Personal Allowances - Ouch!

veryintrigued

MaxiRobriguez said:

DragonQ said:

The fact I was disputing was the "worst recovery of the major nations". It certainly wasn't. There was no recession in the UK post 2009, whereas there was in a lot of other major countries inc the EU overall:

https://en.wikipedia.org/wiki/Great_Recession_in_Europe

Housing policies of both Labour and Tories were daft, there's no real difference. Brown started off with good intentions, in his first budget in 1997 he promised not to let house prices get out of control and repeat the Tories mistakes (this was when negative equity was a recent big issue), but he did exactly that and let house prices get totally out of control. Probably because he saw how politically advantageous it was - loads of extra income from stamp duty, IHT etc plus it made stupid people feel happy even if they have no intention of downsizing and releasing their wealth. Applying CGT to owner occupied with carry forwards would dampen house price inflation but neither would dare do that.

House prices overall are lower in real terms than in 2007. In some regions eg the SE they might be higher but just picking out a region to suit an argument looks like cherry picking.

Real wages have followed a similar although flattened trend to house prices and the economy in general, peaking just before the financial crisis. Basically in line with the economy, rather than anything else (just like now!):

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/bulletins/annualsurveyofhoursandearnings/2019

There's more to a recovery than whether there was another recession though. GDP growth has been slow ever since 2009 in the UK, productivity has flatlined, wages are lower in real terms. The average UK house price is identical to pre-financial crash when adjusted for inflation (according to https://propertydata.co.uk/charts/house-prices) which still makes them less affordable now since real wages are lower.

I accept your arguments that the previous Labour government was also bad when it came to housing policy; the reason I mentioned the south east is purely because I live there, it certainly counts as cherry picking but my overall point was that the a family with a high household income shouldn't be struggling to afford a good house in any region of the country, and successive failures on housing policy is the primary cause of that. All we got in the budget is more bad housing policy.

My partner and I earn more than double the average household, have a good 50% equity in our current home and would like to move to a 4 bed detached in a nice area with good schools but we're completely priced out of it. 

Posters may scoff that a 4 bed detached house in a nice area shouldn't be cheap, but we're talking about ones that would need work, in the East Midlands.
 
To afford the house we want in the area we want we would need both incomes to be in the 94th percentile - and even then it would be a stretch, we wouldn't have much left over.  Yet the houses we see are nowhere near 94th percentile in terms of desirability, maybe 75th at best.

Housing stock is an absolute mess.

The stamp duty holiday and the new 5% deposit scheme isn't going to help you either.

House prices are going to continue to go North in a rather drastic way.

MaxiRobriguez

veryintrigued said:

MaxiRobriguez said:

DragonQ said:

The fact I was disputing was the "worst recovery of the major nations". It certainly wasn't. There was no recession in the UK post 2009, whereas there was in a lot of other major countries inc the EU overall:

https://en.wikipedia.org/wiki/Great_Recession_in_Europe

Housing policies of both Labour and Tories were daft, there's no real difference. Brown started off with good intentions, in his first budget in 1997 he promised not to let house prices get out of control and repeat the Tories mistakes (this was when negative equity was a recent big issue), but he did exactly that and let house prices get totally out of control. Probably because he saw how politically advantageous it was - loads of extra income from stamp duty, IHT etc plus it made stupid people feel happy even if they have no intention of downsizing and releasing their wealth. Applying CGT to owner occupied with carry forwards would dampen house price inflation but neither would dare do that.

House prices overall are lower in real terms than in 2007. In some regions eg the SE they might be higher but just picking out a region to suit an argument looks like cherry picking.

Real wages have followed a similar although flattened trend to house prices and the economy in general, peaking just before the financial crisis. Basically in line with the economy, rather than anything else (just like now!):

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/bulletins/annualsurveyofhoursandearnings/2019

There's more to a recovery than whether there was another recession though. GDP growth has been slow ever since 2009 in the UK, productivity has flatlined, wages are lower in real terms. The average UK house price is identical to pre-financial crash when adjusted for inflation (according to https://propertydata.co.uk/charts/house-prices) which still makes them less affordable now since real wages are lower.

I accept your arguments that the previous Labour government was also bad when it came to housing policy; the reason I mentioned the south east is purely because I live there, it certainly counts as cherry picking but my overall point was that the a family with a high household income shouldn't be struggling to afford a good house in any region of the country, and successive failures on housing policy is the primary cause of that. All we got in the budget is more bad housing policy.

My partner and I earn more than double the average household, have a good 50% equity in our current home and would like to move to a 4 bed detached in a nice area with good schools but we're completely priced out of it. 

Posters may scoff that a 4 bed detached house in a nice area shouldn't be cheap, but we're talking about ones that would need work, in the East Midlands.
 
To afford the house we want in the area we want we would need both incomes to be in the 94th percentile - and even then it would be a stretch, we wouldn't have much left over.  Yet the houses we see are nowhere near 94th percentile in terms of desirability, maybe 75th at best.

Housing stock is an absolute mess.

The stamp duty holiday and the new 5% deposit scheme isn't going to help you either.

House prices are going to continue to go North in a rather drastic way.

Yeah unfortunately we know.

