How will the gridock be broken?

Graham_Devon

Hamish, just one point....

LHA will reduce the year after too. It's not just a one off thing, it's a continual decline in payments. Most will have to factor this in, rather than just getting past the first year changes.

Orpheo

HAMISH_MCTAVISH wrote: »

Just around the time the next demographic bulge of potential FTB's reaches the early 30's average age for FTB's to buy.

A demographic bulge bigger than the boomers, in fact.

:rotfl::rotfl::rotfl::rotfl:

Will these highly "potential" FTBs have spent their 20s

a) saving a 20K to 40K deposit?
b) pi$$ing their money up the wall and running up credit card debts on goin' clubbin', holidays to crappy spanish resort, hot-hatches, designer clothes and fags?

Tell you what, Hamish. As you're in the remedial set, I'll give you a 50:50.

a) saving a 20K to 40K deposit?
b) pi$$ing their money up the wall and running up credit card debts on goin' clubbin', holidays to crappy spanish resort, hot-hatches, designer clothes and fags?

Let me know if you need to ask the audience. Or phone a Sibley.

Shakethedisease

Hamish..

Lets say half of that 115,000 start accruing arrears, but even then it won't be the full amount that is accruing. The banks will continue to hold off on reposession for somewhere between 3 months and 12 months, by which time most of those people will be back in work.

Most of those on SMI are pensioners Hamish, and the over 40's. 53% getting SMI at the moment are over 60, only 10% are under 40. Little chance of that.

So maybe 1 or 2 weeks stock hit the market, staggered over a year or so.

Well, the letters are going out now. The reductions start on Oct 1st for all of them.

Not enough to be material to prices.

But will look gawd-awful on the news. And politically for the Coalition.

Maybe 100,000 households will be displaced into cheaper areas.
The rest will find a way to pay the rents, or landlords will compromise, because the gap just isn't that big in most cases.

But the headlines are screaming about it..

http://www.guardian.co.uk/society/2010/sep/22/simon-hughes-housing-benefit-cuts

"Simon Hughes in talks to avert wave of evictions due to housing benefit cuts• Million families to be hit, and capital may face crisis
• Boris Johnson backs giving boroughs funds to cope "

'Averages' are all very well. But in areas that aren't average, there will be chaos. Not calm cool and silent relocations to nameless 'other areas'. Especially for those choosing between keeping their job, or keeping having a roof over their heads. 7 out of 8 on LHA work, but if evicted ? And nowhere local to rent ? The job goes.

Nationally there are a minimum of 272,000 households in receipt of local housing allowance (in effect, housing benefit for those in the private sector) where somebody is in employment, 26% of all LHA recipients. The department's impact assessment indicates that all LHA households will lose as a result of the housing benefit cuts.
There are 24 local authorities where 40% or more of those affected are in employment, including Hackney, Brent, and South and West Oxfordshire. In 158 local authorities 30% or more LHA claimants are in employment, and in 318 areas 20% or more. In London a third of all those affected by the changes are in employment, 59,000 households in total.
The figures shows how important housing benefit has become to working families, especially in higher-cost areas. Since November 2008 the number of working people in receipt of housing benefit has increased by 235,000, mainly as hours have been cut back and more families have had to rely on only one wage packet.

Again, when the cuts hit and the house goes, in many cases, the job goes too. You haven't taken this into account. These people aren't relocating 'traditionally' to find employment. They're relocating to find somewhere to 'live'.. mainly AWAY from opportunities to find employment ( which is why they were living where they were in the first place ! ).

from same article..

More than half the increase in the benefit bill is due to an increase in claimants in the private rented sector.

Telling that statement that, is it not ?

IMHO The government are cutting the feet from the market in order to slash the welfare bill. And the bigger they are...

dopester

DVardysShadow wrote: »

Nobody is forcing anyone to enter the market against their will. So there are no FTB's who do not want to enter the market at this time.

There are FTBs who want to enter the market now - and would-be FTBs who want to wait.

