How far will house prices fall? [Volume 3]

[WhoseGeneration]

groak said:

The most basic decision society as a whole should make is whether or not to provide housing assistance for people incapable of providing it for themselves. There are many countries which don't so we have lots of their experience to draw on. And they are, of course, exclusively in the 3rd world. I'd suggest (tho not insist) that modelling ourselves on 3rd world countries might not be ideal. BUT if society decides it WILL assist housing needs then we can expect it to be a very complicated matter to organise and administer. Not a field where much benefit will be derived from thoughtless opinionation and emotion-driven value judgement.

I would suggest that any society that would want to "provide housing assistance for people incapable of providing it for themselves", should provide that as a State asset, built and administered by that State.
Not, hand over taxpayers' means to the private sector, that private sector hoping to profit from capital appreciation.
Then, we have to consider the motives of the State, don't we?
Whichever particular bunch of misfits is "in power".
Afterall, this State doesn't own much land, does it?
I'm including LAs.

[groak]

WhoseGeneration said:

groak said:

The most basic decision society as a whole should make is whether or not to provide housing assistance for people incapable of providing it for themselves. There are many countries which don't so we have lots of their experience to draw on. And they are, of course, exclusively in the 3rd world. I'd suggest (tho not insist) that modelling ourselves on 3rd world countries might not be ideal. BUT if society decides it WILL assist housing needs then we can expect it to be a very complicated matter to organise and administer. Not a field where much benefit will be derived from thoughtless opinionation and emotion-driven value judgement.

I would suggest that any society that would want to "provide housing assistance for people incapable of providing it for themselves", should provide that as a State asset, built and administered by that State.
Not, hand over taxpayers' means to the private sector, that private sector hoping to profit from capital appreciation.

O I C!! Sort of Big Government socialist ideal of state provided nationalised housing at, no doubt, rock bottom rents! An anti-Thatcherite reversal buyback of ex-LA property perhaps? Or an ENORMOUS state expenditure on providing newbuild estates for ordinary people to rent at low cost? And an even more enormous expenditure on maintaining and administering them forever. Presumably this Stalinist ideal won't allow the repeat of the mistake of the past when bleak grey boxes built of st hardly lasted 10 years before requiring functional REbuild. This time we'll build 'em of granite and mahogany, eh? And of course our rockbottom rents'll hardly cover the cost of waging the army of administrators never mind the massive refurbishment requirement as the occupants set about destroying them, so we can,erm, raise taxes sufficiently to subsidise this New Tory adventure!! LOL!

I quite enjoy this Ken Livingstonish new PH socialist tendency of anti-capitalism expressed in outrage against profiteering private sector landlords. What about all the other profiteering capitalist pigs supplying the multitude of other goods and services to the state? Shall we nationalise EVERYTHING??? (or just housing?). Do you know why we don't? Because it is VASTLY cheaper to outsource than to leave it to the useless fukkup local and national authorities to do (any)things. Whatever they touch turns to stt. Haven't you noticed?

[WhoseGeneration]

groak said:

O I C!! Sort of Big Government socialist ideal of state provided nationalised housing at, no doubt, rock bottom rents! An anti-Thatcherite reversal buyback of ex-LA property perhaps? Or an ENORMOUS state expenditure on providing newbuild estates for ordinary people to rent at low cost? And an even more enormous expenditure on maintaining and administering them forever. Presumably this Stalinist ideal won't allow the repeat of the mistake of the past when bleak grey boxes built of st hardly lasted 10 years before requiring functional REbuild. This time we'll build 'em of granite and mahogany, eh? And of course our rockbottom rents'll hardly cover the cost of waging the army of administrators never mind the massive refurbishment requirement as the occupants set about destroying them, so we can,erm, raise taxes sufficiently to subsidise this New Tory adventure!! LOL!

I quite enjoy this Ken Livingstonish new PH socialist tendency of anti-capitalism expressed in outrage against profiteering private sector landlords. What about all the other profiteering capitalist pigs supplying the multitude of other goods and services to the state? Shall we nationalise EVERYTHING??? (or just housing?). Do you know why we don't? Because it is VASTLY cheaper to outsource than to leave it to the useless fukkup local and national authorities to do (any)things. Whatever they touch turns to stt. Haven't you noticed?

