house prices continue to drop ....

System

We've almost got there, I feel like I've done my bit for educating board members today.

des_cartes

Joeskeppi wrote: »

We've almost got there, I feel like I've done my bit for educating board members today.

Nice to have a convert to the cause.

IveSeenTheLight

des_cartes wrote: »

House ownership is falling in 2010. Reason: house prices are too high meaning ftb's cannot buy meaning people cannot trade up even if they could afford to. That is the here and now.

It's not because of house prices are too high, it's because the lending criteria had tightened

It's not because of affordability to service the monthly mortgage payments that's the problem, its affordability to obtain the required deposit.

That's the here and now.

Reducing prices will simply restrict the lending further again and result in even less oppoertunity for people to become owners.

IveSeenTheLight

des_cartes wrote: »

Your selective statistics do not take account of the fact that house purchases are half the number they were before the crash. I'm sure you will understand that 34% of half is less than 29% in absolute terms. I would also suggest that those ftb's who are able to buy at 2010 prices are earning above average incomes and the correlation is therefore that less of their income is going on mortgage interest.

It's not selective at all.

Yes, I agree that transaction levels are lower than 2007 boom, but are you really going down that old trodden route of people comparing to the boom period.

Been there, discussed before that these are new precedenting levels.

The point was that the percentage of purchases from FTBers have not changed much (of course they fluctuate a little each month)

With regards to only higher earners buying, I totally agree.
This is as a result of credit tightening, restricting the oppertunity for more people to own.

To resolve this what you need is more properties and credit restrictions to be tightened.
Simply hoping that prices will lower does not affect these two factors

IveSeenTheLight

Graham_Devon wrote: »

I'm more baffled as to where all the money comes from.

Deposits gone up to 35%. It's as if when deposit requirements go up, FTB's just offer more "just like that" from their magic money piggy bank.

Of course, these figures only count those FTB's who can actually afford it.

The figures seem to suggest that on average, these FTB's are taking out a 124k mortgage, with a 35% deposit, therefore, these FTB's seem to be buying a property just above the average property price in the UK.

Therefore, I can only assume these FTB's are pretty wealthy. They'd have to be to be offering 35% deposits and be paying only 13% of their income on the interest payments.

Unfortunately, these sort of figures mask the true picture. Yes, the figures are correct, but cannot be used as a measure of any sort of affordability, as they will exlcude so many potential FTB's priced out of the market, and only concentrate on those wealthy FTB's buying properties that are even above the average property price in the UK as their first home.

I therefore, conclude, that many of these people are people moving back from other countries, people who have been out of the market for 6 months and so on.

If it's true FTB's, it's some seriously wealthy FTB's.

I think you are looking at the wrong table.
FTBers took out an average LTV of 76%, meaning a 24% deposit.
It even stated that

First-time buyers put down average deposits of 24% in the month

IveSeenTheLight

JonnyBravo wrote: »

Just like you don't let dirk rambo get to you eh?
:roll eyes:

Agent Troll Dirk Rambo doesn't get to me.
He has gone quiet since I pointed out what a great job he was doing representing the negative side of the fence

Graham_Devon

IveSeenTheLight wrote: »

I think you are looking at the wrong table.
FTBers took out an average LTV of 76%, meaning a 24% deposit.
It even stated that

I think I may have read this wrong?

Like first-time buyers, home movers have seen their average deposits rise again -from 33% in June to 35% in July.

However, even if it's 24% and the property bought is therefore slightly lower in price, the rest of my point still stands I believe.

It still can't be used as any measure of affordability, as it only includes those who can afford it.

IveSeenTheLight

Graham_Devon wrote: »

It still can't be used as any measure of affordability, as it only includes those who can afford it.

We've said this a number of times.
Due to credit restrictions, only those with larges deposits can afford.

Many others could afford the monthly repayments, however don't have access to meet the deposit restrictions.

The upshot is that there is likely to be a reduction of owner occupiers as a percentage of property and an increase in rented (social and private).

Only making more properties available along with making credit easier to access will resolve a greater percentage of the population being have the opportunity to become owners.

N1AK

IveSeenTheLight wrote: »

Only making more properties available along with making credit easier to access will resolve a greater percentage of the population being have the opportunity to become owners.

More property would certainly help. In fact a decent amount of property building alone would be the ideal solution; although it will never happen. Everyone wants more property; no one wants it where they are.

The ability of people to buy property can be increased by making it easier to get more credit. However, this has costs:

• Most people seemed to blame the banks lending too easily for the recent economic issues...
• Bigger loans are more dangerous if interest rates rise.
• Bigger loans increase the amount of money people are spending on interest. I'm sure the banks don't mind that idea. It shrinks spending in the rest of the economy though.
• Total lending by banks is limited. Larger loans means less loans in total.

Decreasing property prices affect banks, although not that greatly. Unless they have to repossess the property it is the owner that ends up covering any loss in value.

FTBFun

des_cartes wrote: »

Thats nice. You will be able to brainstorm the solution to negative equity in a rising interest rate environment with them in a couple of years then. I'm pleased to hear your not alone.

:rotfl:

I like you.