MSE News: Guest Comment - Glimmer of hope for first time buyers

Graham_Devon

amontlake wrote: »

Ha, thanks I am beginning to notice that !

Good to read some of the responses and a useful way for me to gage opinion - lots of people like yourself that I can learn from - some excellent points very well made.

It is unfortunate how many people believe that commentators like myself say things just for the sake of it or because we are being paid - we are not, just being honest.

If you were just being honest, then would you be prepared to carry on just being honest?

Can you honestly say that these new, builder shared ownership schemes are a good deal? Would you encourage your son or daughter to go for it? Would you encourage them to take 2 loans to buy a house, which you know is overpriced to start with, as the package of shared ownership allows them to choose which house you can have and how much that house is?

Would you be happy for your son or daughter to take a 5 year interest free loan, knowing pretty much full well from experience, that after 5 years they won't be able to pay the loan off....and it will start attracting interest.

Would you be happy to send your son or daughter into a scheme whereby if they want to get out, they will likely have to, in many cases, make sure the builder does not end up out of pocket, by making themselves completely out of pocket? Read these forums for those people now stuck in these schemes.....and the schemes they are stuck in were the better homebuy schemes....not these builder schemes.

Would you encourage your loved ones down this path? Honestly?

Sitting on the sidelines suggesting it's helping others is fine. We can all sit on the sidelines and suggest things are good for people. But if it was you...your loved ones....your own son and daughter. Wouldyou honestly sit there and tell them "no no, you don't want lower prices, you want to pay more, the more the better". Could you really convince yourself when it's your own blood you are talking about and sending down the same path?

I highly doubt it.

I always ask myself, when I see these types of articles and explanations, if people actually convince their family members that taking higher priced loans are the best option. Whether they sit there and tell their daughters "look, that fiesta at that ford garage MAY be 6 grand....but up the road, theres an identical car at 8 grand. You want the 8 grand one, it's better for you to pay more for the exact same thing". Whether they encourage their sons to find the worst savings account, as it's better for them. Would they encourage their elderly mother to invest a massive chunk of her life savings into a bank which is on the edge, coming up with various schemes just to try and stay afloat? Would you encourage your dad to invest his life savings, into for example, HMV?

Again, I highly doubt it. But it's easier to encourage others in. Especially if you are invested yourself.

HAMISH_MCTAVISH

scarletjim wrote: »

Totally miissing the point. I agree that generally house prices won't falll much,

True.

And in fact will inevitably rise.

but who benefits if they keep rising?

A surprisingly large section of the population.

1. Everyone who has a mortgage of 50% LTV or less, who may need to remortgage onto a better rate afforded to those in a higher LTV bracket. Around half of mortgage holders, or approximately 5.5 million households.

2. The roughly 50% of homeowners (approximately 11 million households) whose next move is most likely to be a downsize or leaving an inheritance to their children.

3. The several million owners of multiple or investment properties.

4. The banking system.... It's shareholders (including the taxpayer), employees, savers and the pension funds who invest in it. The ability to reduce the write offs on their balance sheet due to falling property values would be immensely helpful.

5. The wider economy. The housing market and it's associated services are an important part of GDP and the labour market, whether it be housebuilding, refurbishment, redecorating, sales of properties, etc.

HAMISH_MCTAVISH

J_i_m wrote: »

, a lot of waffle about crashes, stagnation, supply & demand etc.

Well those factors are what sets house prices.

Not "simply wanting" houses to be cheaper....

I can tell you that I don't give a fig about waffle about supply & demand, nor arguments about if houses are overpriced or not...

You should.

Because without a massive expansion of homebuilding, and the pre-requisite massive expansion of lending to allow that to happen, a lot of people will be doomed to a lifetime of renting and enriching their landlords.

I simply want to be able to afford to buy a satisfactory property in a nice enough area, (i.e not having drug addicts on my doorstep) and for the monthly payments to be within my means and to not be ripped off, it's really not too much to ask is it?

What you want is of no relevance.

The only thing that sets house prices is supply and demand. Nothing else.

And a few years from now, the biggest generation of FTB-s in history, bigger even than the boomers, is going to crash into the biggest housing shortage in history thanks to years of underbuilding after the crash.

There is only one possible result, and it isn't cheaper house prices....

Graham_Devon

HAMISH_MCTAVISH wrote: »

True.

There is no such thing as "overpriced" housing.

Prices are set by supply and demand, nothing else.

What about undervalued housing then.

Can that exist?

You certainly appear to believe so. Which is strange. Because you state there is no such thing as overvalued housing, but DO believe there is such thing as undervalued housing.

J_i_m

I'm also slightly confused to where in my post I said "wanting houses to be cheaper".

Perhaps I do want houses to be cheaper so it'd be slightly more attainable for me to buy one, perhaps I have a vested interest but please show who hasn't, and I'll show you a liar.

