Will the housing crisis ever be solved?

[ByJustScroller]

Do you think there is any hope for young people wanting to buy in? I have friends and family where I live but now I am priced out. I am not just competing with locals but people who live in London and the ever increasing new arrivals. Housing supply has not kept up with demand for years and this government has no plans. I will be renting for ever.

BTL, holiday home, AirBnB debt

As a % of all mortgages - you are still on shaky ground even at the peak.

What about people that lied about income, overtime, partner"s income etc. before the 2008 bust, what % is that? And remember the cheap rates really came in then to prop the whole thing up and push prices up some more.

Yes, all those "self certification" liar loans that banks were complicit with as they often knew the "declared" incomes were false, but did virtually no checks and just accepted whatever lie the applicant put on their application forms.

Predatory Liar Loans, haven"t heard that one in a while, the whole Pyramid scam was built on them, then the media were complicit in pretending that really high prices were "normal" and the problem was that people just couldn"t borrow enough, and large swathes of the public bought into it! (literally)

You must agree though that in previous decades ordinary people were very unlikely to have extra property for renting out, unless they inherited a house or a cottage or something, it would have been unusual?

I agree. But I don't think home ownership itself is the main problem. The system is broken and the government has been a poor steward. Now it is scapegoating many those that did the right thing rather than addressing the imbalance that it has allowed to be created and also fed.

@KeepPumping If you work or have worked previously. What motivates/ motivated you to work and pay taxes?

Not sure I fully understand this, what do you mean by the right thing, getting a mortgage? Also the UK government can"t control the monster debt party that just hit the buffers, not anymore because they need all the central banks to collude to also cut rates, that is the only tool they have to keep the debt party going.

Fear of hunger/ homelessness and a desire to avoid a life lived in jogging bottoms smoking weed watching crap TV.

We are here because successive governments allowed things to reach the point where the shit is about to hit the fan. You can't spend decades allowing an economy to become increasingly dependent on cheap debt and ever-rising asset prices, then point to the resulting lack of room for manoeuvre as though it appeared, as if by magic, out of nowhere or, worse, blame ordinary people for pursuing the very self-reliance and financial security they were encouraged to pursue.

“Doing the right thing”, isn't just getting a mortgage. I mean doing what successive governments have encouraged people to do: work, save, get a mortgage or cover their own rent, avoid relying on benefits more than they need to, contribute to a pension and try to provide some financial security for themselves and their families, raising them the same way.

The same applies to the first part. I don't own any jogging bottoms or weed, although I do like crap telly.

But why do you seem to have so much contempt for people who are motivated by exactly the same things, just because they happen to own their home? Why are you blaming them for not seeing through the messages and incentives successive governments were feeding them?

Owning your home and having a mortgage on it are slightly different IMO, although many will argue against that, but if you want to gloss over the gleeful debt feeding frenzy that happened during the UK property bubble years that is your choice, you started by asking why people work, that is a different question to why people take on varying levels of mortgage debt because you don"t really need a mortgage to function successfully in life where I would say you need some sort of direction, goal or "work" to thrive as a human being.

I am not glossing over anything. Some people need one to achieve some level security. Aspiring to own your own home isn't the problem. Poor market controls, poor governance and allowing corporate interests to become too powerful are much bigger issues.

I just don't believe that the aspirations of ordinary working people to have security is something we should sneer at. The welfare state ultimately depends on these people working, taking a risk to start businesses where they employ others, earning, paying taxes, saving and, where they can, providing for themselves. Those are the people who keep its wheels turning.

Yes, sounds good as a soundbite but we know ordinary people got drunk on the credit, they were bidding up property and boasting about how much their little ex-council house was worth like drunken sailors on shore leave, problem is it relies on other ordinary people grafting and borrowing even more! We need a wake up call, the party has ended, the rates need to go up now and people need to take their losses before we can get back to a more stable less expensive for the masses society.

Let's just agree to disagree.

Your life experiences have shaped your outlook, just as mine have shaped mine. I don't want a society in which the answer is simply ever-higher taxes on those who work, save and provide for themselves to cover the socialised cost of other people's "choices" not to work, or not to work full-time, when they are perfectly capable of doing so.

You describe people taking out mortgages to secure a home as “gorging on debt”. Would you be equally comfortable describing someone who chooses not to support themselves, despite being able to, as “gorging on benefits”? Or does that language only apply when you disapprove of the choices being made?

The welfare state should be the safety net it was set up to be. No more, no less.

@Any1ForTennisare you feeling perfectly well?