Gosh, you're on a rant aren't you.
You, of course, don't vote for anyone, "They're all the same".
So, are "They" Capitalist or Socialist?
Whichever Party having power.
Me, I like efficiency and the current system of HB is not efficient.
A capable Government, oxymoron I know, would be able to resolve this problem of housing.
I don't like my taxes not providing assets.
Or, put it this way, an economy both private and public, wasting future labour on servicing existing assets, rather than on investment in productive future capacity and assets.
Oh well, that's how decline happens, whilst others, elsewhere, are more productive.
Remove all planning restrictions, is my view, that Right enough for you?
They're only fecking houses, not exactly at the forefront of any technology.
Sorry, they're "stores of wealth".
Only because of the lack of freedom with regard to land.
Back to those Governments then?

[NoelWatson]

groak said:

NoelWatson said:

groak said:

Of course, this LOOKS LIKE a "penalty" on the HB recipient, but in REALITY it is the landlords who will lose 10% of their rents.

In that case, where do I vote for 20% cut

groak said:

I've believed for many years that Housing Benefit holds up the whole residential letting sector. It'll be interesting to see what happens if the tories manage to destroy HB. Interesting but not necessarily pleasant, or cheap, for Mr Everyman and his house price, especially if low end properties
start value-crashing.

Good, less of an artificial bubble created with my money.

At 10% most of us will suck it up. A bit less of everything will get done (including wage paying) and the reduction will be absorbed and compensated for. But at 20% or more they're out. That creates 2 options. 1) house them in massively more expensive "temporary accommodation" like bed and breakfasts. 2) don't house them at all and make Britain like the other 3rd world countries where vast numbers sleep rough or live in shanty towns. Of course, I forgot, London already has a tiny but evident street-sleeping culture. Imagine half a million sleeping rough in London rather than a few hundred....

....and what exactly IS to be gained from the stress and anxiety millions of downrated properties in negative equity will produce not only for their owners but also for their lenders? Noel, devalued and lowprice properties will just lead to less desire to own and a bigger rental market, like Germany has. Then you'll be angry about a healthy btl market, unless you think everyone will end up on the streets/in a shanty town as may well be the secret tory agenda. Which do you hate most? The idea of people making money from property as a capital investment or the idea of people making money from property as an income producer? Don't think you can have neither, can you?

groak said:

That creates 2 options.

What will happen to the properties when the current landlord bails out?

groak said:

....and what exactly IS to be gained from the stress and anxiety millions of downrated properties in negative equity will produce not only for their owners but also for their lenders?

I'm not convinced that all borrowers are hovering on 100% LTV, but a slow deflation is probably the best way out of this mess. As the Torygraph says

http://blogs.telegraph.co.uk/finance/ambroseevans-...

"The proper role for the Fed from now on is to steer a narrow course between the Scylla of deflation and the Charybdis of inflation, for year after, for as long as it takes, until America is properly purged. AND THEN NEVER COMMIT SAME IDIOTIC MISTAKE AGAIN."

The MPC must attempt the same with the propertaay market

groak said:

Noel, devalued and lowprice properties will just lead to less desire to own

Agreed that this is the way that the typical punter thinks, "buy high sell low", but those FTBs that commit to buy will be in a much better position.

groak said:

Which do you hate most? The idea of people making money from property as a capital investment or the idea of people making money from property as an income producer? Don't think you can have neither, can you?

I'll go with the latter - this will be when property is seen as a place to live by the general population, and BTL is only for the experts, such as yourself.

[turbobloke]

NoelWatson said:

groak said:

Which do you hate most? The idea of people making money from property as a capital investment or the idea of people making money from property as an income producer? Don't think you can have neither, can you?

I'll go with the latter - this will be when property is seen as a place to live by the general population, and BTL is only for the experts, such as yourself.

Happening already, hence lower volumes and increase in renting. As to the general population, owning a house ought perhaps never to have been seen as something that the entire population is going to achieve inevitably and with ease, Clinton could have done with a bit of that, so if the reduced market and less steep falls go together then it will doubtless annoy some but that's not a valid indicator of anything much except the personal reactions that can accompany emotional or actual involvement in a market.

