Coalition ready to let property values fall

FATBALLZ

The argument that house prices must continue to be at or around bubble prices otherwise our banks will all be insolvent and our economy will collapse seems like a bit of a paradox to me.

Thrugelmir

FATBALLZ wrote: »

The argument that house prices must continue to be at or around bubble prices otherwise our banks will all be insolvent and our economy will collapse seems like a bit of a paradox to me.

Not sure the economy will collapse if house prices fall. If more money is lent to wealth producing businessess that employ people. Then we'll all be better off.

chucky

Emy1501 wrote: »

RBS and HBOS's problems were caused by their investments in the US and investing in things they never understood. UK defaults etc are lower now than in the 1990's.

The reality is whilst their balance sheets may not look great if there is a 25% fall in house prices the facts is low interest rates will stop defaults etc. Lower House prices over the next few years if they come will come from the fact that FTB's can only afford so much for a house/flat and with less competition this will have an effect on how much a FTB property costs this will then have a knock on effect up the chain.

I don't know how much say lloyds Mortgage book is valued at but if its 400b and 25% is knocked off. Then I suspect they may have to find an extra 10B maybe to shore up their balance sheet. I can't see them going bust for that and I suspect most of our banks are over capitalised at the moment anyway in case of problems like a 25% fall etc. Didn't the FSA stress test and suggest UK banks could withstand falls of total 35% etc from peak?

Back at the end of 2008 Early 2009 when the banks were being recapitalised the talk was for fall of total 30-35%. We are about 10% from peak now so further falls of 20-25% would take us to those levels. I can't believe that this would not have been taken into account at the time and therefore there seems little evidence that our banks would not withstand falls of a further 20-25%.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6377688.ece

The above suggests that our failed banks had to show that they could withstand total falls of 50% and unemployment of 12% etc. Of course whether they will be able to is another question but seems like the FSA are comfortable with falls of 35%

and no..... totally wrong

RBS issues are due to it's highly acquisition of ABN Amro that caused liquidity issues.

HBOS issues were mostly caused by the corporate lending issues.

neither of the banks issues were "caused by their investments in the US and investing in things they never understood" as you claim.

ILW

Pennywise wrote: »

From my friends, family and associates, house prices certainly aren't the main topic of conversation and barely even figured in the discussions about the general election voting intentions. I'm middle aged and so are most of the people I regularly talk to. Most of us bought our homes about a decade ago and have accepted that we're basically trapped in our homes because we can't afford to up-size due to the high house prices. None of us want to see house prices rise anymore as it makes our next move even more impossible. The next generation of my friends and family havn't a hope of getting on the property ladder and they know it - they're destined to rent or live with parents until house prices come down again. I, for one, would love house prices to come down because the differential between mine and my next home will also fall, making the leap more possible. I've never understood why a home owner would want rampant house price inflation as it does them no good until they come to downsize upon retirement when they can finally take some value out of their bricks and mortar and spent it on something more fun. The only people I see who benefit are property investors, i.e. BTLers etc and to be blunt I'm not that bothered if they don't get the returns they dreamt of. There are more homeowners living in their own homes than there are property speculators, so higher prices is only welcomed by a very small proportion of the voting public - hence a fall in house prices won't significantly affect the voting intentions as most people don't want house prices to keep rising at ridiculous levels.

Very true, it strikes me that the only ones to benefit from high house price inflation are people with more than one house, or with no children that may want to buy themsekves onje day. Apart from that it is nothing but dinner party showing off as to how much ones properdee is worth this week.
I do own a house.