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Debate House Prices
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Is there an exit strategy?
Comments
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MacMickster wrote: »When the lenders themselves are warning that this scheme will distort the housing market then they need to be taken seriously.
Not only do high house prices damage the UK economy, but if lenders believe that there is a bubble, destined to burst when this scheme comes to an end, then they are likely to want ever higher deposits from borrowers in order to protect themselves.
The UK government should be managing a controlled deflation of the housing market, not inflating it further.
Yes - it's an interesting scenario and this was also mentioned on newsnight a couple of weeks ago.
If the banks fear that a bubble is forming thanks to government policy, they will reign in lending to protect themselves for anyone borrowing outside of the government schemes.
So the government scheme could actually be reducing lending to those who would have got it beforehand, but increasing the very lending which increases the chances of manipulation distorting the market.
Strange scenario we are in if government intervention is increasing the risk of a housing bubble and all the problems that come with that while putting those who could have got a mortgage on their own two feet at a disadvantage - as the lenders reign back in order to protect themselves from government interference.0 -
I think you misunderestimate the problem.
Too few houses have been built in the UK since the 60s and since the disastrous failure that is the Green Belt in and around London.HAMISH_MCTAVISH wrote: »Indeed.
A decade is probably quite the underestimation.
But the current shortage is a million or so houses, and it's worsening at the rate of 150,000 houses a year.
From around 1979 the problem was exacerbated and private housebuilding has simply never filled the void.
You can prop the private sector it is simply will not meet demand. The fat in the system has already been drained."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
Is their an argument that supply is being partly limited by the ultra low rates?0
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what will probably happen is the government will sell the debt to a third party, recover the tax payer investment, leaving borrowers at the mercy of a profiteering company, meaning they get into a real mess later
Did something similar happen with student loans? I don't know entirely, but I know colleagues who took out loans in good faith are now in a position where they only pay back interest each month due to rate rises (not sure who manages these), without any capital repayments, meaning a potential life time of debt
Until it gets written off in the case of "official" student loan debt."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
Is their an argument that supply is being partly limited by the ultra low rates?
Given that banks have jacked up their margins to near record highs, I don't think so.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
Is their an argument that supply is being partly limited by the ultra low rates?
The fact that people want to exit La La land and want to operate in perceived normality?"If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
Is their an argument that supply is being partly limited by the ultra low rates?
I reckon so
I cant imagine low rates are offering much to intermediaries by way of return. Why expose yourself to significant risk by lending out high mortgages and make minimal amounts? There are other areas they can invest in0 -
Is their an argument that supply is being partly
limited by the ultra low rates?
There are various arguments here. But the argument that you have to get banks lending in order to increase supply has been proven wrong. lending went crazy, and we didn't get a mass of houses built, we still built way below requirements.
Lending just fuels house prices.
However, restricting building does 2 things. Firstly it increases the asset price of the actual house. Secondly it increases the price of land as that land becomes worth more thanks to the assets that can be built on it being worth more.
Add in government lending and house builders don't have to sell lots of houses to make a profit. Their risk has been greatly reduced at the possible expense of the taxpayer. Meanwhile, limiting supply increases their own asset prices of their built houses and secondly increases the value of their land banks.
Limiting supply is a win win situation for builders. Increases the value of their land banks. Increase the value of any houses built. Increases the chances of further risk easing on their side when the government steps in again.
Why would builders therefore increase supply when doing the opposite works in their favour?0 -
How about charging council tax at point of planning permission?0
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Graham_Devon wrote: »the argument that you have to get banks lending in order to increase supply has been proven wrong.
Nonsense.
Building increased every year from 2001 to 2007, and only fell off a cliff, to 100 year lows, when lending crashed.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0
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