Take this FTB... who I remember her being very unremarkable with her business abilities on The Apprentice. Another of the "I'll give you 110% Sir Alan." "I'm learning Sir Alan."

One take of what is coming up, although the Halifax guy disagrees for this as a reason they are now sometimes reducing what they've agreed to lend to FTBs:

Melanie Bien, of mortgage broker Private Finance, says the Government's Special Liquidity Scheme, which encouraged banks to lend, expires in April and lenders are adjusting their criteria in order to have enough money to repay it.

'First-time buyers can expect mortgage advances to be smaller and valuations to be lower,' she points out.

http://www.dailymail.co.uk/property/article-1313588/Think-Sir-Alan-tough-Then-try-getting-mortgage-Apprentice-star-Debra-Barrs-deal-whipped-away-minute.html

HAMISH_MCTAVISH

Shakethedisease wrote: »

Most of those on SMI are pensioners and the over 40's. 53% getting SMI at the moment are over 60, only 10% are under 40.

And again, you're still missing the point that the current level of SMI is more than most peoples mortgage interest.

If you drop it to a level closer to the average mortgage interest, then it will still pay for the mortgage interest for around half those people. Many more will be so close they'll be able to make up a small shortfall of a few pounds a week.

Some (the minority) will start to accrue arrears. But even then some of those who do will get back into work and paying the mortgage before the banks act to repo the house. And the various banks will act at different speeds, so although this takes effect from Oct 1st for everyone, what reposessions there are as a result will be staggered over a year or more.

So I maintain my previous position. The likely result is that this will result in a week or two of stock hitting the market but spread out over a period of 12 months or so. Tragic for those involved, but insignificant for prices.

But the headlines are screaming about it..

http://www.guardian.co.uk/society/2010/sep/22/simon-hughes-housing-benefit-cuts

"Simon Hughes in talks to avert wave of evictions due to housing benefit cuts• Million families to be hit, and capital may face crisis
• Boris Johnson backs giving boroughs funds to cope "

The headlines will scream about anything they think will sell papers, whether or not such an outcome is inevitable.

I've highlighted the relevant words.

As it stands just now, it has the potential to become a major problem. But if it does become a major problem, government and local authorities have no choice but to sort it out.

Waves of homeless families will not happen in the UK, putting aside the political implications to a fragile coalition from such an obvious public relations disaster, government ultimately has a legal obligation to house those people in such an event, and as I've frequently noted, putting them in B&B is more expensive than keeping them in a house. A solution will be found.

'Averages' are all very well. But in areas that aren't average, there will be chaos. Not calm cool and silent relocations to nameless 'other areas'. Especially for those choosing between keeping their job, or keeping having a roof over their heads. 7 out of 8 on LHA work, but if evicted ? And nowhere local to rent ? The job goes. Again, when the cuts hit and the house goes, in many cases, the job goes too. You haven't taken this into account. These people aren't relocating 'traditionally' to find employment. They're relocating to find somewhere to 'live'.. mainly AWAY from opportunities to find employment ( which is why they were living where they were in the first place ! ).

Sorry, did you expect me to disagree?

I'm sure there will be major upheavals and a lot of people, particularly those supporting families, will lose their jobs as they have to move to cheaper areas. Which of course are only cheaper because there are far less jobs available.

I personally think the whole housing benefits cuts will end up being totally counterproductive, cost as much to implement as they end up saving, and will weaken the coalition immensely from the inevitable PR disaster as a few tens of thousands of London families end up temporarily homeless and in ultra-expensive emergency accommodation.

But as this is primarily a London problem, (and not even all of London, just a few expensive areas within London) I don't think it'll have a significant impact on national house prices. Elsewhere, the gap is small enough that it'll be bridged without too much hassle, partially by landlords accepting £10 or so a week less, partially by tenants finding £10 or so a week more.

IMHO The government are cutting the feet from the market in order to slash the welfare bill. And the bigger they are...

IMHO, the government are slashing welfare bills, and don't much care if house prices in some areas fall a bit..... But if house prices fall a lot, and inevitably drag the wider economy down with them, they'll change their mind rather quickly.

