Gordon and House Prices
"I will not allow house prices to get out of control and put at risk the sustainability of the recovery."Gordon Brown, 1997 Budget Statement.
But Gordon did allow house prices to get out of control. Some of the housing market numbers are scary, the average house now costs 6 times average earnings - in London the figure is 10 times earnings. The historical long term figure is some 3 and half times earnings.
Is it any wonder that the average age of a first time buyer is 33 years old? Twentysomething families can't afford a home of their own.
Yield models suggest* that house prices have to fall 40% to return to the long term average.
The simple truth is that in real terms it is now twice as expensive to buy a house as it was before Gordon promised he would "not allow house prices to get out of control".
Is it any wonder that the average age of a first time buyer is 33 years old? Twentysomething families can't afford a home of their own.
Yield models suggest* that house prices have to fall 40% to return to the long term average.
The simple truth is that in real terms it is now twice as expensive to buy a house as it was before Gordon promised he would "not allow house prices to get out of control".
*Or rents could rise a corresponding amount.
66 comments:
Eton Dave will fix all that.He's an economic genius.
Of course house prices had to rise. How else can big business survive if mugs don't pay huge amounts for houses and pensions to keep them going?
Hynek wrote a brilliant book entitled The Road To Serfdom. Well, we're all serfs now.
Good to hear you saying this, but why am I not hearing the Tory Housing spokesperson shouting from the rooftops about it?
i done hear many De Beauvoir residents complaining
Yes indeed, but that was then. Now the whole economic landscape has changed because Brown is in charge. What was unacceptable then is now perfectly acceptable, and is actually to be encouraged.
Brown will not be satisfied until average house prices are ten times average wages.
That's not very far away, now.
its what happens when you constantly mislead the country about the economic miracle as brown did every time he stood up in parliament. he and bliar rolled off dubious statistic after another that simply encouraged people to borrow and spend. the fact that the economic miracle was based on nothing more than the government borrowing (and hiding most of it off balance sheet via pfi) and spending on non-productive public sector jobs has been hidden as ever with NuLab with lies.
filling the country with economic migrants has directly contributed to the problem by providing loads of mugs to rent out your many buy-to-let properties to. these will all evaporate when the economy tips into recession and there is no demand for polish builders- thus compounding the problem.
the fact is there is nothing government can do about as all the money has been spent. we just have to sit and watch the market correct the problem. cheers gordon, the lies of nulab are finally coming home to roost and it will be the ordinary joe in the street who pays the price.
Brown so debauched pension saving that far too many people piled into property as a "safe" home for investment rather than traditional pension policies.Add to that the explosion of demand caused by mass immigration it is no wonder that our young people,many burdened by huge student debt,cannot contemplate house buying until they are well into their thirties.
Let’s not compound the problem of overheated house prices by exempting owner-occupied housing from inheritance tax. If we wish to attack the burden of inheritance tax (which is taxing income that has already been taxed once), then let us abolish inheritance tax, which raises little and imposes extraordinary complications on the tax system.
Housing already enjoys a big tax advantage from the CGT exemption for the primary residence. This country would benefit greatly from a proper private rental sector (rather than the current combination of too many owner occupiers and a load of buy-to-let punters that are only in it for the capital gain potential).
Twentysomething families can't afford a home of their own.
Of course, they're in a far better position to buy a house than someone like me.
On my own, I can't buy anything at all. On my previous earnings (I'm now a student) I couldn't get a mortgage to cover a flat in the shithole end of town, let alone anywhere respectable. Yet, I couldn't afford to rent, pay Council Tax and everything else on top, either!
Gordon Brown is screwing over young and single people something chronic. Of course, he couldn't have done it without the help of that fat prick, Prescott. Cunts, both of them.
Once I've finished my degree and spent a couple of years working here, I'll probably be looking to buy my first property abroad- I just can't get anything here, and if I could, I'd likely have to sell my soul. Gordon can whistle for repayment of my student loan...
MU, get a better job, like me. I pay my rent easily, and have money left over for champers and coke!
Rent
Eileen
xxx
allen
cristal and flake I hope
'far too many people piled into property as a "safe" home for investment '
bergen,they piled in because they were greedy and leveraged up to make as much fucking money as they could.Number of buy to let mortgages up ten times in ten years.Some of the dumb fuckers are even doing it with a negative yield!!!
