Preparing hard workers for a future of tax paying...

[turbobloke]

There was no claim to that effect, a point I made in my initial reply - yet still you persist in challenging a point that wasn't made rather than the one that was.

The point was that 'this time is different' assumes contributory factors remain the same, and many do not, so assumptions and conclusions based on another viewpoint are there to be challenged.

[fido]

Twincam16 said:

Looks like the government recognise the problem too:

http://www.bbc.co.uk/news/uk-10910048

http://news.bbc.co.uk/1/hi/business/8468605.stm

i prefer the Mash take :-

http://www.thedailymash.co.uk/news/society/governm...

[gamefreaks]

Heated discussion.

Let me ask this:

1) At what point will the housing market seize. What will the average FTB need to be earning (assuming they don't have an unlimited overdraft with Bank of Mum and Dad!) before the bottom of the market seizes. Top 50% earners? Top 10%? At what point will no one sell because no-one can buy? Will BTL landlords come in and snap them all up?

2) What will this do to rents?

3) What is the longest reasonable mortgage? 25yrs? 35yrs, 50yrs? Do you think that in the future we will pay for houses over several generations?

4) Assuming higher mortgages leads to higher rents, what sort of pressure will this put on social housing and housing benefit payments? Will the (can they?) gubberment be happy to hand out ever increasing amounts of taxpayers money to BTL landlords?

[NoelWatson]

gamefreaks said:

4) Assuming higher mortgages leads to higher rents, what sort of pressure will this put on social housing and housing benefit payments? Will the (can they?) gubberment be happy to hand out ever increasing amounts of taxpayers money to BTL landlords?

You do realise that Labour got thrown out?

[gamefreaks]

NoelWatson said:

gamefreaks said:

4) Assuming higher mortgages leads to higher rents, what sort of pressure will this put on social housing and housing benefit payments? Will the (can they?) gubberment be happy to hand out ever increasing amounts of taxpayers money to BTL landlords?

You do realise that Labour got thrown out?

But what difference does that make?

If house prices are (as some suggest) on an ever-increasing spiral in relation to average earnings, then it stands to reason that rents will follow. Hence more and more people will be relying on state benefits.

Or do you think that the Blue-with-yellow-stripe ties will introduce work-camps or suggest living in a cardboard box in an alleyway? Or maybe trailer-parks?

[NoelWatson]

gamefreaks said:

NoelWatson said:

gamefreaks said:

4) Assuming higher mortgages leads to higher rents, what sort of pressure will this put on social housing and housing benefit payments? Will the (can they?) gubberment be happy to hand out ever increasing amounts of taxpayers money to BTL landlords?

You do realise that Labour got thrown out?

But what difference does that make?

If house prices are (as some suggest) on an ever-increasing spiral in relation to average earnings, then it stands to reason that rents will follow. Hence more and more people will be relying on state benefits.

Or do you think that the Blue-with-yellow-stripe ties will introduce work-camps or suggest living in a cardboard box in an alleyway? Or maybe trailer-parks?

gamefreaks said:

But what difference does that make?

http://www.guardian.co.uk/politics/2010/jul/23/housing-benefit-cuts-hit-poorest

gamefreaks said:

If house prices are (as some suggest) on an ever-increasing spiral in relation to average earnings, then it stands to reason that rents will follow.

Nope

[gamefreaks]

NoelWatson said:

gamefreaks said:

If house prices are (as some suggest) on an ever-increasing spiral in relation to average earnings, then it stands to reason that rents will follow.

Nope

Source for graph?

Ok, can you explain why higher mortgages don't lead to higher rents? Supply vs demand? BTL landlords making a loss?

If house prices continue to increase, do you think the graphs will remain tethered or do you think people will simply have to accept that they will have to pay a higher % of income keeping a roof over their head?

[NoelWatson]

gamefreaks said:

NoelWatson said:

gamefreaks said:

If house prices are (as some suggest) on an ever-increasing spiral in relation to average earnings, then it stands to reason that rents will follow.

Nope

Source for graph?

Ok, can you explain why higher mortgages don't lead to higher rents? Supply vs demand? BTL landlords making a loss?

If house prices continue to increase, do you think the graphs will remain tethered or do you think people will simply have to accept that they will have to pay a higher % of income keeping a roof over their head?

Source for graph is shown at bottom. Landlords don't seem to care about yields as property always goes up, and they hope to make money on the capital gain. As for people paying more of a % of income, have a read of the FSA report on mortgages - 46% of people have no money or negative balance each month. MEW helped during this time, but the country is effectively hitting the limit.

[gamefreaks]

NoelWatson said:

gamefreaks said:

NoelWatson said:

You do realise that Labour got thrown out?

But what difference does that make?

If house prices are (as some suggest) on an ever-increasing spiral in relation to average earnings, then it stands to reason that rents will follow. Hence more and more people will be relying on state benefits.

Or do you think that the Blue-with-yellow-stripe ties will introduce work-camps or suggest living in a cardboard box in an alleyway? Or maybe trailer-parks?

gamefreaks said:

But what difference does that make?

http://www.guardian.co.uk/politics/2010/jul/23/housing-benefit-cuts-hit-poorest

Your link actually goes someway towards proving my point:

Guardian said:

The government says the cuts are necessary as the cost to the taxpayer of housing benefit expenditure is now £20bn – double that of a decade ago.

