"Housing Market Slumps"

westernpromise

50% of income tax is paid by 1.5% of taxpayers.

Just saying.

ukcarper

BikingBud wrote: »

So 10-12 years ago when a whole load of people were getting mortgages based upon false data that enabled them to take out low rate, sometimes 0%, loans that wasn't easy money that enabled house prices to increase at unprecedented rates as outbidding was the norm?

Everything was normal?

I suppose normality does depend upon your perspective.

Please explain "large parts of the country" as I cannot comment when our perceptions about something are different.

If that was true then maybe but relatively few people did that and lending criteria has been tightened
considerably since then as for 0% mortgages got any proof they existed.

Windofchange

westernpromise wrote: »

So what? 100% of 2016 Olympic gold medals are held by about 2 or 3 hundred people out of 7 billion. Is that not fair or something?

Well so if 10% of the population holds half the wealth, where is the ability for the other 65 million odd people in this country to all buy 500k flats in London? If the argument that you are agreeing with is that there is so much spare cash floating around that the whole country can be kept afloat forever more surely you need every person in this country to have a slice of that wealth, and also be willing to spend it on property rather than put into shares / !!!! it up the wall at wetherspoons?

Windofchange

economic wrote: »

i will get >500k in gift/inheritance. i know many more who will too. either you need to know people who are smarter or wealthier or lucky then maybe someday you will becime financially wealthy if not already?

GreatApe wrote: »

This is confirmation bias at play.

I have been both rich and poor and I know a huge range of people. What I can say with confidence is most people simply ignore or don't think about capital they concentrate on income.

This is of course extremely stupid in a Developed country with a massive stock of wealth. Also wealth is spread wide in this country. For instance there are about 19 million owner occupiers in this country. That is 19 million who have mostly paid off their housing costs not just for themselves but for generation to come.

A family only needs to buy two homes once and every generation thereafter has virtually free housing irrespective of what house prices do. Already the majority if the country is in this position.

Ok, so where is the source for your statements? If everybody is receiving inheritances of hundreds of thousands to millions of pounds, where is the data? It would appear from a cursory glance that in fact you are both way way off the mark.

http://www.cityam.com/233720/uk-adults-expecting-a-big-windfall-from-inheritance-are-set-to-be-sorely-disappointed-with-one-in-ten-mistakenly-believing-that-the-payout-they-predict-will-fund-their-retirement

Looks like the average payout from an inheritance (2016 article) is around the 60 - 70 grand mark. Your particular social circles may well include lots of sloaneys who are going to inherit daddies property empire, but the reality for the other 90% of this country is that there is no pot of limitless wealth awaiting them.

You mention 19 million home owners, but this is out of a population of 66 million. Ok, so take out roughly 15 million who are under 19 (as per wikipedia) and you are left with 51 million. In other words your home owning populous is 37% of the population.

Infact, according to the 2011 census your 19 million is 4 million too many - there are 15 million owner occupied homes in the UK, of which only 7.2 million are owned outright (no mortgage).

http://webarchive.nationalarchives.gov.uk/20160105160709/http://www.ons.gov.uk/ons/rel/census/2011-census/detailed-characteristics-on-housing-for-local-authorities-in-england-and-wales/short-story-on-detailed-characteristics.html

And yes, ok, a household may include two adults, but even doubling that figure gives you 14.4 million people owning a house jointly - then subtract for the 1 in 3 divorce rate etc etc and you probably come down to near the same number you started with for those who have a stake in 100% of a house.

If you read further into that article, you will see that home ownership in the 25 - 34 age range has actually fallen from 58% in 2001 to 40% in 2011. This again does not support your insistence that there are lots of rich old people leaving their grand children large sums of money to plough into property empires. The stats simply do not support your argument. They also don't support your argument that grandad is giving his house away to the youngsters who now all have their family home.

Great Ape you state that already the majority of this country is in the position where they have paid for housing. I would say that actually according to the stats you are very very wrong. Where are you pulling your information from?

Infact, maybe you could both explain to me how it is that if grandad is leaving all this money for relatives to spend on houses, home ownership has fallen for all age groups under 44 since 1981 (Graph 3)?

http://visual.ons.gov.uk/uk-perspectives-housing-and-home-ownership-in-the-uk/

Come on, lets see the numbers behind your assertions that I am in the minority for not knowing hoards of people set to inherit 500k or above, and that most of the country is sitting on a property gold mine

GreatApe

economic wrote: »

completely agree with Cells. me personally, i have parents with assets currently of over £1.5m and will inherit themselves their parents properties worth total £500k. they wont sell the properties and instead be retiring on the income from there properties, private pension and state pension. they have gifted me and my brother £100k each already.

i was shocked how much they have saved. both non university degree educated, relatively low skilled jobs and earning a combined income now of around £60k. both living in london like me.

this is also why interest rates are zero or will be zero indefinitely and likely why they will be negative in the future

you may recall a thread I did about it and pretty much everyone even the smarter ones here dismissed it. However now that the economy is top heavy capital is going to be free. When women have <2 kids then all of histories capital gets concentrated onto the next and then the next and then the next generation.

The savings rate has to go to zero it just has to, but it is not at zero it is still positive so interest rates are low and they will stay low and I think they will possibly even turn negative.

