MSE News: House asking prices rise to unrealistic levels

rickbonar

I think house buyers in the last ten years have gambled that the prices were always going up and that by the time they resold it would be enough to cover any shortfall in their wage income. And until 2008 that was the case, which even the banks and other lenders went along with.

But the logical projection to never ending house price increases are a situation where a bed-sit would end up costing £8,000,000 and someone only earns a wage of £15,000 per annum. And the truth is the vast number of ordinary workers do earn about that.
Now this is someone therefore who can not afford to buy so they have to rent, so the owner of the bed-sit rents it out at £5000 per week in order to recoup his investment.
As even that's only £260,000 a year and it's going to take him 30 years at this rate just to get back his outlay. Now I know housing benefit until recently would have saved the landlords day as that would have paid the majority of the £5000 per week but new legislation has stopped this, unless you have a friend or associate inside working for the soc or your tenant has just claimed asylum from Somalia.

I conclude maybe the answer is either massive inflation and stagnant house prices or conversion and bailout by the euro. Or the government ups the interest rates considerably and lets the market sort it out.

Other than those scenarios I don’t think there are many other ways where the housing market will “recover”.

Paulgonnabedebtfree

rickbonar wrote: »

I did actually write it a bit tongue in cheek because I have seen quite a few such signs ... and interestingly a few weeks later the places are back up For Sale.. now it's either a rapid resale or estate agent kidology to fool sellers and buyers into thinking it's time to get in!

OK , I'm with you now. I didn't pick upon the tongue in cheek bit. Not always easy to do so on a text only medium . Re-reading your post, I guess I should have realised as it's the sort of thing I might have written myself.

powerwin

IMO there should have been a major correction in the property market, but because of the massive bank bailout with taxpayer funds, it didn't happen. Effectively, this means careful savers lose out to those happy to take on large debts.

Rgds

rickbonar

Yes the house prices have been overpriced for years, that's what happens when the estate agents and banks are allowed to do what they want.. justified by quote: "market forces". Well real market forces today are being held back by governments quantitative easing and the bank of England holding back the interest rates.

Quantitative easing is where they print more money (effectively devaluing it) than they've got.

Some Scottish entrepreneurs have tried the same recently to help Messrs
Brown, Cameron, Clegg etc but their enterprise hasn’t been received so enthusiastically.

See the link below:

http://www.bbc.co.uk/news/uk-scotland-glasgow-west-13447832



I don’t know why as it is precisely what our government are doing.

Thrugelmir

rickbonar wrote: »

Other than those scenarios I don’t think there are many other ways where the housing market will “recover”.

Housing is a market. An illiquid one at that. Took many years to inflate the bubble so will take even longer possibly a generation of home owners to deflate and normalise.