People Begging for a House Price Crash

In that case you could sell your house for less and then you pay less for your new house. Surely what matters is the price difference and not the absolute amount you sell for.

Falling house prices is generally good if you are trying to move up market.

But the primary asset this time wasn't housing directly. It was mortgage backed securities, IIRC.

Not necessarily stupid. I'd use the word ignorance. Most people leave school having had no proper education about finance. Maybe it's better now but this was the case when I left school.

The problem in the UK is the short-term nature of rental contracts. I suspect many people do not like the idea that their contract can be terminated at short notice, leaving them very little time to find somewhere else to live.

Indeed.

I have often advocated the complete relaxation of planning controls on land where the buider would be the occupier and the building was under a certain floor area and height.

There's always beeen exotic debt organised to help folks buy the primary asset. There are stories of futures contracts during a bubble in ancient Rome. Due to the fact that tulips didn't come up until the spring, bulbs were sold based on futures deals. The South Seas bubbles brought us the idea of converting government debt into shares in the primary asset, which isn't a kick in the arse away from federal guarantees for Fannie and Freddie mortgage-backs.

If there's one useful thing we could do this time around it is to educate people not to take on debt which they do not fully understand. That would at least probably reduce the overall amount of debt by 90% and upwards.

I agree completely. I hope this aspect changes as a result of the market adjustments.

FoFP

Yes. Although I'd quite like to see all the speculators getting burnt, a crash would cause too much damage (bad debts etc), and a slow decline would lead to the same as the early 90's - as well as people not being able to sell, people are reluctant to buy as (in any deflation) people wait "cos it'll be cheaper next year", the classic demand damp caused by deflation. And wouldn't really fix the underlying problem as it'd probably be followed by a boom again.

What we really need is static prices for the next decade or two, over which time prices could move more towards a reasonable multiple of income. This would also drive the speculators away (a crash wouldn't - as in the mid 90's some saw it as an opportunity), and people might actually buy a house based on what they need, not the current brain dead thinking of buying the the most expensive house you can afford, or buying a holiday house as an investment.

And the speculators will be first in the queue.

No. It is however in our best interests to get the speculation and expectation of profit out of home ownership.

Ah yes, the usual "blame the immigrants" crap. The UK population has risen by about 3-4% or so over the last 10 years, the housing stock has increased by 9-10%.

Increased demand is being fed by speculators, such as those buying second homes and those buying a house much bigger than they need.

Obviously some people can afford it - eg because they've been left a house in a will, have generous parents etc.

The problem is that many can't, and obviously those people will want prices to come down like they'll want the price of anything they buy to come down.

In many cases, yes.

The government, or rather the taxpayer is, via housing benefit.

How has the housing stock dropped by so much? Houses are being built all the time and I doubt that many are being demolished and not replaced.

And buying a house (to leave empty) as an investment.

That's why building a house in the Outer Hebrides is still more expensive than doing the same in France?

I wrote "increased"!!

Indeed.

Yes.

Yes. The demand increase caused by spectulators obviously drives up the cost the component parts of housing, such as land with planning permission, even building costs.

Would you require the builder/occupier to demolish the property and return the land to its greenfield state before moving elsewhere (or his state to do so on his death)?

If not, and if he could simply sell it to someone else, how would it markedly differ from what we had now?

D'Oh!

I wonder why there is still such a shortage then if stock has increased.

And you have figures as to the number of second homes?

So let's recap...

The "problem" is that houses are bought by people who can afford to buy them, and that people who can't afford to buy them... er.... don't buy them.

But when was the situation ever different from that?

Was there some "Golden Age" when everyone could afford to buy?

Just remind me of when it was, please. I can't remember ever hearing about it.

So you must be delighted that excessive abuse of the housing benefit system is to be curbed. The obvious ideal would be that housing benefit should be payable only at levels the claimant could afford to pay out of the sort of income they could reasonably realistically hope to earn for themselves. Then, housing benefit would be a temporary hand up, and not a handout.

Yes, it was when a typical house cost a much lower multiple of an average salary.

In the 1960s, for example, my dad worked in a factory, bought a house on a mortgage and paid it off eight years later.

In (what is now) one of the most expensive places outside of London. That same house is now some 18 times average salary, and probably 25 times what he might have earned now.

To save a 20% deposit on it would mean putting aside 100% of his gross income for 5 years, and spending nothing on food or shelter...

Mot an awful lot of data there, is there?

At most, that illustrates the changing fashionability of some areas - I know somone who remembers his family renting a house in West London's Kensington for less than £10 a week in the sixties.

But that isn't the question.

Would your dad (assuming the same overall conditions) not have afforded to but anywhere now? Or just not in a sought-after area?

But just *anybody* could have afforded to do it a few decades ago, you say...?

It makes land a leveraged bet though. If houses fall 10%, land prices for housing seem to fall 30%. It's hit those housebuilders with "land banks" quite hard. God only knows what it did to them in Ireland with

FoFP

OK...

Or they buy them by borrowing money from a bank, who borrow it from a hedge fund, who borrow it from a bank, who borrow it from...

Or perhaps they borrow it from parents.

Or perhaps they borrow it from some government scheme to help people buy unaffordable housing,

Housing itself is of course unaffordable because the bids in for it are all based not on the money people have saved, but on the above three.

Thus now we have housebuilders screaming because they know that once the government starts pulling in the reins on housing benefit and on their help with mortgage interest for folks in financial trouble, house prices will fall, and rents will fall with them.

Doubt it. There was a plan towards the end of the last credit cycle to make it so for "workers" to buy using "artisans mortgages". That collapsed with a 90% fall in house prices (and presumably the first ever negative equity for working-class Brits) and quickly led to the sacking of the Minister who introduced them.

Well i certainly am.

I think that nobody claiming cash from the taxpayer should get any housing any better than the lowliest of those taxpayers. Since some of them can only afford to live in a single room in a flat shared with others, that ought to be the guide...

FoFP