Has Crashy and co finally come to their senses...

Thrugelmir

westernpromise wrote: »

Because those are the prices the marginal buyer will pay. It's a market not a policy decision.

Markets have been distorted for many years. Leveraging balance sheets to create consumer debt was a post 1970's invention. Like any wave you can only surf it for so long.

kilby_007

westernpromise wrote: »

Because those are the prices the marginal buyer will pay. It's a market not a policy decision.

People who want a crash want some of that too. They just want to buy in at a cheaper level than now, in the belief that it was riskless when people did so in the past. That any reduction in buying interest connotes economic hardship doesn't bother them at all. It's all about themselves and their entitlement.

Of course in a property crash, deposit requirements go up and loan multiples go down. In a boom where a 10% deposit and 4x salary are the norm, someone with £13k and £30k a year can buy a £130k house. In a bust where the deposit now needs to be 40% and the loan can only be 2x salary, It's unaffordable anywhere above £100k. That's if anyone in such a house wants to sell in a falling market. The evidence is that unless you need to, you don't.

Thrugelmir got it spot on. Pre 1980 the market pretty much tracked inflation. It's only the most recent homeowner generations which are pricing future generations out of owning a home.

Marginal buyers don't represent the same cross section of society that it did in the 60's and 70's. Property wealth has become mainstream for the upper and middle classes and that's attracted foreign investment, many of whom will buy up property never having the intention to use it as a home (there are 610,000 empty homes in England). It's become a kind of policy for government to support rising house prices to protect investment and help the rich get richer. People with money can buy property and sit on it, earning more from it's increasing value than a family who go out to work every day and actually contribute to the economy.

Of course many first time buyers (those who can still afford to buy) want a slice of that pie, because that's the nature of human greed. They're part of the problem too BUT I think that what most first time buyers will say is that the market doesn't represent value now for the average person, whereas it has done in the past. House prices increasing at %multitples of inflation creates the boom and bust response that you mentioned, but that only creates winners and losers and eventually that boom and bust system levels out into a housing system where a few winners (i.e. those who owned more property than they needed and sold during the boom, then bought more during the bust, rinse and repeat) end up owning the majority of the market, and the losers and their successive generations will never own property.

economic

kilby_007 wrote: »

Thrugelmir got it spot on. Pre 1980 the market pretty much tracked inflation. It's only the most recent homeowner generations which are pricing future generations out of owning a home.

Marginal buyers don't represent the same cross section of society that it did in the 60's and 70's. Property wealth has become mainstream for the upper and middle classes and that's attracted foreign investment, many of whom will buy up property never having the intention to use it as a home (there are 610,000 empty homes in England). It's become a kind of policy for government to support rising house prices to protect investment and help the rich get richer. People with money can buy property and sit on it, earning more from it's increasing value than a family who go out to work every day and actually contribute to the economy.

Of course many first time buyers (those who can still afford to buy) want a slice of that pie, because that's the nature of human greed. They're part of the problem too BUT I think that what most first time buyers will say is that the market doesn't represent value now for the average person, whereas it has done in the past. House prices increasing at %multitples of inflation creates the boom and bust response that you mentioned, but that only creates winners and losers and eventually that boom and bust system levels out into a housing system where a few winners (i.e. those who owned more property than they needed and sold during the boom, then bought more during the bust, rinse and repeat) end up owning the majority of the market, and the losers and their successive generations will never own property.

It's a market. Things change. As you so rightly said the marginal buyer has changed. Because we have boomed in London. Welcome to a world where things are dynamic and forever changing. I sense you sound quite bitter about prices. Maybe you didn't or couldn't afford to buy?

kilby_007

economic wrote: »

It's a market. Things change. As you so rightly said the marginal buyer has changed. Because we have boomed in London. Welcome to a world where things are dynamic and forever changing. I sense you sound quite bitter about prices. Maybe you didn't or couldn't afford to buy?

We're in a lucky position thanks to my work that we can afford to buy an average sized family house, but proportinally (in terms of salaries and house prices) 20 years ago I could have not only bought a house but I could have built an annex for my disabled brother & paid for a carer, spent a lot of money on experiences, holidays, family and still had money left over to do something good with, give something back so to speak, but as it stands all of my money will be going into a family home, just to live the same quality of life that my parents were able to attain on 1/3 of my salary (in relative terms).

Yes I'm bitter, and I think I have every right to be... I'm not blaming the average homeowner but those multiple homeowners and investors who've purposely turned the market this way for their own monetary gain.

economic

kilby_007 wrote: »

We're in a lucky position thanks to my work that we can afford to buy an average sized family house, but proportinally (in terms of salaries and house prices) 20 years ago I could have not only bought a house but I could have bought a flat for my disabled brother & paid for a carer, spent a lot of money on experiences, holidays, family and still had a money left over to do something good with, give something back so to speak, but as it stands all of my money will be going into a family home, just to live the same quality of life that my parents were able to attain on 1/3 of my salary (in relative terms).

Yes I'm bitter, and I think I have every right to be... I'm not blaming the average homeowner but those multiple homeowners and investors who've purposely turned the market this way for their own monetary gain.

Then why didn't you buy 20 years ago? I think you will find the people who are driving the mainstream market are FTB or movers for their own home. You can't be bitter about that for if you are its hypocritical as you will also be buying....

kilby_007

economic wrote: »

Then why didn't you buy 20 years ago?

Because I was 11.

economic

kilby_007 wrote: »

Because I was 11.

There we go. So you couldn't buy. You need to understand that things change. There is no right level of earning multiples etc. Sorry but things just change and the market is the market. Accept it.

kilby_007

economic wrote: »

Then why didn't you buy 20 years ago? I think you will find the people who are driving the mainstream market are FTB or movers for their own home. You can't be bitter about that for if you are its hypocritical as you will also be buying....

Note that I haven't bought yet...! I'll be one of those uncles in 20 years still renting and waiting for "the crash"... :rotfl: I was previously a homeowner though, so if you believe it's FTB driving prices high then yes I'm a hypocrite, but I don't believe that's the case. I think the system is to blame.:p

wotsthat

kilby_007 wrote: »

We're in a lucky position thanks to my work that we can afford to buy an average sized family house, but proportinally (in terms of salaries and house prices) 20 years ago I could have not only bought a house but I could have built an annex for my disabled brother & paid for a carer, spent a lot of money on experiences, holidays, family and still had money left over to do something good with, give something back so to speak, but as it stands all of my money will be going into a family home, just to live the same quality of life that my parents were able to attain on 1/3 of my salary (in relative terms).

Yes I'm bitter, and I think I have every right to be... I'm not blaming the average homeowner but those multiple homeowners and investors who've purposely turned the market this way for their own monetary gain.

Prices were cheaper 20 years ago but you're kidding yourself that the gap would fund annexes, carers, experiences, holidays, family and the bus fare home.

I'd wager your parents were paying a higher proportion of income to put a roof over your head than you're willing to pay.

kilby_007

economic wrote: »

There we go. So you couldn't buy. You need to understand that things change. There is no right level of earning multiples etc. Sorry but things just change and the market is the market. Accept it.

I understand things have changed, that was my point! The market is the market, also correct, but it's not a just and fair market, is it? Are you a multiple homeowner by any chance?