Why exactly are houses so expensive?

Loopgames

Eellogofusciouhipoppokunu wrote: »

There must have been an avalanche of reposessions in 2008 then because that's when house prices crashed. I dont remembere seeing it reported on the news?

They were available on allsop.co.uk

They had so many repossessions they started holding two day auctions.

It is the markets that is the representive of fact which doesn't always get reported for whatever reason.

HAMISH_MCTAVISH

shortchanged wrote: »

OK then.

Is that with a BoE base rate of a more normal level of 4-5%?

Sure.

So if BOE base rate was at 4.5%, then banks borrow from savers at 3.5% and lend to borrowers at 5.5%, for example.

Nothing wrong with that, so long as the economy is back in growth, employment is rising, businesses are thriving, etc.

Low rates are simply a requirement of a recessionary environment, no need for them to continue forever once the economy recovers.

HAMISH_MCTAVISH

Graham_Devon wrote: »

and then you come up with that....suggesting that increased lending will result in increased prices.

You need to learn to read.....

I said an increase in lending, combined with the current shortage, would cause an increase in prices.

If you waved your bear fairy wand and doubled the number of houses in the UK tomorrow, prices would crash. No matter how much lending you made available.

shortchanged_2

HAMISH_MCTAVISH wrote: »

Sure.

So if BOE base rate was at 4.5%, then banks borrow from savers at 3.5% and lend to borrowers at 5.5%, for example.

Nothing wrong with that, so long as the economy is back in growth, employment is rising, businesses are thriving, etc.

Low rates are simply a requirement of a recessionary environment, no need for them to continue forever once the economy recovers.

Now you are talking guff.

There is no way that if we had strict maximum 2.75 joint and 3.5 single income mortgage with interest rates at 4-5% that house prices would be anywhere near where they are now, earnings would need to be considerably higher than now.

I know you like to deny that loose credit fueled the house price boom, but at the end of the day even with supply and demand issues Hamish it's just simple mathematics.

HAMISH_MCTAVISH

shortchanged wrote: »

it's just simple mathematics.

And yet still you can't grasp the basics....

Clue: The average income of the top earning 70% (ie, house buyers) is higher than the average income of all people.

Now add in equity/deposits, and you may start to realise why I'm right...

shortchanged_2

HAMISH_MCTAVISH wrote: »

And yet still you can't grasp the basics....

Clue: The average income of the top earning 70% (ie, house buyers) is higher than the average income of all people.

Now add in equity/deposits, and you may start to realise why I'm right...

OK Hamish. How do explain the rocketing prices of the previous decade? Yes, you'll give the supply and demand argument. But how did people all of a sudden manage to be able to 'afford' to pay those prices in such a short space of time?

HAMISH_MCTAVISH

shortchanged wrote: »

OK Hamish. How do explain the rocketing prices of the previous decade? Yes, you'll give the supply and demand argument.

Well it's the main reason. So yes, I will.

But how did people all of a sudden manage to be able to 'afford' to pay those prices in such a short space of time?

What are you on about?

If a creditworthy borrower can demonstrate they have the ability to repay funds, then they should be able to borrow them.

That's the sign of a healthy lending market, and that's mostly what we had before the credit crunch.

Remember, UK lending standards had the square root of naff-all to do with the credit crunch, and it wasn't UK lending which brought down the banks.

UK banks lost 15 times more on overseas mortgage lending than they did on UK mortgage lending.

If they'd not overstretched themselves with all that foreign rubbish, they wouldn't have needed a bailout at all!

shortchanged_2

HAMISH_MCTAVISH wrote: »

Well it's the main reason. So yes, I will.



What are you on about?

If a creditworthy borrower can demonstrate they have the ability to repay funds, then they should be able to borrow them.

That's the sign of a healthy lending market, and that's mostly what we had before the credit crunch.

Remember, UK lending standards had the square root of naff-all to do with the credit crunch, and it wasn't UK lending which brought down the banks.

UK banks lost 15 times more on overseas mortgage lending than they did on UK mortgage lending.

If they'd not overstretched themselves with all that foreign rubbish, they wouldn't have needed a bailout at all!

OK Hamish. It's not difficult but lets see if you can say it. I'll give you some clues but I won't make to simple so you can try and work it out.


......................MULTIPLES..................CERT.......

INTEREST ONLY................SELF.........................................


....................LOANS........................ HIGH

......................................LIAR


Now some of those words will help you work out why house prices rocketed in the previous decade.

HAMISH_MCTAVISH

shortchanged wrote: »

OK Hamish. It's not difficult but lets see if you can say it. I'll give you some clues but I won't make to simple so you can try and work it out.


......................MULTIPLES..................CERT.......

INTEREST ONLY................SELF.........................................


....................LOANS........................ HIGH

......................................LIAR


Now some of those words will help you work out why house prices rocketed in the previous decade.

You left out the most important ones....

HOUSING

.................................SHORTAGE


RISING


................................POPULATION


INCREASING


...........................HOUSEHOLD-FORMATION

shortchanged_2

HAMISH_MCTAVISH wrote: »

You left out the most important ones....

HOUSING

.................................SHORTAGE


RISING


................................POPULATION


INCREASING


...........................HOUSEHOLD-FORMATION

So why aren't house prices continuing to boom with IO's rock bottom and the same population issues as a decade ago if not worse?