When will London burst ?

ChopperST

And you would think the majority of people would have some sort of contingency for these risks when carrying a large debt, emergency savings, life cover etc.

lisyloo

Some do but you can't insure for divorce etc.

cells

MARTYM8` wrote: »

The crux is your latter point - the availability of credit is what drives house prices outside central London and not the availability of buyers or sellers or houses.

When banks stopped lending - prices went down. When they started lending again - backed by huge government support - they are going up.

No cheap and easy credit - no can afford the prices.

the normal state of affairs is that mortgages exist to state the bloody obvious that homes would be cheaper if mortgages didn't exist is correct but pointlessly stupid


also its not just that, prices in the UK are about double what they are in France. Both countries have mortgages and banks, the difference is that France has about 6 million more homes than the UK for virtually the same population

MARTYM8`

cells wrote: »

the normal state of affairs is that mortgages exist to state the bloody obvious that homes would be cheaper if mortgages didn't exist is correct but pointlessly stupid


also its not just that, prices in the UK are about double what they are in France. Both countries have mortgages and banks, the difference is that France has about 6 million more homes than the UK for virtually the same population

And is the position that different now in terms of housing supply compared to 2011 – since which time prices have risen significantly in London and the south east?

Funding for lending, QE, help to buy, support for developers and ever dropping mortgage rates etc etc – that is what has driven the price rises. And much of that is directly down to government action. The French government has not done anything like this in scale.

Never mind the level of the debt – feel the monthly payment.:D

If you don’t think the availability of credit and bank’s willingness to lend has been the biggest driver of house price growth in the UK in the last 20 years then you clearly are missing something.

cells

MARTYM8` wrote: »

If you don’t think the availability of credit and bank’s willingness to lend has been the biggest driver of house price growth in the UK in the last 20 years then you clearly are missing something.

its you missing something,

witness the West Midlands, which according to the land registry is down in price by 5% over the last 10 years vs London which is up 75% over the same 10 years

why didn't the magic mortgage fairy drive prices up in the west Midlands? Clearly there is something else driving prices up down or steady and the mortgage market is not the fundamental driver else you would expect a far more uniform movement

cells

The UK has many towns and cities which have performed vastly differently when it comes to house price movement. Clearly the mortgage market and banks and lending are national so you can cross that out in any reasoning to try and explain the variation

HPI over the last 10 years

North East -14%
North West -6%
West Midlands -5%
East Midlands +0%
South West +10%
East +19%
South East +26%
London +70%


I would suggest population growth and house building and local GVA play a bigger part than "it were the banks and mortgages"

MARTYM8`

cells wrote: »

The UK has many towns and cities which have performed vastly differently when it comes to house price movement. Clearly the mortgage market and banks and lending are national so you can cross that out in any reasoning to try and explain the variation

HPI over the last 10 years

North East -14%
North West -6%
West Midlands -5%
East Midlands +0%
South West +10%
East +19%
South East +26%
London +70%


I would suggest population growth and house building and local GVA play a bigger part than "it were the banks and mortgages"

Or banks lend where they think they will make most cash long term.

If banks are willing to lend £500,000 to buy a house in Walthamstow - people will buy a house there for £500,000.

Banks can easily create more money under fractional reserve banking – the percentage growth in house prices and lending on property has risen far faster than the growth in population in percentage terms since 2010. The percentage growth in population was in line with the percentage rise in dwellings.

This graph illustrates the point.

http://2joz611prdme3eogq61h5p3gr08.wpengine.netdna-cdn.com/wp-content/uploads/2013/04/UK-House-Prices1.jpg

wotsthat

MARTYM8` wrote: »

If you don’t think the availability of credit and bank’s willingness to lend has been the biggest driver of house price growth in the UK in the last 20 years then you clearly are missing something.

This tends to be the predominant view on HPC where denying a housing shortage has become a sport.

Cutting credit would reduce prices but less people would be able to buy - what's the point of that? You've treated a symptom and ignored the disease.

After the crash I purchased a holiday home. I had access to credit and a substantial deposit. It was great being able to buy at lower prices without the annoyance of younger people outbidding me. My equity has increased somewhat since the purchase and the younger people will have paid more rent as a result and now be looking at higher price when they eventually are able to buy.