[Magog]

NoelWatson said:

groak said:

Noel, devalued and lowprice properties will just lead to less desire to own

Agreed that this is the way that the typical punter thinks, "buy high sell low", but those FTBs that commit to buy will be in a much better position.

Could it be possible that houses are, or exhibit some of the properties of, Giffen goods.

[NoelWatson]

Magog said:

NoelWatson said:

groak said:

Noel, devalued and lowprice properties will just lead to less desire to own

Agreed that this is the way that the typical punter thinks, "buy high sell low", but those FTBs that commit to buy will be in a much better position.

Could it be possible that houses are, or exhibit some of the properties of, Giffen goods.

It would seem that way. How many time did we hear "if I don't buy now, I may never be able to again"

[NoelWatson]

NoelWatson said:

groak said:

NoelWatson said:

groak said:

Of course, this LOOKS LIKE a "penalty" on the HB recipient, but in REALITY it is the landlords who will lose 10% of their rents.

In that case, where do I vote for 20% cut

groak said:

I've believed for many years that Housing Benefit holds up the whole residential letting sector. It'll be interesting to see what happens if the tories manage to destroy HB. Interesting but not necessarily pleasant, or cheap, for Mr Everyman and his house price, especially if low end properties
start value-crashing.

Good, less of an artificial bubble created with my money.

At 10% most of us will suck it up. A bit less of everything will get done (including wage paying) and the reduction will be absorbed and compensated for. But at 20% or more they're out. That creates 2 options. 1) house them in massively more expensive "temporary accommodation" like bed and breakfasts. 2) don't house them at all and make Britain like the other 3rd world countries where vast numbers sleep rough or live in shanty towns. Of course, I forgot, London already has a tiny but evident street-sleeping culture. Imagine half a million sleeping rough in London rather than a few hundred....

....and what exactly IS to be gained from the stress and anxiety millions of downrated properties in negative equity will produce not only for their owners but also for their lenders? Noel, devalued and lowprice properties will just lead to less desire to own and a bigger rental market, like Germany has. Then you'll be angry about a healthy btl market, unless you think everyone will end up on the streets/in a shanty town as may well be the secret tory agenda. Which do you hate most? The idea of people making money from property as a capital investment or the idea of people making money from property as an income producer? Don't think you can have neither, can you?

groak said:

That creates 2 options.

What will happen to the properties when the current landlord bails out?

groak said:

....and what exactly IS to be gained from the stress and anxiety millions of downrated properties in negative equity will produce not only for their owners but also for their lenders?

I'm not convinced that all borrowers are hovering on 100% LTV, but a slow deflation is probably the best way out of this mess. As the Torygraph says

http://blogs.telegraph.co.uk/finance/ambroseevans-...

"The proper role for the Fed from now on is to steer a narrow course between the Scylla of deflation and the Charybdis of inflation, for year after, for as long as it takes, until America is properly purged. AND THEN NEVER COMMIT SAME IDIOTIC MISTAKE AGAIN."

The MPC must attempt the same with the propertaay market

groak said:

Noel, devalued and lowprice properties will just lead to less desire to own

Agreed that this is the way that the typical punter thinks, "buy high sell low", but those FTBs that commit to buy will be in a much better position.

groak said:

Which do you hate most? The idea of people making money from property as a capital investment or the idea of people making money from property as an income producer? Don't think you can have neither, can you?

I'll go with the latter - this will be when property is seen as a place to live by the general population, and BTL is only for the experts, such as yourself.

groak said:

Don't think you can have neither, can you?

Just to add - isn't that the situation at the moment - negligible capital gain and pitiful yields?

[groak]

In reality there isn't much wrong with HB. Most of it works as well as we can expect, which is why there aren't vast numbers of homeless, why most of the dwellings they live in are in reasonable order, and why most of the rents are at a reasonable rate.

Of course there are some problems with it. And if the tories feel like being sensible they should focus on dealing with the problem areas of HB AND the causes of those problems, and leave the parts of it which are working satisfactorily alone.

