Northerners at greater risk of mortgage arrears

Graham_Devon

JonnyBravo wrote: »

I think you'll find that's actually a quite/very strong correlation.
ie one peaks as other the troughs.

Which one is causing which I'll leave you pair to debate. You'll never agree with Hamish because it doesn't suit you to, but to say there's no correlation? :rotfl:

Well it's a good job I never actually said that then isn't it Jonny! Desperate much?!

All I was proving is that house prices can fall with increasing employment etc, as Hamish stated there was no way house prices can fall without unemployment rising. I've done that.

JonnyBravo

Graham_Devon wrote: »

Well it's a good job I never actually said that then isn't it Jonny! Desperate much?!

All I was proving is that house prices can fall with increasing employment etc, as Hamish stated there was no way house prices can fall without unemployment rising. I've done that.

Indeed.
I'm sure the fact that you've found some examples (either geographically or temporally) that don't follow the hypothesis has disproved it beyond doubt.
As usual it becomes an argument of semantics.
I'm out.

Graham_Devon

JonnyBravo wrote: »

Indeed.
I'm sure the fact that you've found some examples (either geographically or temporally) that don't follow the hypothesis has disproved it beyond doubt.

Well, yes, it does.

If someone states "house prices will only fall with rising unemployment" and asks for proof otherwise. Giving that proof kinda disproves what they said.

I can see you running in to back up Hamish, but you've soon run back out. It only became semantics when the goalposts started moving and vague denominators such as "significant" started to appear into the mix.

So run along.

michaels

Good - we are in agreement.

However I do wonder what the situation would be if there was a general nationwide increase in unemployment, especially if this went hand in hand with a reduction in benefits resulting in the local population being forced to take on some of the low paid jobs that currently attract immigration and reduced payments to landlords providing accommodation paid for by the tax-payer.

Hopefully it won't happen (at least the unemployment bit) but it seems there are circumstances in which it would be possible to see a sustained fall in house prices.

HAMISH_MCTAVISH wrote: »

Not quite. Varying employment levels lead to varying levels of demand in local areas. However all this can exist within the context of an overall shortage.

There is an overall severe shortage of housing that is causing prices, on average, to remain high despite mortgage rationing, recession, unemployment, etc etc etc.

However, within the context of an overall shortage, there are still some very localised pockets of oversupply. Empty house rates in the UK vary widely by area, and they range from 1% (severe shortage) in large parts of the south, to 7% (oversupplied) in some parts of the north.

Clearly, employment is a big factor in attracting people to an area.

The demand for housing is therefore highest where the jobs exist to support people, which then enables them to pay for housing.

Conversely, the demand for housing is lowest where there are no jobs, as people tend to move away in search of work.

To give a practical example, there are around 1600 empty houses (most now derelict) in Caithness and Sutherland, on the northern tip of Scotland. And housing is indeed quite cheap up there by comparison to the south of England. But these empty houses are of no help whatsoever to the young professional looking for a house in London, or even Edinburgh or Aberdeen..... All of which have a shortage of housing, and thus higher prices.

HAMISH_MCTAVISH

michaels wrote: »

I do wonder what the situation would be if there was a general nationwide increase in unemployment,

As always, it very much depends on the scale.

If unemployment doubled nationwide, it's probably safe to say you'd see significant falls in house prices. If unemployment tripled nationwide, well then you've got an Ireland or Spain scenario. (But what sane person would want that?)

If unemployment edges up another few tenths of a percent (as is forecast), then chances are there will be little impact, as a national average.

Of course, if you live in a single employer town, and that single employer shuts down, then locally you may experience a very different picture as people move away in search of work and housing becomes oversupplied.

especially if this went hand in hand with a reduction in benefits resulting in the local population being forced to take on some of the low paid jobs that currently attract immigration and reduced payments to landlords providing accommodation paid for by the tax-payer.

What is currently forecast will have virtually no effect.

Again, you could create a scenario where all benefits nationally were cut radically or ceased to be paid, and of course it would have an impact....

But the likelyhood of that is virtually zero.

it seems there are circumstances in which it would be possible to see a sustained fall in house prices.

Yes of course there are.

It's entirely possible to construct hypothetical scenarios where very unlikely things happen and the bears get their wet dream of a crash.

For example:

• You radically cut all benefits far beyond what would ever be politically possible,
• You badly mismanage the economy and unemployment increases by hundreds of percent to absurdly high Irish, Spanish or Greek levels,
• You withdraw from Europe and lock down the borders
• You have a shrinking population and so both national infrastructure and pension obligations are abandoned,
• An asteroid hits the earth
• Plague breaks out and kills half the population

etc

But the probability of any of those circumstances occurring is virtually zero.

And most of us prefer to debate realistic scenarios, rather than absurd fantasies.

kaya64

I live in the North and houses are being repossessed like hot cakes, its very sad to see .

michaels

Any knowledge you have on the background to this would be useful. Is unemployment the key issue or is it that the loans were taken out with low LTV, Interest only or even self-cert that is causing all the problems?

Also I assume it is repossessions rather than forced sales because borrowers do not have enough equity at current prices to try and sell themselves?

kaya64 wrote: »

I live in the North and houses are being repossessed like hot cakes, its very sad to see .

SecondLegDownIsTheBigOne

Houses with low LTV mortgages, that is loans with more equity, are more likely to be repossessed than those with high LTV mortgages (borrowed to the hilt) because the banks have less or nothing to lose.

alleycat`

kaya64 wrote: »

I live in the North and houses are being repossessed like hot cakes, its very sad to see .

I live in the north (which i admit is a big area) and i'd like to know where?

I've seen plenty sold at values circa 2004/2005 prices but I don't know of any that were repossessed.