Twenty years on – the winners and losers of Britain’s property boom

Graham_Devon

cells wrote: »

Anyway lets ignore for a moment that argument as neither of us have the power to sway the regulators. do you at least accept that with higher mortgage regulation there is no choice but to see more renters than there otherwise would be? Is it a coincidence that the owner stock increased all the way towards 2006 and then post crash and overreaction and overregulation the rental sector has been growing rapidly?

Yes, I accept that.

However, I must add some clarity to that.

Mortgage regulation is just one aspect of a huge array of aspects which affect the ability for someone to buy a house.

First and foremost, the price is by far the biggest mountain to climb. Only when you can afford the price does mortgage regulation come into play.

The price is determined by lots of factors, and as were talking about renting instead of buying, rental prices are determined by lots of factors.

With house pricing, you have builders seeking ever larger profits, interest rates at an all time low helping push up prices, planning issues, a plethora of stimulus to increase demand etc etc etc

With rentals you have a pretty much vacant regulation structure, easier access to mortgage funds, and now, easier access to funds through pensions and billions of pounds worth of taxpayers money stimulus in the form of housing benefit.

So while I accept your premise, I don't believe you can identify falling mortgage numbers based on a time when we have an extreme lack of regulation and identify "mortgage rationing" (or normalisation as it should probably be called) as the one sole reason for declining home ownership.

To wrap up, what I'm saying is "The crash was America's fault and nothing to do with us" and "fewer mortgages = mortgage rationing" all seems to fall into a very simplistic way of looking at things. So simplistic it seems to miss the entire point.

You will always find yourself frustrated by regulation if you first won't accept why it's been put into place.

HAMISH_MCTAVISH

mwpt wrote: »

during the loosest period of lending in UK history from early 2001-2007, home ownership declined. The peak was 69% in 2001.

No it didn't.

Home ownership increased in numerical terms between 2001 and 2006.

It declined in % terms only because population grew faster.

Only since mortgage rationing commenced has it fallen in absolute terms as well as proportionate terms.

cells

Graham_Devon wrote: »

Yes, I accept that.

However, I must add some clarity to that.

Mortgage regulation is just one aspect of a huge array of aspects which affect the ability for someone to buy a house.

First and foremost, the price is by far the biggest mountain to climb. Only when you can afford the price does mortgage regulation come into play.

The price is determined by lots of factors, and as were talking about renting instead of buying, rental prices are determined by lots of factors.

With house pricing, you have builders seeking ever larger profits, interest rates at an all time low helping push up prices, planning issues, a plethora of stimulus to increase demand etc etc etc

With rentals you have a pretty much vacant regulation structure, easier access to mortgage funds, and now, easier access to funds through pensions and billions of pounds worth of taxpayers money stimulus in the form of housing benefit.

So while I accept your premise, I don't believe you can identify falling mortgage numbers based on a time when we have an extreme lack of regulation and identify "mortgage rationing" (or normalisation as it should probably be called) as the one sole reason for declining home ownership.

To wrap up, what I'm saying is "The crash was America's fault and nothing to do with us" and "fewer mortgages = mortgage rationing" all seems to fall into a very simplistic way of looking at things. So simplistic it seems to miss the entire point.

You will always find yourself frustrated by regulation if you first won't accept why it's been put into place.

If mortgage rationing (or whatever your word for it is) is not a primary or important factor, then why is ownership declining in half the country where prices are cheap?

That to me suggests mortgage regulation has a bigger impact than price levels.

I was on your side of the table and arguing similar points when I first heard of Hamhish views but some two years on I think he was right and was certainly ahead of me. It might take another couple of years before the government and regulator wake up to what they have done. Namely force a sector of the population to be renters when they could be owners were it not for illogical over-reaction based on nothing but silly notions of interest only or self cert being evil.


credit is the big equaliser (another hamish idea) and the harder you make credit regulations the more concentrated wealth will become as access to credit is removed forcing those who need it to rent instead of own

cells

mwpt wrote: »

I know why it fell in 2008 and I've not denied this would have had a detrimental affect. Since then though, low rates contributed in so many ways to the rise of prices and now that we have a good range of mortgage products available but high prices are causing problems for people wishing to borrow.

