House Price Crash

Gorgeous_George

The housing market is driven by the FTBs to a large extent. So, it follows, that the stupid house price inflation taht we are experiencing is caused by FTBers.

Dear FTBer
Stop paying so much for rabbit-hutch-size starter homes. Stop borrowing from family to secure crazy multiples of debt to buy the hutch. The housing market will then be able to correct itself.

It is not my fault prices are so high and it won't be my fault when/if they crash. It's more likely to be FTBers' fault.

Of course, older generations die eventually and leave their ill-gotten gains to their children. So, future generations will have large legacies to push prices higher. Without a larger inheritance, tax the gap between the haves and the have-nots will increase. 100% IHT is required Mr Brown - otherwise HPI may continue to be out of control and it will be your fault.



GG

movieman

The housing market is driven by the FTBs to a large extent.

Last I read, FTBs made up a whole eight percent of the market: just another sign that it's a huge bubble.

CB1979_2

movieman wrote:

Last I read, FTBs made up a whole eight percent of the market: just another sign that it's a huge bubble.

not ANOTHER sign surely that the bubble will burst!

RHemmings

CB1979 wrote:

not ANOTHER sign surely that the bubble will burst!

There's a difference between signs that the property market is a bubble, and signs that it is about to burst. Even though I believe that it's a bubble, and point to the low number of FTBs as a sign that it is, that doesn't mean that I claim that it will start bursting tomorrow.

See CB1979, not a single question in my reply.

FaTB

Gorgeous_George wrote:

Personally, I would not be surprised by a 25% fall. Nor would I be surprised by a 25% gain over the next few years. Or, put another way, I don't know.



GG

You're right that nobody really KNOWS, but sometimes you have to use a bit of commonsense and make a judgement.

If you look carefully enough there have been enough subtle warnings :-

Mervyn Kings comments
IMF reports
RBS Lecture
Martin Lewis

...to name just a few.

Hereward

RHemmings wrote:

Thank you. I think the car example is a really good one. First, nobody would normally pay for a car over "up to" 25 years. They'd realise that they were paying an unreasonably huge amount of interest on the car. And of course that's what they're doing if they add it to their mortgage. Secondly as you mention, cars depreciate. So even if they keep it ten years, it's a banger by then. Thirdly, cars cost money to run, and I wouldn't be surprised if many of these mortgage-equity-withdrawl car buyers are trading in their cheap to run small cars on some massive 4x4 with a V8 engine. So their car running costs may increase, and they're going to be paying for it for years and years and years, and higher total interest charges for their mortgage each month.

Last time I look owning a house cost money: maintenance, buildings insurance, council tax, etc. I'm quite sure that if you bought the right car it would appreciate. IIRC when the Audi TT was first introduced they were worth more second hand than they were brand new from the dealership. This was caused by the long waiting lists, so those who already owned one could sell it for a profit and be placed back onto the waiting list.

CB1979_2

well i don't know all these if & buts reasons for prices keep rising, blah blah blah.

the genereal public cannot do anything about it, except for agreeing that no one buys above a set price, which just isn't going to happen.

there are so many factors that are causing demand to outstrip supply.

1) immigrants
2) mutli home owners
3) BTL's
4) marriage breakups/single parent families.

now what can WE do about it?
1) not alot with the EU laws and their "human rights" we're gonna be seeing more people coming over to the great island that is britain and needing homes (however many per room/house are living there)

2) they've earnt their money (does it really matter how?) and now want a holiday home or whatever, good on them.

3) Landlords again, good on them, they are supplying what is needed and some of them even do it as a Full Time job, say to them they're not allowed and then you're taking away their income.

4) unfortunately this doesn't look like it's going to change any time soon either, so most (not all) single parents need DSS housing/private lettings. divorced mum's usually get given the house and the dad has to go get one for himself, again either buying/renting/DSS.

now they're just very basic examples that seem to be fundamentals at the moment, and unless the govt decide to think f*ck it, we'll build on all the green belt, there just simply isn't going to be enough houses.

add to this as i keep saying companies/banks offering longer term mortgages/higher multiples/shared ownership then FTB probably don't really see a problem with it, alot of these people also predict their salaries to increase vastly as well, they don't see themselves still earning £18k in 10 years time!

yes we'd all like to see cheaper houses, all these people moaning that prices are too high, is this just simply because you can't get on the ladder? what when prices fall and you do get on the ladder, I'm sure most will be wanting the prices to rise again pretty sharply.

wow that was quite long for me!

Again just my humble opinion.

RHemmings

Hereward wrote:

Last time I look owning a house cost money: maintenance, buildings insurance, council tax, etc. I'm quite sure that if you bought the right car it would appreciate. IIRC when the Audi TT was first introduced they were worth more second hand than they were brand new from the dealership. This was caused by the long waiting lists, so those who already owned one could sell it for a profit and be placed back onto the waiting list.

The occasional car might appreciate, but most of them depreciate. Predicting which car will appreciate from now might be a bit tricky.

The council tax etc. will be paid whether or not the home owner uses mortgage equity withdrawl to finance a car.

aderbyshirelad

RHemmings wrote:

The occasional car might appreciate, but most of them depreciate. Predicting which car will appreciate from now might be a bit tricky.

The council tax etc. will be paid whether or not the home owner uses mortgage equity withdrawl to finance a car.

A lot of people here would also say that predicting which house will appreciate from now might be a bit tricky too.

There are clearly many strands to this debate, but I have to agree with you that buying a car through MEWing just cannot make sense.

I think much of the nation's approach to debt is the problem. One of my colleagues was surprised when I mentioned I was about to pay my mortgage arrangement fee over the telephone. "Oh, I just added ours to the mortgage." It didn't seem to register when I pointed out that they'd therefore be paying interest on that for 25 years, too, when they could easily have afforded to pay it outright. The laziness and ignorance of some people taking on debt just stuns me.

westernpromise

movieman wrote:

Only if supply doesn't increase to suit.

It doesn't really need to, though, does it? If you have 1,000 people in 500 couples living in one house each, you need 500 houses. If the incomes of those 1,000 people double then so, roughly, will the price of those houses. If you build house #501, nobody would buy it because nobody needs it. You couldn't buy it cheap, as the house no one needs, because to do so you'd need to sell your own house first - and then that would become the house nobody needs. So nobody would gain.

The increase is not in the absolute number of houses required, but in what people are prepared to pay for them.

Of course this is all in an unrealistic economic vacuum, but sometimes it can be a helpful thought experiment to think about stuff in that way.

Your point is good though - and being a bit cynical I must ask why this has developed. I often find myself wondering also why social mobility, the rich-poor gap, and racial crime always get worse under Labour. Probably it is because Labour draws its votes from people living awful poverty-stricken lives, beset by racist thugs, in grim estates they cannot earn their way out of because they're so badly educated.

That being so, it is electorally in the Government's interest to keep the poverty, racism, and inequality coming, and to import it from Bangladesh if necessary if it should show signs of clearing up. Otherwise, they'd get prosperous and stop voting Labour for 20 years or so, like we saw from 1975 to 1995.

But then I would think that, because I'm just a cynical old Thatcherite.