Housing Market: Difference between revisions

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'''Figure 4''' illustrates how the market crashed in 2008 and how it made a remarkable recovery. This is historically unheard of for a market to collapse and then almost immediately recover to previous levels. This was due to the financial sector pretty much carrying on as before with large swathes of cash pumped into the sector allowing it to recover and start the whole process again by using rising house prices to provide security for deriviatives. The banks were given public money that saw them survive the crash and then through the introduction of [[Quantitative Easing]] begin to gamble and to support the gambling by using mortgages as security.

'''Figure 4''' illustrates how the market crashed in 2008 and how it made a remarkable recovery.<ref>HM UK Land Registry House Price Index - https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/june2018</ref> This is historically unheard of for a market to collapse and then almost immediately recover to previous levels. This was due to the financial sector pretty much carrying on as before with large swathes of cash pumped into the sector allowing it to recover and start the whole process again by using rising house prices to provide security for deriviatives. The banks were given public money that saw them survive the crash and then through the introduction of [[Quantitative Easing]] begin to gamble and to support the gambling by using mortgages as security.

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At the introduction of right to buy the house builders so a significant increase in profits due to them adding the 20% into the price of the house. The reality being that the right to buy was a major success at propping up house price inflation. Duncan Stott of the PricedOut group said at the time “Help to buy should really be called ‘help to sell’, as the main winners will be developers and existing homeowners who will find it easier to sell at inflated prices. Pumping more money into a housing market with chronic undersupply has one surefire outcome: house prices will go up.”

At the introduction of right to buy the house builders so a significant increase in profits due to them adding the 20% into the price of the house. The reality being that the right to buy was a major success at propping up house price inflation.<ref>Guardian: Help to Buy mostly helped house builders boost profits 21st October 2017 - https://www.theguardian.com/money/blog/2017/oct/21/help-to-buy-property-new-build-price-rise</ref> Duncan Stott of the PricedOut group said at the time “Help to buy should really be called ‘help to sell’, as the main winners will be developers and existing homeowners who will find it easier to sell at inflated prices. Pumping more money into a housing market with chronic undersupply has one surefire outcome: house prices will go up.”

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==First time buyers==

[[File:HPI June 2018 Actuals.JPG|650px|border]]

</div>

Much of the impact on first time buyers has been covered in sections [[#House price inflation|House price inflation]] and [[#Government purposely Inflating prices|Government purposely Inflating prices]]. However the trend we will see with the present model of house inflation is ''First Time Buyers'' becoming ''Last Time Buyers''. All properties across the spectrum have seen similar inflation except for flats which have seen a lower growth. A 5% inflation rate on a house valued at £200,000 will see the house rise to £210,000 in a year, while the same increase on a house valued at £300,000 will increase to £315,000. This creates an equity gap of £5,000 between the two properties. This has always been the case, but the difference now is that those in the buying window are not seeing the wage increases that allow this gap to be filled. You can see in '''figure 5''' how house prices are running away from first time buyers and those who get on the housing ladder are chasing a larger gap to change their house to something larger when they start a family.

The impact of higher and higher demand for starter homes at affordable prices with buyers who cannot move up the housing ladder should be a drop in the price of more expensive homes as demand falls away. As the [[Housing - Rental Market|rental market]] grows this has taken up the slack, with many larger homes being purchased by investors and converted into rental units. This of course raises the spectre of returning to the early 20th century where families lived in cramped conditions.

The other factor that has a serious negative impact on first time buyers is the level of foreign investors in the UK housing market. Not only does this push up the price of new builds (particularly in the South), it also forces longer commutes which again is a drain on the income.

==Extracting the asset==

One of the ways the first time buyers could move up the ladder family assets becoming available as the older generation died. This wealth staying in the family was very important to those who were not wealthy as it provided a large boost to their financial prospects. One of the biggest assets has always been property. This has been particularly important when a generation could move up the housing ladder and accordingly create a valuable asset to pass on to family members.

