to feel seething resentment towards those who profited from the house price bubble and hot anger at the Governments who allowed it to happen?

[TartyMcFarty]

You'll have to forgive my naivety here - I'm ranting about something I don't really understand.

DH and I are stuck. In 2006 we bought a (modest) property on a 100% mortgage. Foolish in hindsight, I know, but based on the advice of our IFA, the unshakeable faith of our families and society that property ownership was the way to go, and the increasing pressure at the time to get on the ladder or miss out, that was the decision we made. We then found that the lender, bastard bastard Northern Rock were unwilling to remortgage based on our lack of equity, despite us having overpaid by several thousand pounds. We couldn't shift the place, and with the agreement of a different IFA, remortgaged against the equity in my DM's property (love her!). It gets more complicated than that, but that's all that's needed here. Now we still can't sell it , our tax credits have suddenly disappeared, my pension contribution has increased (DH doesn't even have a pension) and the tracker rate is slowly increasing. We're on interest only, and as I'm part time since the having DD, with another DC on the way, there's not much of a cushion.

What's really angered me over the last couple of days is the dawning realisation of how people just a few years older than us have profited from the massive increase in property 'values'. I'm still in touch with our ex-neighbour. She bought seven years earlier than us, sold at £120k profit after 10 years (this is not London!), her partner was in a similar situation so they have ended up comfortably in a property of twice the size, renovated to a really lovely standard. Obviously my resentment isn't directed at them personally - they're good people, have profited from a stupid market and good luck to them - but it's just an illustration.

How can we possibly hope to survive in a property market that boomed by more than 3.5x in this instance alone? We can't even afford to maintain our own home to a good standard. Pay isn't moving at all, and we're currently looking at less than .75 of a pension between us. I can't even bear to think about how we'll support our DCs through HE, and the risk to my DM's home if interest rates shoot up.

I just need a rant. Those of us stupid enough to be sucked in at high LTV rates towards the peak of the market are fucked all ways, whereas people just 5 years older than us are untouchable. I know I've only given one example for which I know the exact figures, but there are others I can think of in the same lucky situation. There just doesn't seem to be any point in trying when you compare our situation with those who profited so enormously in the 00s.

Quite possibly, Starwisher. As recently as the 70s women could not get a mortgage in their own right without a male guarantor, so single women buying their own homes is only a fairly recent phenomenon.

Icelanders just had their mortgage debts cancelled this week - not that you'll hear that on the BBC. Default would be much the best option for the UK but you'll never hear that from a banker as it would be them rather than us taking the pain if we pursue that option.

The UK's property bubble was the biggest in Europe, the only reason we haven't crashed and burned like Ireland is a) we didn't go on an overbuilding frenzy and b) we can set our own interest rates as we're not part of the EU and can print money to prop up our banking system. So I wouldn't go holding up the UK as a paragon of virtue, we are as guilty of splurging on debt, in just as much of an asset bubble, but having a slow painful crash rather than ripping the plaster off quickly.

hmm see I will probably get savaged for saying this but I am in a position to pay off my mortgage (due to family death) and am actually wondering if I should....might be a little galling if all the mortgages get cancelled a few months later. On a little though...it's not like I earned this money.

Mmm. Haven't watched the vid yet, but somehow don't think women's lib caused the de-regulation of the banking industry. Or Credit Default Swaps. Or jobs to be outsourced to China. Etc.

And by the way, married women working full-time is hardly a new idea. Those textiles jobs now being done in China? 100+ years ago they were done by women here.

ahhh I see that I would lose the money either way. Makes sense really - ish. erm actually it isnt exactly fair that people who can afford their mortgage get to carry on paying while those who can't get their debt forgiven.

oh gosh it is really complicated

Oh thanks jaja just set sky to record it

entropygirl, see thats what I mean about all the Government intervention. It happens in businesses also. Businesses dont know whether to invest in more plant, machinery, and hiring more staff, because they and probably the Government themselves dont know what the Government are going to do next.We might take on another full time or part time staff member this winter, but because of all the uncertainty, we will leave it till the last minute to decide.

Mortgages in the UK are not going to get cancelled. In Iceland houses are worth a small fraction of what they were bought for. They have lots of space and 250,000 people most of whom live in the capital. Very different.

Ireland had a fundamentally flawed building policy: you could offset building a property against you tax bill. So if you owe say 100,000 euros, you could hold a house for that value and pay no tax.

So tax receipts down, stupid number of houses built. Again v different than the UK.

Hold = build

Oh aye indeed Wasabi our banking industry is much more powerful than in Iceland - they 'twatted' theirs and are prosecuting the worst offenders - we are bailing ours out, again and again. So yes I really do doubt that we'll get debt forgiveness in the UK. However the concept that UK houses couldn't be worth a small fraction of what they were bought for - really does ignore history - that's happened before and could well happen again. And with our recent credit bubble - I really do doubt UK houses represent fair value! Unless you think a workers slum terrace dwelling which probably cost £50k to build in modern money is really worth £700k? I mean we don't pay thousands of pounds for tulips anymore but at one point speculators did.

And yes Serial I do agree with you most of the problems of the last bubble were indeed jeff all to do with womens' lib (all of the issues you cite) but the move from one to two incomes has been negative as it means we end up paying twice as much for the same asset. I really do recommend watching that video it explains so well the cumulation of problems we're facing, and why those who blithely state 'the good times will return' (with no evidence to back it up) are just wishful thinking.