Now what I actually said is that

I simply want to be able to afford to buy a satisfactory property in a nice enough area

And I'm sorry but what people want is relevant. If people can't afford to buy, whether they are FTB, or already on "the ladder" for what ever means, whether it be mortgage lending is scare or house prices are high, if people can't afford to buy, and can't get funding then they're not going to buy. And a house owner can debate until the cows come home about if their asking price is "over priced" or "under priced", if they're property is not selling because no would be interested buyer can afford it... well then it's not selling.

And to a large extent this is what confuses and annoys me about the housing market. Why so many people seem to think a house is a savings account for a mega windfall in money. Well I don't care to fund that windfall, I simply want to be able to afford to buy home at a fair affordable price.

Jimmy_31

J_i_m wrote: »

I'm also slightly confused to where in my post I said "wanting houses to be cheaper".

Perhaps I do want houses to be cheaper so it'd be slightly more attainable for me to buy one, perhaps I have a vested interest but please show who hasn't, and I'll show you a liar.

Now what I actually said is that

And I'm sorry but what people want is relevant. If people can't afford to buy, whether they are FTB, or already on "the ladder" for what ever means, whether it be mortgage lending is scare or house prices are high, if people can't afford to buy, and can't get funding then they're not going to buy. And a house owner can debate until the cows come home about if their asking price is "over priced" or "under priced", if they're property is not selling because no would be interested buyer can afford it... well then it's not selling.

And to a large extent this is what confuses and annoys me about the housing market. Why so many people seem to think a house is a savings account for a mega windfall in money. Well I don't care to fund that windfall, I simply want to be able to afford to buy home at a fair affordable price.

I think along the same lines as you, i would like to see affordable housing for everybody who wants to buy a home, and if that means house prices tanking and somebody at the top of the ladder ends up with no pension when they come to retirement then thats fine by me.

To avoid this no pension scenario all that people have to do is hope house prices crash by a large percentage, then mortagage payments will be hundreds and hundreds of pounds less per month for 25,30,35 years so the money you save you then put in a savings account and use it as a pension fund, (dont worry about interest rates being low because they wont be staying where they are forever).

HAMISH_MCTAVISH

milliebear00001 wrote: »

looking to sellers to drop their prices so you can buy one is not a winner! They aren't going to drop their prices unless forced to. What I am saying, is that there is little on the horizon, so far as I can see, that is going to force them.
.

Absolutely correct.

The crash is over.

Prices are currently stagnating in the "bump along the bottom" phase, but will be rising rapidly soon enough unless an awful lot more houses get built.

geoffky

hamish.....interest rates rising will be your undoing,all your arguments will fall when it happens,as it will.last time they let them rise they did not for one minute care about the housing market and will not again.

HAMISH_MCTAVISH

geoffky wrote: »

hamish.....interest rates rising will be your undoing,all your arguments will fall when it happens,as it will.last time they let them rise they did not for one minute care about the housing market and will not again.

Zzzzzzzz.

Not that tired discredited old chestnut.

You crashaholics are always coming up with new excuses, and just like all the others, when this one fails to materialise you'll move on to something else.

But anyway.....

Interest rates will rise eventually, but it won't be soon and they won't rise far or fast when they do. Most economists expect base rates to still be below 3% in 5 years.

Now given that 97% of the people in full time work before the recession are still in work after it, and given that they could afford base rates of nearly 6% then, what makes you think they'll suddenly all have to rush for the exits today?

Especially when 75% of those who lose a job find another within 6 months, and support for mortgage interest takes care of most of the rest?

UK population is growing by 408,000 people a year, adding 252,000 households a year, and we build just 100,000 or so houses.

The shortage is reaching crisis proportions.

And the crash has resulted in housebuilding falling to the lowest level since 1923 last year, and new starts are down 41% from that YoY so far this year.

The seeds of the next boom have already been sown. Now you're force feeding them Miracle Grow.....

Just as the next generation of FTB-s reaches buying age starting from 2012 onwards, (a generational bulge that is the biggest in history, by the way, bigger even than the baby boomers) they're going to collide with the biggest housing shortage in UK history.

There's only one possible result. And it ain't a crash....;)

tara747

HAMISH_MCTAVISH wrote: »

So your 'solution' to some people being priced out of the market, is to prevent even more people being able to buy through refusing to give them mortgages.

Genius.

You miss the point Hamish. The more restricted the mortgage market, the lower house prices will fall! Simples.

Every sensible person agrees that FTBs should save a deposit to buy a house. It teaches financial discipline and lowers repayments. The higher the deposit, the better. We who have been prudent and saved (and continue to do so) will be in a better position to buy if mortgages are harder to get and house prices fall as a result.

HAMISH_MCTAVISH wrote: »

.........

Just as the next generation of FTB-s reaches buying age starting from 2012 onwards, (a generational bulge that is the biggest in history, by the way, bigger even than the baby boomers) they're going to collide with the biggest housing shortage in UK history.

There's only one possible result. And it ain't a crash....;)

Would that be the same generation which is currently graduating from higher education with huge student loans to pay back, and poor job prospects? Riiiight. I can see them being major players in the housing market in the next few years at current prices. :cool:

House prices will fall further, precisely because of the financial woes of the early-20s generation.