Are MN homeowners as deluded as HPCers?

[Cybercynic]

Last few days there has been spike in the number of posts on potential house price declines. In the UK prices have already dipped more than 3% since August. I find it amusing that many HPCers are frequenting MN to report such news and potentially express glee on those that have bought.

However, even more amusing is the response of home owners suggesting how prickly they are to the remote possibility of house price declines. (PS: I am a homeowner and bought 20 years ago. While I have made equity gains over the years, I support overall declines in prices otherwise I feel my kids will be forever renting in this country).

While I hold no brief for doomsayers and think most of those are crazies, I believe the homeowners on this forum are turning increasingly prickly at facts and they offer the following standard responses to prospect of price reductions:

Response#1: House is not an investment it is a home. OR if you buy for long term you will always be okay

Counter: Ok then stop worrying about what doomsayers say. Let the prices decline by 10-25% and be okay with it.

Response#2: UK prices will never go down because it is an island and we just 'love' immigration

Counter: Please check out what is happening in Australia and New Zealand. Both factors apply there and they already have >10% yearly declines so far and more is expected

Response#3: If prices decline I will simply refuse to sell. Nobody can force me to sell.

Counter: Yes, you don’t need to sell because you can refuse to participate in the market. However, that does not stop price decline just as prices went up even when you refused to sell your own property in a rising market. House prices are determined at margins. Valuations are based on comparable transactions (whether you sell or nor). Unless there is a sellers strike announced similar to the train strike next week, not sure how this argument stands.

Response#4: There wont be any re-possessions

Counter: Agreed there will be few repossessions. It takes a long time to repossess and therefore, Banks will work with borrowers to find ways to make sure homes are not taken away. But one does not need forced sales to price declines. Australia, Canada, New Zealand, Sweden have all seen declines in the last 1 year without repossessions. And as I said earlier, UK has had declines >3% since Aug. And we are not even in recession yet officially. House prices are a function of affordability and I for one do think that era of <1% interest rate is over and average will hover around 4-5% for some time and with those rates you cannot have rapid growth.

Response#5: If one hopes for price reductions throughout, one must be a horrible person 'cause some people will feel pain

Counter: HPI has caused more pain to generations. And therefore, please explain a situation when we can have affordable housing without price declines. Affordability either comes with consistent wage growth and that aint happening without rampant inflation and resulting interest rate increases. So please let us know what advise they have for the younger generation to become home owners and who want affordable housing. And please do not suggest council housing since you will need to first check the govt finances to make that suggestion

No they simply wont.

'It's an interesting debate but better to keep it polite. With the exception of DHB because they invite retaliation with their constant LOLs about recent homebuyers falling into negative equity or being unable to pay their mortgage. The rest of us should be trying to maintain a respectful debate.'

Come off it @Twiglets1 with this trying to assume the moral high ground. There have been other patronising or aggressive responses on this and other threads. @Mark19735 gives as good as he gets from @HotChoxs. The only actually, repeated bullying and childish name calling has been towards DHB. I don't agree with everything this poster says by any means and I can't stand LOLs but they have absolutely not invited the playground level responses from some other posters. I didn't see you calling them out when they were laughing at him masturbating in his bedsit.

Sorry, but @Twiglets1 is quite correct to call out the tone of some of the posts.

There's one side on this debate that frequently calls others stupid or economically illiterate.
There's one side on this debate that frequently makes (often incorrect) assumptions and allegations about other posters, their motives and their situations. questioning their good faith.
There's one side on this debate in which "contributions" frequently take the form of intense, rapid-fire bursts of post by accounts that appear to have very little else to contribute, and then disappear as quickly as they materialised.
There's one side on this debate that slips into ad hominem attacks on other posters.

I don't care if the handful of posters on that side of the debate are genuinely unique and real people, sock puppets, trolls, shills for some campaign, or an army of Russian bots using AI to further some strategic objective. I see them for what they are ... a tiny minority, hell-bent on causing distress to a portion of society they believe 'has it coming', and doing it in a way that is usually characterised by chauvinism, arrogance, misogyny and intolerance towards others.

