Budget Change & High Rental Yields to boost Prices

Generali

julieq wrote: »

It's inevitable really that if we return to a situation of tight credit controls, the market for housing will tend to shift towards rental, and will be operated by large corporate investors - pension funds or specialist landlords who are financing outside mortgages. That is de facto creating the two tier society with a property owning elite and the everyone else renting or leasing. In that scenario you see ownership levels dropping back to trend prior to deregulation, and FTBs being essentially squeezed out as we understand them at present.

Which oddly enough seems to be what is happening.

What is interesting is the idea that you can return to one trend - ratio of prices to salary - without reverting to another - historic rate of owner occupation. No real sense in that.

I don't think mortgages will be restricted for much longer, and I don't think we're headed back to the 1870s. But there's certainly the potential for that to happen and the supply/demand numbers only point one way, which is increasing costs for housing, unless we build more.

If Basle III is implemented as currently agreed then being an FTB will be a lot harder in future than at present because of reserve requirement rules.

I don't see the UK going back to 1870 either. Married women couldn't even own a home in their own name in 1870!

FWIW, I don't think that Basle III will pass into law as currently agreed at the BIS.

FATBALLZ

julieq wrote: »

Highly cogent argument, well done. Do you want to expand at all and explain why you think as you do?

No, thought not.

It's nearly as good an argument as your methodology of deriding people for not replying to your posts before you've actually posted them.

Graham_Devon

julieq wrote: »

It's inevitable really that if we return to a situation of tight credit controls, the market for housing will tend to shift towards rental, and will be operated by large corporate investors - pension funds or specialist landlords who are financing outside mortgages. That is de facto creating the two tier society with a property owning elite and the everyone else renting or leasing. In that scenario you see ownership levels dropping back to trend prior to deregulation, and FTBs being essentially squeezed out as we understand them at present.

Which oddly enough seems to be what is happening.

What is interesting is the idea that you can return to one trend - ratio of prices to salary - without reverting to another - historic rate of owner occupation. No real sense in that.

I don't think mortgages will be restricted for much longer, and I don't think we're headed back to the 1870s. But there's certainly the potential for that to happen and the supply/demand numbers only point one way, which is increasing costs for housing, unless we build more.

Where are the properties that they will buy?

Isn't it more likely that they would want to build properties, so that they manage one chunk of property, or several chunks, rather than have houses dotted around the country.

This could work in favour of slightly lower rents and more supply.

I doubt big companies like this would be willing to pay for the services required to micro manage several hundred houses dotted all around the country. They will want large scale investments. That usually means building them. Micro managing hundreds of specific houses would cost a fair whack. Whereas cash flow on one large plot is a lot easier to manage. You know for instance your health and safety is going to cost you x amout....you know in ten years, your replacement windows across all properties are going to cost x amount, and can factor all this in.

I think it would be highly stupid, and highly unlikely any big company would want to invest in something in which there are hundreds of abnormalities and associated unknown costs across the range of styles and ages of properties.

Graham_Devon

Another point on this one, is that this creates absolutely no wealth. At least investing in shares can provide wealth, through the companies, and therefore create growth. This does nothing but suck money out, and provides absolutely no growth or wealth creation, apart from for the investors, and therefore, pensions, maybe.

We tried to build an economy on financial services and selling houses to each other. It didn't work (well you could argue it did work for maybe 4-5 years). Ploughing wealth into these sorts of schemes which provides no growth, no real jobs, and no up and coming companies for the UK isn't exactly what the UK needs right now.

Losing_the_way

Sorry reading between the lines but is this a sweetener for a flood of expected repossessions. If it is then the implications are worrying.

Graham_Devon

RenovationMan wrote: »

This could be true for any company that does not export products. The only real wealth created is when it is brought in from overseas, otherwise all we are doing is moving our own money around the economy.

To move to an export led economy we have to have a favourable exchange rate, which we have right now because of the low interest rates.

But surely pension funds investing in companies, as many do now, provides more growth than investing in houses?

ukcarper

Graham_Devon wrote: »

But surely pension funds investing in companies, as many do now, provides more growth than investing in houses?

I’m not sure many pension funds invest directly in companies I might be wrong.

Graham_Devon

ukcarper wrote: »

I’m not sure many pension funds invest directly in companies I might be wrong.

Never said directly. (thats the same as assuming these funds are going to buy individual houses directly).

But they do use corporate bonds.

That, is investing into companies.

ukcarper

Graham_Devon wrote: »

Never said directly. (thats the same as assuming these funds are going to buy individual houses directly).

But they do use corporate bonds.

That, is investing into companies.

I agree investing in bonds and new share issues could help growth provided that the companies that are invested in are likely to create growth.