Home owners struggling with 1/2% intererst rates

IveSeenTheLight

Mallotum_X wrote: »

Did wages fall last time house prices fell.. whether thats in 2008 or back in the early 1990's...

If not then whats different now?

You will see that I said if they sustainably fell to a lower level.

Why did wages not follow suit previously?, because they weren't sustained at such levels over a significant period of time and as such assisted towards house prices re-correcting back to and beyond the mean.

I do still believe if you were to (hypothetically as we are discussing) see property prices correct significanlty lower and be sustained sufficiently long enough to impact the housing market fluidity to revert to what some may term as 'normal' market conditions, it would impact on the whole of society requiring less income due to the lower expenditure needs.

Thrugelmir

IveSeenTheLight wrote: »

I do still believe if you were to (hypothetically as we are discussing) see property prices correct significanlty lower and be sustained sufficiently long enough to impact the housing market fluidity to revert to what some may term as 'normal' market conditions, it would impact on the whole of society requiring less income due to the lower expenditure needs.

Isn't the issue though that disposable incomes are declining (or will decline in the case of the public sector). So wage levels will influence the direction of house prices for the foreseeable future not the other way round.

ninky_2

HAMISH_MCTAVISH wrote: »

Just to correct you, as this particular piece of misinformation seems to be popping up more frequently these days, housing benefit does not take anything from the economy.

Benefits are paid to landlords, who then use the money to do a variety of things "in the economy".....

1. Debt service. Money paid in interest to banks through a mortgage, then goes to pay savers a return on their savings. The banks take a cut and use it to pay their employees, their shareholders (like our pension schemes), their taxes, etc.

2. Maintenance. Money paid to people for goods and services to repair and maintain housing. Are you claiming that a washing machine repairman, a furniture salesman, an electrician or gas safety check company, are not part of "the economy"?

3. Profit for the landlord. Who then spends it "in the economy".

Some posters on here seem t think housing is a big black hole completely unrelated to the rest of the economy. Which is obviously absurd.

Even house prices rising does not take anything from the economy. All money allocated in housing is eventually returned to the younger generations. And unless we abolish death, it always will be.

other than the pressure on people to work for their rent rather than get it paid perhaps?

you could say the same about any benefit.

the likelihood of benefit money being recirculated in the economy is in proportion to the wealth of the recipient. therefore jsa is highly likely to be recirculated as these people don't have any savings / other disposable income.

i'd say housing benefit is more likely to be horded since landlords have (on average) a higher asset / wealth base.

housing benefit has of late also created rent inflation which is unhelpful.

Mallotum_X

Thrugelmir wrote: »

Isn't the issue though that disposable incomes are declining (or will decline in the case of the public sector). So wage levels will influence the direction of house prices for the foreseeable future not the other way round.

Yep but some people dont like that idea.

ninky_2

it's funny how some only see the positive of public spending in terms of invigorating / growing the economy when they directly see it going into their pocket......

chucky

Thrugelmir wrote: »

Isn't the issue though that disposable incomes are declining (or will decline in the case of the public sector). So wage levels will influence the direction of house prices for the foreseeable future not the other way round.

so because the tesco shelf stacker is not getting a pay rise, house prices won't rise.

when you need 100% of people getting pay rises for house prices to rise in value, please let me know.

lisyloo

So why they are all struggling of a sudden?

Movologi - I don't think it's much about mortgage costs which for many people have not risen.

People are being squeezed because

1) Petrol/Diesel has gone up.
2) Gas/Electricity has gone up and for rural areas heating oil has gone through the roof.
3) Car insurance went up about 30% in 2010 and that's worse if you are young or high risk as insurers are cherry picking.
4) Food and general costs (see RPI/CPI) has risen.
5) The cost of holidays abraod (if you can afford them) has risen due to the weakness of Sterling.
6) Savings rates have fallen.
7) A lot of people are seeing falling incomes. If not through a pay cut, then through lack of overtime or bonuses.
8) Unsecured interest rates have gone up e.g. credit card at 30% is nothing to do with base rates of 0.5%.

I don't think anyone would disagree with any of that although it's not meant to be an exhaustive list.
Basically incomes are not going up in line with costs and we're all being squeezed.

Thrugelmir

chucky wrote: »

so because the tesco shelf stacker is not getting a pay rise, house prices won't rise.

when you need 100% of people getting pay rises for house prices to rise in value, please let me know.

Your observations are at times totally obtruse.

chucky

Thrugelmir wrote: »

Your observations are at times totally obtruse.

maybe but you miss deliberatly miss the key peice of information.

you don't need 100% of people to have HPI - i would have thought 30% of people getting pay rises for there to be positive HPI.

i know that's not what people want to see but you can have the minority of people getting pay rises and there still be HPI.

IveSeenTheLight

Thrugelmir wrote: »

Isn't the issue though that disposable incomes are declining (or will decline in the case of the public sector). So wage levels will influence the direction of house prices for the foreseeable future not the other way round.

In this scenario, I foresee lower transactions, lower owner occupancy and an increase in people renting.

Unfortunately, it will mean a reverse of the trend of becoming owners and more will need to rent.