What Makes Someone Cheer On And Support House Price Inflation?

shortchanged_2

HAMISH_MCTAVISH wrote: »

No, it is a lack of lending.

Banks are lending 100% of the funds they have available to lend.

If prices fell by 10%, then they could only lend 10% more mortgages. A few thousand more a month.

But they need to be lending 200% to 300% more mortgages in order for sales volumes to return to normal levels, let alone to take care of pent-up demand. So another hundred thousand a month at least.

If everyone dropped their prices by 10%, or 20%, or 30%, there would only be a very small increase in numbers of buyers. They wouldn't triple, because the banks simply don't have the ,money to lend.

Equally, if a million FTB's approached their banks this year with a spotless credit history and a 25% deposit, the banks would have to change the goalposts yet again to deny mortgages to 65% of them, as they simply don't have the money to lend.

Until banks start lending more, then the majority of potential FTB-s will remain excluded form the housing market. And lowering prices won't change that fact in any meaningful way.

All this does Hamish is explain that house prices are still vastly overpriced, particularly houses further up the chain. This is why we don't have a functioning market at the moment because people can't climb the ladder because the next rung is far too big. As I stated earlier, houses that are keenly priced sell, those that aren't don't.

HAMISH_MCTAVISH

shortchanged wrote: »

All this does Hamish is explain that house prices are still vastly overpriced, particularly houses further up the chain. This is why we don't have a functioning market at the moment because people can't climb the ladder because the next rung is far too big. As I stated earlier, houses that are keenly priced sell, those that aren't don't.

Wow, you really don't get it at all.

If vendors dropped their prices by 20%, and banks were able to issue 20% more mortgages, how does that increase the number of mortgages issued from the 45K a month we have today, to the 120K to 150K a month we need to have?

shortchanged_2

HAMISH_MCTAVISH wrote: »

Wow, you really don't get it at all.

If vendors dropped their prices by 20%, and banks were able to issue 20% more mortgages, how does that increase the number of mortgages issued from the 45K a month we have today, to the 120K to 150K a month we need to have?

Has it occurred to you that the lack of mortgages is because the banks are not willing to lend the amounts that people are asking for houses.

It isn't 2007 any more Hamish. Banks are not very willing to lend 5+ times income mortgages now, that is why the housing market is not functioning.

While I accept your argument about high deposits and I think 10%+ deposits are fine. I still think there will be a void because simply the banks are not willing to lend the amounts that people now want to sell houses for and you are just arguing for a return to loose lending.

HAMISH_MCTAVISH

shortchanged wrote: »

Has it occurred to you that the lack of mortgages is because the banks are not willing to lend the amounts that people are asking for houses.

No, it's because the banks simply don't have the money to lend.

Thanks to the monumental failings of the ratings agencies, and the US sub-prime debacle, the global wholesale money markets are starved of credit.



It wouldn't make the slightest difference if a million high earning FTB-s with spotless credit and 25% deposits showed up at their banks this year.

The banks have no money to lend.

The banks would still have to move the goalposts and find a way to reject 65% or so of them.

Jimmy_31

HAMISH_MCTAVISH wrote: »

No, it's because the banks simply don't have the money to lend.

Thanks to the monumental failings of the ratings agencies, and the US sub-prime debacle, the global wholesale money markets are starved of credit.



It wouldn't make the slightest difference if a million high earning FTB-s with spotless credit and 25% deposits showed up at their banks this year.

The banks have no money to lend.

The banks would still have to move the goalposts and find a way to reject 65% or so of them.

Well if the banks have no money to lend, house prices are only going to go one way, and it aint your way:)

shortchanged_2

HAMISH_MCTAVISH wrote: »

No, it's because the banks simply don't have the money to lend.

Thanks to the monumental failings of the ratings agencies, and the US sub-prime debacle, the global wholesale money markets are starved of credit.



It wouldn't make the slightest difference if a million high earning FTB-s with spotless credit and 25% deposits showed up at their banks this year.

The banks have no money to lend.

The banks would still have to move the goalposts and find a way to reject 65% or so of them.

Oh well I suppose all this means is that it should all eventually return to normal levels if the credit fueled boom tap has been turned off.

homelessskilledworker

HAMISH_MCTAVISH wrote: »

Wow, you really don't get it at all.

If vendors dropped their prices by 20%, and banks were able to issue 20% more mortgages, how does that increase the number of mortgages issued from the 45K a month we have today, to the 120K to 150K a month we need to have?

No Hamish, you really don't get it!!

If prices were to drop 20% then for a start the Banks would maybe start feeling that they were lending against an asset that was approaching real value rather than than the bubble price it is at now.

And I would include myself in that way of thinking, a 20% fall right now would arouse my taste buds, a 30% to 40% fall would make property an attractive purchase.

homelessskilledworker

HAMISH_MCTAVISH wrote: »

No, it's because the banks simply don't have the money to lend.

Thanks to the monumental failings of the ratings agencies, and the US sub-prime debacle, the global wholesale money markets are starved of credit.



It wouldn't make the slightest difference if a million high earning FTB-s with spotless credit and 25% deposits showed up at their banks this year.

The banks have no money to lend.

The banks would still have to move the goalposts and find a way to reject 65% or so of them.

Hamish I don't think you are a millions miles away from having the same thought pattern as some of the more articulate property bears.
With what you are saying about certain difficulties(and I agree) than in some form or other things will give, and if not financially then socially/politically.

pineapple

macaque wrote: »

It appears to be lost on them that house price inflation destroys jobs and forces genuine honest hard-working families into rent/mortgage poverty each and every day, and could ultimately affect them themselves when, hopefully, they themselves lose their job.

Perhaps it's a sad indictment of our age but I think self interest holds more sway than the big picture.
An investor in property or land (from the little guy to the big player) won't welcome a fall in house prices.
Someone who's only pension was their home and who planned to downsize on retirement won't particularly welcome a fall either.
Neither will those with negative equity.
But the first time buyer who wants to get a foothold on the first rung will be understandably be cheering on a price fall.
As indeed will the new long term investor - some of whom are quite happy to buy up the homes of the dispossessed.
Depends where you stand.

HAMISH_MCTAVISH

homelessskilledworker wrote: »

Hamish I don't think you are a millions miles away from having the same thought pattern as some of the more articulate property bears.

We see the same economic reality.

We disagree about the causes and most probable outcomes.

With what you are saying about certain difficulties(and I agree) than in some form or other things will give, and if not financially then socially/politically.

My money is on politically.

There's an election coming, and another 3 years of a dysfunctional housing market will not be tolerable for a party seeking re-election.