Home ownership drops faster in Greater Manchester than in London

cells

Graham_Devon wrote: »

It is the dominant factor.

Credit is simply a tool. A tool which expands and contracts as it's also a highly volitile and potentially dangerous tool.

The restrictions in credit at the moment are an anomaly only when you compare it to the last 10 years. Go back to the 70s, 80s and 90s and credit is easier to get today than it was then.....

The crucial point here is that although credit was harder to get back then, ownership was higher.

The reason for this is the price. The price determines everything. Take your 130k example. Knock 60k off that price and suddenly the credit available today is perfectly adequate. Nothing has changed credit wise, only the price has changed.

Credit, which you appear to assume determines everything is elastic....it contracts and expands based on other issues. Stretch it too far and it snaps.

The rest of the stuff you are talking about on this thread is the absolute minute detail and may apply to a handful of family or friend samples across the country. (Not many people actually want to buy with their friends or work colleagues, for example, yet you seem to imply there some sort of scope of huge shift here) Getting bogged down in such minute detail is pretty pointless and seems to be clouding your view.

credit and capital exists the regulations simply determine if a bank will lend the credit/capital onward

A person, John, might have £130,000 in a bank account or shares.
Davids family might want to borrow that £130,000 from the bank to buy a house

If the bank says no to David, David goes to John directly and asks John to buy a house and rent it to David as David does not want to be homeless.



Of course in the real world David and John dont know each other and the market signals determine the above to happen and of course in the real world there may be many chains in the process above but the fundamental is the same. David needs a house and will either buy directly if the banks offer him the funds, or his will buy indirectly by going to a John.

cells

mwpt wrote: »

I'm posting all of this in short breaks as I don't have time for much research. I'm not understanding your answer to the question. We have availability of 95% mortgages at around 4% interest rates. That is better than at any other period (except if you count 100% LTV IO mortgages available for a few short years in first half of 2000s). So why if we have cheaper and easier credit available now, than in the 90s for eg, is ownership declining?

Why did ownership increase in the period 1995-2006 during a time of rapid house price increases in all the regions?

Sapphire

Home ownership is much lower in other European countries. I believe in Germany, for example, it is around 38 per cent. Probably need much better rent conditions in the UK, as there are on the Continent, where many people remain in their rented flats (usually) for years, and even decades. Sounds like a better system than we have here – if it works there, it should do so here.

westernpromise

cells wrote: »

imagine a household. David his wife and their kids

They either buy with a 100% mortgage or they go to a rich man and ask him to buy outright with his savings and rent the property to Davids household. Of course naturally the rich man will want some compensation for the risk/time/overheads so David household is worse off as they pay for the housing and the overheads

A house is purchased in either version of events. Demand for housing does not decrease or increase if bob purchases directly or asks a landlord to do it

The price does not fall 30% for families like David to buy at a lower price because the demand has not fallen.


What we, by which I mean the silly government and its supporters have done is say to David and his family. Sorry buddy if we lend you a 100% mortgage there is an insignificant risk to the banking system (or rather the shareholders) and then the government so we will have to screw you and your family by forcing you to go to a landlord who will buy outright. The risk there to the banking system instead of being virtually zero is zero. We avoid a tiny risk with a tiny consequence at the expense of a large burden on you and your family. I hope you understand its for the greater good and yes I am happy that this has no cost on me and my buddies and all on you and people like you on the margin. chin up

http://www.wsj.com/articles/warning-from-tokyo-dont-let-bank-regulators-create-another-japan-1470084857

....the country’s top bank regulator has a warning for his global counterparts: Overreacting to the bust could undermine the recovery.

“Supervisors’ emphasis on clean bank balance sheets...may have had side effects,” Nobuchika Mori said... Rather than being tough on big banks, Japanese regulators say their priority now is urging financial institutions to take more risks. As his agency’s chief bank inspector in 2013, Mr. Mori “turned upside down” examination policy by giving banks more freedom to assess borrower credit...

Japan now gets it. Forcing banks to become risk averse in their lending stymies growth.

mwpt

cells wrote: »

Why did ownership increase in the period 1995-2006 during a time of rapid house price increases in all the regions?

