How long can FTB-s afford to wait?

Shupufski

HAMISH_MCTAVISH wrote: »

But this is just utter nonsense.

There are only two choices.

1. Pay the market rate for houses.

2. Pay the market rate for rent.

In the long term, buying is massively cheaper than renting.

And now even in the short term, rent is more expensive than mortgage interest in 80% of the UK.

Your perception of "what represents value" is an irrelevancy.

You fail to understand the acute market distortions that the property boom and financial crash have brought about.

No true market comparison can be made until the current abnormalities are purged from the system.

But please, carry on with your usual A-level economics arguments.

HAMISH_MCTAVISH

abaxas wrote: »

So depriving a generation of housing and forcing them into tenure is great?

Well it's you lot that wanted mortgage rationing, now you'll just have to live with the consequences.

Remember that excessive asset prices caused lots of our current problems.

Name one.

chewmylegoff

HAMISH_MCTAVISH wrote: »

2007 -- 400,000--- All FTB's
2008 -- 200,000--- BOMAD only
2009 -- 200,000--- BOMAD only
2010 -- 200,000--- BOMAD only
2011 -- 200,000--- BOMAD only <---- We are here
2012 -- 400,000--- BOMAD + Savers since 2008
2013 -- 400,000--- BOMAD + Savers since 2009
2014 -- 400,000--- BOMAD + Savers since 2010
2015 -- 400,000--- BOMAD + Savers since 2011

...

So there most certainly is a time pressure on FTB-s to get in before that happens.

The question is, when will it happen?

isn't the point that, if your theory is correct, FTBs can't actually "get in before that happens" because they are savings for deposits and won't have the necessary deposit to buy until it actually does happen?

also, whilst i do understand the theory of the argument, it does of course depend on all of the FTBs who could have bought in 2007 without BOMOD being capable of saving a deposit in 4 years and being willing to do so.

there were a fair number of FTBs in 2007 and before who hadn't saved a penny and were borrowing 100% or more than 100%. if they couldn't save a penny then, what is there to suggest that they could now? this is particularly true in an environment of frozen wages and rising inflation (in particular, the rising rents which you keep going on about).

so, whilst FTBs may start to return to the market in greater numbers, i expect the total number of FTBs from 2012 onwards in your illustrative model should probably be lower than the total in 2007.

obviously more FTBs is likely to result in higher prices, so i agree with the general picture you are painting, but i doubt the upwards pressure on prices will be anything like 2007.

Percy1983

HAMISH_MCTAVISH wrote: »

Well it's you lot that wanted mortgage rationing, now you'll just have to live with the consequences.

I still fail to see how your arguement of to make something more affordable you simply lend more...

The only logic I can see to this arguement is if you wanted prices to rise for your own selfish needs.

You do seem bitter that sensibility has returned to the mortgage market and your 'pension' isn't performing as expected.

HAMISH_MCTAVISH

chewmylegoff wrote: »

isn't the point that, if your theory is correct, FTBs can't actually "get in before that happens" because they are savings for deposits and won't have the necessary deposit to buy until it actually does happen?

Well they could accelerate their savings rate if possible.

also, whilst i do understand the theory of the argument, it does of course depend on all of the FTBs who could have bought in 2007 without BOMOD being capable of saving a deposit in 4 years and being willing to do so.

there were a fair number of FTBs in 2007 and before who hadn't saved a penny and were borrowing 100% or more than 100%. if they couldn't save a penny then, what is there to suggest that they could now? this is particularly true in an environment of frozen wages and rising inflation (in particular, the rising rents which you keep going on about).

so, whilst FTBs may start to return to the market in greater numbers, i expect the total number of FTBs from 2012 onwards in your illustrative model should probably be lower than the total in 2007.

I expect you're right, it should be lower. Impossible to accurately estimate though.

One other thing though, which I didn't put in the illustrative example as it will confuse some....

The biggest generation in history is about to hit FTB age. So there will be more FTB age people in the next 10 years by far than there were in the decade from 2000 to 2010.

That will almost certainly result in FTB numbers being higher than 2007 at some point within the next decade, particularly when you add the overhang of frustrated buyers from today.

obviously more FTBs is likely to result in higher prices, so i agree with the general picture you are painting, but i doubt the upwards pressure on prices will be anything like 2007.

Agreed, it is just a general picture, and it will certainly result in higher prices.

As to how much higher, or the type of pressure, don't forget to factor in the current incredibly low housebuilding rates colliding with the biggest generation of FTB-s in history, bigger even than the boomer generation.

HAMISH_MCTAVISH

Percy1983 wrote: »

I still fail to see how your arguement of to make something more affordable you simply lend more...