But that idea can not be true because prices are lower now in five regions homes to half the population than in 2007

so with lower prices why are there more renters than ever in those regions? The argument hamish puts forward is that its down to over-reaction and over regulation forcing more people to rent.

How else can you explain lower prices (higher incomes) and yet more renters in the northern and midlands regions where prices are lower now than before 2007 and dam cheap vs salary multiples too

Graham_Devon

cells wrote: »

If mortgage rationing (or whatever your word for it is) is not a primary or important factor, then why is ownership declining in half the country where prices are cheap?

Prices are not "cheap" in half the country.

If prices were "cheap", people would be buying.

I know you have your own sums on this based on optimum figures in every scenario (and large doses of reality completely ignored), but those are just that - your own sums.

Your entire argument boils down to one thing - extend the amount of credit and make said credit easier to get hold of.

We've done all of this. Prices align themselves to the new looser credit and then you are back to the same problem. So you have to expand and loosen credit further - prices catch up and so on. You end up where we ended up in 2008. Now, I know you think that was all America's fault and nothing to do with us, but the simple fact that we were so embroiled in it, with out own UK only banks suggests we had our own issues, even if you won't accept it. Again that's your opinion and some will agree with it.

Like I say, until you accept this (and it's quite clear you won't at the moment) you will always be wondering why regulation is in place and wondering why someone doesn't just flick a magic lending switch.

At the moment, all I seem to be getting from your posts is that someone somewhere has decided to be nasty to the population of the UK and imposed regulation because they can - rather than because it's necessary.

If you won't accept anything anyone is putting to you (and it's not just "crash wishers" you are arguing with here regarding the banks and regulation) then theres no where the argument can go other than to agree to disagree.

HornetSaver

I believe what Cells is trying to say when describing half the country's prices as "cheap" is that 4x average income is "cheap" for an average property. I don't necessarily agree with that, but I understand what is meant.

But as for the thrust of Cells' argument, I never got a response on my comment about emigrating. I just want to make the point that I was being entirely serious. I'm fluent in French and could no doubt get a job comparable to my current one in France or Belgium with similar quality of life. I have no doubt that travel times and costs to and from Hertfordshire (where I have strong family and friend ties) would be similar or not significantly more than those between Hertfordshire and the North West, Wales or North East.

I'm open to the idea of relocating to within an hour or so's drive in clear traffic of where I would ideally want to be based. I am also open to the idea of buying far smaller accomodation than I could get elsewhere in order to satisfy my desire to live in reasonable proximity to where I grew up. To that limited extent I understand Cells' conviction that London prices are not out of control. I also understand (but due to the costs of getting to central London relative to full time earnings in necessary, lower paying jobs, strongly disagree with) the notion that there should be less social housing in London. But frankly the idea of moving to somewhere like Doncaster is no less radical for me than moving to a relatively cheap suburb of Brussels or Paris.

Given that I earn above the national average income, and have a household of one, it's utterly insane that I should struggle to be able to get onto the housing ladder. Now, I will get there through saving very aggressively for a very large percentage of deposit - I can make a lot of savings that are simply not possible for parents, I have a lot of scope for earning extra money, and I'm on course for another promotion within the next 18 months or so. But I shudder to think how households of four or five with the main earner on a lower salary than me could possibly do it. To tell them to jog along to the north of England where the picture is fine (which may or may not be the case) is no more constructive than telling them to leave the country.

seven-day-weekend

Wednesday2000 wrote: »

This makes me depressed.:D I wish I had bought property instead of going to uni. I wish I had bought a flat or house in Blackheath or Greenwich as I would like to live there now.

It must be a million times harder for first time buyers in London now, unless they are taking money from Mummy and Daddy.

