EU Referendum: The result and aftermath...

[yorksrob]

Interest rates are pretty important. For example, the monthly repayments on a repayment mortgage with a 10% rate (normal until the mid 90s) are nearly double that at 3%. A lot of people won't be able to afford their repayments if rates went up to 10%.

This is true, but that doesn't make it a desireable thing for mortgage rates to go up to such levels. Infact, it would be just a different impediment to working class people owning a home.

 

[radamfi]

This is true, but that doesn't make it a desireable thing for mortgage rates to go up to such levels. Infact, it would be just a different impediment to working class people owning a home.

In a high interest rate environment, prices would be lower.

 

[yorksrob]

In a high interest rate environment, prices would be lower.

A lower headline price doesn't mean that much if exorbitant interest rates price people out of the market. They need to think of smarter ways of influencing the housing market than just manipulating interest rates.

 

[AM9]

A lower headline price doesn't mean that much if exorbitant interest rates price people out of the market. They need to think of smarter ways of influencing the housing market than just manipulating interest rates.

The main driver of house prices in the last 50 years has been the multiplier of salary that lenders would lend up to. In the sixties and seventies, twice the lead annual salary and half the second (which was usually the female in a then normal marriage). There was little point in vendors hiking the price as nobody would get a mortgage for it.
In the '80s, all this regulation went out of the windo. Multiples rose, and the scrutiny before awarding the loan virtually disappeared until the heady days of less than 20 years ago when self-certifying a salary could land a loan of 110% the purchase value. If the certification was fictional, that could result in a loan of more 10 times the borrower's actual annual pay. Once the cat was out of the bag, the now deregulated banks were so hell-bent on increasing their profits that it took the credit crunch and a severe recession to stop it.
It seems that the sustained low interest rates we now have has driven them back to their old ways very quickly though, allowing ordinary buyers to rack up debts that they are unlikely to service, particularly with the new recession from the referendum result arriving soon. Add to that the impact of the ridiculous encouragement to buy to let and we have another perfect storm.

 

[yorksrob]

The main driver of house prices in the last 50 years has been the multiplier of salary that lenders would lend up to. In the sixties and seventies, twice the lead annual salary and half the second (which was usually the female in a then normal marriage). There was little point in vendors hiking the price as nobody would get a mortgage for it.
In the '80s, all this regulation went out of the windo. Multiples rose, and the scrutiny before awarding the loan virtually disappeared until the heady days of less than 20 years ago when self-certifying a salary could land a loan of 110% the purchase value. If the certification was fictional, that could result in a loan of more 10 times the borrower's actual annual pay. Once the cat was out of the bag, the now deregulated banks were so hell-bent on increasing their profits that it took the credit crunch and a severe recession to stop it.
It seems that the sustained low interest rates we now have has driven them back to their old ways very quickly though, allowing ordinary buyers to rack up debts that they are unlikely to service, particularly with the new recession from the referendum result arriving soon. Add to that the impact of the ridiculous encouragement to buy to let and we have another perfect storm.

Limiting the salary multiplier might be worth trying to limit house price inflation. They'd have to pay people properly though, as we wouldn't be able to rely on borrowing against equity to keep the consumer economy going.

 

[AM9]

Not so, just a plain statement of fact. If you are prepared to accept that you are willing to make savings all your working life when the opportunity affords itself, you are likely to reap the benefits in future years.

I have learned to accept criticism on this website over the last six years from those who choose not to understand what the underlying meaning in my similar postings are and instead, come out with a deliberately puerile riposte such as that made in response above.

My criticism is nothing to do with the detail of your comment, or it's underlying meaning, neither of which impact on me personally anyway. There are many posters here who are in a far less fortunate position than me or you, and I doubt that they feel that these repetitive reminders of your 'good fortune' contributes to the essence of his discussion. However, as a member of this forum, you have the right to post whatever you wish within the board rules, - as doi.
You may not have intended your comment to read like self indulgence, but it certainly comes across that way to me like many of your other posts about your lifestyle, - in words about which many before me have commented unfavourably, which you have above passed off as "choosing not to understand what the underlying meaning in your postings are" .

