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Debate House Prices
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Fantasy house prices
Comments
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Er house prices fall because people are forced to sell their house.
Wrong. Well, wrong in this recession, anyway.
House prices would fall if there were enough forced sellers, but that wasn't why prices fell, because there were very few forced sellers in 2007.
Prices started falling because wholesale mortgage funding was abruptly cut off to all the banks, who then had to ration mortgages to people. Thats why NR failed to begin with.
Demand was strangled by a lack of mortgages, and so prices fell.Northern Rock going bust did not mean people should not have been able to pay their mortgage.
It didn't. And people not paying their mortgages is not what caused prices to fall anyway.What the CC meant was many simple could not roll over their debt as before. Many subprime borrowers who were given the impression that they could have rolled over their debt at the end of their fixed rate or tracker found themselves on high interest rates when they realised no one wanted to take on their rolled over debt.
True, but meaningless. Default rates are far lower than previous recessions.
A glut of supply did not cause prices to fall.
In fact, supply has decreased significantly since 2007, which has more than compensated for the mortgage rationing induced fall in demand.
Which is why prices have risen 10% in the last 10 months.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
er house prices fall because people are forced to sell their house. Northern rock going bust did not mean people should not have been able to pay their mortgage. What the cc meant was many simple could not roll over their debt as before. Many subprime borrowers who were given the impression that they could have rolled over their debt at the end of their fixed rate or tracker found themselves on high interest rates when they realised no one wanted to take on their rolled over debt.
Gobbledygook, that reminds me where is Dev
'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
...In the mid 90's Leeds football won the premership and got to the semi finals of the CL and the chairman was seen as a hero. A few years later they were bust. They gambled on their team over achieving for years to come. I get the impression that GB is doing this at the moment. It may pay off it may not. ....
Not quite the same (although I agree with your basic assertion).
We finished 4th in the league and lost in the semi's of the CL (not bad in my humble opinion). Unfortunately, the banks didn't like it and pulled the plug and wanted their money back. Result? We had to sell everything; ground, training ground/academy, players...leading to freefall. This would happen to any team, or any individual in the same scenario. For example, what do you think would happen to you (if you have a mortgage) if the bank came to you today and demanded their money back?Marching On Together
I've upped my standards...so up yours!
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IveSeenTheLight wrote: »We both worked and put away one full income into our property.
By the time we were ready to have kids the mortgage on the property was sustainable on one income.
Why do so many people want / expect to have it all on day one?
Couldn't agree more.
I was born in the 50's and lived on a council estate. When people got married in those days they had very little; my parents used to joke about in the early days of their marriage the house was empty and they used to sit on tea-chests as they couldn't afford to furnish - which was common.
Fast-forward to modern times and even people on the dole have a lot of luxury 'things'; wide-screen TV, mobile phone, ipod etc. which would have been unthinkable years ago even for many full-time workers in my area. Ok, nowadays possibly lots of people buy on credit (that they cannot service) which was not widely available then, but people must learn to take responsibility for their actions; if you want something, single-mindedly save for it and buy it. Don't waste money (that you don't have) on non-essentials and then whine that you're hard done by because you cannot afford a large expensive house.Marching On Together
I've upped my standards...so up yours!0 -
HAMISH_MCTAVISH wrote: »Wrong. Well, wrong in this recession, anyway.
House prices would fall if there were enough forced sellers, but that wasn't why prices fell, because there were very few forced sellers in 2007.
Prices started falling because wholesale mortgage funding was abruptly cut off to all the banks, who then had to ration mortgages to people. Thats why NR failed to begin with.
Demand was strangled by a lack of mortgages, and so prices fell.
It didn't. And people not paying their mortgages is not what caused prices to fall anyway.
True, but meaningless. Default rates are far lower than previous recessions.
A glut of supply did not cause prices to fall.
In fact, supply has decreased significantly since 2007, which has more than compensated for the mortgage rationing induced fall in demand.
Which is why prices have risen 10% in the last 10 months.
Nonsense Hamish. In 2007 and 2008 just like now if people did not want to sell they would not have. In my area in 2008 mosts properties on the market were no onward chain. Loads of BTL's who could not roll over the debt with a new BTL mortgage and could not rent for a high enough prices to make it worthwhile. These people were forced to sell. Do you not think us is a surprise that interes rates fell to .5 SMI etc was introduced and prices stopped falling and prices rose? Do you not think that BB's dafault rates would have been way higher than 5% if people were not paying 1.75% above base rate for their mortgage(Thanks by the way Mr Brown) It ould have been the same for NR and HBOS. Look as far back as 2004 you could have walked into a broker and asked for any mortgage you wanted without any proof of income and you would have got one. I know people who got them based on their wage plus the rent on a second home without any deduction for for the mortgage they were paying on the second home. I also know people who just went in and were asked how much do you want it does not matter how much you earn.