As far as I see credit rationing made a wealthier than average person even wealthier and vice versa. Probably why it's a popular idea on HPC where many claim to be sitting on large savings.

MARTYM8`

wotsthat wrote: »

This tends to be the predominant view on HPC where denying a housing shortage has become a sport.

Cutting credit would reduce prices but less people would be able to buy - what's the point of that? You've treated a symptom and ignored the disease.

After the crash I purchased a holiday home. I had access to credit and a substantial deposit. It was great being able to buy at lower prices without the annoyance of younger people outbidding me. My equity has increased somewhat since the purchase and the younger people will have paid more rent as a result and now be looking at higher price when they eventually are able to buy.

As far as I see credit rationing made a wealthier than average person even wealthier and vice versa. Probably why it's a popular idea on HPC where many claim to be sitting on large savings.

I think your comment here speaks volumes – ooh those annoying young people!

It all depends whether you think destroying the value of money and promoting inflation actually helps people in the long term – yes it boosts asset prices but destroys the value of pensions (by reducing annuity rates – hence the governments new scheme to rescue the system), wages and savings.

Perhaps if you are a single person with no kids or grandkids or nephews and nieces this is wonderful. But some of us are concerned about the next generation – rather than paper house price gains which are just that unless you sell up and move somewhere worse/cheaper than the area you have spent time and effort wanting to live in. Its not alright jack because we prosper – at the expense of the next generation.

If house prices aren’t a function of credit how did house prices in Ireland fall over night by 50% - the banks simply stopped lending silly money but there were still the same number of people needing housing and the same number of houses weren’t there? Now the banks are back lending again – has nothing been learned – prices are again shooting up. But the number of houses and people needing houses hasn’t changed has it?

I most certainly do not subscribe to the likelihood of any impending house price crash – but do I think this is all good whereby so much resource is invested in housing in the UK. No - its a misallocation of resources.

wotsthat

MARTYM8` wrote: »

I think your comment here speaks volumes – ooh those annoying young people!

When credit was restricted it removed competition from the housing market and left wealthier people like me able to afford a holiday home at low prices not seen for a generation. Buy to letters were able to mop up cheap BTL's and rent them to young people who would otherwise would have been able to buy them themselves. Young people got shafted - never mind - at least prices were cheaper for all the good it did them.

MARTYM8` wrote: »

It all depends whether you think destroying the value of money and promoting inflation actually helps people in the long term – yes it boosts asset prices but destroys the value of pensions (by reducing annuity rates – hence the governments new scheme to rescue the system), wages and savings.

It doesn't depend on any of those things - there's a housing shortage.

MARTYM8` wrote: »

Perhaps if you are a single person with no kids or grandkids or nephews and nieces this is wonderful. But some of us are concerned about the next generation – rather than paper house price gains which are just that unless you sell up and move somewhere worse/cheaper than the area you have spent time and effort wanting to live in. Its not alright jack because we prosper – at the expense of the next generation.

The argument is being lost when the climb up moral mountain starts.

Young people need houses and the credit to buy them. It's of no benefit to them if prices fall and they don't have access to credit and/ or wealthy benefactors.

MARTYM8` wrote: »

If house prices aren’t a function of credit how did house prices in Ireland fall over night by 50% - the banks simply stopped lending silly money but there were still the same number of people needing housing and the same number of houses weren’t there? Now the banks are back lending again – has nothing been learned – prices are again shooting up. But the number of houses and people needing houses hasn’t changed has it?

A straw man too! Nobody suggests house prices aren't a function of credit but you're trying to solve a housing shortage by reducing credit - it won't work. Great for me because I've got an upsize coming, cash in the bank and easy access to credit so knock yourself out.

MARTYM8` wrote: »

I most certainly do not subscribe to the likelihood of any impending house price crash – but do I think this is all good whereby so much resource is invested in housing in the UK. No - its a misallocation of resources.

Houses are allocated by ability to pay, there's a shortage of them and people can't just choose to allocate less resource and still get what they want.