 

[AM9]

Limiting the salary multiplier might be worth trying to limit house price inflation. They'd have to pay people properly though, as we wouldn't be able to rely on borrowing against equity to keep the consumer economy going.

Despite the gross errors causing the dire consequences of 2008/9, it seems that the government, the lenders and most of the commentators haven't learnt from the experience. The nation is heading for another debt-induced recession.

 

[yorksrob]

Despite the gross errors causing the dire consequences of 2008/9, it seems that the government, the lenders and most of the commentators haven't learnt from the experience. The nation is heading for another debt-induced recession.

True, although it has to be remembered that the gross errors of 2008/09 kicked off in the American sub-prime mortgage markets. I'm not aware of any evidence that there has been a mass default of UK mortgages made at that time within the last ten years.

 

[SteveP29]

No, it is better to not have to spend huge amounts of time at a job you hate to prevent the collapse into miserable penury.

The bounty of automation brings the day closer when people aren't forced into poorly renumerated jobs they hate just to avoid starvation/destitution.


Rural East MIdlands where all the jobs are essentially very low paid manufacturing or very low paid agricultural - unless you are lucky enough to get a public sector job in the NHS or council.

The birthrate in the UK could increase sufficiently to offset the demographic cliff and it would make absolutely no difference to the fate of the planet.
Huge climate change is going to happen.

All we can do is make sure the UK can weather it the best it can - and it is far too late to be deliberately restricting birth rates in a desperate attempt to avert it.
Remissions that make other parts of the world richer inevitably make Britain poorer.



Why not?
If we had more houses then the house prices would tend to fall



The water supply network's capability is almost irrelevant - the price climbs because Ofwat allows the private sector to bleed the public dry for something they cannot do without, making collosal returns on vital infrastructure investment that could be paid for far more cheaply by the state.
We pay more and get less

Considering that water desalination is now practiced in Israel for 55 US cents a cubic metre the idea that there is any potable water shortage at domestic water prices is nonsensical and caused by a lack of good government policy and subserviance to blind ideology.


Who then became the next generation of slum lords, they were simply lucky enough to be holding onto the ladder when it was hauled up.
This gain can only happen once and can never be repeated because the housing stock is gone.

And it was a terrible deal for the taxpayer because now they have to expend £25 billion pounds a year on housing benefit - simply because the housing stock was sold for a tiny fraction of its value to the lucky few.

Why can't it take it?
There is still low value agricultural land in the south east - hell there is still low value agricultural land inside the M25.

There are huge numbers of plots available for the taking but there is a vested interest amongst the home owning classes to ensure house prices stay high forever, allowing them to bleed more public money through BTL and Housing Benefit.
Its the rise of a new aristocracy, aided and abetted by NIMBYism and the Town and Country PLanning Act.

And local infrastructure is only at saturation point because most of it was sold to venture capitalists who get the best returns they can when the infrastructure is so overused that it is only a little short of complete collapse.
That is simply how the market works.

I wish there was a like button for this, tory (and certain Labour governments) policy crushed in 5 minutes of reading

 

[northwichcat]

In a high interest rate environment, prices would be lower.

You could argue mortgages are more affordable due to low interest rates but the counter argument is a deposit is harder to obtain when you get 1% interest on your savings opposed to 5%. So does a low interest actually increase or decrease demand or does it make no real difference?

 

[HSTEd]

The only way to making housin gmore affordable is to build more of it.
Increasing interest rates might force down headline prices but won't help the vast majority of people who don't simply have a massive pile of money lying around to buy a house outright.

Honestly I don't expect interest rates to rise much in the near future - it appears we are in a period of sluggish industrial growth similar to that which prevailed for the vast majority of human history.

 

[AM9]

You could argue mortgages are more affordable due to low interest rates but the counter argument is a deposit is harder to obtain when you get 1% interest on your savings opposed to 5%. So does a low interest actually increase or decrease demand or does it make no real difference?

