House Price Rises Capped at 5%

Paul11 said:
how would you even manage it

what if i do a renovation on my house and that adds to the value ?
Click to expand...

It has nothing to do with individual prices as far as I can tell.

It is purely an attempt to link lending to the average price increase.

If the average house price starts to increase by more than 5%, then the banks would be expected to make mortgages harder to get, or less affordable.

Whereas in the past, when prices started rising the banks lent more and more (cheap) money, increasing the rate at which prices rose.
 
because once property is more attractive than other investment:

- lending is more backed by fake numbers than money which exists
- prices rise such that working people can't afford houses to live in
- prices rise such that housing benefit costs more
- other investments lose out, e.g. investments to businesses
 
div0 said:
Can you show me where this is what they are proposing?

All I can find is a statement which says that the BoE would be expected to restrict lending (mortgage availability / affordability) if the average price increase exceeds 5% per year.
Click to expand...

And what formula do you think they will use too establish this restricted lending figure ?
 
I just don't think that it would work. Even if they did cap it, 5% is far too low. A more realistic figure would be 15%.

If we enter a period of inflation above 5% there is no way that house prices (ie. a bricks and mortar investment) will decrease in (real) value.
 
div0 said:
If the average house price starts to increase by more than 5%, then the banks would be expected to make mortgages harder to get, or less affordable
Click to expand...

How is this a benefit to anyone ? It would just stagnate the housing market for everyone other than the minority that don't need a mortgage.
 
Sadly, houses are no longer homes, they are investments. There is no limit to the price of an investment.

When I moved into my flat only 2 out of 36 flats were rented. Most of the rest were owned by elderly folk who'd downsized, or first time buyers.

Now it's 75% rented to distant landlords, and rents are so high few people renting will be able to save for a place of their own. The world has become a very depressing place, and I'm not sure why there hasn't been a revolution... at least at the ballot box.

Part of the reason may be the fact no party seems to want to address this issue head-on. It might hurt too many people who are quite happy with the status quo.
 
groen said:
The only fix for a housing bubble is a correction.

Only way to fix a housing bubble is for a correction to occur. Boe needs to increase interest rates and millions of people need go in to foreclosure.
Click to expand...

Thats really gonna help things isnt it! lol. Lots of people on the street, or people not spending money. The economy would love that!
 
Moses said:
Because something needs to be done to combat land banking. Obviously it wouldn't necessary apply to Uncle John and the garden he's managed to get planning permission for... I'm talking about substantial developments/large land banks big developers hold and don't bother developing on.

How's it the lack of available land/green belts/planning permission/NIMBYs anything to do with what I said? As I pointed out, the current non-utilised granted planning permission equates to an area the size of Birmingham... if more planning permission was given, for example, we'd still just have a ridiculous area of land, with planning permission, not being built on.
Click to expand...


And are the developers who have historically purchased land and seen the value of their investment drop below what they paid for it to be compensated for this loss or is this just a Zimbabwe style land grab ?
 
Andrew_McP said:
Sadly, houses are no longer homes, they are investments. There is no limit to the price of an investment.

When I moved into my flat only 2 out of 36 flats were rented. Most of the rest were owned by elderly folk who'd downsized, or first time buyers.

Now it's 75% rented to distant landlords, and rents are so high few people renting will be able to save for a place of their own. The world has become a very depressing place, and I'm not sure why there hasn't been a revolution... at least at the ballot box.

Part of the reason may be the fact no party seems to want to address this issue head-on. It might hurt too many people who are quite happy with the status quo.
Click to expand...

So when you come to sell, are you going to ask it be placed on the market at vastly below the market value for your property or are you going to hold out for every last penny ?
The issue is and always will be that people like to make money and not lose it.
 
Personally, I think that something should be done to limit the cost of renting...

Myself and my wife have been extremely fortunate to have recently been accepted for a mortgage, and had an offer accepted on our first house - though this was due to her parents being able to give us a huge helping hand with a 30K deposit (the house is 151K).

