Mortgage help will release a surge of pent up demand.....

wotsthat

shortchanged wrote: »

Most people got sold the dream of ever rising house prices in the noughties and how we could just create thousands of pounds of money from free air from doing literally nothing (apart from a sprinkling of magnolia and a few twigs in a pot in a few cases).

Now reality has set in since the credit crunch and more and more people are realising that these were all just fantasy figures.

It's further, slow, progress - we've now worked out that expectations of future HPI will influence the price people are willing to pay and so will the local economy. It's a step forward because now you're acknowledging that it's not just the price tag that influences the buying decision.

People consider other things too like mortgage availability, deposit requirements, availability of supply, job security etc. etc. but if you want to keep thinking it's not complicated that's up to you.

ukcarper

shortchanged wrote: »

Or alternatively a 20% fall (which seems to be a figure being mooted about) would be a figure of £25600.

Remember carper this is MSE website and every little helps.

But that would still be to much for a large number of people.

A fall of 20% £32k with rent of £8000 a year it would only take 4 years of extra rent to wipe that out.

John_Pierpoint

wotsthat wrote: »

The data doesn't back up this theory either..

Just looked at land reg for the North-West.

August 2007 - transactions 15416 - av.price £136k

August 2012- transactions 6600 - av. price £113k

It's counter-intuitive but when house prices fall so do transaction levels.

More to it than the price tag?

It is the demand for corn that dictates the price of land.

So if the demand for houses falls their price has nothing to do but drop in price. The cost of building them has probably gone up (higher specifications especially for insulation). So it must be the price of land that is falling.

Thrugelmir

John_Pierpoint wrote: »

It is the demand for corn that dictates the price of land.

The price of corn. Depends on the weather globally. The weather is unpredictable.

Graham_Devon

wotsthat wrote: »

The data doesn't back up this theory either..

Just looked at land reg for the North-West.

August 2007 - transactions 15416 - av.price £136k

August 2012- transactions 6600 - av. price £113k

It's counter-intuitive but when house prices fall so do transaction levels.

More to it than the price tag?

2007 was the pinicle of a boom.

You are unlikely to get the same transaction levels in a normal market.

I define "normal" as one that doesn't cause catastophy in the western world.

I talked about affording a property. If you wish to talk about how many people can get a loan, disregarding affordability, based on a time when you could get a 125% interest only loan (before that bank popped because of that) then feel free. But you are discussing something other than affordability.

ukcarper

Graham_Devon wrote: »

2007 was the pinicle of a boom.

You are unlikely to get the same transaction levels in a normal market.

I define "normal" as one that doesn't cause catastophy in the western world.

Do you really beleive high house prices in the UK caused a catastrophy in the western world.

Graham_Devon

ukcarper wrote: »

Do you really beleive high house prices in the UK caused a catastrophy in the western world.

No. I never said that.

What I said was that the lending that was being undertaken caused a catastrophy.

That lending was a problem throughout the western world.

DervProf

Graham, I think the point being made (and has been made by Hamish previously) is that our property market did not cause the financial crisis.

My answer to this is that our property market "rode the wave" of the dodgy dealing going on elsewhere in the world. In fact I think I'm being generous here, because I'm sure our banks were "up to no good", or were at least "recieving stolen goods".

House prices reached the level they did, supported by "funny money". This "supply and demand" argument has been had many times before. You can explain it any way you want, but the fact is that since "funny money" has been taken away, HPI has also reduced, if not vanished in some areas.

I'll say, yet again, that yes, the Americans were the main culprits, but our banks seemed to be rather close to what was going on over there. No suprise that some of our more "aggressive" lenders (Northern Rock etc) could not survive once their supply of dodgy funds was cut off. Had Northern Rock been playing the game properly, they would not have been able to supply 125% mortgages, have grown from a very small lender into one of the UKs largest in a short space of time, and they would probably be still around today.

ukcarper

Graham_Devon wrote: »

No. I never said that.

What I said was that the lending that was being undertaken caused a catastrophy.

That lending was a problem throughout the western world.

Only after you edited your post.

wotsthat

Graham_Devon wrote: »

2007 was the pinicle of a boom.

You are unlikely to get the same transaction levels in a normal market.

I define "normal" as one that doesn't cause catastophy in the western world.

Land Reg has data from 1995. During this time as prices increased so did transactions levels - I'm not arguing about which causes which but there's a clear correlation during this time - there's an inverse relationship between price and transaction levels.

I'm not sure how the UK housing market caused catastrophe in the western world but if I was looking to define normal I'd steer away from the UK property market.

Graham_Devon wrote: »

I talked about affording a property. If you wish to talk about how many people can get a loan, disregarding affordability, based on a time when you could get a 125% interest only loan (before that bank popped because of that) then feel free. But you are discussing something other than affordability.

How many people took 125% IO loans? Was it significant?