Cassandra- working class women have always worked and middle class women worked until marriage and again once DCs were older, or all their life if they never married. It's a myth that a whole generation of women were sahms all their lives.

I'm watching your video YellowWellies. Interesting so far, in between chatty children's interruptions.

Yellow - Icelands banking industry was far larger part of the GDP than ours. i dont think your comparision stands up.

when you say fair value, do you mean this in the economic sense?

I know Margery I didn't say that they were all SAHMs but it's not a myth to say that women struggled to get mortgages or that women's income was not taken into account when assessing mortgage affordability before the mid 70s early 80s. It isn't women working that has helped inflate the bubble - it's womens' income being used to inflate the amount of credit available to one household that has.

Iceland's banking industry was a larger part of their GDP but it was less a part of their social fabric - our banking industry has been part of our socio-political elite for hundreds of years. Iceland's banking industry was a much newer beast - equally on a small island it was possible to isolate and identify the 'culprits' and there wasn't a chance that they weren't going to meet their comeupance. I live on Orkney and it's similar here - the community self polices as if you're up to shite your neighbours know!

I didn't state 'fair value' did I Wasabi - am struggling to find the phrase in my post (could be early morning low caffeine dyslexia on my part?). What I meant is - even though we've had some falls, the bubble is still deflating - we're not back to the long term 'fair value' (meant in the economic sense) by a long mark. I mean I would suggest, looking at these graphs (showing real and inflation adjusted prices) that we're not at the bottom yet?

upload.wikimedia.org/wikipedia/commons/e/e6/UK_house_prices_adjusted_for_inflation.png

and

upload.wikimedia.org/wikipedia/commons/d/d2/UK_real_house_prices_1975-2010.svg

If you genuinely believe that even with credit returning to sensible levels that the next logical move is for these charts to dash off upwards then I think we need to agree that you're an optimist and I'm a pessimist but then my motto has always been hope for the best, prepare for the worst.

Very true Elenor I really can see a rise in gated communities coming. It isn't fair nor an accurate (i.e. accurate reflection of hard work) distribution of wealth for one generation to have 80% of the wealth whilst simultaneously having the best working and retirement conditions and denying those to the generations following them (winding up final salary pensions, changes to the pay and conditions of jobs i.e. police - all for the worse). Society needs each other. No generation is an island. I think the impolite way of phrasing it is 'good luck wiping your own arse when you're 90! No one in my generation can afford to do anything as socially useful as work in the care industry - not if they want a roof over their heads'. I do genuinely think, without some form of redistributive taxation and means testing of benefits - that this will get ugly.

Yes I have watched the Money Masters - cracking video too - though possibly a little tin foil hat for some MNers?

Yellow - for me good times is not prices rushing up! i hope it going to be more sensible in the future.

I think the government has realised that too - that whilst rising house prices creates an electoral feelgood factor of illusory wealth (for those on the ladder) actually high house prices just poison everything:

• they're socially divisive (between the haves and have nots);
• they don't reward hard work and effort and actually disincentivise it when they rise faster than wages;
• they make us uncompetitive internationally as they increase the costs of production (wages need to be higher);
• they divert money from the useful economy - people need to invest so much cash just to get a roof over their heads useful enterprises are undersubscribed for investment;
• they divert huge chunks of peoples' salaries every month direct to the banks when they could be supporting other parts of the economy;

I do genuinely think, bar yet another crazy intervention by government we are due more falls but that the government's aim is to do this gradually and keep interest rates low to try to avoid millions plunging into NE.

Have a look at this chart of the psychology of a bubble - where do you think we are in the UK housing market? My guess is we're somewhere between 'Return to Normal' and 'Fear'

steadfastfinances.com/blog/wp-content/uploads/2009/11/Psychology-of-bubbles-plotted-by-investor-psychology-vs-value-Dr.-Rodrigue-Hofstra-university1.gif

Do you know what, I've read this whole thread with complete fascination and total bafflement. I have absolutely no idea what to think, and need to lie down in a darkened room, but I am in awe of your contributions yellowwellies

Excellent video. So in real terms we earn more than a generation ago but no savings, bigger debt and more overall risk.

It would have been interesting to hear more from her on what it could look like in the future.

Icelanders just had their mortgage debts cancelled this week - not that you'll hear that on the BBC. Default would be much the best option for the UK but you'll never hear that from a banker as it would be them rather than us taking the pain if we pursue that option.

Default is the best play for Greece too, it will be very interesting to watch that one, because if they do it....

The fascinating question for me at the moment is how much influence the government will really have if market psychology starts working against it.

It's fairly clear that what the government wants is a very slowly deflating bubble. Massive sudden falls and loads of repossessions would be bad politically (the human cost would be awful).
However, the high prices paid for houses have been dependent on people saying to themselves 'It's worth stretching myself because house prices can only go up long term.' If people stop believing that and there is a rush out of property, particularly among BTLers (because most people, after all, don't care how much their house is worth, they just want to live in it) I don't know how much the govt can really do. However they may not stop believing it, because the idea is very deep-rooted here. In the last year there's been a noticeable shift from 'houses are just going to keep on going up!' to 'houses may go down a bit for a while but then they will go up again'. It remains to be seen whether this will go further and become 'you can't guarantee you'll get your money back' or even 'houses are always going to be a bad investment.' Market sentiment isn't rational so anything could happen. We might see a slow deflation over several decades like in Japan, or it might get out of control and there'd be a steeper fall including an undershoot which allows it to bounce again within 10 years.