Lets Crash the Housing Market..First Time Buyers.

There are people who are immune to flattery in about the same numbers are there are people who are immune to bullets.

FoFP

In message , curiosity writes

And for others, renting is better, it gives a sense of freedom and mobility.

In message , M Holmes writes

Had to laugh when I saw Gordon Brown telling us that there is no need to worry about petrol supplies - like anyone will believe him?

According to the Economist, published as recently as today, that same Economist which ISTR you recently quoted as an authority, France is having a house price boom....so presumably you live in a different France to that one as well?

When?

A very slight swell compared to the UK's tsunami. And probably most of it stimulated by the UK and in tourist hotspots rather than indigenous investment nationwide.

Thanks for the heads-up on that article

The last paragraph was the most entertaining

"Japan provides a nasty warning of what can happen when boom turns to bust. Japanese property prices have dropped for 14 years in a row, by

40% from their peak in 1991. Yet the rise in prices in Japan during the decade before 1991 was less than the increase over the past ten years in most of the countries that have experienced housing booms (see chart 3). And it is surely no coincidence that Japan and Germany, the two countries where house prices have fallen for most of the past decade, have had the weakest growth in consumer spending of all developed economies over that period. Americans who believe that house prices can only go up and pose no risk to their economy would be well advised to look overseas. "

And since the oil-debacle pundits are pouring out telling us we'll just have to get used to consuming less.

Sounds ominous to me ....

In message , curiosity writes

"Probably" being your operative word - you truly dont have any facts do you??

Ah, i did say 'ISTR' ... I see it was Crowley, my apologies.

a nice way of trying to definine it away :-)

But FWIW over the last year the Economist says that France has risen 15% to the UK's 5%, and that since 1997 France has risen 87 to the UK's 154 ..eg a half, so maybe the difference between a medium tsunami and a big one rather than a swell to a tsunami.

I'm thinking of moving house in France and while speaking to an agent there on the subject of booms generally he told me that French regulations absolutely determine that mortgages are maximum 3x (it might have been 3.5x) available income after other commitments. While that sort of reg is in place and being observed I wouldn't expect any silliness in France on a grand scale.

...and that will mean that people will be forced to rent instead of buy, even if they can afford it. Government deciding whats best rather than letting people take responsibility for their own actions. It will also mean that foreigners will tend to be able to outbid locals because they will be less affected by such regulations. You did ascribe much of the recent French house price rise to UK buyers didnt you? I wouldnt be surprised if French people were now complaining that foreigners were pricing them out of the housing market.

A different sort of 'silliness', not the absence of it.

Bollocks.

I suggest you watch Capital on M6 or read le Figaro or l'Express or Le Nouvel Observateur on occassion and inform youself a bit.

You have to recognise that around half of all French people rent. Not exactly a testament to owner occupation. It currently costs around 20% of purchase price in fees to buy a second hand property, that's estate agents fees of 7% (you have to do a 2 year course and training to be an agent in France) plus notaires fees and stamp duty. This is not exatly great for FTBers. It basically means that most French people, when they eventually get the dosh together to buy will probably stay in that house. Generally you save and save until you finally get a deposit together (you need 25% of the purchase price in France at the moment). You will probably end up living in an apartment.

So what can you get for your money? In the Paris area (where 25% of French people live and work) 1 million euros will get you a nice 3 bedroom appartment within the ring road. Somewhere like St Mandé on the outskirts is now around 400,000 euros for a small 2 bed apartment. You really don't want to go much out of the center because the Metro doesn't go that far and you get into the horror of the French surbaban train network, strikes, unreliable services and armed gangs. Prices have doubled in Paris over the last 4 years.

In most big towns the picture is the same Lyon and Grenoble are unaffordable. So is Bordeaux. You have to remember that when house prices rose 87% in France wages were pretty much static and that from a low base... a school teacher or policeman would earn less than 20K / year in France after 10 years service compared to well over 30K / year in the UK (38K / yr for a police constable if anyone wants the figures).

But you can figure for yourself, if 50% of the population is letting houses or flats, then there are a lot of people who own property to let.

he reminds me of Corporal Jones

Looks like that's a deflation adjusted number. Certainly in Tokyo they're down nominally by something closer to 90%

Japan had a credit bust at the same time as the property bust though. While I expect that here and in the US, it's not confirmed yet.

More interestingly, Australia has been ahead of the UK in the housing cycle. For a couple of years the stats have shown Sydney prices at a standstill in a transactions slowdown and talk that the real housing market was down by more. Recently the numbers have started to look like prices there are down by 20% and still no recovery in transaction volume

- indicating further falls to come.

The key in the UK will be what happens to credit in general and mortgage credit in particular. If things get tight because the banks get scared, or because of some derivatives accident (I wouldn't rule out New Orleans causing exactly that - the insurance business holds a hell of a lot of derivatives insurance contracts that almost nobody really understands) or even because our savings ratio returns to something more akin to normal, then any housing bust will be much exacerbated. Time to start watching credit numbers and the savings ratio.

FoFP

For definitions of "afford it" that involve borrowing three and a half times one's income for more than half of one's working life anyway.

Interesting how the meanings of words change during a mania eh?

FoFP

What happened to the house-buying idyll that 'curiosity' was describing to us? I suppose thats another France as well? They seem to be multiplying faster than French house prices.

I'll do my own definitions thanks....where "afford it" means, "pay less in mortgage than the rent I currently pay"

I've been there and I know many others have, being turned down even though a mortgage would mean a decrease in monthly outgoings.

One strange thing which occurs to me is that landlords in England have always been anecdotally seen as sharks and spivs, whereas in Europe, renting your home for life was always the norm, (I dont know if it's changed), and there doesnt/didnt seem to be the same animosity.

Is it because the English just hate to see someone be successful, and love it when they take a fall, a trait which doesnt seem common amongst other Europeans..

To be honest, I'm getting a bit f''ing sick of it and will probably move to Monaco or somewhere soon.

MMM! There have been times in my life when I have wanted to borrow to the hilt, and chop my other spending to "afford" it, and I didnt want someone else dictating regarding my ability to cope.

The fact is that there comes a point where "we" are happy to settle for what we've got, so the borrowing ratio falls in relation to income.