Housing allocation

HAMISH_MCTAVISH

DervProf wrote: »

I wish to see lower prices, but realise that as things stand there isn't much chance that prices will go much lower.

A reasonable assumption.

With this in mind, I would like to see properties being allocated to those that can truly afford them. This can be achieved by responsible lending.

An interesting perspective.

I know you are quite capable of being objective and reasonable, and I suspect deep down inside you accept banks could lend responsibly to an awful lot more people than they do today, if they weren't so short of cash to lend.

But then we get back to housing allocation again, as there just aren't enough houses to go around were banks to resume prudent, sensible and historically normal lending.

OK, transactions are low at the moment due to deposit requirements. Those that can, or will be able to truly afford property will be saving for a deposit right now. Those that can't, won't be able to buy. I don't want to see the banks relaxing lending criteria too much, as it can put themselves, as well as their customers (and the taxpayer) at risk.

So what happens if, as some of us suspect, there is a big surge of applicants with big deposits at some point in the next couple of years as they've had enough time to save by then?

There would seem to be only two options.

1. The banks manage to obtain more funding by then to increase lending. In which case house prices rise.

2. The banks are forced to move the goalposts yet again to continue rationing limited funds. In which case house prices remain stable, but only because an awful lot more people are prevented from buying houses.

DervProf

HAMISH_MCTAVISH wrote: »

I know you are quite capable of being objective and reasonable, and I suspect deep down inside you accept banks could lend responsibly to an awful lot more people than they do today, if they weren't so short of cash to lend.

I do accept that.

As you say, the banks are short of cash to lend, and therefore (as Lord Sugar mentions in the article I highlighted earlier) it is wrong to critisise them for not lending, when the reason for their current problems is for lending money they didn't really have.

DervProf

HAMISH_MCTAVISH wrote: »

There would seem to be only two options.

Three......

3. The banks manage to obtain more funding by then to increase lending. The government introduce an effective scheme to direct a good proportion of this lending to fund house building. House prices remain stable and property shortage is not increased as much as it would be if lending were distributed "randomly".

I think that's probably the best practical outcome.

Emy1501

HAMISH_MCTAVISH wrote: »

A reasonable assumption.




An interesting perspective.

I know you are quite capable of being objective and reasonable, and I suspect deep down inside you accept banks could lend responsibly to an awful lot more people than they do today, if they weren't so short of cash to lend.

But then we get back to housing allocation again, as there just aren't enough houses to go around were banks to resume prudent, sensible and historically normal lending.



So what happens if, as some of us suspect, there is a big surge of applicants with big deposits at some point in the next couple of years as they've had enough time to save by then?

There would seem to be only two options.

1. The banks manage to obtain more funding by then to increase lending. In which case house prices rise.

2. The banks are forced to move the goalposts yet again to continue rationing limited funds. In which case house prices remain stable, but only because an awful lot more people are prevented from buying houses.

Your forgetting affordability. Read some of Conards posts or visit the mortgage board. There is only so much a bank will lend regardless of deposit.

I suspect house prices will rise in nominal terms but fall in real terms. Once people save for deposits then builders can build again. The governments new buy scheme shows that the funds from lenders are there but the deposits are not. Once people can save a 15-20% deposit the lenders will lend and people can build new builds. It will take time probably 5 years or so but the market will move again but regulations will keep in check with wage inflation aprt from central London and other sort after areas when wealthy investors will have an effect.

ruggedtoast

HAMISH_MCTAVISH wrote: »

So you can't answer the question then.

Once again, if not through price, how do we allocate houses?

How about we allocate them based on how many tens of thousands of circular one sided posts the applicant has made on the Money Saving Expert Housing Debate board?

You could get a free bungalow thrown in for every 100th Daily Express article you've linked to; by that reckoning you should be entitled to most of Leicestershire by now.

The current price of property is kept artificially high by a range of government mandated market distortions, New Buy (or whatever Orwellian phrase they are using) being the most recent.

Maybe we should have a new thread called:

"What would the average house price be if all the policies that have been put in place to stop HAMISH_MCTAVISH (and people like him) from being repossessed were withdrawn all at once?"

wotsthat

ruggedtoast wrote: »

Maybe we should have a new thread called:

"What would the average house price be if all the policies that have been put in place to stop HAMISH_MCTAVISH (and people like him) from being repossessed were withdrawn all at once?"

In an improving economy I'd say a couple of hundred quid off.

It's irrelevant. These policies aren't going to be withdrawn all at once if at all. That's the absolute reality. You got a plan B for reducing house prices?

toby3000

morag1202 wrote: »

Don't know how old you are but will you want to share with 3 others forever? even when you have a partner and kid?

While I see that as a fair point, I'm 27, and the people in the house are between 26-31, so we're in the age range where people on here seem to assume that we're desperate to live by ourselves. I'd have thought people marrying/reproducing later in life should ease things a bit (and personally I don't want children, so it doesn't affect me, but I see that it wouldn't be practical with children).

I had an economics lecturer who said (only in passing) that the demand for housing was pretty much limitless: for a lot of people, if prices were lower they'd just buy a bigger house, or a second house or whatever.

The government could attempt to reduce demand through taxation though, I suppose.

ILW

toby3000 wrote: »

While I see that as a fair point, I'm 27, and the people in the house are between 26-31, so we're in the age range where people on here seem to assume that we're desperate to live by ourselves. I'd have thought people marrying/reproducing later in life should ease things a bit (and personally I don't want children, so it doesn't affect me, but I see that it wouldn't be practical with children).

I had an economics lecturer who said (only in passing) that the demand for housing was pretty much limitless: for a lot of people, if prices were lower they'd just buy a bigger house, or a second house or whatever.

The government could attempt to reduce demand through taxation though, I suppose.

High taxation on any second or subsequent homes (in this country) would free up the market and stop the drift of ownership to those that already have.

toby3000

ILW wrote: »

High taxation on any second or subsequent homes (in this country) would free up the market and stop the drift of ownership to those that already have.

Or capital gains on all house sales? Or looking on Council Tax (and at very least re-valuing it)

Graham_Devon

HAMISH_MCTAVISH wrote: »

In that sense, the market is working as it is supposed to

Howcome that doesn't apply to banks Hamish?

And prices do not allocate housing per se.

You also have to factor in rent and housing benefit. if housing benefit was removed tommorow, house prices would fall of a cliff tommorow.

Hence it's not only price which allocates housing.