MILLIONS of Young People WANT & NEED Higher House prices!!!

the_flying_pig

Clifford_Pope wrote: »

Here's a real example of the benefits of HPI:

In 1976 I lived in rented accommodation and possessed £1000.
I bought a small maisonette in London for £9,000, with a mortgage of £8,000.

In 1981 I sold the maisonette for £20,000 and bought a house nearby for £30,000, with a £20,000 mortgage.

In 1984 I sold the house for £60,000, and moved to the country, buying a house outright with no mortgage for £30,000.

So in 1975 I possessed £1,000 and no house. Today I have a large house with land pushing my assets into the Inheritance Tax bracket.
Am I better off?
What has caused that, if not house price inflation?

do i really need to spell it out?

mayonnaise

the_flying_pig wrote: »

do i really need to spell it out?

Nah, don't bother.

the_flying_pig

mayonnaise wrote: »

Nah, don't bother.

nah, here goes.

dear Clifford,

You reached your 'peak house', i.e. bought the most valuable house that you were ever destined to buy, in 1981. From this point onwards you became a [potential] downsizer only so, yes, HPI was potentially beneficial.

But, no, the HPI that took place between 1976 and 1981 was most likely not your friend.

By your account the total inflation between those years was 122%.

Had it not taken place then the £20k you borrowed in 1981 in order to buy two thirds of a London house would have in fact bought you one anda half London houses [since rather than costing c. £30k it’d have set you back. £13,500], or equivalently a London house that was half as big again.

In other words, had the 1976-1981 HPI not taken place your current wealth measured in property might have been about half as big again as it is now.

The 1981-1984 HPI clearly benefitted you since it enabled you to own a bigger share of your less valuable country house outright.

The 1984 – 2014 HPI has benefited you in the sense of giving you a much bigger retirement pot though presumably has made or will make buying more difficult for your kids and/or grandkids.

Though it’d have been more beneficial still if you’d hung onto that London house, & I should think far more beneficial still if you’d been able, in 1981, to buy a London house that was half as big again as you eventually bought [as you’d have been able to do absent HPI], & then subsequently hung onto it.

The maths behind this is incredibly trivial & obvious.

Cheers.

System

I'm not interested in examining the details of the intervening period, nor in regretting that with hindsight and a better strategy I could have made more money.
I am simply suggesting that I have, overall, benefitted from house price inflation.
Is that true, or not?
No need to "spell it out" - a simple Yes or No will do.

If you think the answer is No, perhaps you could suggest an alternative explanation?

the_flying_pig

Clifford_Pope wrote: »

...I am simply suggesting that I have, overall, benefitted from house price inflation.
Is that true, or not?
No need to "spell it out" - a simple Yes or No will do.

If you think the answer is No, perhaps you could suggest an alternative explanation?

that's [with respect] really daft because i have never seen anyone dispute that HPI tends to benefit downsizers or old[er] people generally. i've never argued this myself or, i think, seen anyone else anywhere argue it. have you ever seen anyone try such an argument? this thread is specifically about the impact of HPI on upsizers.

but as you say you want a simple answer, then, measured in houses [as opposed to inflation unadjusted pounds] then, yes, without that late 70s HPI you could, making the same basic moves [upsize within London in 1981, move to the country in 1984] now own a bigger and/or better house than you do now, so HPI has in this sense made you worse off.

LydiaJ

Clifford_Pope wrote: »

I'm not interested in examining the details of the intervening period, nor in regretting that with hindsight and a better strategy I could have made more money.
I am simply suggesting that I have, overall, benefitted from house price inflation.
Is that true, or not?
No need to "spell it out" - a simple Yes or No will do.

If you think the answer is No, perhaps you could suggest an alternative explanation?

Nobody is disputing the fact that people who have already bought their "peak house" benefit from HPI.

Unless you are willing to consider the different stages of your life separately, then your life as an example is not relevant to the discussion of whether HPI benefits young people in starter homes wishing to trade up to 2nd time buyer homes, which is the topic of this thread.

[X-posted with the flying pig]

the_flying_pig

LydiaJ wrote: »

Nobody is disputing the fact that people who have already bought their "peak house" benefit from HPI.

Unless you are willing to consider the different stages of your life separately, then your life as an example is not relevant to the discussion of whether HPI benefits young people in starter homes wishing to trade up to 2nd time buyer homes, which is the topic of this thread.

[X-posted with the flying pig]

yeah, the 'mistake' i made in post 74 [it wouldn't have been a mistake if debating with someone completely fair minded & who was going to respond to the post as a whole] was to include a slightly speculative point in my penultimate paragraph I]"[FONT=Calibri][SIZE=3]it’d have been more beneficial still if you’d hung onto that London house...[/SIZE][/FONT]"[/I as an aside... an interesting aside, i thought, which highlights the way in which HPI [dis]benefits you differently depending on what decision you've made, but an aside nonetheless.

doing this enabled poster to seize on this bit, that was very much a side-issue & [sloppily, unconvingly] tar everything else in my post, even the rock-solid undeniable stuff, with the same brush. a bit of a HAMISH special.

wotsthat

the_flying_pig wrote: »

that's [with respect] really daft because i have never seen anyone dispute that HPI tends to benefit downsizers or old[er] people generally. i've never argued this myself or, i think, seen anyone else anywhere argue it. have you ever seen anyone try such an argument? this thread is specifically about the impact of HPI on upsizers.

but as you say you want a simple answer, then, measured in houses [as opposed to inflation unadjusted pounds] then, yes, without that late 70s HPI you could, making the same basic moves [upsize within London in 1981, move to the country in 1984] now own a bigger and/or better house than you do now, so HPI has in this sense made you worse off.

So he's benefitted because he's an older potential downsizer, per the first paragraph, but HPI has made him worse off per the second as long as you don't use money as the measure?

kinger101

thequant wrote: »

Millions of younger homeowners are stuck in their property with no hope of moving up the housing ladder unless their current home value increases, according to a poll.
Of homeowners aged 18 to 34 who would like to buy their next home within the next two years, 71 per cent say it is unrealistic they will be able to do so, research from Santander Mortgages found.
The main barrier is the need for their home value to increase, with 63 per cent saying this. Price rises raise the equity stake of owners and give them more money to plough into their next property. The bank has dubbed those stuck as 'frustrated middle movers.'

Read more: http://www.thisismoney.co.uk/money/mortgageshome/article-2865295/Millions-younger-homeowners-struggle-ladder-two-years.html#ixzz3LLG3yygH

So 63% of people don't know how a ladder works. If you move the rungs further apart, they become more difficult to climb.

BobQ

thequant wrote: »

Millions of younger homeowners are stuck in their property with no hope of moving up the housing ladder unless their current home value increases, according to a poll.
Of homeowners aged 18 to 34 who would like to buy their next home within the next two years, 71 per cent say it is unrealistic they will be able to do so, research from Santander Mortgages found.
The main barrier is the need for their home value to increase, with 63 per cent saying this. Price rises raise the equity stake of owners and give them more money to plough into their next property. The bank has dubbed those stuck as 'frustrated middle movers.'


Read more: http://www.thisismoney.co.uk/money/mortgageshome/article-2865295/Millions-younger-homeowners-struggle-ladder-two-years.html#ixzz3LLG3yygH

This is daft. The houses they want to buy will be more expensive too.