Gordon Brown, the imbecile who wrote an ignorant pamphlet "how to live off the state"!
Gordon Brown, the self important pratt who abolished boom & bust!
Gordon Brown, The liar who brought you "low inflation" by fiddling the figures!
Gordon Brown, the traitor that lets our soldiers die in Iraq for no reason other than to save his ugly face!
Gordon Brown, The scumbag who can find 167 BILLION pounds for his army of gravytrain nonjobbers while the real army dresses in Chinese made rags, Have less money spent on their food than the dogs they serve with, Troops dying on the battlefield for lack of helicopters and medics and injured troops just thrown into the NHS system and then thrown away like so much trash!
Gordon Brown hero of the socialists!
Guido does economics! You're right to point to the odd yields, especially considering people are piling into Buy-To-Let with interest only mortgages, when they'd get a superior - and above all risk free and liquid - return on cash with a range of savings banks.
Still, remember that if this boom has happened under Gordon Brown, Nigel Lawson and John Major engineered a spectacular boom too. They've happened across time and are nothing new.
What's bad though us that during this boom, government debt has been rising. So should a downturn come, there are three options:
- raise taxes (in a recession!)
- cut spending (in a recession!)
- borrow even more...
...which is monetising and causes inflation and could encourage higher interest rates (in a recession!)
Brown's delivered the hospital pass of the century to Darling but it's likely that if things head south then the incumbent government will cop the blame for the misery.
english democrat. bang on mate. what a devious liar he is
Aren't house prices going up in terms of earnings multiples because more partners in the family are working and hence contributing to the mortgage? Comparing house prices as an earnings multiple over the last 20 years is a pretty misleading way of valuing whether property is overpriced or not.
What's all this? Bring back the jokes about queers and totty. It's what you're best at.
Strange how quiet all the "Nulabotomys" are about "Brown`s "Boom and Bust Era", maybe they`re having new Microchips fitted !
Wait for endless streams of empty rhetoric !
Lying, nose-picking bastard. Moi?
Anon 5:02
No. This number is based on individual, not household income. That is important because:
1. More people live alone now, and
2. That it's no longer possible for the vast majority of families to keep a roof over their head (while rents have not quite kept up with sale prices they have increased substantially too) on a single pay packet is an important point.
Lots of normal families would sacrifice a lot of disposable cash (thus holidays, big TVs, flash motors, etc) so that mum (usually) didn't have to work. That option has been closed off to many many people in the past 10 years.
The remarkable thing is the way that the ratio (house price to average earnings) has kept on growing. The explanation which makes sense to me (and supported by various examples I've come across) is that there is substantial "recycling" back into the property market of capital from house-owning parents and grandparents, downsizing or deceased. Abolishing IHT isn't likely to diminish such an effect.
Move country. Why stay in the UK?
Is it any wonder that the average age of a first time buyer is 33 years old? Twentysomething families can't afford a home of their own.
According to the Council of Mortgage Lenders the median age of first-time buyers has gone from
29 in 1997 to ... er ... 29 in 2006.
The housing shortage is why the government plans a vast increase in house building, both for sale and for rent.
And what are the Tories planning to do about housing? Bugger all.
It's an old stunt. Create a boom, please the middle, call an election, win and then clobber the suckers.
Rents have not 'increased substantially' in my experience...largely due to massive oversupply of properties bought up by Buy to Let mugs, who are now subsidizing their tenants.
Was recently renting a 2 bed new build in central Manchester for £550 pcm (sold to BTL investors for £175k.
Am now back in Edinburgh paying a mere £30 per month more than I did in 1999 (for a comparable flat). Current asking price for the flat that I'm in is about thr £150k mark....rent £500pcm...you do the maths.
No great rent inflation here......
Of course, the economy is totally fecked and the coming storm will bankrupt millions - but I can watch it unfold from a nice cheap flat.
Most people don't buy with cash; they pay mortgages, and the cost of those varies with the interest rates. The last few years they've beeen low.
Mortgage payments haven't changed that much over the last fifteen years or so...
Paying 5% on a £200k loan isn't any worse than paying 10% on a £100k loan. That's on reason that house prices have risen: they're more affordable.
Which is where we came in.
1989 anyone?
The Elephant in the Room:
Huge mass immigration will force up prices - they have to live somewhere those Polish plumbers.
