Nationwide Feb:+9.4% YoY

CLAPTON

Graham_Devon wrote: »

Are property prices affordable? Of course, to some, but in general?

If so, why do we need help to buy and all the other schemes put before it?

Surely if prices were affordable, you wouldn't need schemes enabling people (by various measures) to afford them?

If all houses for sale get sold, then, in general houses are affordable.

For some people houses are not affordable; that is so.

Help to buy for new property hopefully was intended to stimulate the new build housing market and of course as a political gimmick.

Second phase of HTB is 100% a political gimmick and will of course simply increase the price of houses and so the same number of people will be unable to afford them as it won't increase the supply significantly.

Basically supply and demand determine the price:
if the government makes more money available of existing stock then the price rises as there is no significant increase in supply.

We need to build more houses if we want more people to be able to buy houses.

CLAPTON

TickersPlaysPop wrote: »

Re: mortgage term of over 25% and how many people.....

I've just looked at lot of official house lending information available online FCA, BSA, Bank of England etc

I couldn't find statistics for the loan term.... I think we need to trend and track this parameter over time. If it becomes part of the routine figures reported regularly, there will be more motivation to control this aspect of the housing market.

If you have no figures for this over 30 years long mortgages, why are you sure it's high and growing?

thequant

92203 wrote: »

I agree with everything you've written in this post Hamish, however what I was objecting to is TheQuant's stated desire that he would like to see measures put in place to drive prices higher, and for people to be forced to live in cramped conditions to support this situation.

The thing is, this is actually happening now.


All those young FTB's in their starter one-bed flats who have yet to pay down the negative-equity are going to be bringing up their children in those properties.


Longer term mortgages ? I read an article recently that the average term on new mortgages is now in excess of 25 years and is increasing.


FTB's buying now are buying properties which they will likely end their days in (or equivalent)


The rungs on the ladder are to far apart now, takes too long to pay off the first step, especially without 70's style hyper-inflation to rescue people.


Different this time ? Yes it is, everything has changed and ultimately comes down to what Hamish is saying, there is not enough supply.


You think ultra high density living will never happen ? Look at Hong Kong.


Inter-generational mortgages ? look at Japan.


This is going to be London in our dystopian future.


You either embrace it and cash in, or you don't and condemn future generations of your family to living in rabbit hutches.


Meanwhile in the past couple of days, my house has risen by £300 if recent trends are to go by.


Ker...CHING !!!

TickersPlaysPop

I can see what you are all saying now....

Without the supply and with available credit, the housing market will go up.... there is no way to stop it, so the only way for people to borrow is to borrow for much longer terms to keep the mthly payments affordable. Also standards will fall with respect to space and quality of property. Example ..... Right now my sister is 36, married and she has 1 yr old twins and lives in a 3rd floor new 2 bed apartment right next to the Thames at Greenhithe. There is no prospect of her being able to move.

I think it is seriously negligent of our society to allow banks to loan for that length of time. Surely it is better to put a cap on term length and force people to live in slightly less spacious properties in slightly less desirable areas? It will surely stop the market increasing so quickly? A property market with inter generational loans sounds hideous and a situation that has been allowed to get out of control, it will surely put people and families into even more risk of financial ruin? The next step at that point would be for housing to become institutional where only large organisations are able to own property and most people would then pay rent.

The banks stopped giving loans to building companies, that is why the building stopped.... Example, my dad a life time in the building trade.... With a lot of invested money in building.... Stuck over the past few years with no real cash flow with his cash stuck in commercial property. Why did the banks suddenly stop lending to builders? Because the banks sucked even last drop out of the world housing market and then some more... Well you all know the details of that debate.

Banks and the housing market surely need to be boxed in with hard and clear limits on what is legally and morally allowed?

The problem is, I'm guessing the banks will only start lending again to builders once the housing market has more value in it and hence more of a buffer for a guaranteed return on their investment?.... So it seems like a catch 22?

thequant

TickersPlaysPop wrote: »

I can see what you are all saying now....

Without the supply and with available credit, the housing market will go up.... there is no way to stop it, so the only way for people to borrow is to borrow for much longer terms to keep the mthly payments affordable. Also standards will fall with respect to space and quality of property. Example ..... Right now my sister is 36, married and she has 1 yr old twins and lives in a 3rd floor new 2 bed apartment right next to the Thames at Greenhithe. There is no prospect of her being able to move.

