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somenerve:

This clip is certifiably ancient in the memesphere. I really should find another [but won't]. However, the British property market – and my perpetually dumbfounded reaction to it – has long felt stuck in groundhog day.



AIBU To think most property owners don’t understand how hard it now is to buy a house


--- Quote ---@somenerve if house prices fall and home buyers go in to negative equity they could lose their house. The interest rates will rise and they won't be affordable. I think perhaps you should do some research.

If house prices fall, they won't become affordable for those struggling to get on the ladder because the lenders will reduce how much they are willing to lend.
--- End quote ---

In reply to this and many other posts:

On an individual level it may seem great when a bank is willing to give you lots of money, at a low rate, to buy that house you want. But what it actually does it push prices up.

You may think prices go up because of supply and demand of houses, and that's certainly part of it: but what got us to the point where people on decent salaries, without an inheritance, are finding it impossible to buy a house they can live a good life in (rather than barely squeeze into for a couple of years and hope to sell at a profit, probably in a place where they can't find a job), is the supply of money available to borrow. Don't believe me? Maybe you'll believe the Bank of England, itself the chief culprit.

The system is set up for young first time buyers stepping onto a low rung of the ladder, then spending their productive working lives climbing it. If it isn't obvious to you that this system and "the ladder" is broken, we're probably never going to agree on anything. It's even worse if you didn't order your life just so, and run into a situation where, as DarkenedTimes put it,


--- Quote ---we thought we had time on our side, since house prices back before about 1998 ish were only 3 times normal wages. You could even find houses at just double wages in cheap areas. Then they doubled, we all thought they'd fall again and waited: then they doubled again, tripled, and finally quadrupled and that was that, most people were locked out unless they had parents to help. It changed so quickly.
--- End quote ---

A lot of people "don’t get it" because they got extraordinarily lucky with timing and figure the ladder worked for them, of course it'll work for you, if you just "make sacrifices". This is where avocados usually come into the conversation. It may be the only sacrifice you can make at that point is to restrain yourself from slapping them.

I get that if you've managed to buy a house, the thought of it suddenly losing value, even if that's just theoretical at the moment, can be scary, and it will make you angry when people suggest prices should come down – "crash" is the preferred terminology for maximum psychological effect. They’re trying to take money from your pocket!

Look at it from their point of view. (Well, from mine.) As a saver suffering many years now of extraordinarily low interest rates, the fact that rates have been kept low to prop up the market you’ve bought into means money has been taken from my pocket.

Also, you've purchased what in all likelihood is a very overpriced house, helping to set a price for whatever street you live on, your transaction yet another little data point in the great housing spreadsheet of the nation. Perhaps you’ve used "help to buy" or shared ownership or some other crackpot scheme cooked up to keep the whole wheeze going (another one of those things that may or may not be great for you, but is awful on a larger scale). I don't know your circumstances. Maybe you've even worked nose to the grindstone at three jobs and have never caught a whiff of avocado other than from the bathroom suite at your nana's. It doesn’t matter. What matters is that a) you've just done your bit to keep prices high, and b) many, many of you now figure you're a protected species: that your possible negative equity is a worse fate than not being able to buy in the first place.

Sorry, but chances are you've become part of the problem. Don't believe me? Believe an articulate homeowner.

We're now at a point where otherwise nice people may be actively rooting for a Covid crash or a Brexit crash or any crash really, not because they want to inflict pain on you personally, but because it looks like the only way for them to have a shot at owning a house.

This is where homeowners usually say but the economy will be trashed!! Banks won't lend!! Be careful what you wish for!!! I would suggest that they're more concerned about their money making machine breaking down than they are about the predicament of non-homeowners.

As far as I'm concerned, the status quo is a worse option. Housing sucks up far too much money which could be better spent elsewhere in the economy. Uncounted years of life are spent servicing debt that needn’t be. "Affordability" is king, pay less for longer so really pay a lot more in the end because who cares? You're planning to be long gone…

Unless something big happens to shake things up, the future looks to be even more debt servitude, and at best, owning a small slice of a house because we mustn't ever let them come down in price. Anyway, the economy is already fucked. If it isn’t for you personally, good for you; but it is for a lot of people, simply because it isn't working very well to provide decent options for shelter and stability.

Tl;dr: if you don't see a BIG problem, it suits you to not be looking very hard

– somenerve, Mumsnet and HPC irregular

The savings trap
Why I love renting
Witless
Winning friends and influencing enemies
The Wrongmove Ride
Toxic emotional waste
Premature schadenfreude
Steckenpferd

Overheard:
Everyone has to take personal responsibility for their own circumstances


--- Quote ---Wish that were true. The state takes responsibilty for the price of housing, the solvency of banks and the price of credit.  The rest of us have to make financial decisions by predicting whether or not state will continue to act in an insane way.

Do you buy a house when interest rates are at zero percent and house prices are in a massive bubble? Is that taking responsibilty? Or do you wait decades for the state to stop forcing interest rates down and house prices up? To me it seems like borrowing piles of money that could not be paid back if interest rates return to a sensible level is not taking responsibilty. But I always seem to get this wrong.

I have no idea how much longer the state is going to continue to meddle in the markets. If they decide they've lowered standards of living enough they may stop this year. Or they may continue for decades. I have no say and no way to predict the behaviour of the insane. So how do I take personal responsibility?
--- End quote ---

Charles Ponzi:

somenerve:
Guardian pick, and one of mine, too:


--- Quote ---I work in a different asset class, where are the same trends can be seen. Rich old people who bought decades ago, inured to ever onwards, ever upwards. Everyone who has ever sold has lost. In my business, 2008 didn't happen - we just powered through as people lost faith in money so the value of assets went stratospheric. There was a period in the early teens when it looked possible that money would simply turn into loo paper. The closer you could get to the money tap, the better. I watched people being hosed down with free money through QE desperate to find hard assets to convert their effectively free money into.

And since then, every time there's been a wobble or a tantrum, the central banks have turned the hose back on. We should be in a recession, but there's no distress selling. Rather it's the people in the business who are suffering, as we hear the mantra "I don't need the money" from people when they ask about selling and don't like the valuation they are given. I deal with a generation of fully pensioned up old men whose thinking betrays a belief - an entitlement - to living forever. There is no wisdom. And yes, many of them are into property as well. The financial heroin of well-heeled Brits, for generations.

I sometimes say to people, the value of Xs isn't going up, the value of money is coming down. And unlike in the past, you aren't competing with your compatriots. You are competing with the whole world. And with covid the firehose has been turned back on again, and the financial sector are being hosed down - and a lot of that money goes into physical assets.

Should you buy at these elevated levels? Do you feel lucky? And that's my professional advice.

The problem with housing is simple. It's a credit problem. There's too much fantasy money around. We probably don't need to build any more houses, we should make better use of, and take more care of, the existing stock. But what we need to do is radically restrict the sources of finance. Drastic reductions of money coming in from overseas, drastic reductions in the amounts lent by banks, controls on multiple home ownership, controls on corporate buying, controls on landlording. The balance needs to be tipped dramatically in favour of the average wage-earning UK citizen.

The chances of the Tories ever doing anything remotely like this? Absolutely naff all.
--- End quote ---

The same as the chances of anyone in power helping bring prices down to earth. At least on purpose.

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