If that description doesn't reflect your agenda, @rainingsnoring, then perhaps just try to take it in good grace that by simping for those you've cited who do match this description, it will mean that some people may think of you in that way, too.

I don't care if the handful of posters on that side of the debate are genuinely unique and real people, sock puppets, trolls, shills for some campaign, or an army of Russian bots using AI to further some strategic objective. I see them for what they are ... a tiny minority, hell-bent on causing distress to a portion of society they believe 'has it coming', and doing it in a way that is usually characterised by chauvinism, arrogance, misogyny and intolerance towards others.

The only poster who could be seen wanting people to "have it coming" is DHB who is best ignored. The posters who are engaging with them are giving as good as one gets though.

These threads always get very personal & divisive which is unnecessary.

Indeed. Unnecessary.

@Mark19735 - it is most certainly not one sided. You, for example, have written patronising and rude responses to me and accused me of name changing which is against MN rules and was also totally incorrect. Pretty rich for you to then accuse others of making ad hominem remarks.

Being personal and divisive is the point of these threads surely? You don't start a thread the way OP did if you want calm, reasoned discussion. Start a thread like a gf : get gfs.

Oh dear ... too quick on the keyboard?

If you are referring to the post where I commented that no sooner had @deadhousebounce apparently been banned, @flowersandbutterflies started posting in much the same vein ... I stand by that observation. I made no direct accusation of name-changing by anyone. I did later refer to sock puppet accounts, which believe it or not, are a thing on the internet. But I didn't accuse @rainingsnoring of ever having changed a name on their account. Maybe you're getting mixed up which line of thought belongs to which thread. Can easily happen ... I'm sure.

@WinnieFosterReads that's a fair point 😆

Here you go Mark. The memory seems to be serving me okay. As I said before, if you are going to indirectly or directly accuse people of name changing, at least get better at it and try to be honest.
Anyway, I'm sure you've got better things to do including looking after your 'property portfolio' 😂

'@rainingsnoring - what do you think?

Remember to switch between firefox, edge and chrome when posting to back each other up ...

Keep up the good work though ... I'm nearly persuaded.'

Yes, @WinnieFosterReads makes a fair point. This is a pretty daft thread, although the same has happened on others which were purely data based.

I'm glad we seem to have reached consensus that any insinuations about sock puppetry were only indirect allegations, at most. It's a much lesser charge than directly accusing a named individual of something that is demonstrably not true ... and one that can comfortably be parried by the point @WinnieFosterReads made. Doesn't make them untrue, of course. Nor is the outrage it provokes any less funny for it.

By the way - I'm not sure why anyone would assume I have a property portfolio. I'm also not sure why anyone would think that if I did, it somehow discredits the points I make, or strengthens the points they make.

Yes it’s true I don’t have a problem with people mocking DHB - I do it myself ONLY because he has made the decision to adopt a mocking, jeering tone himself towards the people the rest of us presumably feel sorry for - those (mainly)younger buyers who may be caught in the negative equity trap if they had to sell this year. I’ve experienced that myself in the past and it isn’t pleasant. Plus it’s obvious DHB enjoys winding people up for sport.

Leaving DHB to one side, the rest of us should make an effort to be more polite to one another. It certainly isn’t right to use personal attacks on people who are being reasonable in their remarks, even if you disagree with their point of view. I know things get heated on these threads sometimes but the tone against one person by several others was starting to verge on bullying.

Goodness me bullying because I asked @Mark19735 whether he had started an innovative business?the

He keeps going on about people not understanding economics, so I wanted to see from a position of an Entrepreneur whether he wants everyone else to do the innovating and pay higher salaries to everyone while his house price goes up?

I mean this is economics 101, if you can't afford to do it, then you're bankrupt.

It's a pretty simple question that I'm sure he can handle, and doesn't require intervention.

@Twiglets1
It's just a difference of opinion over whether house prices will crash drastically or not over the coming year, not a divide based on who wants people to suffer. I doubt any of us want that

But the Country has wanted that, it has mandated a massive house price boom.