Tinkering with mortgage (artificial) interest rates, minimum deposits, gazumping rules, etc.. will not reduce homelessness. There is only one way to really change the housing deficit and that is to make more houses available to those who need it. Yes, simplistic and trite, but that can only be addressed from two directions:

1) increase the housing stock by building more. If there isn't enough profit to interest builders, then local and national government must stop selling their land and build on it themselves. There was nothing wrong with municipal housing per se in the UK until the government decided to bribe sitting tenants in the hope that they might vote for them. The even more critical aspect of that act was to prevent local authorityies from using the proceeds to create more of the same.
2) somehow, (and this is difficult and electorally risky) change the psyche of householders that residential property is an investment rather than a place to live. It would take at least a generation of financial nudges to deter the cynical spiral of rising house prices, multiple home ownership and absentee property ownership.​

There is evidence that the bullet is gradually being bitten in the recent announcement about paying for care by placing a charge against property. There was uproar from those who forsee a personal loss because they have gamed the housing market as an investment and would expect their care costs to be paid from public funds in order that their offspring can benefit form their inheritance. I think that as the housing situation gets worse, public opinion may decide that this is not only a fairer way to fund long-term care, but it will also increase the housing stock eventually.

 

[HSTEd]

There is evidence that the bullet is gradually being bitten in the recent announcement about paying for care by placing a charge against property. There was uproar from those who forsee a personal loss because they have gamed the housing market as an investment and would expect their care costs to be paid from public funds in order that their offspring can benefit form their inheritance. I think that as the housing situation gets worse, public opinion may decide that this is not only a fairer way to fund long-term care, but it will also increase the housing stock eventually.

The problem is that this scheme was rather unfair - it was essentially a game of Russian roulette, where people who lose suffer a near 100% inheritance tax, and people who win pay virtually nothing at all.

 

[radamfi]

If people don't "learn" then the market will decide for itself and the bubble will burst. Arguably we are already in that situation in most of the country, as my statistics earlier show that prices have fallen in real terms since 2007. So I'm not convinced by the arguments that we need to build more, especially in the long run. The population here in Europe is due to fall dramatically, especially if immigration is not high enough, so we may well end up with vast numbers of empty apartments.

 

[northwichcat]

If people don't "learn" then the market will decide for itself and the bubble will burst. Arguably we are already in that situation in most of the country, as my statistics earlier show that prices have fallen in real terms since 2007. So I'm not convinced by the arguments that we need to build more, especially in the long run. The population here in Europe is due to fall dramatically, especially if immigration is not high enough, so we may well end up with vast numbers of empty apartments.

In the unlikely event that we get too much housing it won't be a problem. Houses which have been divided in to multiple occupant small flats (particularly in London) could be converted back to single occupant houses, while instead of derelict houses being bought and people spending 10s of thousands to bring them up to livable standard, they could be bulldozed.

 

[Dave1987]

WOW!

A Tory extreme right winger and Brexit supporter has just said there would be little impact from no trade deal with the EU being reached and the UK going to WTO rules for trade with the EU, stating that some businesses already trade under WTO rules so business knows the score with WTO.

This is the insanity of this Government ladies and gents.

The Tories are likely to cripple the economy with the way they are going with this. All because some Tory MPs are power hungry and dislike having anything above them like the ECJ.

Curious how May trying to woo the Japanese when they have said the £3.6bn trade deal with the EU is more important. May now talking about "piggy backing" EU deals for future UK deals. Thought the world was eagerly ready to trade with us? Or maybe they are more keen on trading with the EU first!

 

[HSTEd]

If people don't "learn" then the market will decide for itself and the bubble will burst. Arguably we are already in that situation in most of the country, as my statistics earlier show that prices have fallen in real terms since 2007. So I'm not convinced by the arguments that we need to build more, especially in the long run. The population here in Europe is due to fall dramatically, especially if immigration is not high enough, so we may well end up with vast numbers of empty apartments.

Any slowdown in house price escalation is simply because people are managing their expectations down to overcrowded house shares or similar, as they have now decided there is absolutely no way they could ever afford even to rent somewhere, let alone buy somewhere.

This does not change the fact that we do not have enough houses.
I am not entirley sure how we could ever have too much housing.