But why if credit is cheaper and easier than in the 90s, has ownership declined?

cells

Graham_Devon wrote: »

Marriage will have even less to do with anything. Marriage doesn't determine whether people will buy or not.

Fewer people are getting married regardless. It doesn't mean there are less couples willing to buy. It just means theres far less pressure (and perks, for that matter) to justify marriage today.

a lot of people i know, actually all of them that got married in the last year or two went from renters (or living at home) to buying

This might not be true for everyone but it will be true for a portion of people and if people get married later it means they rent longer (or live at home longer) which will push the portion from owners to renters.

Likewise if people never get married I suspect they are more likely to rent much longer and maybe forever than their counterparts who do. One simple reason is two wages v one for bidding to buy. Another is that a lot of renters these days share and of course sharing with strangers when you get married is much much less of an option so people leaving renterville and become owners

mwpt

Sapphire wrote: »

Home ownership is much lower in other European countries. I believe in Germany, for example, it is around 38 per cent. Probably need much better rent conditions in the UK, as there are on the Continent, where many people remain in their rented flats (usually) for years, and even decades. Sounds like a better system than we have here – if it works there, it should do so here.

Well Germany doesn't appear to do boom and bust in the housing market. Perhaps people their don't strive to fund their lifestyles and retirements through property inflation but instead do so through actual work and investment in other productive assets. They rent while required given their nice security of tenure and eventually buy when they want / can afford knowing that property prices haven't rocketed out of reach in the meantime.

wotsthat

Graham_Devon wrote: »

The restrictions in credit at the moment are an anomaly only when you compare it to the last 10 years. Go back to the 70s, 80s and 90s and credit is easier to get today than it was then.....

I don't think that's correct. I purchased my first house in the early 90's with a 5% deposit paid for by the builder. The one after I purchased with a 5% deposit where I borrowed the deposit short term and paid it back with cashback from the lender.

When did you buy? I bet getting the mortgage was a doddle compared to today.

I'd suggest restriction of credit is the main factor in the fall in ratio of owner-occupiers. Continued good news for the well-off - ensures a steady flow of income from the riff raff.

cells

mwpt wrote: »

But why if credit is cheaper and easier than in the 90s, has ownership declined?

I am not sure that mortgages today are easier than in 1995. Can anyone confirm one way or the other with confidence?

First of all its worth noting the percentage of owners.

1995 = 66.9%
2005 = 69.0% (roughly the peak year)

Prices in England >tripped from £54k to £164k during those years yet ownership increased? Why? How?


2005 = 69%
2014 = 63% (2015 not available)

Prices in England (excluding London) went up from £128 to £138k = 8%
Prices in London went from £236 to £387 = 64%

Prices went up just 8% in England (minus London) in nominal terms (less in real terms and much less in mortgage terms) yet ownership decreased? Why? How?



So the two periods both contradict the idea that price determines ownership levels. From 1995-2005 there was a boom in prices with prices up 300% yet ownership went up. From 2005-2015 there was a modest 8% nominal increase yet ownership went down.


Why?

mwpt

cells wrote: »

I am not sure that mortgages today are easier than in 1995. Can anyone confirm one way or the other with confidence?

First of all its worth noting the percentage of owners.

1995 = 66.9%
2005 = 69.0% (roughly the peak year)

Prices in England >tripped from £54k to £164k during those years yet ownership increased? Why? How?


2005 = 69%
2014 = 63% (2015 not available)

Prices in England (excluding London) went up from £128 to £138k = 8%
Prices in London went from £236 to £387 = 64%

Prices went up just 8% in England (minus London) in nominal terms (less in real terms and much less in mortgage terms) yet ownership decreased? Why? How?



So the two periods both contradict the idea that price determines ownership levels. From 1995-2005 there was a boom in prices with prices up 300% yet ownership went up. From 2005-2015 there was a modest 8% nominal increase yet ownership went down.


Why?

Because if you make it easier for people to borrow money, they will buy homes? That is accepted.

But if credit is at least as easy and cheaper than 1995, which is home ownership lower than then?