Containg the Property Boom

Raising interest rates may not be the answer to containing house prices.

One of the major reasons; is that the present boom in house prices started with Brown's £6 billion-a-year raid on pension funds in 1997.

The destruction of this pillar of long term savings has resulted in heavy property investment and a corresponding fall in the value of equities.

Some parents are actually selling stocks to fund their children into the property market.

The knock on effect is devastating for young and old alike. Young couples cannot afford houses and pensioners' funds have lost considerable value.

Both have been forced into relative poverty. We are now in a crazy situation. Perhaps heading for Japanese disaster similar to that of

1990 when property values reached around five times their realistic levels.

When the Stock Market gets more attractive (and this maybe brought about by a change in government), that I think, will be the danger time for house values.

Malcolm Shykles

Reply to
Malcolm Shykles
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Reply to
John Smith

Nope, it started with Nigel fscking Lawson's announcement that joint MIRAS would be abolished for new applicants ... in six months' time.

Result: a monstrous bubble in the housing market whilst non-married couples, young professionals buying in common to beat rental prices, and any other group purchasers raided the market for anything they could find that they could get bought within that period. And despair for anyone else instantly priced out of the market whilst house prices almost doubled in a few months.

A few years later, it all collapsed again, and negative equity became a force of misery for hundreds of thousands, with follow-on effects on the domestic economy as consumers suddenly lost spending power.

Jon

Reply to
Jon S Green

I was reading a report yesterday, think it was the Council of Mortgage Lenders, that said historically the amount of BTL mortgages given out was about 28,000 per year but last year some 400,000 BLT mortgages were givern out.

Reply to
John Smith

I am suggesting to my BTL clients to review their portfolios to see if a pile of cash might not be a better option at the moment.

The current asset value increases mean that some of the returns have fallen below 4% p.a. even without void periods The downward pressure on rents won't help either.

Reply to
Doug Ramage

No that was in August 1988. A semi in Essex was worth(at the market peak)some £80,000. One could now be sold for around £200,000 or more. The realistic value would be around £160,000.

Malcolm

Reply to
Malcolm Shykles

This occurred in the 03/88 budget and double relief ended in 08/88.

Before this Lawson had carried out a currency fix with the Deutschmark at around DEM 3 to the pound. This occurred from around 03/87 to 03/88 and resulted in base (and exchange) rates being lower than they would otherwise have been.

So house price inflation was well and truly primed.

More info. here -

Subsequently some f****it called Major carried out another currency fix with the EMU between 10/90 and 9/92 resulting in base (and exchange) rates higher than they would otherwise have been.

So house price deflation was well and truly primed.

Daytona

Reply to
Daytona

thats right blame goold old John Major. the only decent PM we have had in the past 30 years.

Reply to
sam1967

Why do you think he's not to blame for this ?

Reply to
Daytona

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