Home ownership back to 1988 levels.....

HAMISH_MCTAVISH

DirtyDick wrote: »

Home ownership is quite a recent phenomenon for the majority of people anyhow, .

It is indeed.

A century ago, 90% of the houses in the UK were owned by just 10% of the people.

Property wealth was concentrated in the hands of the very few, and 90% of the population were "priced out".

The only thing that changed that was the expansion of credit.

Mortgage lending for the masses enabled more and more people to buy houses. Indeed, the absolute number of owner occupiers peaked in 2006 (although the percentage peaked a few years earlier).

And unsurprisingly, with credit now hard to come by, owner occupation is falling rapidly and wealth is once again being concentrated in the hands of an ever smaller and richer percentage of the population.

A lot of posters on here blame the expansion of credit (or "loose lending" as they like to call it) for driving up house prices.... Which is misleading.

What the expansion of credit actually did was drive up owner occupation rates, enabling more people than ever before to own their own home..... and because we have a massive shortage of housing in this country, that then drove up prices.

A point amply demonstrated by the fact that we have now withdrawn 65% of lending, yet prices remain at nearly 90% of peak levels.

Restricting lending has made only a small change to house prices, but it has had a devastating effect on a million or so people who have been prevented from buying their own home and forced into enriching a landlord instead.

The only way to enable those people to buy houses is to increase lending dramatically.

And of course the only "solution" for those who want cheaper house prices in the long term is to build dramatically more houses. But that's not going to happen as long as mortgage lending remains rationed. After all, builders won't build what they can't sell.

shortchanged_2

HAMISH_MCTAVISH wrote: »

A lot of posters on here blame the expansion of credit (or "loose lending" as they like to call it) for driving up house prices.... Which is misleading.

This a a load of cr&p and you know it.

shortchanged_2

OK, a simple question for you Hamish.

Do you honestly with hand on heart believe that house prices would be where they are now if the banks never sold 1 mortgage with more than say 3.5 times a single income and 2.5 times a joint income mortgage?

Rinoa

shortchanged wrote: »

OK, a simple question for you Hamish.

Do you honestly with hand on heart believe that house prices would be where they are now if the banks never sold 1 mortgage with more than say 3.5 times a single income and 2.5 times a joint income mortgage?

Easy lending also led to many more people buying new cars, plasma TV's etc.

But the price of cars/TV's didn't rise, they just manufactured more to cope with demand.

HAMISH_MCTAVISH

shortchanged wrote: »

OK, a simple question for you Hamish.

Do you honestly with hand on heart believe that house prices would be where they are now if the banks never sold 1 mortgage with more than say 3.5 times a single income and 2.5 times a joint income mortgage?

Easier lending enabled more people to buy houses, which then drove up prices.

As proven by the fact lending is down 65% but prices remain at close to 90% of peak.

Without the "loose lending" then millions fewer people would have been able to buy houses, and so house prices would indeed have remained lower.

But that's hardly a "solution".....

You don't "fix" a perceived problem where a few hundred thousand are locked out of the housing market through price, by replacing it with a situation where a few million are locked out through mortgage rationing.

To even suggest that's an acceptable situation is just plain daft.

Jimmy_31

HAMISH_MCTAVISH wrote: »

Easier lending enabled more people to buy houses, which then drove up prices.

As proven by the fact lending is down 65% but prices remain at close to 90% of peak.

Without the "loose lending" then millions fewer people would have been able to buy houses, and so house prices would indeed have remained lower.

But that's hardly a "solution".....

You don't "fix" a perceived problem where a few hundred thousand are locked out of the housing market through price, by replacing it with a situation where a few million are locked out through mortgage rationing.

To even suggest that's an acceptable situation is just plain daft.

The percieved problem is slowly being fixed around here:).

shortchanged_2

HAMISH_MCTAVISH wrote: »

Easier lending enabled more people to buy houses, which then drove up prices.

As proven by the fact lending is down 65% but prices remain at close to 90% of peak.

Without the "loose lending" then millions fewer people would have been able to buy houses, and so house prices would indeed have remained lower.

But that's hardly a "solution".....

You don't "fix" a perceived problem where a few hundred thousand are locked out of the housing market through price, by replacing it with a situation where a few million are locked out through mortgage rationing.

To even suggest that's an acceptable situation is just plain daft.

No Hamish. Loose lending has created the problems we have now. You are arguing for the lending to be loosened again to open the floodgates again.

What this country needs is lower prices with a stable and sustainable future which means I'm afraid tight lending practices.

If you have lower prices combined with tight lending then there will be much less opportunity for people to speculate with house prices and create boom conditions.

With the housing market that the UK has had i.e boom and bust of the past years there is always going to be winners and losers.

Surely even you can see a more stable housing market, less prone to boom and bust is more beneficial to the majority of the population.

HAMISH_MCTAVISH

shortchanged wrote: »

No Hamish. .

No Shortchanged, a housing shortage has created the problems we have now.

And preventing millions of people from owning by restricting lending is not going to help them.

shortchanged_2

HAMISH_MCTAVISH wrote: »

No Shortchanged, a housing shortage has created the problems we have now.

And preventing millions of people from owning by restricting lending is not going to help them.

So why are there so few house sales now compared with say 2006 - 2007?

Rinoa

shortchanged wrote: »

What this country needs is lower prices with a stable and sustainable future which means I'm afraid tight lending practices.

Lower prices aren't much use to aspiring FTB's if tight lending practices prevent them from buying.