House Price Rises Capped at 5%

No1newts

No1newts

No1newts

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http://news.sky.com/story/1141014/house-price-growth-should-be-capped-at-5-percent

Good idea or bad?

Part of me thinks its a good idea as house prices cannot keep rising the way they are, especially with wages staying relatively static the generation of kids now will never be able to buy a house. Houses will end up as commodity and rent will be the only way forward which to my mind isn't right.

Part of me also thinks its not the best idea as why should your value not be able to increase if you put in the work and improve the property.

What's everyone's thoughts?
 
House prices should be set by the free market. If your house is worth more then why should you be forced to sell it for less?
 
You can't prevent a bubble in housing by price controls, it will only be a band aide on a broken leg and the underlying problem will not be fixed only temporary postponed. 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. Only then will the bubble be fixed and house prices adjusted to the market rate.

Instead the government is doing more to exasperate the problem by keeping rates too low and encouraging banks to lend to people and underwriting risk as well through shared to own schemes and other schemes.
 
I'm in a situation where I'll be buying in about 2 years. The goalpost for a deposit just keeps rising in line with house prices, and it's pretty annoying.

Trying to budget for a house on today's prices is pretty irrelevant. And the most annoying this is we have missed the boat with house prices last summer and this summer being at the lowest I'd day.

But society has given me blows throughout life, I graduated at the time when the recession hit, graduate jobs ceased, thus making it a lot harder to get a career in the course I'd studied. So it doesn't surprise me that inevitably house prices will rise and mortgage rates will also rise around the time I come to buy.
 
Hamish said:
House prices should be set by the free market. If your house is worth more then why should you be forced to sell it for less?
Click to expand...

I don't think anyone's saying they would force you to sell your house for less.
Carney has talked about forcing banks to increase their reserve ratios so they can't lend as much money for mortgages.
As that's the main factor for house prices rises it would naturally dampen the market without 'forcing' anyone to sell for less.

House prices in this country, especially London, are frankly crazy and I don't think it's healthy to see them go up much more from where we are at the moment.
 
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I can't imagine it's a good idea.

One thing however, given that they've already said no restrictions on the price that someone can sell for, could someone tell me how they're going to limit it to 5% a year?
 
platypus said:
I can't imagine it's a good idea.

One thing however, given that they've already said no restrictions on the price that someone can sell for, could someone tell me how they're going to limit it to 5% a year?
Click to expand...

As above, they'd basically force banks to reduce lending by imposing limits on their capital ratios.
As house prices are usually a lagging indicator I imagine it would be fraught with difficulties to try and get it stable around 5% a year though.
 
as someone who is planning on buying in about 6 months im not very excited about price rises

as it is the LTV you need is stupid, if prices go up my house is going to become a pokey flat instead, and I wont be able to raise a bigger deposit quicker than price rises

buy to let is killing first time buyers - id vote for tax on a second house (or removal of stamp duty on first house / increase on second house)
 
No1newts said:
Part of me also thinks its not the best idea as why should your value not be able to increase if you put in the work and improve the property.
Click to expand...

Hamish said:
House prices should be set by the free market. If your house is worth more then why should you be forced to sell it for less?
Click to expand...

You wouldn't.

This has nothing to do with individual properties.

The proposal is simply that the BoE would be responsible for trying to ensure that the average rise in house prices, remains at 5% (or below). If it looks like prices are rising too quickly, then the BoE would be expected to introduce measures to slow the market down, whether that be reduced lending, increased mortgage rates, etc.

It is actually a fairly sensible proposal, although I can't see it being easy to manage. But on first view it looks like an attempt to avoid a situation where banks go 'crazy' again and start lending 110% mortgages to anyone and everyone, just because the market is 'booming'. It should (in theory) also help to make it easier for first-time buyers to plan their way onto the property ladder.

All that said, I can't see it being easy to manage.
 
gettothechopper said:
buy to let is killing first time buyers
Click to expand...

If this was done properly, it might help (slightly) with this problem. If 'investors' can make more money elsewhere, then they may not see 'property' as such a good investment.

Although the problem with 'buy to let' is that you don't actually need the house price to rise, for it to be an investment (although that does help). You just need to be able to cover mortgage (and repair / upgrade) costs, with the money you make in rent.
 
http://www.rics.org/Global/Josh House price inflation limiting - Summer 2013.pdf

This shocked me a bit


Respondents now expect house prices to
increase by 2.2% over the next year compared
to only 0.1% at the time of the December survey
round. Meanwhile, the latest survey round
revealed that respondents expect house prices
to increase by 4.4% a year over the next 5 years
(or 24% in compound terms) compared to 2.5%
a year last December. In London, respondents
expect house prices to increase by 4.2% over
the next year and by 8.2% a year over the next​
5 years (or 48% in compound terms).
Click to expand...

Another 48% in London in the next five years :eek:
 
Terirable idea.

The issue is two fold.
A) lack of houses being built and ones which are being built are just stupid money.
b) the bigger factor is stupid mortgages and help to buy shcemes. Bot of ehich should be phased out, cap mortgages and get rid of help to buy schemes. This will make houses me affordable and realistic. Unless you downsize house prices dont give you any more weath.
But untill that happens we are stuck with masisve mortgages and help to buy schemes, which in turn prop the market up and stop house prices falling or staying static.
 
They should do this for everything in the economy, no more need to worry about rampant inflation! Plus then everyone should be paid the same wage, and there should be no such thing as private ownership. OP, I definitely think this is the future.
 
As its 5% annually, it wont really effect the majority of properties anyway, mostly London prices would bare the brunt of it.
 
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