Government could have stopped the liar loans years sooner.

government have control over stamp duty rates, incentives such as shared ownership schemes, laws over leaseholds, etc. they could have acted sooner to limit rents paid by benefit claimants, they could have reversed council house sell offs, they could have helped build more homes, convert empty homes, build new council houses etc.

it suited the governments when we had access to cheap finance, easy loans, etc as it was a short term fix to give the illusion of a boom and growing economy.

They were entirely complicit with housing cost inflation and, the debt/f8nancial crisis and home shortage. It suited them at the time.

The governments of the time certainly weren’t passive bystanders helpless to the ever increasing debt and asset price inflation.

But people did gorge on debt. People were over stretching themselves to buy homes they didn’t need in the hope of big profits and windfalls, whether homes for themselves far beyond sensible debt ratios compared to earnings and savings, or buying additional properties to rent out. If people had only been buying a home commensurate with the own needs and finances, there’d have been no problem. Greed took over.

Some people did gorge on debt. Some people overstretched themselves to buy homes they didn’t need, in the hope of big profits and windfalls. Those are two very different groups of people. And the stats show that the majority of people were buying one home to live in themselves. If house prices rise, people have to stretch themselves to buy a home. Its not rocket science.

Where is your ire for the blocks of thousands of homes that are still being bought by institutional investors and HNWs, including properties that are left empty? Where is your ire for administrations that provide taxpayer-backed financing to private developers but fail to capture a reasonable share of the longer-term revenue from the homes or build-to-rent properties they help finance?

“Parasite” politics is a one-trick pony. It is easy to blame individual homeowners and raid them with punitive taxes while ignoring the institutions, policies and incentives that helped create the market in the first place. People distorting the conversation by talking about ordinary people “gorging themselves on cheap debt” are actually an obstacle to finding a reasonable and sustainable solution.

Institutional investors are buying homes in bulk. Homes that people can't afford or are hesitant to buy because of all the current uncertainty. Sure, those investors are financing much needed additional homes, but these are homes that might otherwise have been sold to owners who live in them and who are resident in the UK, paying all their taxes here. So we haven't stopped housing being used to generate wealth. We have just changed who owns them, who receives the rent and capital appreciation, and potentially where those profits ultimately flow. I really can't see any problem with profits flowing through complex tax structures, straight out of the country to more favourable jurisdictions...

But the problem was and is ordinary people who own one home, which they live in, whilst greedily “gorging on debt”.

All those can be problems though.

I think availability of mortgages was a huge factor in house prices in the 2000s. Both people buying a home AND people buying one, then another to let, and another leveraged off that to BTL.

More recently is seemed that institutional, and overseas investors were buying property as an investment.

Both of the above groups rely on the value of property going up. If it goes down they get in trouble and lose money.

The 2000s highly leveraged people gambled, gorged on debt. But have probably got away with it by now (increased values of properties lowering LTV, remortgaged, rents paid off large chunks of debt, may even have sold the properties to crystalise the profit.
We wait and see what happens to the institutional and foreign investors. I suspect some are already net negative on flats in London.

And for the people who buy a home to live in. You can chose to gamble on stretch (if lending criteria allow it) or take a more conservative approach. I took a conservative approach so probably missed out on large property gains. But others may have stretched and be in a position where they will be in trouble if they lose their job, interest rates keep going up and they can't afford the mortgage.
Both groups could be in hot water if the banks get in trouble and start calling in the debt early.

People are gorged on debt and also benefits because the country has been living well beyond it"s means for some time, the day of reckoning is approaching though, you seem to think that because someone worked and didn"t claim benefits and took on a mortgage that they should be protected from losses when the economic conditions that made their choices a "good bet" make it a "not so good bet"? IMO the answer is less people in the country, less benefits, more people in work and much cheaper house prices.

Yes, I agree with all that, nails it perfectly.

Again, excellent description of what happened.

If the end of your first paragraph was correct we wouldn"t be seeing the drop off in demand, sales and mortgage approvals that we are seeing now, people choose mortgage debt, they are not forced into it, more and more people are choosing now not to take it, or being refused it, and making other living arrangements. Can"t see Big Corp bailing out all the little landlords that made bad financial judgements, the corporates like purpose built blocks that they control and maintain aimed at students/professionals, but with immigration going into reverse and more and more young people waking up to the debt for "education" scam are they really piling in and risking getting involved in commercial property meltdown The Sequel?

I agree that the money from the big players will always flow to the low regulation places, we can"t stop that though it will continue, but the public can choose whether to drown themselves in debt or not, that is the biggie IMO.

The book "Treasure Islands" is a good general brushstrokes read on the history of tax havens, have you read it?