What happens after a boom?

If people don't want others to suffer where were they during unsustainable booms? How many wrote to their MPs?

So yes if people want the debt magically 'inflated' away they are asking once again for net importers like myself to put our hands in our pockets and make ourselves uncompetitive. And this time around we're unable to do it. Basically it's advocating once again to make the Country poorer.

*net exporters

Methinks you've mistaken my posts for those of another. I've not said other people don't understand economics ... quite the reverse. I have called out several posters plenty of times for doing just that though ... you know, those people who throw around the phrase "economically illiterate" like a slur ... calling other posters "idiots".

Anxiety stems from uncertainty about our environment and a feeling of powerlessness to influence and control that world. I have absolutely no anxiety at all about house prices. That is because I have control over my housing costs and needs. That is because I am an owner. Or debt-slave ... you pick your preferred descriptor. Doesn't alter the underlying truth of my position.

Now, for the last time ... the price of any house does absolutely nothing from one day to the next. It doesn't rise, or fall. The last paid price can be looked up on the land registry. Until it is put up for sale again, it's 'value' neither exists nor doesn't exist. Think of it as Schrödinger's House Price. Until it sells, nobody will know what it was worth during the interim period. And until it sells on the open market in an arms length transaction with a willing buyer, the only person whose opinion matters as to it's value is the owner. It is worth what they say it is worth, unless they accept an offer to sell and then it becomes worth what the buyer thinks it is worth.

@Mark19735

This has nothing to do with what I asked you.

I'm simply asking how the Country can raise wages without becoming poorer.

@Mark19735
I have absolutely no anxiety at all about house prices. That is because I have control over my housing costs and needs.

But you have no control over whether you're able to get decent healthcare or afford spiralling energy/food costs.

So if you have no anxiety about house prices why would you want wages to increase and inflation to spiral instead of the cost of housing decreasing?

Are you trying to trick me into writing an essay on Karl Marx to 'prove' how economically literate I am? Well - your luck is in. I was bored anyway and it's still more than an hour 'til tea time.

There are differing opinions about which factors of production are most responsible for 'creating' wealth. Marxists tend to think it is 100% the workers. Capitalists tend to think it is 100% the land, property, plant, equipment, raw materials and 'know-how' to assemble the other factors of production so as to produce output. Capitalists tend to think owners of capital should receive the lion's share of profits, and that labour should be treated as a commodity, and priced accordingly. Left-leaning commentators think the optimum balance is somewhat less than this and that there is inherent social value in rewarding work in excess of the lowest cost model.

In olden times, land was worthless. 'Staking your claim' literally meant walking to a field with no one in it and erecting a post with your name on it. Nowadays, all economically useful land has already been allocated and is owned by someone, and governments regulate what can and can't be done with land through planning and zoning laws.

Further, many of the largest enterprises are listed companies owned by shareholders, rather than owner/entrepreneur-led businesses, so it's no longer a two-way split between capital and labour.

Nowadays, any enterprise needs to satisfy four groups of stakeholders who each have a claim on any surpluses after direct and indirect costs of production are covered:

Owners - they get dividends, and a claim on any retained earnings and capital growth.
The people with the 'know-how' - they are management, and they get a combination of wages, plus also bonuses, plus also some equity or higher compensation in lieu of equity.
Governments - they get taxes.
Workers - they get wages.

You ask how we can afford to give people higher wages without making the country as a whole poorer? We rebalance the relative shares of profits given to these four groups, in favour of workers.

I don't mind if the government takes less out of payroll taxes - that seems to work in some countries, although it's seen as regressive because the highest earners benefit the most. So maybe owners will need to accept lower dividends. They'll complain ... but so what? They're hardly going to give up a winning ticket offering them 10% ROI just because last year it gave them 15%. There's 5% of the entire value of the economy right there - it would easily pay for a 20% pay rise for all workers. The way to compel this is to switch the burden of taxation away from employment (PAYE and NI) or from consumption (VAT) and towards wealth and ownership of assets (CGT or, the holy grail LVT).