AFAIK all the outrageous rent levels are in London. For example no-one (even with 20 kids) gets £20k a year in HB in Glasgow, never mind £90k. In fact I'm not even aware of a £12kpa claim in Glasgow. So don't be fooled into thinking that any more than a very very small number of the millions of claimants (and all of these in London) is in receipt of extravagant HB payments. What the proposed cap certainly does do is Boris's social cleansing thing. So what? If you're on benefits it's because you're skint. And if you're skint then you can't live in a posh area or drive a flash motor or eat in an upscale restaurant. What the fukk is hard to understand about that? We're ALL skint to some extent comparatively speaking. I mean, does anyone think the people who live in Surrey and work in London wouldn't prefer to live in luxury London if they could afford it? They don't do that nightmare daily commute because they WANT to. They do it because they haven't 15 million quid for a measly townhouse, never mind FIFTY million for the Real Deal they'd love to live in. And sadly, Mr & Mrs Mangowallah Bongflower and their 11 schoolage children are just going to have to learn to slum it in a 20kpa house in Surrey rather than the 90kpa a year house they feel entitled to in Chelsea. I mean if it's THAT bad having to rub shoulders with the likes of Noel & family, then why don't they scuttle off back to Bongostan and see what the Bongostani taxpayer will supply them for nothing, regardless of their multiplicity of children and health problems. So fukk them and everyone like them. Cap HB. £20kpa is very very generous. And I'm also sure the TPHs (Typical Pistonheads) will be very generous in their welcoming of this influx of urban claimants into their suburban enclaves. It'll add a bit of social variety and colour. I'm sure it'll work out for the best for everyone, eh Noel? They're on the waaa-aaayyyy!!!

[NoelWatson]

groak said:

In reality there isn't much wrong with HB. Most of it works as well as we can expect, which is why there aren't vast numbers of homeless, why most of the dwellings they live in are in reasonable order, and why most of the rents are at a reasonable rate.

Of course there are some problems with it. And if the tories feel like being sensible they should focus on dealing with the problem areas of HB AND the causes of those problems, and leave the parts of it which are working satisfactorily alone.

AFAIK all the outrageous rent levels are in London. For example no-one (even with 20 kids) gets £20k a year in HB in Glasgow, never mind £90k. In fact I'm not even aware of a £12kpa claim in Glasgow. So don't be fooled into thinking that any more than a very very small number of the millions of claimants (and all of these in London) is in receipt of extravagant HB payments. What the proposed cap certainly does do is Boris's social cleansing thing. So what? If you're on benefits it's because you're skint. And if you're skint then you can't live in a posh area or drive a flash motor or eat in an upscale restaurant. What the fukk is hard to understand about that? We're ALL skint to some extent comparatively speaking. I mean, does anyone think the people who live in Surrey and work in London wouldn't prefer to live in luxury London if they could afford it? They don't do that nightmare daily commute because they WANT to. They do it because they haven't 15 million quid for a measly townhouse, never mind FIFTY million for the Real Deal they'd love to live in. And sadly, Mr & Mrs Mangowallah Bongflower and their 11 schoolage children are just going to have to learn to slum it in a 20kpa house in Surrey rather than the 90kpa a year house they feel entitled to in Chelsea. I mean if it's THAT bad having to rub shoulders with the likes of Noel & family, then why don't they scuttle off back to Bongostan and see what the Bongostani taxpayer will supply them for nothing, regardless of their multiplicity of children and health problems. So fukk them and everyone like them. Cap HB. £20kpa is very very generous. And I'm also sure the TPHs (Typical Pistonheads) will be very generous in their welcoming of this influx of urban claimants into their suburban enclaves. It'll add a bit of social variety and colour. I'm sure it'll work out for the best for everyone, eh Noel? They're on the waaa-aaayyyy!!!

groak said:

In reality there isn't much wrong with HB.

I'm not sure how George got to 50% above inflation

http://www.publications.parliament.uk/pa/cm201011/...

"The Chancellor also outlined his determination to reform Housing Benefit, where spending had "risen from £14 billion ten years ago to £21 billion today", which he said represented "close to a 50 per cent increase over and above inflation".


Clegg gives different numbers

"We need to do something about a housing benefit bill which has gone up from £10bn to £21bn in recent years under Labour"

Anyway, rents have gone up much over the last decade, so I disagree, I think there is a problem with HB

groak said:

AFAIK all the outrageous rent levels are in London. For example no-one (even with 20 kids) gets £20k a year in HB in Glasgow, never mind £90k. In fact I'm not even aware of a £12kpa claim in Glasgow. So don't be fooled into thinking that any more than a very very small number of the millions of claimants (and all of these in London) is in receipt of extravagant HB payments.