 

[yorksrob]

There is evidence that the bullet is gradually being bitten in the recent announcement about paying for care by placing a charge against property. There was uproar from those who forsee a personal loss because they have gamed the housing market as an investment and would expect their care costs to be paid from public funds in order that their offspring can benefit form their inheritance. I think that as the housing situation gets worse, public opinion may decide that this is not only a fairer way to fund long-term care, but it will also increase the housing stock eventually.

I don't think I would count people living in their own sole place of residence as having "gamed" the housing market, just because the value has increased. If anything, that measure would have impacted people living in their own homes, without impacting buy-to-let or speculative "investment" at all, which are what I think we need to see reined in.

 

[AM9]

I don't think I would count people living in their own sole place of residence as having "gamed" the housing market, just because the value has increased. If anything, that measure would have impacted people living in their own homes, without impacting buy-to-let or speculative "investment" at all, which are what I think we need to see reined in.

I am talking primarily about care for people in later life, of the kind that normally stops at the end of life. On that basis, the person living alone would no longer needs a house (especially when they are deceased) so it is quite reasonable to use some of the estate's wealth (equity in this case) to pay for the care by placing a charge against it, rather than expect everybody else to subsidise their care in order that they can give the property as a bequest. The charge would only be paid when the house is sold, normally as a part of a probate process.
'Gaming' the housing market isn't necessarily just gambling on house price rises, it also includes keeping a house as an asset in the belief that others will subsidise late-life care costs. That should be discouraged in order to conserve public funds to pay for care for those who genuinely don't have any usable wealth, disposable or tied-up as a dwelling.

 

[yorksrob]

I am talking primarily about care for people in later life, of the kind that normally stops at the end of life. On that basis, the person living alone would no longer needs a house (especially when they are deceased) so it is quite reasonable to use some of the estate's wealth (equity in this case) to pay for the care by placing a charge against it, rather than expect everybody else to subsidise their care in order that they can give the property as a bequest. The charge would only be paid when the house is sold, normally as a part of a probate process.
'Gaming' the housing market isn't necessarily just gambling on house price rises, it also includes keeping a house as an asset in the belief that others will subsidise late-life care costs. That should be discouraged in order to conserve public funds to pay for care for those who genuinely don't have any usable wealth, disposable or tied-up as a dwelling.

True to an extent, although I feel that there are other more pressing inequities thrown up by the housing market that need to be addressed. For example, why should a working class household subsidise someone through rent, who by way of wealth has deprived them of the opportunity to buy such a home in the first place.

 

[HSTEd]

Why not just increase inheritance tax rather than arbitrarily seizing peoples properties if they are unlucky enough to get dementia?
All this does is create pressure on people in the early stages of Alzheimer's to kill themselves to protect the family home

 

[radamfi]

I don't think I would count people living in their own sole place of residence as having "gamed" the housing market, just because the value has increased. If anything, that measure would have impacted people living in their own homes, without impacting buy-to-let or speculative "investment" at all, which are what I think we need to see reined in.

What I don't like is other investments being treated as fair game whereas property is somewhat protected. You can make unlimited tax-free profit on the house you live in but for shares you need to have them in ISAs or pensions and you can only invest a certain amount each year in those tax shelters. That further encourages people to buy the most expensive house they can and invest in their house rather than shares.

 

[AM9]

True to an extent, although I feel that there are other more pressing inequities thrown up by the housing market that need to be addressed. For example, why should a working class household subsidise someone through rent, who by way of wealth has deprived them of the opportunity to buy such a home in the first place.

Fix the utility end of the rental market to the way it was before Thatcher's bright vote-catching idea, and leave the luxury end in the hands of the profiteers. That just leaves the transitory renters, - to prevent the return of Rachman racketerrs,keep a tight reign on their operations.
When the pro-rent freedom critics start, just remind them if they ever do carry out their threats and pull out of the rental market, the properties will still be there, so it will only be the middle-man that is missing.