Isn't it strange why no politicians think that Poles would make great Westminster MP's and BBC TV presenters and producers? Even though they would willingly be my MP for a tenth of the price (and NO pension)?
House prices are clearly in an unsustainable bubble engendered by the widespread availability in recent years of cheap credit.
The gathering credit crunch will burst that bubble and within the foreseeable future house prices will be at least 30 to 40% lower.
Low interest rates. Thank China and Greenspan who once walked on water but who, in retrospect, has fucked the US housing market by giving away money from 2001 to 2006 - aided of course by fuckwit lenders.
Rent.
Yields to landlords have fallen for 13 years.
The housing market is dependent on borrowing, which has been low for a long time (Bank of England and free market economy). More people wanted to borrow, and the financial institutions let them....a lot of it recklessly, creating an unsustainable housing "boom". It's now pay back time. GB's policies had a small influence on the housing market. Just like he can't claim all the credit for the good times (although he will try), he shouldn't get all the blame for the bad times.
gs said...
Good to hear you saying this, but why am I not hearing the Tory Housing spokesperson shouting from the rooftops about it?
Bet you don't know who he/she/it is without a bit of googling.
The housing bubble's already bursting in the US, Oz, Spain, Irish Republic etc. UK's next and it's gonna be a biggie!
Credit crunch, house price crash, retail sales collapse, rising unemployment, sterling/dollar meltdown,recession, stagflation, deflation......in that order.
Anonymous said...
It's an old stunt. Create a boom, please the middle, call an election, win and then clobber the suckers.
6:34 PM, August 20, 2007
(c) Ireland 2007
Captain Spaulding said...
The housing shortage is why the government plans a vast increase in house building, both for sale and for rent.
Exactly, and no matter what Gordon does, the idiots who post here will attack him for it. That is until they need to find a place to live themselves.
There's no housing shortage just a shortage of AFFORDABLE housing. The coming correction(crash) will solve that then we'll hear no more about a housing shortage, just lots of sob stories about repossessions, bankrupcies, unemployment etc
Then Snotface Brown's megalomaniac political ambitions will be toast with millions clamouring to string him up from the nearest lamp post.
An alternative view:-
'Debt is basically fine. In fact, we're coining it in the UK, with more wealth stretching ever further ahead of the amount we owe.'
see
http://news.bbc.co.uk/1/hi/magazine/6954817.stm
What a shite article from the BBC, typical New Labour short-termist ignoramus tripe aimed at the shopaholic morons.
The debt chickens are coming home to roost and there's no point in pretending otherwise.
There's a real head of steam building up for an October election.
With house prices stalling in many parts of the country and big falls just around the corner Brown knows he has to cut and run early to stand any chance of winning before his ponzi economy implodes.
Please let's congratulate the Sunday Telegraph for highlighting Redwood's reference to the nosepicking episode! More, More! When Hell freezes over, the Beeb will show it!
Casual Observer said...
Move country. Why stay in the UK?
You mean, become an economic migrant like the Polish builders?
NuLab is buggared.
NuLab turds read this Times piece and weep
just have to say.......
I sold off my share portfolio last month to pay off the mortgage.
And I've been wearing a very big smile for the past week.
With the UK economy drowning in debt and about to go tits up has Gordo left it too late to win a working majority in the Autumn?
The next few polls will be the deciding factor as to whether he goes for a cut and run election I suspect.
Now sell your house Charcoal and invest the proceeds in Yen, Gold, Silver and German, Norwegian and Swiss government debt.
Equities have only slipped a few percent recently. They could well fall more, most of the recent rise has been short covering. But house prices could well fall by 30% too. Enough to wipe the smile off your face.
Why does it matter if house prices crash? The only time the value matters is when you sell or die. If you have to sell for a lower price than you expected, the property you buy will also be cheaper than it used to be. If you die, your estate will pay less inheritance tax. What's the problem exactly?
Oh yes, the mortgage lenders will have lent more money than the property is worth.
What a shame.
dogface said...
Please let's congratulate the Sunday Telegraph for highlighting Redwood's reference to the nosepicking episode!
Grow up.
Redwood's article was very true and quite funny, however there is no chance the Labour party are going to stop lying or the media are going to grow up. We now have a chronically ill informed, apathetic, deceived electorate. (For examples of the level of ignorance out there just look at some of the labour lobotomite/beeboid trolling on this blog)
Mr Cameron told the BBC Radio 4 Today programme: "We are not going to deal with anarchy in the UK unless we actually strengthen families and communities in the UK."
