Housing crisis solutions

ScoTTyBEEE said:
this is creating a whole sea of credit which has led to house price inflation.
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THIS!

House price inflation is one of the main drivers of demand in the UK. Its always been seen as being a great investment. The desire to buy increases demand and price and the cycle continues.

Businesses (domestic and foreign),banks and individuals have too much invested in the housing market for it to be allowed to fail.

Boom and bust, boom and bust. The cycle continues.

The market correction in 2007 and 2008 was a bump in the road, and I genuinely believe that the next one is going to be the same. FTBErs have to make sure that they jump on at the right time that we bump. I dont believe though that many of them will be able to without gaining access to the credit that invariably supports inflation.

Help to buy being a major culprit, and IMO a time bomb that will explode in the borrowers face once the debt gets called in with incremental interest rate rises.
 
ScoTTyBEEE said:
But the houses in Germany are in demand, people are still living in them. Supply and demand is different in housing due to barriers to entry. The demand for Ferrari's would be high but obviously the price is a barrier to entry.

The price isn't the same barrier with houses because people can borrow the money (try getting a mortgage on a Ferrari). The demand for houses doesn't increase the price, the amount people can borrow determines this. Banks in Germany are prudent in their lending, banks in the UK are not. This is why house price inflation is so rampant.

Add in BTL landlords avoiding 40% tax (therefore outbidding those that can't avoid this), 0% mortgages (renting from the bank, also outbidding those that want a repayment mortage) and a whole other host of props such as help to buy and funding for lending this is creating a whole sea of credit which has led to house price inflation.

It's not as simple as more people want to buy, therefore they go up.
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In Germany most people rent and the demand is for rental property not home ownership. There are a lot of properties to rent so whilst there is demand the demand doesn't out strip supply so rents are lower.

I hear about the German "solution" but that is not what it is, no one in Germany had a home ownership problem so there was no solution required, it is just how the market evolved.
 
Rifte said:
THIS!

House price inflation is one of the main drivers of demand in the UK. Its always been seen as being a great investment. The desire to buy increases demand and price and the cycle continues.

Businesses (domestic and foreign),banks and individuals have too much invested in the housing market for it to be allowed to fail.

Boom and bust, boom and bust. The cycle continues.

The market correction in 2007 and 2008 was a bump in the road, and I genuinely believe that the next one is going to be the same. FTBErs have to make sure that they jump on at the right time that we bump. I dont believe though that many of them will be able to without gaining access to the credit that invariably supports inflation.

Help to buy being a major culprit, and IMO a time bomb that will explode in the borrowers face once the debt gets called in with incremental interest rate rises.
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The problem with boom and bust is that some areas of the country have a small boom and big bust whilst other area's have a big boom and small bust. I fortunately live in a latter area.
 
Jono8 said:
It really isn't that simple. You cant adjust the value of housing in this country overnight without plunging millions of people into ruin.
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This is the problem. Nothing in this dump can ever be fixed, the damage has been done.

Past greed has just made this place a joke.
 
Rroff said:
Won't lie I'm hoping for a crash - got a bit of money put away and in no hurry - so if it did happen will be in a prime position to pickup something nice.
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Pretty sure its going to happen again.

Personally not too concerned because I do not plan to sell and once the market does crash it will soon 'correct' itself again with FTBErs jumping on the bandwagon with cheap credit which will drive price again.

Two steps forwards, and one back. The key bit is ( I suppose) jumping on when we go one back.
 
satchef1 said:
Germans spend considerably less of their income on housing than we do, whether renting or buying. Combine that with a robust set of rights and responsibilities for tenants/landlords, and renting is an attractive option - you get a secure home, and have enough money left at the end of the month to save for the future (and eventual retirement).

That is the key to understanding why critics of our system admire the German solution. Whether you choose to buy or rent, you have a reasonably secure future. In the UK, due to the relatively high cost and low level of security when renting, buying is the norm. Home ownership is the key to a secure future. If you can't afford to buy, chances are you can't afford to save much, or make meaningful pension contributions either. If that becomes true for a significant proportion of the population then we have a big problem looming.
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This is also why many Germans stay at home to look after their children after they are born. They also have more money to spend it their economy and boosting businesses.

In the UK we are literally working to pay for something that we don't need to. We are collectively killing ourselves for no reason.

What the government has done to generations of its citizens is completely unforgiveable; and so few can see it.
 