Got it in one.


If we had perpetual inter-generational mortgages, then the mortgage would be interest free.


An average person on £25k salary has a take home salary of £20k


It's not unusual (especially in London) to spend 50% of your take home pay on housing.


That gives £10k a year to service a mortgage.


However most people buying now are dual earners, that gives £20k a year to service the mortgage.


Now lets assume a mortgage rate of 2% becomes the norm, on an interest free mortgage that could service a mortgage of £1,000,000 !!!!


When supply is restricted, then any loosing of credit increases prices at all levels. Because the end result is that the same people buy, they just all have increased purchasing power which pushes up the prices for themselves.


You can see from my example above that if we lived in a world outlined above that we could easily see the average house price pass the million pound mark.

TickersPlaysPop

That is truly a terrible vision of the future for this country. So I guess we just need enough building but not too much.... Also rules and regulation on house lending, and estate agents.

During the last bubble was building at a high enough rate? If it was.... I guess the relaxed lending criteria caused that one?

So.... The cash rich businesses who have been stock piling cash since 2008.... Why have they not spent it on building? I suppose building can now only be based on real money and not borrowed? Who could be motivated to build? We also need infrastructure for more dwellings... Where is that money going to come from?!

cells

floridaman wrote: »

House prices must drop for the greater good.

That in itself does not fix the problem

The problem is that there isn't sufficient new supply to allow the occupancy rate to fall by 0.1 per decade which has been the norm everywhere for all of modern history. Even in the uk the occupancy rate has always fallen (except in 2001-2011) wprse yet it seems the occupancy rate will increase from 2011-2021 in the uk a historic first.

Even if houses cost just a fiver you qould have the supply problem. In the case of houses for a fiver no one would move no one would sell to any 'outsider'.

It would be a game of musical chairs with the ones not able to find chairs relegated to sleeping in tents and their cars

cells

TickersPlaysPop wrote: »

That is truly a terrible vision of the future for this country. So I guess we just need enough building but not too much.... Also rules and regulation on house lending, and estate agents.

During the last bubble was building at a high enough rate? If it was.... I guess the relaxed lending criteria caused that one?

So.... The cash rich businesses who have been stock piling cash since 2008.... Why have they not spent it on building? I suppose building can now only be based on real money and not borrowed? Who could be motivated to build? We also need infrastructure for more dwellings... Where is that money going to come from?!

I hate people like you. The defeatist nothing is possible breed.

The uk is a modern nation with lots of spare capacity both people and machines and capital enough to construct a million new homes a year if the stupid councils did not get in the way

france in 2011 built 421k new homes the UK...closer to 130k
When did the french become the nation that does and the UK the nation that withers

cells

thequant wrote: »

Got it in one.

If we had perpetual inter-generational mortgages, then the mortgage would be interest free.

An average person on £25k salary has a take home salary of £20k

It's not unusual (especially in London) to spend 50% of your take home pay on housing.

That gives £10k a year to service a mortgage.

However most people buying now are dual earners, that gives £20k a year to service the mortgage.

Now lets assume a mortgage rate of 2% becomes the norm, on an interest free mortgage that could service a mortgage of £1,000,000 !!!!

When supply is restricted, then any loosing of credit increases prices at all levels. Because the end result is that the same people buy, they just all have increased purchasing power which pushes up the prices for themselves.

You can see from my example above that if we lived in a world outlined above that we could easily see the average house price pass the million pound mark.

Not that simple

with a need to build 400-500k homes and a supply closer to 130k the market is doing what has to be done to avoid homelessness.

Owner occupied homes are being converted to rentals (as you can squeeze more into a rental) and there are more people living at home with parents or in HMOs than ever.

I would estimate some 0.75 to 1 million more people PER year EVERY year are living in rental homes. This means the voting power of renters is growing while that of NIMBYs is shrinking. There will come a time qhen the government will HAVE TO ALLOW 500k new builds a year

however that point could well be 20 years away

grizzly1911

cells wrote: »

When did the french become the nation that does and the UK the nation that withers

I don't know the answer but are the French as heavily dependent on a HPI to support their heavily finance based economy and in turn the state.

Are their debt levels per capita, both public and private, at the same levels?

Do they have as ma many German cars on their roads?