You can dress it up as you want Hamish but if you are to believed then we had the supply and demand problem in 2007-2008. No bank forced anyone to pay back all the debt on their house in 2007 or 2008 so if we believe what you say then we would have simply had the same situation as we have now if you are to be believed.
I also keep telling you that mortgages were widley available to to those who wanted 100% and 95% mortgages up untill the spring of 2008. The people with problesm were Subprime and BTLR's. Do you honestly believe the Wilsons would not bust now if tthey were not paying 1.75% above base rate on a fair few of their mortgages? To be honest I suspect they are bust but benefiting on banks no repossessing.0 -
Not quite the same (although I agree with your basic assertion).
We finished 4th in the league and lost in the semi's of the CL (not bad in my humble opinion). Unfortunately, the banks didn't like it and pulled the plug and wanted their money back. Result? We had to sell everything; ground, training ground/academy, players...leading to freefall. This would happen to any team, or any individual in the same scenario. For example, what do you think would happen to you (if you have a mortgage) if the bank came to you today and demanded their money back?
Bnaks did not like it because they realised that the model was not sustainable unless you finshed in the top 4 every year I assume. Once they started falling down the league and the money from CL etc dried up then the model became unsustainable.
I liken the UK at the moment to Man U. The Glaziers came alond bought the clubs an loaded with debt and then spents lots on players and since they came in have been the biggest and best in the world. Speak to Man U fans and lots will say does not matter they are the mosted debted club in the world they can easily pay the debt and will always finish in the top four so no problem. Speak to thers and they will say prices are now unaffordable there is too much debt. Sooner or later they will struggle to buy players because they cannot keep rolling over the debt etc.
We are now seeing the Glazier having to try to entice people with bonds which they admit are risky and based on the belief that Man U will always do well in the near future. On the other hand Mr Wenger who I liken to a Bear likes Arsenal to be run in the proper way constanly moans about the debt of Man U etc and thinks clubs should only borrow within their means has not won anything for 4-5 years now. Time will tell who is right. One way of thinking risky with instant short term success. The other method not too risky but with ltd success.
GB has saddled the UK with lots of debt now and just Glaziers believes the UK will always be one of the top teams in the world but just like Man city and others are coming up and threatening Man U's position Countries like Brazil, India and others are coming and threatening our postion.
I suspect the risky strategy may pay off but there is no guarantee of this and unlike Man U we do not have the best in the world leading us.
Time will tell but some on here are popping the cork way to early and saying that Mr Brown has led us out of trouble and there is no real risk in the future.0 -
and there was me thinking there were currently low transaction volumes especially in 2008... isn't that the case any more?Nonsense Hamish. In 2007 and 2008 just like now if people did not want to sell they would not have. In my area in 2008 mosts properties on the market were no onward chain. Loads of BTL's who could not roll over the debt with a new BTL mortgage and could not rent for a high enough prices to make it worthwhile. These people were forced to sell.0 -
I liken the UK at the moment to Man U. The Glaziers came alond bought the clubs an loaded with debt and then spents lots on players and since they came in have been the biggest and best in the world.
Wrong Stoke City, West Ham, Sunderland, Everton and whinging Liverpool, along with the usual suspects have all had a net spend higher than Man Utd over the past five years.
United as a club have not benefitted from the debt, it was merely a replacement of share capital. Ironically the debt is a mirror of success, the share price increased from £1 to £3 before the Glazers took over, so the debt required to replace the share capital trebled in a couple of years.
http://www.transferleague.co.uk/index.php?option=com_content&view=frontpage&Itemid=1'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
Wrong Stoke City, West Ham, Sunderland, Everton and whinging Liverpool, along with the usual suspects have all had a net spend higher than Man Utd over the past five years.
United as a club have not benefitted from the debt, it was merely a replacement of share capital. Ironically the debt is a mirror of success, the share price increased from £1 to £3 before the Glazers took over, so the debt required to replace the share capital trebled in a couple of years.
http://www.transferleague.co.uk/index.php?option=com_content&view=frontpage&Itemid=1
Cant see where I said their net spend was the highest in the league
I said they bought the club with debt and they then bought a lot of players using more debt 0 -
and there was me thinking there were currently low transaction volumes especially in 2008... isn't that the case any more?
There were so many No chain properties where I live compared to previous years in 2008 that one of the National EA chains started a No chain part on their website. I would say 70% of the properties on the market in my area were no chain 2008. There are harldy any now0
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