ChatterBank7 mins ago
Whatever happened to....
12 Answers
The housing crisis, a few years ago there was a cry and a clamour for houses, what happened to all those people who needed a place to live?
Could it be that there never was a housing crisis, rather a (too much) credit crisis?
Could it be that there never was a housing crisis, rather a (too much) credit crisis?
Answers
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The Housing Shortage hasn't gone away, it is just too dull a story to catch headlines.
House building has dropped dramatically since 2008, while the population continues to grow. The problem is getting worse, not better.
http://news.sky.com/s...ticle/201003315577632
House building has dropped dramatically since 2008, while the population continues to grow. The problem is getting worse, not better.
http://news.sky.com/s...ticle/201003315577632
The last time we had a stable housing market was in the 1960s when there was prudent lending by the building societies. In 1960 the average weekly wage was about £10 and you could buy the average house for about £2000 in other words 200 times the weekly wage.
Over the years when building societies allowed almost anyone to buy a house ( No deposits and 130% morgages ) house prices inevitably shot up until the crash two years ago.
However despite the crash house prices are still excessively high.
Today the average wage is £470 and the average house is £166,000 which is 353 times the weekly wage.
Until that gap is narrowed we will never get a stable housing market where supply and demand are in some sort of balance and that means housing prices must fall. Its no good wages going up that would just push up the cost of building.
Nobody wants to see the value of their property fall and many are hoping that when the economy picks up so will property values. They will have a long wait.
Over the years when building societies allowed almost anyone to buy a house ( No deposits and 130% morgages ) house prices inevitably shot up until the crash two years ago.
However despite the crash house prices are still excessively high.
Today the average wage is £470 and the average house is £166,000 which is 353 times the weekly wage.
Until that gap is narrowed we will never get a stable housing market where supply and demand are in some sort of balance and that means housing prices must fall. Its no good wages going up that would just push up the cost of building.
Nobody wants to see the value of their property fall and many are hoping that when the economy picks up so will property values. They will have a long wait.
We don't need to build more houses, just live in the ones we've got built.
My belief is that the housing boom was funded almost entirely by poor mortgage products like self certs (which was just an excuse to launder money) which caused the price rises.
How's this for an idea, all houses have to be registered with Land Registry, all houses have to be made fit for human habitation by (say) April 2012 or demolished.
Any house not suitably repaired by the owner will be compulsarily purchased by the council at the value of the land it sits upon (may actually be on the statute already as Neville Chamberlain introduced a paper whilst Chancellor Of The Exchequer), the cost of this purchase plus disbursements then becomes the starting price of the property at public auction.
The houses can only be bought by individuals (not companies), they cannot be sub-let and the ownner must live in it for a specified period before being allowed to sell it.
We own the banks, so the government tells the banks to devise a mortgage that allows this to happen.
What it means, is derelict property if unregistered will be state owned and sold quickly (he money held in trust), derelict property will either be renovated by it's current owner or a new one, the cost to the tax payer is nil as the cost of acquisition will be borne by the new buyer, builders and tradesmen will be found work that is not state funded and all these builders would have to be registered and the licence carry an indemnity to dissuade rogues.
My belief is that the housing boom was funded almost entirely by poor mortgage products like self certs (which was just an excuse to launder money) which caused the price rises.
How's this for an idea, all houses have to be registered with Land Registry, all houses have to be made fit for human habitation by (say) April 2012 or demolished.
Any house not suitably repaired by the owner will be compulsarily purchased by the council at the value of the land it sits upon (may actually be on the statute already as Neville Chamberlain introduced a paper whilst Chancellor Of The Exchequer), the cost of this purchase plus disbursements then becomes the starting price of the property at public auction.
The houses can only be bought by individuals (not companies), they cannot be sub-let and the ownner must live in it for a specified period before being allowed to sell it.
We own the banks, so the government tells the banks to devise a mortgage that allows this to happen.
What it means, is derelict property if unregistered will be state owned and sold quickly (he money held in trust), derelict property will either be renovated by it's current owner or a new one, the cost to the tax payer is nil as the cost of acquisition will be borne by the new buyer, builders and tradesmen will be found work that is not state funded and all these builders would have to be registered and the licence carry an indemnity to dissuade rogues.
I think you're addressing the wrong problem
There are lots of rental houses that are bought to let by people as investments be it for pensions for themselves or just somewhere to put money with very low interest rates. These people contribute to pushing up house prices
The problem is much worse where holiday homes are common.
Then you have lots of young people who cannot afford to buy because the prices are so high.
There are many places where you can't buy anything for less than £100,000 that means that unless you have two people paying the mortgage both on a relatively decent wage they're just priced out.
I'm sure there are derelict hoses but probably not enough and not in the more expensive areas where the problem is most acute.
There are lots of rental houses that are bought to let by people as investments be it for pensions for themselves or just somewhere to put money with very low interest rates. These people contribute to pushing up house prices
The problem is much worse where holiday homes are common.
Then you have lots of young people who cannot afford to buy because the prices are so high.
There are many places where you can't buy anything for less than £100,000 that means that unless you have two people paying the mortgage both on a relatively decent wage they're just priced out.
I'm sure there are derelict hoses but probably not enough and not in the more expensive areas where the problem is most acute.