HAMISH_MCTAVISH

des_cartes wrote: »

SMI and HB cuts are taking money out of the housing market, just as the end of liar loans and restrictions on ltv and income multiples are taking money out of the housing market, just as reduced wage growth and higher food costs are taking money out of the housing market, just as higher interest rates (they cannot go down can they) will take money out of the housing market. ?

All of those things are taking money out of the system, I'll give you that.

But whether they take money out of housing, or whether people reprioritise spending to preserve keeping a roof over their head, remains to be seen.

Ultimately, housing is a primary need. People will prioritise housing over almost everything else.

So my money is on most of the impact being felt in other areas.

With money coming out of the housing market, where is the money coming from to finance your predicted hpi?

I'm still waiting for you to answer the 7 questions I posed earlier.....

When you do, the answer will become clear.

Graham_Devon

HAMISH_MCTAVISH wrote: »

All of those things are taking money out of the system, I'll give you that.

But whether they take money out of housing, or whether people reprioritise spending to preserve keeping a roof over their head, remains to be seen.

Ultimately, housing is a primary need. People will prioritise housing over almost everything else.

So my money is on most of the impact being felt in other areas.

Hamish, Hamish Hamish!!!!

Why is it that housing can never lose?

If you take more money out of peoples pockets, and get them to pay more in housing costs, business's fail, people lose jobs, people can't pay their housing costs.

It's all relative. You can't have housing increasing while spending in the economy falls, therefore unemployment rises, and STILL have people spending all their money on housing.

The more people unemployed, the more on lower SMI, the more on lower LHA payments, with this decreasing year on year. How do you think prices can hold their price while everythind else fails?

The two things that pushed up prices are now gone. LHA payments are reducing, which was a massive push up of rental prices, and excess lending is gone, which was a massive push up in house prices.

Your situation, and what you seem to be suggesting is that the economy would revolve more and more around mortgage and rent payments, with an ever decreasing amount being spent in the economy, ever increasing unemployment, and house prices rising?!!? Plus, if people can't pay their rent or mortgages, they will simply move elsewhere, where there is no employment and this will sort their housign issues out?!?!

You seem to be jumping all over the place regarding SMI and lower LHA payments, just to come up with a reason house prices / rental prices won't fall, but seem to be ignoring all the issues this would put on the economy and real life.

Sibley

At the end of the day the gridlock will be broken when banks start lending like before. They will cave in soon. Once one bank goes back to 5% deposit or 100% loans the others will follow. End of house price reductions. If you could get 110% loans starting tomorrow the banks would be full of people wanting to sign the line. There is money to be made in housing and it's only a matter of time before it all kicks off again.

If people can't see this is their only good chance to buy that's up to them.

Plenty going to be without a chair when the music stops.

Thrugelmir

Sibley wrote: »

At the end of the day the gridlock will be broken when banks start lending like before. They will cave in soon. Once one bank goes back to 5% deposit or 100% loans the others will follow. End of house price reductions. If you could get 110% loans starting tomorrow the banks would be full of people wanting to sign the line. There is money to be made in housing and it's only a matter of time before it all kicks off again.

The HSBC is currently creaming off the best mortgage business without having to resort to the tactis you state.

Leaving the rest with "poorer" quality loan books. Interest rate differentials between lenders are showing their relative financial strengths.

I think that gridlock will be broken well before the banks cave in.

wherediditallgothen

Sibley wrote: »

At the end of the day the gridlock will be broken when banks start lending like before. They will cave in soon. Once one bank goes back to 5% deposit or 100% loans the others will follow. End of house price reductions. If you could get 110% loans starting tomorrow the banks would be full of people wanting to sign the line. There is money to be made in housing and it's only a matter of time before it all kicks off again.

If people can't see this is their only good chance to buy that's up to them.

Plenty going to be without a chair when the music stops.

If it was only that easy why isn't it happening now? Banks have never normally been known to miss a trick. Well certainly not all of them at once.