So if cheap houses are so good for the economy....

michaels

Graham_Devon wrote: »

Isn't it obvious? It's pretty simple and follows the same reasoning as has always been.

They aren't booming because they don't have the employment around them.

Hamish has taken something that was stated a while ago to the absolute extreme, ignoring the context that was applied at the time.

If there is little employment, there is little money to pay for houses, and therefore little scope for booming house prices.

High house prices are thus the result of a healthy economy where people choose to spend a large proportion of their income on housing...and yet they are also a bad thing?

Graham_Devon

michaels wrote: »

High house prices are thus the result of a healthy economy where people choose to spend a large proportion of their income on housing...and yet they are also a bad thing?

OK, so if I turn the tables on you and question you on something you didn't state...

So you think rising house prices no matter what it takes is a good thing?

As I said in my post, theres far more to all this than one singular outcome or factor. Continually focusing in on one single factor while removing all context wins (or creates) an argument on the internet, but doesn't do much more than that.

There are various and complex reasons for house prices across the country. It's not a singular issue, as Hamish makes out.

Loughton_Monkey

Generali wrote: »

It's the Government that has lived beyond its means. Consumers just lived less within their means than usual.

A relevant distinction.

A lot of whingers are sceptical of what they see as a debt-fuelled economy. I am too if that debt is government debt, or if it is unsecured personal debt. But secured personal debt (generally in the form of buying property) is 'good' for the economy. It represents a sound personal investment that ultimately lowers an individual's costs, allowing him to share more of his wealth in the economy. In general, it transfers wealth from 'rich' to 'poor'.

Unsecured debt is much more "iffy". At the worst extreme, we have all the Wonga loans, and maxed out credit card merchants, which achieves nothing except making the poor poorer by transferring their tiny wealth to the rich. At the better end might be a few small business start-ups than can ultimately be good for the economy.

This is why HTB was such a canny move. The UK cannot turn around by Keynsian economics because we are bankrupt. But to stimulate a secured-debt led recovery, at little or no cost to the taxpayer is a stroke of genius.

chucky

Graham_Devon wrote: »

But the majority of rising prices are to do with funding for lending and indeed, help to buy has raised confidence and the expectation of price rises.

And as Hamish has said before, the expectation of price rises pushes prices up.

That's a little bit different than the usual rants of Help to Buy propping up house prices.

IveSeenTheLight

Graham_Devon wrote: »

Those on strike were not hell bent on destroying the industries, but I would assume you would rather they worked purely to throw some crumbs to their children in place of a normal meal at tea time. Afterall, they couldn't afford much more, hence why going on strike.

I recall as an Apprentice, working at a company that went on strike.
The offer they received was a 10% pay rise which would be in place for 2 years.
This was in 1992 and I couldn't understand why people wanted more, especially as it was higher than inflation.

TruckerT

chucky wrote: »

How different would that have been 50 pr 100 years ago?

Could everyone buy property then?

50-100 years ago - no ,they couldn't. But suddenly, 30 years ago, council houses were available at a fraction of their true value, and affordable by the masses. Unfortunately, and predictably, the councils rapidly sold out of stock!

michaels wrote: »

High house prices are thus the result of a healthy economy where people choose to spend a large proportion of their income on housing...and yet they are also a bad thing?

High house prices used to be the result of easy finance and then they became the result of a limited supply. We now seem to be about to enter a phase of easy finance AND limited supply!

Loughton_Monkey wrote: »

A relevant distinction.

A lot of whingers are sceptical of what they see as a debt-fuelled economy. I am too if that debt is government debt, or if it is unsecured personal debt. But secured personal debt (generally in the form of buying property) is 'good' for the economy. It represents a sound personal investment that ultimately lowers an individual's costs, allowing him to share more of his wealth in the economy. In general, it transfers wealth from 'rich' to 'poor'.

Unsecured debt is much more "iffy". At the worst extreme, we have all the Wonga loans, and maxed out credit card merchants, which achieves nothing except making the poor poorer by transferring their tiny wealth to the rich. At the better end might be a few small business start-ups than can ultimately be good for the economy.

This is why HTB was such a canny move. The UK cannot turn around by Keynsian economics because we are bankrupt. But to stimulate a secured-debt led recovery, at little or no cost to the taxpayer is a stroke of genius.

It remains to be seen how much the taxpayer will be required to bear the cost of a new house price spiral. It seems that the banks have learned their lesson, and are no longer willing to take the gamble on their own - the HTB scheme is a kind of pre-nuptial agreement whereby the taxpayer agrees in advance to buy out the banks in the event of a relationship breakdown - the house-buyer (I hesitate to use the word 'home-owner') secures their debt against the property, and the bank secures its risk against the taxpayer.

TruckerT

John_Pierpoint

IveSeenTheLight wrote: »

I recall as an Apprentice, working at a company that went on strike.
The offer they received was a 10% pay rise which would be in place for 2 years.
This was in 1992 and I couldn't understand why people wanted more, especially as it was higher than inflation.

It is all about differentials. "We are the sort of family that can afford a BMW not a Ford" that sort of thing, in an industry where the employees do have a hard to acquire skill.

Alternatively it may be a group of workers who have the management by the "short and curlys".

For example the not very attractive job of insulating a power-station could in theory be a minimum wage job; but a united work force of "laggers" sticking together in an aggressive union, knows that a fortune has been invested in the project so far and a ransom can be extracted for getting the job completed on time.

IveSeenTheLight

John_Pierpoint wrote: »

It is all about differentials. "We are the sort of family that can afford a BMW not a Ford" that sort of thing, in an industry where the employees do have a hard to acquire skill.

Alternatively it may be a group of workers who have the management by the "short and curlys".

For example the not very attractive job of insulating a power-station could in theory be a minimum wage job; but a united work force of "laggers" sticking together in an aggressive union, knows that a fortune has been invested in the project so far and a ransom can be extracted for getting the job completed on time.

I agree.
It's certainly not a foregone summation that it's purely because they can only afford to feed their children crumbs, let alone why they would simply throw such a precious resource on the table.

Kennyboy66

John_Pierpoint wrote: »

It was ever thus, in 1965 I was pounding the streets of Vancouver, looking for a job. I got into conversation with a guy grafting in a hole - he was a redundant miner from the boom mining county of Cornwall.

Blimey, how old was he, 128 years old ?

I don't think Cornwall was booming anytime in the 20th Century.

Back in the 1870's up to 16,000 people a year emigrated from Cornwall due to mining decline.

Kennyboy66

chucknorris wrote: »

So what is the answer to Hamish's question:

Why aren't the places with the cheapest land and house prices now the places booming?

Because normally its location & the economy that leads house prices rather than house prices leading the economy.

Why would anyone think otherwise is beyond me.