I'm thinking also of

http://www.dwp.gov.uk/local-authority-staff/housin...

"set LHA rates at the 30th percentile of rents in each Broad Rental Market Area rather than the median"

Why is this such a bad thing?

[groak]

NoelWatson said:

groak said:

In reality there isn't much wrong with HB.

I'm not sure how George got to 50% above inflation

http://www.publications.parliament.uk/pa/cm201011/...

"The Chancellor also outlined his determination to reform Housing Benefit, where spending had "risen from £14 billion ten years ago to £21 billion today", which he said represented "close to a 50 per cent increase over and above inflation".


Clegg gives different numbers

"We need to do something about a housing benefit bill which has gone up from £10bn to £21bn in recent years under Labour"

Anyway, rents have gone up much over the last decade, so I disagree, I think there is a problem with HB

groak said:

AFAIK all the outrageous rent levels are in London. For example no-one (even with 20 kids) gets £20k a year in HB in Glasgow, never mind £90k. In fact I'm not even aware of a £12kpa claim in Glasgow. So don't be fooled into thinking that any more than a very very small number of the millions of claimants (and all of these in London) is in receipt of extravagant HB payments.

I'm thinking also of

http://www.dwp.gov.uk/local-authority-staff/housin...

"set LHA rates at the 30th percentile of rents in each Broad Rental Market Area rather than the median"

Why is this such a bad thing?

Only a few years ago letting agents used to get data sheets sent through by the local rent assessor's office which we were asked to volunteer to complete and return. The main aim of this was to ascertain private sector NON-HB rent levels and changes to same, and was used as one source (along with, for example, newspaper ads) to set local HB levels. This hasn't been done for some time, and certainly not since LHA was introduced. Don't know HOW they determine rents these days, but their "median calculations" certainly aren't too far out. The only problem with standardising rent payments for set areas is that dumps get the same rate as palaces. That's been a bone of contention since HB began, though years ago every tenancy was inspected prior to inception and especially poor property wasn't paid for until it was sorted. Obviously in the non-HB private sector a dump is (usually) cheaper than a palace. That's one thing "New HB" could address.

And personally I find their "30th percentile" slight reduction quite acceptable. It still sets rents at an acceptable (to me) level. I won't be even thinking of discontinuing tenancies with that size of reduction.

I don't necessarily think that THAT (headline rent) is the problem with HB, though. Mind you without consulting operators in the sector I don't see how they're going to understand its merits and demerits. Since local council "landlord forums" were incepted a few years ago, and for the first time communication between the HB administrators (local&national govt depts) and its operators has been in place, it's been painfully evident how little THEY know about the practical reality of HB tenancies and how little they are interested in listening to, never mind addressing landlords' comments and concerns. With that in mind, how central government hopes to formulate some new and successful system I cannot possibly say.

Incidentally, a fair bit of government property is (or, at least, used to be) rented from the Heron Group. Have they looked at reducing the rents they're prepared to pay for it, or, indeed, taking leases on much cheaper, though less city central property? No? Thought not. Funny that.

[NoelWatson]

groak said:

Incidentally, a fair bit of government property is (or, at least, used to be) rented from the Heron Group. Have they looked at reducing the rents they're prepared to pay for it, or, indeed, taking leases on much cheaper, though less city central property? No? Thought not. Funny that.

Why don't you mention it at your next local Tory fundraising?

[turbobloke]

Are there such things as Tory fundraising events? Didn't they have more money for the election than they could spend?

"ConservativeHome understands that the party raised £2m to £5m more than it could legally spend; putting it in a good place for a second election if one became necessary.

It's the incompetent lefties that need to raise funds but nobody except timewarp dinosaurs in the unions seem keen to hand over cash, and even the dinosaurs are looking over their shoulder at Ed 'Meteorite' Microgland. Or is his middle name Comet - whatever

[groak]

turbobloke said:

Are there such things as Tory fundraising events? .

Not in Scotland there ain't. We don't allow tories here, tho' I do remember them. In fact I'm sure I met a bloke who knows a guy who is said to once have voted for them before they were abolished.

