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Debate House Prices


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When did house-prices become a crucial indicator of economic well-being?

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Comments

  • John424
    John424 Posts: 143 Forumite
    House price increases don't increase the nation's wealth, simply transfers wealth from the younger to the older. I suspect it's all about confidence isn't it? A low LTV unlocks better mortgage deals etc and means the house can be a 'cash point'?
  • CLAPTON
    CLAPTON Posts: 41,865 Forumite
    10,000 Posts Combo Breaker
    John424 wrote: »
    House price increases don't increase the nation's wealth, simply transfers wealth from the younger to the older. I suspect it's all about confidence isn't it? A low LTV unlocks better mortgage deals etc and means the house can be a 'cash point'?


    is that so?

    why do you say that?
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  • John424 wrote: »
    House price increases don't increase the nation's wealth, simply transfers wealth from the younger to the older. I suspect it's all about confidence isn't it? A low LTV unlocks better mortgage deals etc and means the house can be a 'cash point'?

    CLAPTON wrote: »
    is that so?

    why do you say that?


    Up to a point he's right.

    It's very easy to confuse wealth creation with wealth transfer.

    You have £100K in the bank. I have a house "worth" £100K. You buy it for £100K and on paper, neither of us is more or less 'wealthy'. The house rises in value to £110K, so you think you are now £10K wealthier. On paper, you are, but as we know, the next day could see it worth only £90K.....

    But compare this with, say, buying a luxury car.

    You have £100K in the bank. I am a car dealer with a spanking new AMG for £100K. Together we are 'worth' £200K. You buy the car and drive it home. As you know, it's only 'worth' £80K as second hand, and after 5 years, it's probably only worth £20K. Together, we are then worth only £120K. Where has the £80K gone?

    Do we conclude from this that the existence of a car industry destroys wealth?

    Answers on a postcard.......
  • CLAPTON
    CLAPTON Posts: 41,865 Forumite
    10,000 Posts Combo Breaker
    yes, all a bit more complicated isn't it.

    wealth and income

    wealth as a guarantor of business lending and genuine wealth and job creation

    wealth inherited by the children

    not quite as simple as a transfer from the young to the old

    young get old
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  • black_taxi_2
    black_taxi_2 Posts: 1,816 Forumite
    Debt-free and Proud! Mortgage-free Glee!
    the only person who thinks house prices are crucial indicator of economic well being is the chancellor so were all f**ked
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  • TruckerT
    TruckerT Posts: 1,714 Forumite
    Surely under the RTB scheme, many "working class" people have been afforded the luxury of being homeowners.

    Under the RTB scheme, many working class people were given huge discounts on the purchase price of their house. These days, they are lucky if they qualify for housing benefit on their rent.

    What's changed?

    TruckerT
    According to Clapton, I am a totally ignorant idiot.
  • House prices became indicator of economic well-being when Members of Parliament started using their position and expenses to build property portfolios.
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