Sellers' gloom over property market inactivity

ILW

HAMISH_MCTAVISH wrote: »

In a period of deflation it's not just average prices that will drop, but average wages also.

So no, you couldn't.:cool:

Not necessarily, you can have price deflation without wage deflation, just like with inflation.

WestonDave

How much is it that the banks are refusing applications and how much is it that demand simply isn't there? Similarly how much of this "rationing" is simply the fact that at least 5% deposit is now required, preferably 10% which means that FTB's are having to find somewhere between £5k and £20k before they put in an application? If we assume this situation came as a shock to the "save nothing, spend it all, and borrow a bit more" generation 3 years ago, they've had roughly 36 months to get together a deposit since then. To go from saving nothing to putting aside anything between £150 to £550 per month to get those required deposits isn't going to be easy. In a climate of static wages, and rising costs of living even £150 a month is going to be hard for a person who has never saved. Given that no sane person would suggest that in the current market climate banks lend with less than £5k deposit (as a safety margin for price falls) it may take some time yet before we are back in the territory of 120k viable applications per month.

Shupufski

Graham_Devon wrote: »

Ok, let's talk about this, considering you are not willing to talk about rationing.

Do we REALLY need 120,000 approvals?

What is that based on? Where have you got that figure from? Why is it relevant?

Even if we could have 120,000 approvals each month, why would that magically fix the "problems" you perseive with mortgages?

And why were these approvals not a problem to you in 2009?

Because he is a one trick pony. High house prices are restricting the volume of transactions but the one eyed Scotsman won't see it.

Graham_Devon

WestonDave wrote: »

How much is it that the banks are refusing applications and how much is it that demand simply isn't there? Similarly how much of this "rationing" is simply the fact that at least 5% deposit is now required, preferably 10% which means that FTB's are having to find somewhere between £5k and £20k before they put in an application? If we assume this situation came as a shock to the "save nothing, spend it all, and borrow a bit more" generation 3 years ago, they've had roughly 36 months to get together a deposit since then. To go from saving nothing to putting aside anything between £150 to £550 per month to get those required deposits isn't going to be easy. In a climate of static wages, and rising costs of living even £150 a month is going to be hard for a person who has never saved. Given that no sane person would suggest that in the current market climate banks lend with less than £5k deposit (as a safety margin for price falls) it may take some time yet before we are back in the territory of 120k viable applications per month.

It's going to be even harder to save that money when as a nation we have personal record debts to repay on top of continual rising prices and fallin (in real terms) wages.

HAMISH_MCTAVISH

Graham_Devon wrote: »

why were these approvals not a problem to you in 2009?

They were a problem in 2009.

I've been banging on about mortgage rationing since the day I started posting. (In case you hadn't noticed )

But in 2009 the government almost got it right and force fed QE money into the banking system, which in addition to rebuilding the banks balance sheets, also increased the amount of lending available. Approvals doubled within a year. They've since plateaued at around 45,000. Which is less than half the required levels for the housing market to function properly.

ILW

HAMISH_MCTAVISH wrote: »

They were a problem in 2009.

I've been banging on about mortgage rationing since the day I started posting. (In case you hadn't noticed )

But in 2009 the government almost got it right and force fed QE money into the banking system, which in addition to rebuilding the banks balance sheets, also increased the amount of lending available. Approvals doubled within a year. They've since plateaued at around 45,000. Which is less than half the required levels for the housing market to function properly.

What do you mean by a properly functioning market?

Graham_Devon

Ahhh, not willing to discuss that either.

Just telling us again about these arbitary level requirements, but not telling us why we need them or how they will fix your aforementioned problems.

Great stuff.

Maybe you should stick to telling us inflation will fall back next year, as you have been doing since 2008.

HAMISH_MCTAVISH

ILW wrote: »

What do you mean by a properly functioning market?

One where anyone with a decent job, decent credit, and a historically normal, sensible and prudent 5% to 10% deposit can get a mortgage at within a couple of percent of bank funding costs.

Which is NOT what we have today.

shortchanged_2

As I keep banging on about Hamish, prices are still a major barrier. The fact that house prices still haven't dropped to a acceptable level for the majority is why the housing market isn't functioning.

Yes banks have stricter lending criteria and are not lending at the same levels they were back in the boom times, so it doesn't take a rocket scientist to work out the sums don't add up UNLESS either house prices drop further OR we go back to loose lending so people can 'afford' these properties again.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Maybe you should stick to telling us inflation will fall back next year, as you have been doing since 2008.

Well given that my first post here wasn't until June 2009, that's a neat trick.