FSA advisers urge delay to mortgage reform and more 'flexible' lending

abaxas

Graham_Devon wrote: »

Of course there is.

Not that that answers or discusses any of my other points.

What about the pent up supply?

Really2

Graham_Devon wrote: »

Of course there is.

Not that that answers or discusses any of my other points.

I added a bit more, but I am surprised to here you say that. I agree (see above) but think there is little you can do other than try to make houses more affordable.
If population demand is the cause of high prices, other than build more what can you do.
In reality build costs are also going to be going up because of the population strain.

It is always going to be one plaster at a time the only solution is less people in reality.:eek:

There is no answer to your points, we can blame anything but houses are where they are because of demand, no forecast sees that falling (population).
Also with that it increases land costs, commodity costs etc, so even if you build more there is a fair chance it will not lower prices just mitigate rises in the long term.

chucky

dtsazza wrote: »

If housing prices fall, they immediately become affordable to many more and thus rise again due to increased (realised) demand. Likewise, mortgage reforms to loosen lending restrictions will (ceteris paribus) realise more demand and push up prices.

It seems that if we really do want house prices to fall, the only way in the current situation is to ensure that a good chunk of potential buyers remain unable to buy.

that happens naturally anyway and has always worked that way until they get to their "natural low point" and then increase again like Feb 2009.

people need to understand that when house prices fall or are low less people are able to buy. you will only be able to buy unless you a very large cash deposit due to finance being hard to get or you have an A+ credit score.

Graham_Devon

Really2 wrote: »

I added a bit more, but I am surprised to here you say that. I agree (see above) but think there is little you can do other than try to make houses more affordable.
If population demand is the cause of high prices, other than build more what can you do.
In reality build costs are also going to be going up because of the population strain.

It is always going to be one plaster at a time the only solution is less people in reality.:eek:

In this case, population demand isn't the only cause of the higher prices. The regulatory changes, and extended mortgages are.

We've just been through a period whereby it's widely recognised, the available credit fed higher prices.

We've just seen how credit changes to allow further affordability fueled increase in prices. 100% mortgages rising to 110%. When 110% isn't enough, 115%. When 115% isn't enough, 125%, and prices still rose beyond the new credit levels, due to credit feeding prices.

All of the above only took a few years. You'd have to be completely blind not to see it, and it's widely recognised as a cause for higher prices.

Thinking of extending the life of mortgages when we are on our arris's, with base rates and therefore mortgage rates as low as they can go, and still in stagnation period is a recipe for carnage. Granted, it will see house price rises for a few years.

House prices are not only at the price they are because of demand. Cut mortgage lending to 50% LTV only tommorow, and you will see house prices plummet. House prices are where they are because of several factors which make up real demand. We are not talking artifical demand here.

I don't think I can go any further on this one with you. If you are blind to the above, then I can't really explain it any further. Therefore forgive me if I dip out of the too and fro. Dtsazza (sp) posted a fantastic post. Would be nice if his points were discussed rather than ignored.

Really2

Graham_Devon wrote: »

In this case, population demand isn't the only cause of the higher prices. The regulatory changes, and extended mortgages are.

Not true, if the demand is not there those would have no bearing on price.

The only time affordability will come in to play is when demand far exceeds supply.

If what you are saying was correct your solution would be to do nothing. Those that could, could. Those that can't, can't.

But even doing nothing would eventually push prices up as the population grew those who could afford it the most would compete for the remaining stock.

Think of it as tickets on ebay . It does not matter how many you print until the supply of them exceedes the demand for them they won't be lower than their original retail price.

Either you do nothing and let the richest buy.
Or you build and try to increase affordability for those that are near.
We are never going to build to match population growth in reality unless we change the type of property we live in, more flats??

Graham_Devon wrote: »

All of the above only took a few years. You'd have to be completely blind not to see it, and it's widely recognised as a cause for higher prices.

No price would have risen anyway (due to demand), they were to blame for a faster rise.
All the last decade showed us was how in demand property is, like I said even if you build more unless you outpace growth of population it will only mitigate the speed of prices rising.

Percy1983

The evidence is if everybody who wanted a house could buy prices would rocket, ie look what happened in the build up to 2007/08, anybody who wanted a mortgage got one more or less.

The way I see it now is while supply is down you should limit demand, look at it this way if you have less to sell then people want you sell to the safe bet, so right now those who can prove they can budget and save get the first bite which I think is more than fair enough.

ie, I have a proven record of budgeting now and will soon have a deposit so why should I be bidding against somebody who has never budgeted and just got there 125% mortgage (to clear previous debts)?

chucky

Percy1983 wrote: »

The evidence is if everybody who wanted a house could buy prices would rocket, ie look what happened in the build up to 2007/08, anybody who wanted a mortgage got one more or less.

The way I see it now is while supply is down you should limit demand, look at it this way if you have less to sell then people want you sell to the safe bet, so right now those who can prove they can budget and save get the first bite which I think is more than fair enough.

ie, I have a proven record of budgeting now and will soon have a deposit so why should I be bidding against somebody who has never budgeted and just got there 125% mortgage (to clear previous debts)?

i understand totally what you mean but i'm not sure how that can be done without building up demand and creating a future bubble.

Graham_Devon

Percy1983 wrote: »

The evidence is if everybody who wanted a house could buy prices would rocket, ie look what happened in the build up to 2007/08, anybody who wanted a mortgage got one more or less.

Exactly.

But some are so blind, or so darn ignorant they simply will not admit that the availability and type of credit has a massive impact on real demand (i.e. demand that can actually turn into a purchase).

Really2

Graham_Devon wrote: »

House prices are not only at the price they are because of demand. Cut mortgage lending to 50% LTV only tommorow, and you will see house prices plummet. House prices are where they are because of several factors which make up real demand. We are not talking artifical demand here.

Yes because you lower demand, affordability is real demand. All those cut out by 50% LTV would move to desire.
If you are saying the demand is there to push up prices if affordability is lowered it is fairly obvious that buy price is not the sticking point for many.

Making it harder to own will not mean more people own! you are simply saying less should own by doing that!

50% LTV would not lower the average buying age would it? in reality it would make the market more "have and have not"

Making housing affordable is the only way to make more own, that can be done by a number of methods but with a growing population building more has to be one of them.

Really2

Graham_Devon wrote: »

Exactly.

But some are so blind, or so darn ignorant they simply will not admit that the availability and type of credit has a massive impact on real demand (i.e. demand that can actually turn into a purchase).

Oh dear here we go.

Or perhaps there is far more of a problem than just the price.

Lowering the price by any method would not make houses more affordable or make more own.
Like you stated about 50% LTV, more people would not aspire to own less would.
Rental demand would increase so the very rich by the housing stock and rent them out.

Who won in that situation? the man on £30K or the man on £100K?