The government has began to target this asset with:

* The structure of care homes means that families are having to fund the elderly family members care

* Services like care in the home being cash strapped causing families to cover the gap

*

@@ Line 83: / Line 83: @@
-'''Figure 4''' illustrates how the market crashed in 2008 and how it made a remarkable recovery. This is historically unheard of for a market to collapse and then almost immediately recover to previous levels. This was due to the financial sector pretty much carrying on as before with large swathes of cash pumped into the sector allowing it to recover and start the whole process again by using rising house prices to provide security for deriviatives. The banks were given public money that saw them survive the crash and then through the introduction of [[Quantitative Easing]] begin to gamble and to support the gambling by using mortgages as security.
+'''Figure 4''' illustrates how the market crashed in 2008 and how it made a remarkable recovery.<ref>HM UK Land Registry House Price Index - https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/june2018</ref> This is historically unheard of for a market to collapse and then almost immediately recover to previous levels. This was due to the financial sector pretty much carrying on as before with large swathes of cash pumped into the sector allowing it to recover and start the whole process again by using rising house prices to provide security for deriviatives. The banks were given public money that saw them survive the crash and then through the introduction of [[Quantitative Easing]] begin to gamble and to support the gambling by using mortgages as security.
@@ Line 92: / Line 92: @@
-At the introduction of right to buy the house builders so a significant increase in profits due to them adding the 20% into the price of the house. The reality being that the right to buy was a major success at propping up house price inflation. Duncan Stott of the PricedOut group said at the time “Help to buy should really be called ‘help to sell’, as the main winners will be developers and existing homeowners who will find it easier to sell at inflated prices. Pumping more money into a housing market with chronic undersupply has one surefire outcome: house prices will go up.”
+At the introduction of right to buy the house builders so a significant increase in profits due to them adding the 20% into the price of the house. The reality being that the right to buy was a major success at propping up house price inflation.<ref>Guardian: Help to Buy mostly helped house builders boost profits 21st October 2017 - https://www.theguardian.com/money/blog/2017/oct/21/help-to-buy-property-new-build-price-rise</ref> Duncan Stott of the PricedOut group said at the time “Help to buy should really be called ‘help to sell’, as the main winners will be developers and existing homeowners who will find it easier to sell at inflated prices. Pumping more money into a housing market with chronic undersupply has one surefire outcome: house prices will go up.”
@@ Line 100: / Line 100: @@
 ==First time buyers==
+<div style="float:right;margin-right:5%;margin-left:3%">
+[[File:HPI June 2018 Actuals.JPG|650px|border]]
+</div>
+Much of the impact on first time buyers has been covered in sections [[#House price inflation|House price inflation]] and [[#Government purposely Inflating prices|Government purposely Inflating prices]]. However the trend we will see with the present model of house inflation is ''First Time Buyers'' becoming ''Last Time Buyers''. All properties across the spectrum have seen similar inflation except for flats which have seen a lower growth. A 5% inflation rate on a house valued at £200,000 will see the house rise to £210,000 in a year, while the same increase on a house valued at £300,000 will increase to £315,000. This creates an equity gap of £5,000 between the two properties. This has always been the case, but the difference now is that those in the buying window are not seeing the wage increases that allow this gap to be filled. You can see in '''figure 5''' how house prices are running away from first time buyers and those who get on the housing ladder are chasing a larger gap to change their house to something larger when they start a family.
+The impact of higher and higher demand for starter homes at affordable prices with buyers who cannot move up the housing ladder should be a drop in the price of more expensive homes as demand falls away. As the [[Housing - Rental Market|rental market]] grows this has taken up the slack, with many larger homes being purchased by investors and converted into rental units. This of course raises the spectre of returning to the early 20th century where families lived in cramped conditions.
+The other factor that has a serious negative impact on first time buyers is the level of foreign investors in the UK housing market. Not only does this push up the price of new builds (particularly in the South), it also forces longer commutes which again is a drain on the income.
+<div style="clear:both">
 ==Extracting the asset==
+One of the ways the first time buyers could move up the ladder family assets becoming available as the older generation died. This wealth staying in the family was very important to those who were not wealthy as it provided a large boost to their financial prospects. One of the biggest assets has always been property. This has been particularly important when a generation could move up the housing ladder and accordingly create a valuable asset to pass on to family members.
+The government has began to target this asset with:
+* The structure of care homes means that families are having to fund the elderly family members care
+* Services like care in the home being cash strapped causing families to cover the gap
+*