Ultimately - these are political choices. Choices that will one day be made at the ballot box. Choices that our leaders could make before then, if they wanted to. But they don't.

See how easy it is to set out a position without needing to call anybody else stupid?

@Mark19735

No, I'm just wondering why I should pay my workers more and bankrupt it instead of offshoring part of my company so that your house price can remain as is.

I'm all ears Mark.

Like I said - political choice. You are entitled to cast your vote however you like. I’m pretty sure this government and the next will remain true to form though.

You run along and offshore your business to keep wages depressed … you won’t be missed.

Ha that's funny so the one who proposes that we innovate wants an innovative company to offshore and says we won't be missed (while going on a long lecture about how people shouldn't insult each other on here)

We have a trade deficit, really doesn't take much to see that we have more going out than coming in and it's a major problem.

As stated keep house prices high and you can't export without devaluing the currency, devalue the currency and you get poorer.

And I won't miss people like you either Mark, you can enjoy your failing healthcare and spiralling food prices in your expensive house. I'm about to retire abroad, it's just a shame you managed to take the Country down with you because of your house price obssession.

A decent person would at least have the guts to apologise for their mistaken memory.
I'm not outraged. I didn't comment on it at the time as it doesn't particularly bother me. I am calling you out now as you are trying to take the moral high ground and complain about other people 'bullying' when you have been doing the same yourself, etc. That's disingenuous.

@Twiglets1 'It certainly isn’t right to use personal attacks on people who are being reasonable in their remarks, even if you disagree with their point of view.'
Fair enough although I disagree that the any one person (other than DHB) has been bullied. A number of posters are quite rude and condescending in their posting style and are giving back as good as they get. Anyway, let's move on!

@HotChoxs -I'm trying to understand your perspective as an exporting business person. I should caveat this by saying that I am not an entrepreneur myself.
I think what you are suggesting is that other posters wish for their houses to retain the current high values and suggest that, instead of the BOE raising interest rates and continuing QT, that inflation should be allowed to run hot. If this is what you are suggesting, that would surely lead to further falls in the £ (as happened a few months ago) which would make business for you, as an exporter, more profitable. It would also make the country poorer because we are net importers and everything not denominated in £ would be more expensive relative to the £.
Personally, I think that the BOE is in a position, mainly of its own making and those of other central banks, where it is stuck and has been and is obliged to continue to raise rates and keep them at a level that is multiples of where rates have been for some years. This and other factors will cause house prices to fall (already is) whether anyone on here likes it or not. Even if it chooses to let inflation run hot (which it probably will), people still get poorer and can afford less, including bigger and better houses. Either way, the UK is getting poorer due to decades of poor decisions by politicians, etc whether anyone likes it or not and clearly most of us do not.

Some good questions

It would make it easier to export but not more profitable. We could certainly sell more but this would not be offset by the increase in staff wages and our own import costs.

It's not just that, it's frankly absurdly difficult to run a business right now in the current inflationary environment, also when staff turnover is naturally increased and staff freedom of movement is limited due to the tight rental market and high housing costs, plus the system itself is just generally broken.

Yet people want more wage inflation as if it can just be magicked out of thin air.

Incidentally I'm not actually opposed to wage inflation if that's the only solution, but it's the idea that this is going to lead to less suffering than a house price correction that really galls me.

@HotChoxs -I understand what you are saying.

I agree that now is really not the time to start a business (at least not one in a discretionary service which is the majority in the UK). It's inevitable that people's spending will fall further and discretionary spending will be reduced first. Apart from that, costs have rocketed for businesses as well as individuals/ households.

I am not at all against wage increases but I think the notion that wages will catch up is naive. This is clearly the opposite of the government/ BOE's agenda. It is also clear that there would be other knock on effects would be negative. My opinion is that, if private sector employers are forced to increase wages significantly, it would (overall) lead to more staff being made redundant or hours being cut even more or businesses simply stopping trading/ going to the wall. Then, these people would have no job at all and be on UC rather than (possibly) subsidised by UC. Whatever happens, imo, house prices are going to reduce although by how much is unclear at present.