Tax rises that kick in today will reduce what homeowners can borrow and potentially send house prices downwards, experts have warned....
says the Torygraph under a headline about rises in National insurance meaning that buyers will be able to borrow less and the strapline,
Sellers will have to cut asking prices as tax rises hit buyers' ability to borrow
Now just consider that for a minute. The only people worried about the price of houses are buyers and they have already been reassured that their ability to borrow less will be matched by a corresponding fall in prices, but the conditioning is so strong that even buyers think a fall in prices is a bad thing, uniquely amongst anything that they would want to buy. "Oh, no, I'm going to be paying less for my new house than I thought! Disaster!"
Another point this article makes to which the conditioning blinds us is that house prices are proportional to what people are able to pay, so that the cut in prices is completely illusory, the only difference it will make is to the banks, who will be getting less interest....
...in case anyone was wondering why we have this obsession with house prices in the first place.
Wednesday 6 April 2022
The indoctrination runs deep
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11 comments:
I saw some other classic wailing saying that people who overpaid in 'race for space' now can't remortgage cheaply. Diddums. Plan ahead more than a year ahead, you wankers
I can understand why people who bought recently don't want a reduction because then you owe >x for an asset worth x.
However, prices rises aren't that great. Unless a) you have more homes than children (an easy sum to do) b) never want to move to a bigger home.
I sold a flat a few years ago and moved to a house.
My colleagues were congratulating me on how much I had "made".
Even when I showed them on a spreadsheet that rises had cost more than a years salary they had problems understanding it.
Many of these people were foreigners who had learnt to speak English perfectly, which I would have thought to be harder to do than look at 2 columns on a spreadsheet and understand them.
With interest rates so low, you're paying down principal on the loan very quickly anyway, offsetting even sharp falls in paper value. At the end of my 5 year fix, I'll have paid down more than 17% of the principal, no government would countenance a fall of 17% over 5 years. If they did, I'd be able to move to a much better house anyway and/or my kids would have a lower burden on their housing needs, so fingers crossed :-)
LF "Unless a) you have more homes than children"
That thought had occurred to me. So let's assume our lucky hero has two kids and two spare BTLs, that family is sorted. But will his two kids also have X spare BTLs to pass on to X grandchildren...?
Sooner or later, Homey maths will bite your family in the arse.
@Mark Wadsworth
Good point
However HPI is great if you don't care about anyone other than you!
Saying that you can't spend it, so it is not that great.
LF, the latest wheeze for Boomers is, if you can't be bothered to downsize, just do lifetime mortgage and to Hell with the kids.
If I were naive and/or cynical enough, I could retire today.
MW. Lifetime mortgages - equity release - are booming. £15Bn last year (from memory). The lenders are chucking money at them. And with commissions running at circa 2.5% huge incentives on equity release advisers to sell schemes. We've seen an ER scheme done as part of IHT planning where circa 650,000 was released at a rate of interest of less than 3%. Commission on that was circa £14,000....
And lots of homeowners are being encouraged to release equity to provide a deposit to their children so that they can buy an house. It's mad.
Intriguingly 15% of Aviva's ER funding is from their annuity fund (I have been told).
L "lots of homeowners are being encouraged to release equity to provide a deposit to their children so that they can buy an house. It's mad."
That is just money disappearing into the land value/credit black hole.
MW Quite. Bankers and land lords win again.
I try to discourage it, but people are welded to 'the property ladder' and that their children 'get on it now'.
L, I'm quite wedded to packing in work and living off somebody else's subsidies.
"I can understand why people who bought recently don't want a reduction because then you owe >x for an asset worth x."
I can't understand it. Surely, if you are in negative equity that is a good thing, as the bank will be very unwilling to foreclose on you. It's more a problem for the bank. I once bought a house for £15K that had been mortgaged for £41K (it was a long time ago). The previous owner had remortgaged twice while prices were rising, lived on his mortgage while property prices plummeted and then done a runner. That was far more the bank's problem than his. He'd had a five year paid holiday, they'd lost £26K.
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