Actual benefit of rising prices - a bulls view

Windofchange

HAMISH_MCTAVISH wrote: »

They are the same thing.

There is only a shortage of affordable housing in London because there is a shortage of housing in London....
.

Ok well we'll have to agree to disagree. It has been the perfect storm for housing over the past decade. Emergency interest rates, easy credit, self cert mortgages, FTB loans, HTB, Bailing out the banks etc etc. None of this demonstrates a healthy and functioning economy.

To use your example of 1000 buyers for 1000 homes a month, what is facilitating these buyers to spend 500k on a 1 bed flat? It might be the bank of mum and dad for some, trust fund babies etc, but for the majority I would say they are being allowed to get into crazy amounts of debt by the establishment who want to tie them into an asset for the next 35 / 40 years.

I have two colleagues at work who have brought into HTB recently. One of them was so desperate to get a flat she went into a 2 bedder with her best friend from home. They got I believe a 30% share in an east London flat, and they own 15% each. They have bank of mum and dad help and they have government help. Talking to her though, having over half a million pounds of debt aged 25 is quite normal.

My point is that they will likely never pay this back. They are being sold a dream that help to buy is helping them, when really we know it isn't unless they can cash their chips in a few years down the line to some other poor sod.

I am sad that housing is used like casino chips, fully facilitated by the powers that be. Take a drive from west London to central at night past nine elms and Vauxhall. 10's of thousands of flats with most of the lights off. So, if it is supply and demand why haven't prices come down? There's no-one living there and they can't all have been brought by the Russians!?

HAMISH_MCTAVISH

Windofchange wrote: »

why isn't more being done to tackle the housing crisis?

Because people like these.....



.... are organised, determined, and vote...

To put it all another way. Can we all agree that housing is a necessity to life? I'd say shelter is behind food and water only as an essential ingredient. What if the price of bread rose to £10 a loaf? What if to take an extreme we had a situation like the hyperinflation of the Weimar republic? Where would we morally say well enough is enough?

Build. More. Houses.

:wall:

People don't have to live in London agreed, but I just find the way that the government is propping up the prices here to be unpalatable. You just have to look at all the new builds that come onto market. 400k plus for a 1 bed shoe box that the government lends you 40% of the money for because that is probably about how overpriced things are at the moment. Should all this go iffy, I wonder how the taxpayer will get their money back? Oh, they won't because we will have socialised the losses through tax money given to FTB's, and the privatised profits of Barrett homes et al will have sailed off into the sunset.

Oh for the love of....

If you remove all government HTB schemes tomorrow prices won't fall in a meaningful way.

They're simply too small in numbers to have much of an impact.

What will happen however is the relatively small number of people who depend on those schemes to buy, usually lower income FTB types, will be outbid by everyone else and will end up not owning.

ProDave

Jack_Johnson_the_acorn wrote: »

Ever rising prices... pretty much every purchasable item is ever increasing.
Where I live in the NW a good 3 bed semi will cost around £180k.
A small 3 bed semi around £135k.

That seems completely reasonable to me.

A mortgage with 10% deposit @ say 3% is less than £500pcm. Easily affordable for a working couple.

Too many people focus on London pricing. There's a reason that the most desirable and culturally exciting place is the most expensive place to live.

And just to put that into perspective, when I bought my first 1 bedroom "starter home" for £36,000 in the late 1980's, and interest rates went up to 15%, I was paying £500 per month then. That was more than half my take home pay and I was single then.

By comparison, it's easy now?

economic

what does housing crisis even mean? i dont see any homeless people on the streets.

Thrugelmir

Jack_Johnson_the_acorn wrote: »

That seems completely reasonable to me.

A mortgage with 10% deposit @ say 3% is less than £500pcm. Easily affordable for a working couple.

Too many people are getting complacent. 3% interest rates for how long?

cns06

Don't worry HMG are gearing us up to reduce debt as they know its coming. They are going after new cars this year, next year they will push up the NMW. I can see 2020 rates starting to climb.

System

Windofchange wrote: »

To put it all another way. Can we all agree that housing is a necessity to life? I'd say shelter is behind food and water only as an essential ingredient. What if the price of bread rose to £10 a loaf? What if to take an extreme we had a situation like the hyperinflation of the Weimar republic? Where would we morally say well enough is enough?

Yes, but you don't have to own it and it certainly doesn't have to be in London.

Your analogy is flawed, unless you're still desperate to buy the £10 loaf of bread even though the shop down the road has it for 80p.

westernpromise

It should be noted that rising house prices are good for renters who don't want to buy. When house prices are rising, buying looks more attractive, so fewer want to rent, which holds rents down. This is why, over the last 20-odd years, properties like mine in west London have gone up in price by about 300%, but the rent on it has risen only 100%.

Crash trolls who think they want a big house price correction had better be living with their mothers, and if they're not, they soon will be when they see what all the demand not to own property in a crash does to the demand (and cost) to rent instead.

westernpromise

vivatifosi wrote: »

Why would anyone sell a flat to you for say, £200k, if someone else is willing to pay £700k for the same property?

Or to put it another way, why would anyone sell a flat to the OP for £200k when it's going to cost them £700k to replace it?

The whole flaw in the OP's thinking is the assumption that someone has made a choice on what house prices should be, has arbitrarily imposed this, and all that's required is a nanny state change of policy so that senses of entitlement can be gratified. While nanny is about it, why not abolish winter because it's so cold?

westernpromise

HAMISH_MCTAVISH wrote: »

But prices aren't your problem. NIMBY's are....

I'm not so sure.Where are the huge green areas of London that NIMBYs are preventing from being developed? There's no point concreting over Ceredigion or Powys to build houses. Nobody lives or works there. Houses are needed in the cities. Look at the M25 on Google Earth and superficially there are quite a lot of green areas that could be built on - except that such areas needs roads, utilities, public transport, schools, etc.

You can't just plonk new housing down in the middle of nowhere - look how long it too to get Docklands established. 20 years? And that took a lot of central government subs which in turn were forthcoming largely to defend London's position as a financial centre; the slum clearance and housing regeneration were never a major goal.

In the meantime it's going to get worse in London before it gets better; the tax attack on landlords is going to reduce rental supply and rental property is the most efficiently used in terms of occupants per square meter.