HB payments have doubled in the last 10 years, now some of this is going to be down to the 'carnt be bovvered with wurk, warez mah free house?' crowd. But all of it?

[gamefreaks]

NoelWatson said:

Source for graph is shown at bottom. Landlords don't seem to care about yields as property always goes up, and they hope to make money on the capital gain. As for people paying more of a % of income, have a read of the FSA report on mortgages - 46% of people have no money or negative balance each month. MEW helped during this time, but the country is effectively hitting the limit.

Ah, source right in front of me. Sorry, I was being hard of reading...

Anyway, the discussion I was trying to open up is, if prices are to continue to spiral upward, what would the ramifications be?

[NoelWatson]

gamefreaks said:

NoelWatson said:

Source for graph is shown at bottom. Landlords don't seem to care about yields as property always goes up, and they hope to make money on the capital gain. As for people paying more of a % of income, have a read of the FSA report on mortgages - 46% of people have no money or negative balance each month. MEW helped during this time, but the country is effectively hitting the limit.

Ah, source right in front of me. Sorry, I was being hard of reading...

Anyway, the discussion I was trying to open up is, if prices are to continue to spiral upward, what would the ramifications be?

An even bigger bust.

[cymtriks]

NoelWatson said:

....I genuinely can't see any factor that makes housing more than twice as expensive relative to earnings as 15 years ago.

Immigration, longevity, divorce, staying single, marrying later. All up.

Planning restrictions, conservation, concerns over flood plains. All up.

The effect is not linear. Imagine 99 people buying 100 homes. One seller will be left with an unsold house and every buyer will get a house even if the last guy, who gets a choice of two, offers junk value. Now imagine 100 people buying 99 homes. The numbers have hardly changed but the outcome is completely different. One buyer will now be homeless and the last seller will have double the number of customers than he can actually sell to. Thus small changes in availability can prompt big changes in price.

The above is supply and demand.

Add to this the recent history of low interest rates. Over the last ten years the base rate has averaged only 3.3 percent making this a very low rate decade. House prices have compensated for low rates by increasing. The more people get used to low rates the more likely rates are to stay low and the more likely big income multiples are to continue.

It really is this simple. Supply and demand plus lending criteria.

Non of this is going to change soon so the outlook is therefore very expensive homes. This might not be the price but something will cost more. It has to.

Can you see any of the factors I've listed going into reverse in the foreseable future?

[dilbert]

cymtriks said:

NoelWatson said:

....I genuinely can't see any factor that makes housing more than twice as expensive relative to earnings as 15 years ago.

Immigration, longevity, divorce, staying single, marrying later. All up.

Planning restrictions, conservation, concerns over flood plains. All up.

The effect is not linear. Imagine 99 people buying 100 homes. One seller will be left with an unsold house and every buyer will get a house even if the last guy, who gets a choice of two, offers junk value. Now imagine 100 people buying 99 homes. The numbers have hardly changed but the outcome is completely different. One buyer will now be homeless and the last seller will have double the number of customers than he can actually sell to. Thus small changes in availability can prompt big changes in price.

The above is supply and demand.

Add to this the recent history of low interest rates. Over the last ten years the base rate has averaged only 3.3 percent making this a very low rate decade. House prices have compensated for low rates by increasing. The more people get used to low rates the more likely rates are to stay low and the more likely big income multiples are to continue.

It really is this simple. Supply and demand plus lending criteria.

Non of this is going to change soon so the outlook is therefore very expensive homes. This might not be the price but something will cost more. It has to.

Can you see any of the factors I've listed going into reverse in the foreseable future?

Thats true for jobs too....

If we cancel benefits, we're faced with the same problems that the Nazis had with the jews.

My main reason for pointing this out, is that without deep inspection, it seems satisfactory to free up homes by cancelling benefit.

One thing that I note, is that if interest rates go up, then the benefits bill also goes up.
We could do with a rise in interest rates to prevent inflation.

This really does seem like the thirties.

I wonder if it will be bad enough to fuel a backlash against communism.

Edited by dilbert on Tuesday 10th August 00:36

[Poledriver]

dilbert said:

Thats true for jobs too....

If we cancel benefits, we're faced with the same problems that the Nazis had with the jews.

My main reason for pointing this out, is that without deep inspection, it seems satisfactory to free up homes by cancelling benefit.

One thing that I note, is that if interest rates go up, then the benefits bill also goes up.
We could do with a rise in interest rates to prevent inflation.

This really does seem like the thirties.

I wonder if it will be bad enough to fuel a backlash against communism.

One lives in hope!

[NoelWatson]

cymtriks said:

NoelWatson said:

....I genuinely can't see any factor that makes housing more than twice as expensive relative to earnings as 15 years ago.

Immigration, longevity, divorce, staying single, marrying later. All up.

Planning restrictions, conservation, concerns over flood plains. All up.

