the housing stock, tenants are much, much happier and renting is far more popular. I'd much rather rent from a company that provided a professional service (with Tesco's cut prices, possibly?) to its customers than some jumped-up amateur landlord.

julieq

It's not credible that someone would stick their house on the market just to allow themselves the privilege of renting another one at a time when millions of other people are doing the same (which is what the claim is). Why on earth would they do that? Only to cash in on equity, and they're hardly likely to want to destroy their equity by reducing price.

The STL argument really doesn't stack up unless prices are sustained. If prices are sustained, rentals are sustained. If prices drop, people stay put unless forced out.

The idea that an amateur landlord is "jumped up" is a bit insulting to people who by any measure are taking a chance to make money rather than expecting a guaranteed return via a savings account and whinging for England when the rate drops. There are some poor ones probably, but I'd far rather have someone I can contact if something were to go wrong.

But then again, given this sort of attitude to landlords, I can't imagine many landlords would want you as a tenant either.

kabayiri

In car fleet lease, there is a product often taken up by businesses struggling for cash flow ... sale & leaseback.

The equivalent we all know exists in housing. Companies will seek to 'help' people by purchasing their homes and leasing them back.

This service will be right for some but not all. I expect to hear a lot more horror stories on Watchdog in months to come.

carolt

julieq wrote: »

It's not credible that someone would stick their house on the market just to allow themselves the privilege of renting another one at a time when millions of other people are doing the same (which is what the claim is). Why on earth would they do that? Only to cash in on equity, and they're hardly likely to want to destroy their equity by reducing price.

The STL argument really doesn't stack up unless prices are sustained. If prices are sustained, rentals are sustained. If prices drop, people stay put unless forced out.

The idea that an amateur landlord is "jumped up" is a bit insulting to people who by any measure are taking a chance to make money rather than expecting a guaranteed return via a savings account and whinging for England when the rate drops. There are some poor ones probably, but I'd far rather have someone I can contact if something were to go wrong.

But then again, given this sort of attitude to landlords, I can't imagine many landlords would want you as a tenant either.

I'm flattered you wasted your life searching through my back posts. I take it you're not a landlord, julie, or you'd apreciate that a tenant who never misses a payment and looks after your property is like gold dust - the holy grail of landlords.

Your idea that no-one would sell their houses at a time of falling prices is charming in the extreme, but somewhat unrealistic.

Once the current economic life support system is removed, as it will be v soon post election, and rats start to rise again, many will have no choice but to sell - and the sense to realise that those who get out earlier will lose less than those who get out later.