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flowrider99 said:
The problem with boom and bust is that some areas of the country have a small boom and big bust whilst other area's have a big boom and small bust. I fortunately live in a latter area.
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I noticed you live in Hertfordshire? One of my properties is in Hertfordshire, and I felt the bust of 2007/2008, but the market since then recovered to 2006 prices by 2011. So at the moment in respect of paper valuation it looks like I am sitting pretty. Guess you are the same.
 
flowrider99 said:
inflation is linked to demand, low demand low inflation, high demand high inflation. In a way all those trying to get on the ladder are perpetuating the problem merely by being in the market. It is very unfortunate but i cant see how it will ever improve unless the demand drops dramatically.
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There's plenty of demand in Germany, it's just not everyone scrambling to get on this British obsession with the 'property ladder'.

Rents are much lower than the UK, and rental protections are much better so life as a tenant is fine. People generally only buy somewhere when they get their family home with room for kids, and often they'll build themselves.

The end result here is that the property market is pretty stable, single digit growth, but reliable, the construction sector is strong, there are thousands and thousands of new properties coming onto the market just within sight of my office, and they're all sensible sized, sensibly priced properties that normal people on average salaries can afford, not 'luxury condos' aimed at foreign investors.

Seriously this British property obsession is absolutely baffling once you spend some time out of the bubble. Hell even Hong Kong was sane compared to London, at least you can afford a nice apartment in the middle of the city!
 
flowrider99 said:
I hear about the German "solution" but that is not what it is, no one in Germany had a home ownership problem so there was no solution required, it is just how the market evolved.
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There is no ownership 'problem' here because the laws here mean that you can actually live a secure and stable life in a rented property.

Germans also don't have this concept of 'property ladder' drummed into them constantly by the media, the government and society in general. One of the best things about being here is not having to listen to people talk about bloody property prices!
 
mid_gen said:
There's plenty of demand in Germany, it's just not everyone scrambling to get on this British obsession with the 'property ladder'.

Rents are much lower than the UK, and rental protections are much better so life as a tenant is fine. People generally only buy somewhere when they get their family home with room for kids, and often they'll build themselves.

The end result here is that the property market is pretty stable, single digit growth, but reliable, the construction sector is strong, there are thousands and thousands of new properties coming onto the market just within sight of my office, and they're all sensible sized, sensibly priced properties that normal people on average salaries can afford, not 'luxury condos' aimed at foreign investors.

Seriously this British property obsession is absolutely baffling once you spend some time out of the bubble. Hell even Hong Kong was sane compared to London, at least you can afford a nice apartment in the middle of the city!
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You can't berate the British obsession with ownership whilst championing the German system in the same post! Lol, if we had that kind of rental protection here then people wouldn't be so obsessed. I am honestly amazed you posted that without seeing something so glaringly obvious.
 
satchef1 said:
If you can't afford to buy, chances are you can't afford to save much, or make meaningful pension contributions either. If that becomes true for a significant proportion of the population then we have a big problem looming.
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This. 100% this. We have a massive problem looming. Although I can't afford to buy due to living in London, the girlfriend and I have a fair amount of savings each. But I'd wager for every one person with our mentality, there's 10 or 20 that can't afford to save, or don't.

If the cycle of high rents, crap pensions and no savings continue then people are going to end up homeless and destitute into their later years. It's truly terrifying if you think about it. And there's a whole generation priced out of home ownership that this applies to.
 
Scam said:
This. 100% this. We have a massive problem looming. Although I can't afford to buy due to living in London, the girlfriend and I have a fair amount of savings each. But I'd wager for every one person with our mentality, there's 10 or 20 that can't afford to save, or don't.

If the cycle of high rents, crap pensions and no savings continue then people are going to end up homeless and destitute into their later years. It's truly terrifying if you think about it. And there's a whole generation priced out of home ownership that this applies to.
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This is so true.
 
My problem is not with owning but renting (which is linked to housing prices).

I live just outside of London and the price of rent means that my family and I struggle.

I would love to own but it doesn't seem likely, the problem is that 70%+ of my wage goes on rent (which is even very slightly subsidised as the property is owed by family), then more on bills etc, it doesn't leave much to support my family with. We've been told that rent will be going up each year.

Could I just move up North? Well maybe but I don't have a job or friends/family up North and it would mean moving one of my children to a different school.
 
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