[turbobloke]

groak said:

turbobloke said:

Are there such things as Tory fundraising events? .

Not in Scotland there ain't. We don't allow tories here, tho' I do remember them. In fact I'm sure I met a bloke who knows a guy who is said to once have voted for them before they were abolished.

Sounds like Scotland is the BBC only bigger and with more snow.

[groak]

turbobloke said:

groak said:

turbobloke said:

Are there such things as Tory fundraising events? .

Not in Scotland there ain't. We don't allow tories here, tho' I do remember them. In fact I'm sure I met a bloke who knows a guy who is said to once have voted for them before they were abolished.

Sounds like Scotland is the BBC only bigger and with more snow.

Scotland is everyone's worst nightmare. Please tell everyone you know and assure them that the worst thing they could do is come here, other than for tourism or business purposes, ie come here, do what you have to do, and leave.

[turbobloke]

groak said:

turbobloke said:

groak said:

turbobloke said:

Are there such things as Tory fundraising events? .

Not in Scotland there ain't. We don't allow tories here, tho' I do remember them. In fact I'm sure I met a bloke who knows a guy who is said to once have voted for them before they were abolished.

Sounds like Scotland is the BBC only bigger and with more snow.

Scotland is everyone's worst nightmare. Please tell everyone you know and assure them that the worst thing they could do is come here, other than for tourism or business purposes, ie come here, do what you have to do, and leave.

Already been there, done business (got paid on time each time too) and left - everybody happy

Meanwhile the next housing boom continues to be documented.

http://www.nationwide.co.uk/hpi/

I refer of course to "Further quantitative easing could boost the housing market"

[RYH64E]

turbobloke said:

groak said:

turbobloke said:

groak said:

turbobloke said:

Are there such things as Tory fundraising events? .

Not in Scotland there ain't. We don't allow tories here, tho' I do remember them. In fact I'm sure I met a bloke who knows a guy who is said to once have voted for them before they were abolished.

Sounds like Scotland is the BBC only bigger and with more snow.

Scotland is everyone's worst nightmare. Please tell everyone you know and assure them that the worst thing they could do is come here, other than for tourism or business purposes, ie come here, do what you have to do, and leave.

Already been there, done business (got paid on time each time too) and left - everybody happy

Meanwhile the next housing boom continues to be documented.

http://www.nationwide.co.uk/hpi/

I refer of course to "Further quantitative easing could boost the housing market"

Conversely, it will be interesting to see what happens to house prices when interest rates begin to rise. A 1% increase in base rates over the next 12-18 months is not unlikely imo.

edited to add

http://www.telegraph.co.uk/finance/personalfinance...

Edited by RYH64E on Sunday 31st October 13:19

[NoelWatson]

RYH64E said:

turbobloke said:

groak said:

turbobloke said:

groak said:

turbobloke said:

Are there such things as Tory fundraising events? .

Not in Scotland there ain't. We don't allow tories here, tho' I do remember them. In fact I'm sure I met a bloke who knows a guy who is said to once have voted for them before they were abolished.

Sounds like Scotland is the BBC only bigger and with more snow.

Scotland is everyone's worst nightmare. Please tell everyone you know and assure them that the worst thing they could do is come here, other than for tourism or business purposes, ie come here, do what you have to do, and leave.

Already been there, done business (got paid on time each time too) and left - everybody happy

Meanwhile the next housing boom continues to be documented.

http://www.nationwide.co.uk/hpi/

I refer of course to "Further quantitative easing could boost the housing market"

Conversely, it will be interesting to see what happens to house prices when interest rates begin to rise. A 1% increase in base rates over the next 12-18 months is not unlikely imo.

edited to add

http://www.telegraph.co.uk/finance/personalfinance...

Edited by RYH64E on Sunday 31st October 13:19

The MPC are leaving it a bit late. People are starting to think that the propertaay market/borrowers aren't in trouble as the pain is being masked by stupidly low interest rates.

[turbobloke]

No doubt some mortgage holders would find an extra 2% difficult but the phrase in that report "loans that breached the regulator's affordability guidelines" takes the sting out of this as affordability guidelines are just that and like chicken soup average house prices they can't reflect individual positions that well. 'The computer says' is usually a prologue to bks.