The effect is not linear. Imagine 99 people buying 100 homes. One seller will be left with an unsold house and every buyer will get a house even if the last guy, who gets a choice of two, offers junk value. Now imagine 100 people buying 99 homes. The numbers have hardly changed but the outcome is completely different. One buyer will now be homeless and the last seller will have double the number of customers than he can actually sell to. Thus small changes in availability can prompt big changes in price.

The above is supply and demand.

Add to this the recent history of low interest rates. Over the last ten years the base rate has averaged only 3.3 percent making this a very low rate decade. House prices have compensated for low rates by increasing. The more people get used to low rates the more likely rates are to stay low and the more likely big income multiples are to continue.

It really is this simple. Supply and demand plus lending criteria.

Non of this is going to change soon so the outlook is therefore very expensive homes. This might not be the price but something will cost more. It has to.

Can you see any of the factors I've listed going into reverse in the foreseable future?

cymtriks said:

Immigration, longevity, divorce, staying single, marrying later. All up.

Planning restrictions, conservation, concerns over flood plains. All up.

Are you picking these at random or have you genuine evidence that suggests there has been massive increases over the past 15 years and this has had a knock on effect on prices. Furthermore, I assume you are suggesting that at least one of these factors was in reverse when house prices fell in the 90s

cymtriks said:

Add to this the recent history of low interest rates. Over the last ten years the base rate has averaged only 3.3 percent making this a very low rate decade. House prices have compensated for low rates by increasing. The more people get used to low rates the more likely rates are to stay low and the more likely big income multiples are to continue.

While this may seem plausible, the suggestion that low interest rates mean that house prices are more affordable over the term of the mortgage does not hold up to any scrutiny, unless

a). The link between earnings, inflation and interest rates has changed
b). It is different this time, and there will be no spikes in interest rates ever again

From where are you getting your 3.3% average? I see 4.3%

cymtriks said:

Can you see any of the factors I've listed going into reverse in the foreseable future?

I have another factor. That 46% of people do not have any money left at the end of the month because they have overstretched themselves to buy overvalued housing. I think that will be the overriding factor

cymtriks said:

so the outlook is therefore very expensive homes

http://www.telegraph.co.uk/finance/personalfinance/7934593/Mini-property-boom-is-over-amid-concerns-about-double-dip-recession.html

[turbobloke]

NoelWatson said:

cymtriks said:

Immigration, longevity, divorce, staying single, marrying later. All up.

Planning restrictions, conservation, concerns over flood plains. All up.

Are you picking these at random or have you genuine evidence that suggests there has been massive increases over the past 15 years and this has had a knock on effect on prices. Furthermore, I assume you are suggesting that at least one of these factors was in reverse when house prices fell in the 90s

There have been significant increases in those top line factors and the second list is also clearly relevant. As to at least one going into reverse, was unemployment ignored for a particular reason? Some like single factor arguments yet everybody else has to list every single market driver in every post, long-term and short, to avoid specious remarks. Curious.

[monthefish]

Willie Dee said:

Your delusional if you think wealth comes from merit or hard work in this, or many other countries.

Willie Dee said:

I worked hard and was successful

[NoelWatson]

turbobloke said:

NoelWatson said:

cymtriks said:

Immigration, longevity, divorce, staying single, marrying later. All up.

Planning restrictions, conservation, concerns over flood plains. All up.

Are you picking these at random or have you genuine evidence that suggests there has been massive increases over the past 15 years and this has had a knock on effect on prices. Furthermore, I assume you are suggesting that at least one of these factors was in reverse when house prices fell in the 90s

There have been significant increases in those top line factors and the second list is also clearly relevant. As to at least one going into reverse, was unemployment ignored for a particular reason? Some like single factor arguments yet everybody else has to list every single market driver in every post, long-term and short, to avoid specious remarks. Curious.

Let's take the first one - net immigration. I don't really see a step change

http://www.google.com/publicdata?ds=wb-wdi&met...

nor life expeectancy

http://www.google.com/publicdata?ds=wb-wdi&met...

Divorce

http://www.statistics.gov.uk/images/charts/170.gif

Agreed on unemployment.

[anonymous-user]

cymtriks said:

...longevity, divorce, staying single, marrying later. All up....

agreed

people per house
1991 2.51
2001 2.36
2006 2.32
2016 2.23
2026 2.16
2036 2.13

2.51 to 2.32 in real terms means you need roughly 2 million more houses just for 1991's population (57.4m)

http://www.statistics.gov.uk/census2001/profiles/c...
http://www.communities.gov.uk/documents/statistics...

Edited by fbrs on Tuesday 10th August 13:51

[NoelWatson]

fbrs said:

cymtriks said:

...longevity, divorce, staying single, marrying later. All up....

agreed

people per house
1991 2.51
2001 2.36
2006 2.32
2016 2.23
2026 2.16
2036 2.13

2.51 to 2.32 in real terms means you need roughly 2 million more houses just for 1991's population (57.4m)

http://www.statistics.gov.uk/census2001/profiles/c...
http://www.communities.gov.uk/documents/statistics...

Edited by fbrs on Tuesday 10th August 13:51

Isn't this the same as saying there is a shortage of Ferraris because everyone wants one?