Prior to this, we have been renting in Bristol whilst she's full time at uni, and my salary has funded living there, but the cost of renting our current place has risen from an initial £675 a moth, to £695, and now to £725 - if we were to stay for the remainder of her course then I could easily to expect that figure to rise to nearly (maybe over) £800 a month!

Though I totally accept our situation can be changed by moving to a cheaper place, it seems daft that rent can cost this much, when our mortgage is £600 fixed for 5 years.

Though I appreciate that our landlord probably has a variable mortgage that will mean his repayments go up, maybe there should be some sort of change to regulations or something, so that 'buy to let' homes can only be funded by small mortgages (maybe 60%), and the monthly fee charged to tennants cannot exceed X amount; this would mean that people 'stuck' renting have a more realistic chance of saving a deposit...

Just my thoughts, I'm certainly glad to be out of the renting trap (as I personally see it) and looking forward to the challenges that being a home owner brings.
 
I'm confused by a statement that keeps cropping up in this thread and in everything I read about housing 'affordable homes'. What exactly is an 'affordable home'? Surely what is affordable now, in a few years time may not be since house prices are increasing faster than incomes. Does this mean that in a few years time we'll need to build a new set of 'affordable homes'? Surely to make them more 'affordable' than other houses they would have to be smaller or of worse quality? Well...how far do you take this? In some point in the future does the 'affordable home' of the time simply become a box with a window in it?
 
Scort said:
Though I appreciate that our landlord probably has a variable mortgage that will mean his repayments go up.
Click to expand...

If it is for the last few years it's unlikely they've been going any direction other than down (if any). I think many landlords just like to increase rents periodically because they feel like they can.
 
div0 said:
If the average house price starts to increase by more than 5%, then the banks would be expected to make mortgages harder to get, or less affordable.
Click to expand...

They wouldn't be 'expected' to make mortgages harder to get. The BoE would restrict them. That is, a public body would regulate the activities of private institutions and individuals. That is, they would meddle with the free market.

It suggested the Bank could put the brakes on house price growth by imposing a ceiling on the amounts of money banks are allowed to lend.

It could also put caps on the term of a mortgage, the amount people can borrow in relation to their deposit or the sum they can borrow in relation to their income.
Click to expand...
 
Dis86 said:
I'm confused by a statement that keeps cropping up in this thread and in everything I read about housing 'affordable homes'. What exactly is an 'affordable home'? Surely what is affordable now, in a few years time may not be since house prices are increasing faster than incomes. Does this mean that in a few years time we'll need to build a new set of 'affordable homes'? Surely to make them more 'affordable' than other houses they would have to be smaller or of worse quality? Well...how far do you take this? In some point in the future does the 'affordable home' of the time simply become a box with a window in it?
Click to expand...

I think generally affordable homes refers to a specific scheme where rent is at a reduced rate in a similar manner to existing council housing. Often builders are obliged to allocate certain proportions of their new builds as affordable housing, even though they will be exactly the same as other properties that are not 'affordable'.

I think this might include the help to buy stuff as well
 
Last edited:
Scort said:
Though I totally accept our situation can be changed by moving to a cheaper place, it seems daft that rent can cost this much, when our mortgage is £600 fixed for 5 years.

.
Click to expand...

your mortgage is that figure because you put £30k down as a deposit.
 
[FnG]magnolia;24936995 said:
Why?
Click to expand...

It's tough to strike a balance between the notion of houses as investments and houses as necessities. As long as rental properties are available then no-one "needs" to own a house. The problem you have now is that house prices and rents are so inflated that it is to the detriment of people renting which is unfair, in my opinion. High rents make it difficult to save for a deposit, and with every extra month of saving house prices become more expensive and your deposit becomes less valuable.

Houses are an excellent investment but the market shouldn't be artificially inflated to widen the gap between the haves and have nots.
 
You must log in or register to reply here.
Back
Top Bottom