Take Home Pay, House Prices, Retail Sales - All Falling!!

Why is house prices falling bad? Cheaper houses mean more people can afford them. Though IIRC that 'fall' was for one month and overall prices still rose over the year?

None. They will want the elections out the way before it gets even worse.

In message , Tumbleweed writes

It may only have been for one month, and very generalised, but there is no doubt that the market is softening and prices will probably fall, either a bit, or a lot.

You know as well as I do that house prices rising generates a feelgood factor, notwithstanding the fact that it drives some people out of the market.

It's the combination of the 3 things which is the screw up. If it continues, people will be made redundant, lose their houses, and so on.....

Taxes only ever increase. House prices only ever go up. Capitalism requires relentless growth. The election will be on May 5th. Debt has to be repaid. In the long run we are all dead.

Some of the above are facts.

I'm sure it isnt generating a feelgood factor for the younger generation , being squeezed out of the market entirely.

Who are as nothing compared to the ~20m existing homeowners, and say

Daytona.

People wanting to move upmarket are in a similar position to first time buyers. House price rises are good for people wanting to move downmarket, and bad for people wanting to move upmarket (as well as FTB's). What are the relative proportions?

"Andy Pandy" wrote

Yes, but house price *falls* can *also* be bad for people wanting to move upmarket - for instance if they find themselves in negative equity ...

Yes, falls which put them in negative equity are bad news, also possibly falls which reduce their equity to less than about 5-10% or so.

But falls that merely wipe out some of the gains they've made over the last few years, which leave them with reasonable equity, should be *good* news for someone looking to move upmarket. However many seem to be too thick to realise this.

Someone currently not in NE but so stretched as to find themselves, in a falling market, so positioned, are unlikely to be seriously considering moving upmarket anyway.

"curiosity" wrote

(1) Doesn't it depend on how far the market falls? (2) Aren't people, even so positioned, able to find themselves (within 12 months) with an extra child or two & no space in which to keep them??

Yes though I had in mind the alleged falls in the market over the last few months. Those who've bought recently with a 95% or higher mortgage or who have MEWed themselves to the hilt - those with a higher risk of NE - will probably be less aspirational. I don't see them as likely to be considering moving.

But a market fall and any resulting NE would surely be academic to a family which hasn't the resources to trade up even if the market is stable or rising?

"Tumbleweed" wrote

And meanwhile the older generation have had their pensions shagged. Exactly who does think this governemnt is good for them? It's not students, middle income earners, or the elderly.

"Sammy" wrote

Just the last three.

Capitalism without growth?

Sure. Growth under capitalism is not necessarily 'relentless'. The occasional recession is possible.

House prices crash looming

By Iain Harrison. from The Sunday Post (Scotland) 3rd April 2005

THE economist who first predicted Britain's 1992 recession warned yesterday that the next major economic crash is looming.

Fred Harrison claims Britain's house price bubble will burst by 2007, sparking a savage depression in 2010.

He says the slump will wipe a staggering £800 billion off the value of the nation's housing stock, with Scotland being particularly hard hit. Job losses Executive director of the Land Research Trust, Mr Harrison believes the knock-on effect will result in significant job losses. The fiscal expert has spent 25 years studying the economic cycles of the UK economy. In his 1983 book The Power In The Land he accurately predicted that Britain would be hit by recession nine years later.

Despite submitting his findings to the Thatcher government's treasury select committee, his concerns went unheeded. Harrison's analysis has revealed a remarkably consistent pattern. The country enjoys an economic peak every 18 years. But after the boom years comes the bust. Started already And he claims the drop in house prices has started already and will have fully hit within two years. While recession won't begin immediately, it will be here by 2010. "For 300 years, we've paid on average five per cent for a mortgage," he said. "That delivers a building cycle that lasts about 14 years. "Towards the end of each cycle speculators try to corner the market in land. "They t hen hold communities to ransom and make a killing by selling the land when people are desperate for it. "As a result a few people get very rich but the effect pushes house prices so high they became unaffordable. "So the housing industry shuts down, building firms go bust, people are sacked and the public stop spending money. "The initial 14-year cycle is followed by about four years of recession." Mr Harrison says the increasing trend towards re-mortgaging is one of the core problems of this boom-bust situation. "People withdraw all the equity in their houses which leads to a ?let's live beyond our means' psychology," he says. Large profits "This helps drive up prices and as a result people think they'll make large profits out of buying and selling so they trade up." According to Mr Harrison, consecutive UK governments have failed to solve the problem of economic booms and busts because economists refuse to take land prices into account when tracking inflation. "The solution is to remove taxes from people's wages so they're encouraged to be more productive," he insists. "People should be aware that the next house price crash will deliver negative equity on a massive scale, particularly in the Edinburgh area. "I would urge them to think very carefully about investing in the property market from now on or they may lose the shirts off their backs." Ed Stansfield, of Capital Economics, backs Mr Harrison's theories on the housing market but falls short of predicting an all-out recession. "We believe house prices peaked at the end of 2004 and by the end of

The occasional recession has been a fact of life but without wanting to put words into the OP's mouth I suspect by 'requires' he means that Capitalism - at least the greedy band-wagon brand of it we've jumped on or been subjected to rather than some untested idealism - has always and must always, for it's own safety, target growth. Recession in its milder form has been an unavoidable yet apparently survivable flaw rather than a targeted strategy. But nobody can promise that a future massive global downturn won't precipitate Armageddon - long hard recessions have a habit of wreaking anything from severe social unrest to world war. ...... With your denial of #3 I wondered if you might be an insightful devotee of Schumacher's Small is Beautiful. LSE's Richard Layard has some bright ideas too.

Incidentally, on item 5, a good friend of mine went bankrupt and after 3 years his slate was pristine - no debt repaid. Look also at the occasional international 'gestures' of debt cancellation.

In message , crowley writes

Rocket Science??