BTL, vile lowlife business, nobody wants to be living under their roofs

StevieJ

chucky wrote: »

if the massive lending caused the boom in prices, why didn't prices rise in Wigan as they did in a popular and trendy part of London or Bath?

both places have the same banks, the same lending rules, the same mortgage rates.

it's people and their demand for them that caused the increase in house prices.

I thought they did?

http://www.zoopla.co.uk/house-prices/greater-manchester/standish/byley-rise/?sold_price_types=all&sold_price_years=all&so=date&sd=desc

julieq

StevieJ wrote: »

I doubt if most people were even aware that they existed and that goes for the so called liar loans as well. The fact is that most first time buyers will use fully what they are allowed to borrow, so the effective in 'effective demand' is provided by the banks.

I'd challenge this very strongly.

When buying a house, most people's first action is to find out what they can borrow. Then they look at repayments. Then they compare repayments to current accomodation costs and see what's left over. And then they make choices as to whether to buy at all, what size of place to buy, location, and so on.

At the extreme end, people will look to maximise what they can borrow and go direct for the Georgian rectory in the nice village. That is a small part of the market. You didn't need to go down dark alleys and give secret passwords to access finance to do that, you had to get past yourself. In reality, most people are very pessimistic and risk averse.

Incidentally, those people in the Georgian Rectories are likely to be sitting pretty anyway, it's a thin market and plenty of demand from the well heeled. Ironically it's those who underextended themselves and bought at the low end who are most likely to be hit by negative equity, because these are less likely to be desirable places to live. Who dares wins, and all that.

The *collective* decision of everyone participating in the market during the boom was that 3.5x salary was what it was reasonable to borrow. That includes what lenders decided was prudent to loan, yes, but was also constrained by what borrowers decided they wanted to borrow. In an auction, which is essentially what the property market is by and large, the seller has very little role in determining price apart from approving the final offer.

If we are to believe the idea that large salary multiples which lenders were "irresponsibly" offering willy-nilly were the driver of price increases, then we would expect that to be reflected in that multiple, but it isn't. We have a very sensible and conservative cap level, which is one reason to believe that there is no value in setting a mandatory cap.

The main driver for HPI above wage inflation was a shift up in the wealth of people successfully participating in the market, not the relaxation of lending criteria. I don't think the numbers allow you to argue anything else.

Cleaver

chucky wrote: »

lol - where's a rubbish place in the UK that never really benefited from HPI?

I think you have to look at types of properties in certain areas rather than whole cities or towns (as I think every town and city has, on average, much higher prices than a decade ago).

There are plenty of new build blocks of flats here in Manchester that were built in 2000/1/2/3 where you can pick up a flat around the same price, or even cheaper, now. A semi-detached house a mile away is probably double or treble the price it was in 2000.

Linton

StevieJ wrote: »

I suggest you do a survey of potential buyers at the moment, mortgage finance is restricted and house prices have/will fall.

Yes, lending is restricted because of the global economy so prices may be slowly falling. The housing market will always be subordinate to the wider economy.

Are most potential FTBers any better off? Previously they couldnt buy a house because it was too expensive, now they cant buy a house because they cant get a mortgage.

Once the current restrictions disappear what are you suggesting? Government should prevent buyers from buying houses they could well afford and prevent lenders from undertaking business that they may rightly believe can be both prudent and profitable?

StevieJ

Don't agree, house prices have trebled since 1995 (including first time buyer properties) somehow I don't think wages have. This would suggests that wage multiples have increased (probably in response to lower long term interest rates i.e. affordability).

StevieJ

Linton wrote: »

Yes, lending is restricted because of the global economy so prices may be slowly falling. The housing market will always be subordinate to the wider economy.

Are most potential FTBers any better off? Previously they couldnt buy a house because it was too expensive, now they cant buy a house because they cant get a mortgage.

Once the current restrictions disappear what are you suggesting? Government should prevent buyers from buying houses they could well afford and prevent lenders from undertaking business that they may rightly believe can be both prudent and profitable?

Have I joined the Bear club

Cleaver

StevieJ wrote: »

Have I joined the Bear club

I believe that there are some bear clubs in Manchester, but they have nothing to do with house prices.

The-mouth-of-the-south

Houes are affordable - the people who moan just need to work harder and not spend there money on xbox, cars and going out drinking. What this country needs is a good kick up the bum and to see house prices soar - get on the train before its to late.

julieq

StevieJ wrote: »

Don't agree, house prices have trebled since 1995 (including first time buyer properties) somehow I don't think wages have. This would suggests that wage multiples have increased (probably in response to lower long term interest rates i.e. affordability).

No, that's simplistic.

My wages have increased well beyond inflation over my career. I participate in the housing market. Assuming I had a mortgage (I don't) I would still be paying far less as a proportion of my income than I did when I first entered the market, and by extension could borrow more and add in the equity from selling my house if I wanted a new one. Therefore from my perspective, I don't see HPI at all.

That's true for a very large proportion of the participants in the market. The issue is that not everyone in the general population has to participate to get HPI, it is only necessary that those who can afford it participate. Given the rate at which we create households is higher than the rate at which we create homes, the proportion of above average incomes to available homes is bound to increase.

So it's meaningless to talk about average wages growth in relation to house prices, any more than it is to point out that anyone could have bought a Van Gogh from the artist so current prices are clearly unsustainable.

Linton

StevieJ wrote: »

Have I joined the Bear club

Dont think so - you havent come up with "facts" that guarantee a collapse, claims of the unfairness of it all, and an insistance that I should move all my investments into Gold. Not yet anyway.