That's not my argument, and never has been.

If you want to make houses more affordable over the long term, lending more won't do it. Only building more will do that.

However lending at higher LTV and LTI ratios has demonstrably increased the percentage of owner occupiers over the last couple of decades, and enabled those on lower incomes to compete with landlord investors.

The only logic I can see to this arguement is if you wanted prices to rise for your own selfish needs.

I'm very clear to anyone that asks that I have a VI in rising prices.

But I also genuinely believe that rising prices are far better for society and the wider economy than falling prices.

You do seem bitter that sensibility has returned to the mortgage market and your 'pension' isn't performing as expected.

My "pension" is performing very well, thank you. As are my property investments, given I live in a town where house prices are more expensive now than they were in 2007.

But this mortgage market is not currently sensible. It's dysfunctional.

This is not the historical norm..... I was offered a 95% mortgage in 1990. As were my parents in 1967. 100% mortgages were available at least as far back as the 1980's.

All you've succeeded in doing with mortgage restrictions is enrich a bunch of landlords.

macaque_2

HAMISH_MCTAVISH wrote: »

Yes.

I utterly detest crashaholics like you.

I find you're invariably vile, repugnant, nasty little creatures, who actively cheer on and celebrate recession, increasing unemployment, repossessions, and mass misery.

The sooner we get back to growth in the economy, falling unemployment, and rising asset prices, the better.

You use the word crash but others would call it an overdue correction. Without this, the wealth creating side of the economy will continue to decline. Manufacturing companies now have to pay employees £10k a year just to cover housing costs. This, combined with high taxes, drives UK companies to outsource as much as possible.

£50 - 100 billion a year is handed over by home owners to lenders in the form of interest payments. The lenders use this money to take large salaries and employ armies of people who spend their days forcing more debt onto people. This is not a healthy or sustainable model for an economy.

I cannot see how we can get real growth without a massive house price correction.

geneer

HAMISH_MCTAVISH wrote: »

Yes.

I utterly detest crashaholics like you.

I find you're invariably vile, repugnant, nasty little creatures, who actively cheer on and celebrate recession, increasing unemployment, repossessions, and mass misery.

The sooner we get back to growth in the economy, falling unemployment, and rising asset prices, the better.

tee hee. Bonkers!

Another, slavering rendition of the "evil bears punch kittens and eat babies" song (C) 2008.


Of course this is only to be expected.
People need a scapegoat.

If they didn't have one they might just realise that real blame for our economic woes and the personal costs to millions can readily land at the door of the "doommongers" who gleefully cheered as a generation was either kept from the possibility of a family home, or became endentured servants to their mortgages.

Is that a fair assesment?
Can the collapse not be blamed on the bubble?
Can the bubble not be blamed, at least in a very large part, on those who contributed to the same.
On those who thoughtlessy accepted, regurgitated and reinforced the hysterical VI memes?
On those who actively contributed to the faulty received wisdom of the masses?
Who effectively created the economic conditions which would bring our very way of life teetering to the brink.

Oh I think so.

Graham_Devon

HAMISH_MCTAVISH wrote: »

Yet both the number of FTB-s and also the amount they are paying for houses is increasing.

And with rents increasing markedly, and prices now rising again, not buying is a bit, well, stupid. Which probably explains your stance on the matter.

Oh come on Hamish.

Even you congratulate yourself constantly for suggesting house prices would stagnate. Yet in these arguments, you state house prices are rising.

They rose 0.1% on halifax. Down 2+% in the year.

They have risen slightly on nationwide, can't remember the numbers for the year.

They are down on land registry, monthly and yearly.

You are using absolute macro movements to suggest prices are rising and people should buy now to avoid paying higher prices.

These really are macro movements. But you can't argue in one argument that stagnation is happening, then in another argument, choose to say prices are rising, dependant on which suits your argument the best.

HAMISH_MCTAVISH wrote: »

I find you're invariably vile, repugnant, nasty little creatures, who actively cheer on and celebrate recession, increasing unemployment, repossessions, and mass misery.

And this? After you have been picking and choosing your figures to talk DOWN the economy, in relation to your plea for extending low interest rates?

Hypocrisy 101.

crash123

Shupufski wrote: »

I think we generally agree old chap.

Everyone will have different perception of when is the right time and what represents value. But my general point is that FTB's armed with deposits will not simply purchase in droves because they have the money.

I waited and waited in the last crash, from 1989 until I bought in 1993, missed the bottom by a couple of years but it was only a couple of grand. This time it could be a lot more so if I was in the same position now I would wait and see.
There is still too much debt not just in the UK but worldwide.