 

[yorksrob]

What I don't like is other investments being treated as fair game whereas property is somewhat protected. You can make unlimited tax-free profit on the house you live in but for shares you need to have them in ISAs or pensions and you can only invest a certain amount each year in those tax shelters. That further encourages people to buy the most expensive house they can and invest in their house rather than shares.

I must admit, I do think that there's a logic to treating ones place of residence separately to an ordinary investment. In terms of encouraging people to move to bigger, more expensive houses, this could be seen as a good thing in that it vacates the smaller properties for first time buyers and the lower paid.

 

[yorksrob]

Fix the utility end of the rental market to the way it was before Thatcher's bright vote-catching idea, and leave the luxury end in the hands of the profiteers. That just leaves the transitory renters, - to prevent the return of Rachman racketerrs,keep a tight reign on their operations.
When the pro-rent freedom critics start, just remind them if they ever do carry out their threats and pull out of the rental market, the properties will still be there, so it will only be the middle-man that is missing.

Yes, I would agree that there needs to be a lot more regulation of the private rental market up to and including rent. There should also be compulsory licensing across the country.

 

[Senex]

Why not just increase inheritance tax rather than arbitrarily seizing peoples properties if they are unlucky enough to get dementia?
All this does is create pressure on people in the early stages of Alzheimer's to kill themselves to protect the family home

It's the arbitrary nature of pretty well all the proposals for care so far that is so objectionable. Increase inheritance tax, require pensioners to pay National Insurance, even increase Income Tax .... there are various possible ways of spreading the burden of the arbitrary need for long-term care just as the burden of dealing with health needs is spread through the NHS. Otherwise, let's have provision for voluntary euthanasia asap. (But we have a British state that effectively says it won't look after us but it won't let us easily kill ourselves either. Typical!)

 

[yorksrob]

Why not just increase inheritance tax rather than arbitrarily seizing peoples properties if they are unlucky enough to get dementia?
All this does is create pressure on people in the early stages of Alzheimer's to kill themselves to protect the family home

This is a good point - inheritance isn't earnt, so it's less regressive to increase it than other taxes, and it's less of a lottery than going by whether someone needs end-of-life care.

 

[Senex]

WOW!

A Tory extreme right winger and Brexit supporter has just said there would be little impact from no trade deal with the EU being reached and the UK going to WTO rules for trade with the EU, stating that some businesses already trade under WTO rules so business knows the score with WTO.

This is the insanity of this Government ladies and gents.

The Tories are likely to cripple the economy with the way they are going with this. All because some Tory MPs are power hungry and dislike having anything above them like the ECJ.

Curious how May trying to woo the Japanese when they have said the £3.6bn trade deal with the EU is more important. May now talking about "piggy backing" EU deals for future UK deals. Thought the world was eagerly ready to trade with us? Or maybe they are more keen on trading with the EU first!

One is tempted to wonder what world our politicians are living in. It seems that David Davies's negotiating position in Brussels is based on the notion that the EU needs us so much more than we need them that we can simply make demands and that even as the party leaving the club we are the ones in the position to dictate terms. No wonder Michel Barnier is exasperated! Verhofstadt seems to be right in asserting thatg Britian has wanted special treatment all through its EU membership and now seems to expect the same to help it to leave the union.

(Does anyone else find that their sympathies are wholly with Barnier?)

 

[yorksrob]

(Does anyone else find that their sympathies are wholly with Barnier?)

Considering we don't know what either side proposes to include in the divorce settlement, I would have to say no.

 

[bramling]

One is tempted to wonder what world our politicians are living in. It seems that David Davies's negotiating position in Brussels is based on the notion that the EU needs us so much more than we need them that we can simply make demands and that even as the party leaving the club we are the ones in the position to dictate terms. No wonder Michel Barnier is exasperated! Verhofstadt seems to be right in asserting thatg Britian has wanted special treatment all through its EU membership and now seems to expect the same to help it to leave the union.

(Does anyone else find that their sympathies are wholly with Barnier?)

No not at all. All this bickering about the exit bill has served to show up just how much Britain has been paying to the EU over the years. Even some remain voters are expressing discontent at the figures. Sooner we stop up the leaking tap the better.

What "demands" do we think Britain has actually made?