The system just can not work with people saving and concentrating it down to <2 kids per generation.


This is actually a great way of our free market economy making things fairer. Those that do not have inherited capital will be able to borrow it for nothing. We are pretty much already there with 1% mortgages now for the most prime borrowers

lisyloo

Windofchange wrote: »

Well so if 10% of the population holds half the wealth, where is the ability for the other 65 million odd people in this country to all buy 500k flats in London? If the argument that you are agreeing with is that there is so much spare cash floating around that the whole country can be kept afloat forever more surely you need every person in this country to have a slice of that wealth, and also be willing to spend it on property rather than put into shares / !!!! it up the wall at wetherspoons?

You don't need 65 million uk people.
You simply need more people worldwide than the number of flats available for sale to put upward pressure on prices.

Why are you limiting yourself to this country.
Most of the £500k flats are currently going to middle class Malaysians and Chinese.

GreatApe

Windofchange wrote: »

Come on, lets see the numbers behind your assertions that I am in the minority for not knowing hoards of people set to inherit 500k or above, and that most of the country is sitting on a property gold mine

Why do the hordes need to inherit £500k or above?
In much of the country a house does not cost close to that.

These are the stats, take them to the crash cheerleaders and have them gander upon it with a tear in their eyes as they finally realize the show runs not just on income but inheritances and gifts. So it never was and never will be average person should be able to buy an average house. It is average person coupled with another average person both of who get gifts and inheritances should be able to buy the average house. (you also need to knock 17% of the population out of any of this debate as they are in the social stock and the poor inherit that housing)

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/541407/Table_12-3.pdf

Since the data is a few years old I would suggest you increase the figures by 50% if you want an idea of a more reasonable account of what is going on in 2017 rather than 2013/14


For 2013/2014
2,280 people left an inheritance of >£2 million
6,061 people left an inheritance of > £1 million to £2 million
21,742 people left an inheritence of > £0.5 million to £1 million
54,842 people left an inheritance of >£0.3 million to £0.5 million
43,087 people left an inheritence of > £0.2 million to £0.3 million
71,849 people left an inheritance of > £100k to £200k
Do I need to go on?

It is clear very significant sums are left as inheritances and it is very widely spread.

So while you cry average wage vs average terrace, hundreds of thousands of people each year are getting inheritances big enough to buy outright


and now this is before you consider gifts which will be at least as much as inheritances if not much more as people with be loath to pay inheritance tax and also many people want to get their affairs in order before they are too old or not mentally capable so effective give early inheritances (Aka gifts) which are not shown in the data above.

GreatApe

To add to my post above which shows about 200,000 inheritances left each year which leave at least £100k pots. If you take a generation as 30 years (age difference between parents and kids) then if you multiply the above figures by 30 you will get an idea of how much one generation leaves to the next.

So 200,000 inheritances x 30 years = 6 million pots of gold

Most people have 2 children so the pots will be shared between at least 2-3 perhaps more people.

That means 12-18 million people receive a share of a pot of gold per generation.
Most people are married or have partners so almost double the number to 20-30 million people who will either get a pot of gold or are married/partner of someone who will get a pot of gold

Exclude children below 20, exclude those above 65 doing the dying and you have the middle which make up about 35 million people of which 20-30 million get a share of a pot of gold or a claim to it........so two thirds plus of the population

GreatApe

GreatApe wrote: »

To add to my post above which shows about 200,000 inheritances left each year which leave at least £100k pots. If you take a generation as 30 years (age difference between parents and kids) then if you multiply the above figures by 30 you will get an idea of how much one generation leaves to the next.

So 200,000 inheritances x 30 years = 6 million pots of gold

Most people have 2 children so the pots will be shared between at least 2-3 perhaps more people.

That means 12-18 million people receive a share of a pot of gold per generation.
Most people are married or have partners so almost double the number to 20-30 million people who will either get a pot of gold or are married/partner of someone who will get a pot of gold

Exclude children below 20, exclude those above 65 doing the dying and you have the middle which make up about 35 million people of which 20-30 million get a share of a pot of gold or a claim to it........so two thirds plus of the population

This is also why the income debates for economists are often wrong and missing information

Maybe it is true in real terms the income of 10 years ago just before the recession was a tiny bit higher, but today inheritances are much bigger than then. So the total income for households, worked income, capital income and inherited/gifted income is probably higher. Well not probably, definitely.

And marriages, deaths, divorces, children, mean that the £10 trillion stock of wealth in the uk is spread wider each generation not concentrated up. A billionaire that has two kids that have two kids etc will see his £1 billion spread to a single package holiday in spain for his kids kids 20 generations down the line.

Windofchange

lisyloo wrote: »

You don't need 65 million uk people.
You simply need more people worldwide than the number of flats available for sale to put upward pressure on prices.

Why are you limiting yourself to this country.
Most of the £500k flats are currently going to middle class Malaysians and Chinese.

Except for the fact that (MOST) 68% of prime London is brought by UK buyers and not those pesky Chinese and Malaysians, although I agree with the sentiment that this is certainly helping the bubble along:

Background of Prime London buyers
Savills estimate for 2013/14

Proportion of buyers:

UK buyers68%
International buyersMain residence20%
Second home6%
Investment5%
Other1%

Source: Savills, Spotlight: the World in London, 2014