How many people should we prevent from buying a house?

GDB2222

I once worked with a very nice but rather odd bloke who did some research using the data from the General Household Survey. He found that there was a strong positive correlation between the number of children a family had and the number of bedrooms in their house. So far, so good, no surprises there. What was surprising was his conclusion, namely that, if the government insisted that larger houses were built, family sizes would grow to utilise the extra bedrooms.

I am wondering whether he is a relative of Hamish?

DpchMd

shortchanged wrote: »

I'll tell you what Hamish why don't sellers reduce their prices a lot more and then we'll see how many are locked out of the market.

You blame restricted lending and I say house prices are too high.

If house prices were cheaper, more people would be able to afford them so demand would go up.

As demand increases, seller's will put their house prices up.

shortchanged wrote: »

Do you seriously believe that the level of sales would be as low as they are now if house prices were say 50% cheaper?

Yes, we could only have a sustained 50% reduction in house prices if their was an equal reduction in buying power.

You should be careful what you wish for: In my opinion, a 50% nominal fall in house prices is only feasible during a significant economic downturn and none of us want that.

shortchanged_2

DpchMd wrote: »

If house prices were cheaper, more people would be able to afford them so demand would go up.

As demand increases, seller's will put their house prices up.

It depends if there is the means to fund the demand. If the banks keep a pretty strict lid on lending then where will people find the finances? It was the loose credit practices that fuelled the last boom, it is now the lack of credit that is putting downwards pressure on houseprices. It is only the low interest rates and other government props that have stopped the housing market from falling further.

And yes I accept house prices will go up. As I have stated before there is nothing wrong with HPI if it is at a controlled level. i.e more in line with general inflation/wage inflation. The problem being where we are now is that house prices are still out of sync with earnings and need to correct downwards BEFORE they start rising again in a more controlled manner.

Some people call it a crash, I would call it a correction from the ridiculous levels of the previous decade.

shortchanged_2

DpchMd wrote: »

If house prices were cheaper, more people would be able to afford them so demand would go up.

As demand increases, seller's will put their house prices up.

So according to Hamish's argument does that mean that builders would build more houses as well?

abaxas

Remove all help.

Let houses crash.

Magically people who can afford to buy, can!

Emy1501

I suspect most people want affordable and substainable lending practises. The FSA have done their research and have suggested lending practises which in the main part are more lenient than many lenders are practising at the moment.

As we keep being told house buying is not for everyone and therefore anyone who does not fit into the banks lending criteria should not be able to buy.

I suspect that in reality the government should be looking into more long term affordable renting. Maybe looking at other parts of Europe where where renter have much better rights than they have here.

wotsthat

Emy1501 wrote: »

I suspect that in reality the government should be looking into more long term affordable renting. Maybe looking at other parts of Europe where where renter have much better rights than they have here.

Think about the areas near you that are pleasant and somewhere you'd like to live.

Now think about the areas near you that are horrible and you don't want to live.

I'd hazard a guess that the nice areas have a high number of houses owned by the occupiers and the horrible areas cater more for the rental market.

This isn't a dig at renters but higher levels of owner occupiers correlate with nicer places to live - whether there's a causal link is open to debate. Not everyone can buy of course but the government should be encouraging longer term sustainable ownership and not rental.

GDB2222

I agree with the idea that owner occupancy is a "good thing". However, if we want lots more houses, we have as a nation to make some decisions. Are we prepared to release more farmland for housing? If we are, that could bring the cost of housing right down, as at the moment land is the largest element in the cost of most houses.

If the cost of housing comes down, that could cause significant difficulties for the banks that have enormous loans secured on housing. presumably, nobody in the nation wants that.

HAMISH_MCTAVISH

Second page. Still no response.

How many people should be prevented from buying houses so that prices remain at current low levels?

Is it acceptable to prevent a million people from buying to prevent 17,000 repossessions?

Because lets be clear, the posters who want lending to remain restricted are actually wanting fewer people to be able to buy houses.

And by artificially limiting demand to exclude a million people that could otherwise afford to buy, changing the supply/demand balance that sets pricing.

ILW

Seems that a 10% deposit and a decent credit file should get you a mortgage. Where is the problem?