I have said this before, but everyone I know who has bought property as a first-time- buyer in the last five years has had help with their deposit, either from the Bank of Mum and Dad, or from inheritances. I know no-one who has bought in London.

ibizafan_2

My son and his best friend from uni bought a two bedroom flat in Clapham in 2008 without any help from parents. He saved up a healthy deposit by working evenings in a restaurant in Leicester Square and living in a shared house in Cricklewood. The flat was £315000 and his share of the mortgage was a real struggle at first. Fast forward to today and the flat is worth £650000, he is on a much higher salary, and very glad they went for it. So it can be done without parental help, or should I say could, as it would not be easy today.

cells

HornetSaver wrote: »

I believe what Cells is trying to say when describing half the country's prices as "cheap" is that 4x average income is "cheap" for an average property. I don't necessarily agree with that, but I understand what is meant.

But as for the thrust of Cells' argument, I never got a response on my comment about emigrating. I just want to make the point that I was being entirely serious. I'm fluent in French and could no doubt get a job comparable to my current one in France or Belgium with similar quality of life. I have no doubt that travel times and costs to and from Hertfordshire (where I have strong family and friend ties) would be similar or not significantly more than those between Hertfordshire and the North West, Wales or North East.

I'm open to the idea of relocating to within an hour or so's drive in clear traffic of where I would ideally want to be based. I am also open to the idea of buying far smaller accomodation than I could get elsewhere in order to satisfy my desire to live in reasonable proximity to where I grew up. To that limited extent I understand Cells' conviction that London prices are not out of control. I also understand (but due to the costs of getting to central London relative to full time earnings in necessary, lower paying jobs, strongly disagree with) the notion that there should be less social housing in London. But frankly the idea of moving to somewhere like Doncaster is no less radical for me than moving to a relatively cheap suburb of Brussels or Paris.

Given that I earn above the national average income, and have a household of one, it's utterly insane that I should struggle to be able to get onto the housing ladder. Now, I will get there through saving very aggressively for a very large percentage of deposit - I can make a lot of savings that are simply not possible for parents, I have a lot of scope for earning extra money, and I'm on course for another promotion within the next 18 months or so. But I shudder to think how households of four or five with the main earner on a lower salary than me could possibly do it. To tell them to jog along to the north of England where the picture is fine (which may or may not be the case) is no more constructive than telling them to leave the country.

people on low incomes in high priced areas get housing benefit and thus have to rent.

maybe there should be an equivalent mortgage benefit. If household A is entitled to £XYZ per month on housing benefit maybe they should also be entitled to £XYZ per month in mortgage benefits.

OR of course the alternative is neither housing benefit or mortgage benefits but for them to do what would be natural which is to move 20 miles outside of London where prices are less than half of what they are inside London

cells

Graham_Devon wrote: »

Prices are not "cheap" in half the country.

If prices were "cheap", people would be buying.

I know you have your own sums on this based on optimum figures in every scenario (and large doses of reality completely ignored), but those are just that - your own sums.

Your entire argument boils down to one thing - extend the amount of credit and make said credit easier to get hold of.

We've done all of this. Prices align themselves to the new looser credit and then you are back to the same problem. So you have to expand and loosen credit further - prices catch up and so on. You end up where we ended up in 2008. Now, I know you think that was all America's fault and nothing to do with us, but the simple fact that we were so embroiled in it, with out own UK only banks suggests we had our own issues, even if you won't accept it. Again that's your opinion and some will agree with it.

Like I say, until you accept this (and it's quite clear you won't at the moment) you will always be wondering why regulation is in place and wondering why someone doesn't just flick a magic lending switch.

At the moment, all I seem to be getting from your posts is that someone somewhere has decided to be nasty to the population of the UK and imposed regulation because they can - rather than because it's necessary.

If you won't accept anything anyone is putting to you (and it's not just "crash wishers" you are arguing with here regarding the banks and regulation) then theres no where the argument can go other than to agree to disagree.

you are asking me to accept your viewpoint with nothing other than the suggestion that if self cert mortgages came back to town prices would be higher.

Why not do what you think is so good for society. Why not lower the max a bank will give from ~4.5x joint to 3 x joint then 2 x joint then 1 x joint then hell all a bank will give you is a tenner.
According to you that will just mean houses are just as affordable but at a lower price.

As you can see, the argument you make is loony