I am only now beginning to believe Civil Disobedience and/or Anarchy is the only way those that have declared war on our families and communities namely our corrupt so called political masters can be redressed.
Here in green-welly land of the Cotswolds most of the rich Londoners stopped coming here to buy their second homes over a year ago. The housing market has been in the doldrums for months and now we're seeing increasing numbers of price cuts.
But guess what?
There's still hardly anything selling.
Soon we'll be seeing more and more estate agents on the dole and house prices down by 30% and more.
My accountant tells me it's to do with something he calls the business cycle, boom and bust and all that. He seems to believe it's all going to get considerably worse before it gets better.
guido this is getting weaker and weaker. you genuinely believe you are an opinion former, and not in actual fact a geekish masturbating twat who most people hold in in total distain. otherwise known as the school cunt.
i genuinely hope gordon brown bumps into you one day and beats the living shit out of you. you pathetic spineless 1 inch cock wanker.
The NuLab turds are rattled. No wonder, with Brown's fucked-up ponzi economy about to blow up in their faces
The Hitch, as ever, makes an important series of points.
Dogface 9.36 pm - the BBC did show/refer to the bogey episode, and if I recall their piece was dripping with the word "alleged", as in the eyes of the Beeb, putting one's finger up one's conk, dragging finger out, sticking it in one's moouth, then wiping said finger on one's tie is merely circumstantial evidence of him actually scoffing his nasal excreta.
Anonymous said...
guido this is getting weaker and weaker. you genuinely believe you are an opinion former, and not in actual fact a geekish masturbating twat who most people hold in in total distain. otherwise known as the school ...etc etc
hello Gordon. Don't you have an economy to screw up?
Dave promises bare knuckle fight.Bet he feels as if he could crush a grape.
Tuscan Tony said.BBC did show/refer to the bogey episode
When the folk come out to vote,the bogey incident will be the last thing on their minds.Your posts are getting more trivial by the day.Time to stop posting,you've said all you need to say.Shut up,now!
Jilted John said...hello Gordon. Don't you have an economy to screw up?
Bloody funny posting jj,your a class act.If only I'd thought of that first,but alas it was not to be.Look forward to your next gem.It's just one hilarious posting after another with you.Mummy must be proud.
Tuscan Tony said...
The Hitch, as ever, makes an important series of points.
Which points are you referring to ? It appears he has deleted his own posting.Why was that do you think ?
So OK, you've caught Gordo out on house prices. So. Politicians lie all the time.
Where's the rest of his lies.
Also, has anyone yet worked out the future cost to the taxpayer of all the PFI/PPP deals he's cut. We're bankrupt and will need a bankrupt EU to bale us out, in exchange for becoming Brussels' bitch.
I see that my comment of 5.55pm yesterday has fuelled the venom in the "Nulabotomites" pens to start flowing; Hurrah ! They`re not all at School Camp after all.
At least two sets of postings,(annymongs) fired off, in triplicate, as usual, emulate a certain style of Master C.Paul,O.B.B.N.P.S.(Order of Brown`s Brown Nose Pickers
Society). Don`t you ever listen to Professor Daile`s advice ? "Stop using the pseudonym of anonymous". Your writings are easily recognisable by, the poor content, poor grammar and totally incorrect statistics. So, back to School you "Stupid Boy" and take your brainwashed "NuLabotomite" chums with you !
There's only one Nu Labour troll on here and that's sad old pensioner Mike the Brown-arse licking lonely old tosser.
He's all Brown's got left these days as he sits in his Scottish bunker (what happened to the "happy family holiday" in Dorset?) shitting himself as the economy goes tits up.
your [sic]a very silly person said...
Tuscan Tony said.BBC did show/refer to the bogey episode
When the folk come out...shut up,now!
Great to hear from you Lord Kinnock - how's Glenda?
I think your comments here would be lent credence if you made it clearer who you are.
anon 11:01am
To his adherents, The Hitch is the living reincarnation of Rev Jimmy Jones. Even when he deletes his own comments, pages of comment can be written on the meaning of his retractions. All Hail the Hitch!
There are some that say The Ghost of The Hitch is none other than Tim Ireland, the scourge of the free bloggosphere, playing Devil's Avocado.
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