[John_D]

Re: Clegg's apology - death throes of a doomed party leader? : Tue Sep 25, 2012 8:55 am  

Kosh wrote:

Someone who's bought a house for £240k is unlikely to be able to afford to sell it for £75k. And that's the scale of the drop that would be required to bring house prices back into line with average earnings. So although it would work for new builds the existing housing stock would be a different matter entirely.

Getting out of the mindset of a house as an investment rather than somewhere to live is also required. Besides, we all know the valule of investments can go down as well as up, so tough luck. Gamblers often lose.

Re: Clegg's apology - death throes of a doomed party leader? : Tue Sep 25, 2012 9:01 am  

John_D wrote:

Getting out of the mindset of a house as an investment rather than somewhere to live is also required. Besides, we all know the valule of investments can go down as well as up, so tough luck. Gamblers often lose.

A great start would be getting away from the mindset that renting is somehow inferior to buying. There were plenty of what would now be categorised as middle class households in rented accommodation through the 1950s, 60s & 70s

[DaveO]

Re: Clegg's apology - death throes of a doomed party leader? : Tue Sep 25, 2012 9:14 am  

John_D wrote:

Getting out of the mindset of a house as an investment rather than somewhere to live is also required. Besides, we all know the valule of investments can go down as well as up, so tough luck. Gamblers often lose.

I have never viewed buying a house as an investment. I never understood why people who only "own" one house would do so. It is a place to live and for me buying has been cheaper than renting an equivalent property. I have never gambled on the value of it going up. The fact housing prices have usually gone up over the years means little to me because I would be selling and buying in the same market.

However people do have to move house occasionally so where there a housing price crash then that would make it impossible for many who also didn't buy their house as an investment to move.

So ideally you want price stability but we will never get that in our supply and demand driven market unless there was just the right amount of housebuilding to stop the generally ever upward trend in prices and I don't see that happening.

If on the other hand you buy a house to rent then I guess you ought to do this based on your returns of the invested cash. So if you bought a house for £150K to rent, is the rent you will receive a better return on that money than investing it elsewhere? Basing your rate of return on rent + increasing value of the asset is gambling. Mind you I am sure some people will still see property as a safer place for their money than a bank! Even if prices did crash the property is unlikely to be worthless and you could reasonably expect to continue getting some rental income off it.

Re: Clegg's apology - death throes of a doomed party leader? : Tue Sep 25, 2012 9:15 am  

cod'ead wrote:

A great start would be getting away from the mindset that renting is somehow inferior to buying. There were plenty of what would now be categorised as middle class households in rented accommodation through the 1950s, 60s & 70s

Spot on! I'd happily rent, at least for a few years anyway. But it's just not worth it as the rental price is almost the same as the mortgage rate.

House prices need to be significantly cheaper, rental prices need to be massively cheaper. Think of the benefit to the economy if people weren't spending such a huge chunk of their income on housing.

Re: Clegg's apology - death throes of a doomed party leader? : Tue Sep 25, 2012 9:32 am  

Him wrote:

Think of the benefit to the economy if people weren't spending such a huge chunk of their income on housing.

I think the economic benefits work the opposite way. Personally I'd have got off the treadmill years ago if it weren't for the mortgage. At one time food was the main expenditure, now its housing. In the future it will probably be food, energy and housing.

[John_D]

Re: Clegg's apology - death throes of a doomed party leader? : Tue Sep 25, 2012 10:29 am  

DaveO wrote:

However people do have to move house occasionally so where there a housing price crash then that would make it impossible for many who also didn't buy their house as an investment to move.

Pain for the few for the long-term good of everyone. Call me Jeremy Bentham.

[John_D]

Re: Clegg's apology - death throes of a doomed party leader? : Tue Sep 25, 2012 10:30 am  

cod'ead wrote:

A great start would be getting away from the mindset that renting is somehow inferior to buying. There were plenty of what would now be categorised as middle class households in rented accommodation through the 1950s, 60s & 70s

Agreed

Re: Clegg's apology - death throes of a doomed party leader? : Tue Sep 25, 2012 11:08 am  

Its incredibly expensive to rent. I've just sold my house and looking for somewhere to rent until we find somewhere to buy. I'd perhaps naively hoped that if we rented a house with a comparable value to the one we've sold, the rent could be paid by the interest on the sales proceeds. Not even close. Obviously the current depressed interest rates are a major factor, but given that they're not likely incease much for a while, it just makes the rental sector very pricey.

Re: Clegg's apology - death throes of a doomed party leader? : Tue Sep 25, 2012 11:21 am  

Kosh wrote:

Someone who's bought a house for £240k is unlikely to be able to afford to sell it for £75k. And that's the scale of the drop that would be required to bring house prices back into line with average earnings. So although it would work for new builds the existing housing stock would be a different matter entirely.

The solution is for lenders to stop equating loans to a ficticious formula that once was a reasonable guide to affordability but now is not.

Its time for lenders to do proper and fit assessements again, possibly to employ people fit do do such assessments and then trust those people to offer a home loan linked to the buyers income and age.

For example with my eldest and her partner at 24 years of age and both working in what a lender would class "professional" jobs, there is no reason why a home loan for them has to be limited to 25 years or three times their income, the absolute criteria should be their household budget which any lender should insist on - "show us how you are going to afford a £900 a month mortgage on your income" and then set the term, interest rate and total offer based on that.

In that respect I am pushing her towards The Nationwide in that they do still employ people who seem to know what they are talking about when it comes to homeloans, being as that is still a major part of their business model.

Re: Clegg's apology - death throes of a doomed party leader? : Tue Sep 25, 2012 12:12 pm  

Cibaman wrote:

Its incredibly expensive to rent. I've just sold my house and looking for somewhere to rent until we find somewhere to buy. I'd perhaps naively hoped that if we rented a house with a comparable value to the one we've sold, the rent could be paid by the interest on the sales proceeds. Not even close. Obviously the current depressed interest rates are a major factor, but given that they're not likely incease much for a while, it just makes the rental sector very pricey.

We're one of very few (any?) nations in Europe that do not have rent regulations.

And yet most other European nations have bigger rental sectors than exists in the UK, which presumably means that rent regulation (hardly a new thing) does not send prospective landlords off in a grand funk about not being able to make enough profit to make it worthwhile.