123 I don't see how your ideas are going to stabilise the market . The only way of doing that is to control the way and amount that can be lent. Going back to the 60s you had to put down at least 10% of the purchase price , the morgage had to be paid up within 25 years and completed before the age of 65. Only one salary could be considered when offering a morgage as especially with young couples the wife's salary was liable to be unavailable when having a family.
All these solid prudent restrictions were whittled away and more and more, and people were able to buy whatever their circumstances. . Societies started to accept the second salary, the deposit was not insisted upon , and as prices started to rise the morgage period was extended from 25 to 30 ,then 40 years and then abolished altogether . People were offered 100% then 130% to refurbish the property . No one was worried because whatever you paid the value of the property would go up every year . In theory you couldn't lose, until the crash !
All these solid prudent restrictions were whittled away and more and more, and people were able to buy whatever their circumstances. . Societies started to accept the second salary, the deposit was not insisted upon , and as prices started to rise the morgage period was extended from 25 to 30 ,then 40 years and then abolished altogether . People were offered 100% then 130% to refurbish the property . No one was worried because whatever you paid the value of the property would go up every year . In theory you couldn't lose, until the crash !
There is a huge problem with people buying houses and leaving them empty in the hope of C.P.
It will bring house prices down as the amount of stock would be increased, another provision could be added to shops, either whole rows of shops could be utilised with low cost loans and assistance for the help of an architect to develop the accomodation.
If a property occupies 20,000 square feet is valued at £20 a square foot, that's a cheap house, add another £40,000 for renovation, that's still a cheap house.
A cheap house, that's offered employment to solicitors, bricklayers, plumbers, joiners, roofers and electricians, it improves the neighbourhoods involved, and it costs the taxpayer nothing.
Modeller, I agree with some of what you say, but not the sentiment.
130% mortgages were always a bad idea, they functioned on the assumption that the renovation would increase the value of the home to create equity in a growing market, it was a punt plainly prone to failure at some point.
Large deposits are tolerable in a stable to the point of static market, for this to occur you need higher interest rates to encourage savings for aspirational growth whilst keeping a check on inflationary pay rises, a difficult trick to pull off.
Dual incomes should be considered in the evaluation of a loan's validity, although i accept that one of the effects of equal working rights has been to raise prices to match, I can't pretend to know the answer to that one.
Rov, that's an interesting point, I don't know anyone living like that myself, but, during the boom we were led to believe that were thousands of people who couldn't find or afford a house to buy, so were are they living now?
It will bring house prices down as the amount of stock would be increased, another provision could be added to shops, either whole rows of shops could be utilised with low cost loans and assistance for the help of an architect to develop the accomodation.
If a property occupies 20,000 square feet is valued at £20 a square foot, that's a cheap house, add another £40,000 for renovation, that's still a cheap house.
A cheap house, that's offered employment to solicitors, bricklayers, plumbers, joiners, roofers and electricians, it improves the neighbourhoods involved, and it costs the taxpayer nothing.
Modeller, I agree with some of what you say, but not the sentiment.
130% mortgages were always a bad idea, they functioned on the assumption that the renovation would increase the value of the home to create equity in a growing market, it was a punt plainly prone to failure at some point.
Large deposits are tolerable in a stable to the point of static market, for this to occur you need higher interest rates to encourage savings for aspirational growth whilst keeping a check on inflationary pay rises, a difficult trick to pull off.
Dual incomes should be considered in the evaluation of a loan's validity, although i accept that one of the effects of equal working rights has been to raise prices to match, I can't pretend to know the answer to that one.
Rov, that's an interesting point, I don't know anyone living like that myself, but, during the boom we were led to believe that were thousands of people who couldn't find or afford a house to buy, so were are they living now?
There never really was a housing crisis.
There was an expectation crisis.
It started in the late 80s and 90s. Too many people who were first time buyers had utterly unrealistic expectations about their first house. They had a list of 'must-haves' – it must be in such-and-such an area, it must have x number of bedrooms (at the very least, two), it must have a garden and a garage, etc.
When these first time buyers looked at the houses that fitted their predefined criteria – oh no! These houses were way too expensive! Something must be done to help these poor, underprivileged, two bedroom, detached house with garage and garden desiring first-timers buyers.
There is now an entire generation of people who think that the world owes them a favour. They look at their parents' possessions and say to themselves – 'I want what you have – and I want it now'.
What a great deal of these young people fail to realise is that to acquire nice things and to live in a nice area takes a great deal of hard work, dedication and above all: time.
There was an expectation crisis.
It started in the late 80s and 90s. Too many people who were first time buyers had utterly unrealistic expectations about their first house. They had a list of 'must-haves' – it must be in such-and-such an area, it must have x number of bedrooms (at the very least, two), it must have a garden and a garage, etc.
When these first time buyers looked at the houses that fitted their predefined criteria – oh no! These houses were way too expensive! Something must be done to help these poor, underprivileged, two bedroom, detached house with garage and garden desiring first-timers buyers.
There is now an entire generation of people who think that the world owes them a favour. They look at their parents' possessions and say to themselves – 'I want what you have – and I want it now'.
What a great deal of these young people fail to realise is that to acquire nice things and to live in a nice area takes a great deal of hard work, dedication and above all: time.
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