So….Labour’s massive overspending and the massive budget deficit is causing cuts….and the massive housing bubble Labour and Brown encouraged is deflating and causing house prices to fall again?

And that is Osbourne’s fault, just….how??

Good article but I think there are some basic principles of economics involved in the whole housing market.

The first being price hiking by owners and estate agents where geographical parameters encouraged such behaviour.

Secondly, the availability of mortgages to people who could not or would not pay them back.

Third, and the worst, irresponsible banking practices like selling on these debts.

It’s easy to dismiss the whole problem as ‘supply and demand’ but it’s brought us close to national bankruptcy. Personally I think house prices will gently drift down over the next 5 years to a point where national average earnings can support a 2-3 times mortgage loan.

In other words, if average earnings are £35k per annum then a maximum mortgage advance would be £105,000.

Cuts in public expenditure would happen under any government at present.

“And that is Osbourne’s fault, just….how??”

Can we at least spell the fucker’s name right, it’s not hard?

Houses more affordable.

The horror! The horror!

This is good news. Only today, I was reading that there is a whole generation who may never be able to afford the deposit to buy a house. I am from a fortunate generation who bought their family home before prices went crazy.

And remember the alternative to buying is renting where you have no security whatsoever. A relative of a friend was given one week to leave her home not through any default on her part but because her landlord had defaulted on the mortgage and the lender wanted to sell. Oh and she was expecting her second child in one week’s time! Wickedness on a biblical scale.

@ 5

Absolutely. My advice to young people now is save as much as you possibly can to maximise your deposit and you’ll get into the property market at the bottom end. That’s what I also did 35 years ago.

More importantly, you’ll almost certainly avoid having to become involved with private landlords and sad events as described at posting 5.

@5 – If the landlord’s mortgage wasn’t buy-to-let then your friend’s relative was not lawfully occupying the property so yes they can just be kicked out.

If it was a buy-to-let or the lender approved the occupation then the lender should have appointed someone to collect the rent and given a minimum of two months notice if they wanted the occupiers out.

IOW if you’re renting check the landlord either owns the property outright or the mortgage holder knows you’re occupying it.

House prices falling? Good. About bloody time the Brown bubble was pricked. Maybe now the children can dream of being able to get homes of their own. Or should they abandon that ‘capitalist’ idea and just try to get themselves housed at public expense like Labour’s carefully-created client-vote? Would that be more acceptable, politically?

High house prices are hugely regressive. Why on earth is this site defending them?

@3 Tom

Can we at least resort to having some kind of cogent argument, rather than resorting to being facetious?

What are the implications for the financial markets of a continued fall in house prices, and an increase in the amount of mortgages being defaulted on?

Did I say anything about wanting high house prices?

I don’t recall that I did. The article does however point out that the cuts are depressing consumer confidence, spending and creating lots of uncertainty. All this will depress the economy.

@ Ted

My advice to young people now is save as much as you possibly can to maximise your deposit and you’ll get into the property market at the bottom end.

What with investment returns near rock-bottom and unemployment a real threat?

What planet are you on?

Sunny,

Did I say anything about wanting high house prices?

I don’t recall that I did. The article does however point out that the cuts are depressing consumer confidence, spending and creating lots of uncertainty. All this will depress the economy.

This only works as a general commentary if you think that the housing market accurately reflects the economy as a whole. Which would be an odd assumption – houses are particularly high-value items (how many of us will ever buy anything more expensive than our house?) which are so far out of the normal league of consumption that they are effectively a different class. I have not seen any indicators that normal consumption, even in relatively expensive areas such as car sales, are showing similiar weakness, although they may do. You cannot extrapolate the economy from the housing market.

@14

“I have not seen any indicators that normal consumption, even in relatively expensive areas such as car sales, are showing similiar weakness, although they may do.”

You didn’t see that new car sales have been in decline for three months straight, then? It was reported on the BBC last week:

http://www.bbc.co.uk/news/business-11482295

One thing that I’ve noticed (as someone who needs to sell so they can move to a new work location), is that there has been a surge in houses up for sale since HIPs were rendered useless. Combined with a lack of buyers due to tough mortgage requirements and fears about jobs, the only thing I can do is to drop the price. It’s not all down to the new government, but they certainly haven’t helped the situation over the past few months.

Nominally, I’d still be making a fair profit, but in reality that will be used to buy another house, on account of how we need somewhere to live and would rather be buying it for ourselves than for a landlord.

House prices are high (mind you, wages are low, especially at the manual level). Cheerleading their fall is not all that wise, though, as a lot of people are (for right or for wrong) tied into debt based on the value of their homes. Negative Equity for a lot of people at a time of job losses would be bad. It was in the early 90s (remember them?)