We're sitting tight for another 2 years as we've just remortgaged. Kicking the can down the road and hoping for some sort of correction by then.

zagfles

DragonQ said:

The fact I was disputing was the "worst recovery of the major nations". It certainly wasn't. There was no recession in the UK post 2009, whereas there was in a lot of other major countries inc the EU overall:

https://en.wikipedia.org/wiki/Great_Recession_in_Europe

Housing policies of both Labour and Tories were daft, there's no real difference. Brown started off with good intentions, in his first budget in 1997 he promised not to let house prices get out of control and repeat the Tories mistakes (this was when negative equity was a recent big issue), but he did exactly that and let house prices get totally out of control. Probably because he saw how politically advantageous it was - loads of extra income from stamp duty, IHT etc plus it made stupid people feel happy even if they have no intention of downsizing and releasing their wealth. Applying CGT to owner occupied with carry forwards would dampen house price inflation but neither would dare do that.

House prices overall are lower in real terms than in 2007. In some regions eg the SE they might be higher but just picking out a region to suit an argument looks like cherry picking.

Real wages have followed a similar although flattened trend to house prices and the economy in general, peaking just before the financial crisis. Basically in line with the economy, rather than anything else (just like now!):

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/bulletins/annualsurveyofhoursandearnings/2019

There's more to a recovery than whether there was another recession though. GDP growth has been slow ever since 2009 in the UK

As it has been in most developed countries. UK growth 2010-2018 was higher than the Eurozone average:

https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(real)_per_capita_growth_rate#10_years_change

productivity has flatlined, wages are lower in real terms. The average UK house price is identical to pre-financial crash when adjusted for inflation (according to https://propertydata.co.uk/charts/house-prices which still makes them less affordable now since real wages are lower.

That URL doesn't show real terms house price rises. This one does: https://www.allagents.co.uk/house-prices-adjusted/

And as you can see, real house prices are significantly lower than the peak at the FC, £257k down to £229k, a fall of about 10% in real terms. Whereas the ONS stats I posted above show real wages are down 3% since the peak.

Affordability has reduced because higher LTVs are required, there's no more stupid 100% or even 105% mortgages available. Stupid lending on houses (mostly in the US) is what caused the crisis. 

I accept your arguments that the previous Labour government was also bad when it came to housing policy; the reason I mentioned the south east is purely because I live there, it certainly counts as cherry picking but my overall point was that the a family with a high household income shouldn't be struggling to afford a good house in any region of the country, and successive failures on housing policy is the primary cause of that. All we got in the budget is more bad housing policy.

The trouble is that good housing policy is going be hugely unpopular. No politican who wants to win an election would ever propose it. Stuff like high CGT on owner occupied with roll forwards, and stuff that removes or reduces the ability of people to profit from housing, so houses are bought as a place to live only and not as an investment.

People and politicians just don't learn. Just look at 1997. One of the issues in the election was housing, negative equity was a big thing because after strong price rises in the 1980's, prices fell in the early 90's, in nominal tems as well as real. People were living with the consequences of negative equity having lived under the illusion house prices only go up.

So had we learnt the lesson that high house price inflation is bad? Well, it seemed so. Labour won a landslide, after highlighting Tory failures in areas like housing. Brown promised, in his first budget, that he won't let house prices get out of control:

https://api.parliament.uk/historic-hansard/commons/1997/jul/02/budget-statement

"Volatility is damaging both to the housing market and to the economy as a whole, so stability will be central to our policy to help home owners. We must be prepared to take the action necessary to secure it. I will not allow house prices to get out of control and put at risk the sustainability of the recovery."

Brilliant! Sensible housing policy!

What then followed? Over the next 10 years, house prices more than doubled in real terms!! All under Brown as chancellor/PM, the same person who promised not to let house prices get out of control.

Why? Well, they quickly realised that high house price growth, even fuelled by an unsustainable credit boom, was popular. Labour won 3 elections, never done before, Labour had never even had 2 full consecutive terms before. Why would they do unpopular stuff to dampen house price inflation?

Probably their biggest "mistake" was giving the Bank of England independance, but then setting them an inflation target which excluded house prices, so the BoE didn't care about runaway house price inflation when setting interest rates. So interest rates stayed far lower than they should have been. But it was a "mistake" that It kept them in power for 13 years, by far the longest spell Labour had ever been in power. Election posters in 2005 boasted about the lowest mortgage rates since the 60's, ie the cause of the massive rise in prices.

Same with the Tories now. Until people are educated that the roof over your head is a cost of living as well as an investment, and so you are not actually better off if your house goes up in price, then the same thing will continue.

DragonQ

zagfles said:

That URL doesn't show real terms house price rises.

Minor point but I am aware of that: the figures I quoted were manually adjusted for inflation by myself after reading the non-adjusted values from that website.

zagfles

DragonQ said:

zagfles said:

That URL doesn't show real terms house price rises.

Minor point but I am aware of that: the figures I quoted were manually adjusted for inflation by myself after reading the non-adjusted values from that website.

It starts in 2008, just after the massive drop in prices after the FC!

Sailtheworld

I'm just glad the government met their pledge of reducing the deficit to zero by 2015. Can you imagine how much harder it would be to pay down the covid spending if they'd instead chosen to keep spending money like a drunken sailor on shore leave?