For those of you who still thirst for knowledge about this week’s housing market strategy, trust the Daily Mash to tell it like it is.
Many thanks to reader Simon Thornton who posted the link earlier this week.
The general message about the Coalition’s policy is: If it’s broke, fix it with the thing that broke it – a housing bubble.
The prime minister is quoted as having said: “This package will help to reinflate the house price bubble and give mortgages to people who can’t really afford them. Unless anyone has any better ideas?
“It’s worth remembering that the only reason the British economy seemed successful in the late ’90s was because of a house price bubble and mortgages being given to people who couldn’t really afford them, so it’s not as if we’re in uncharted territory.
“This will definitely work.”
The link is here:
https://www.thedailymash.co.uk/news/society/housing-market-is-pretty-much-all-we-have-left%2c-admits-cameron-201111214570/
Comments
Rant, the jingle mail option only exists in 19 out of 50 US states. And not at all in Ireland.
That's clearly not the reason for the difference.
Also the USA had QE, help for homeowners and bank bailouts, Ireland had help for homeowners and bank bailouts, yet prices have fallen off a cliff in both.
Once again we're left with......
Empty House Percentage:
ROI = 17%
USA = 13%
UK = 3%
In the US, people have the jingle mail option. People can walk away from negative equity to a much greater extent than they can in the UK. That has been a major factor in why prices have so far come down much quicker in the US than the UK.
I would have a lot more support for the lack of supply argument supporting UK house prices if the evidence of cheap credit wasn't so clearly on display re bank bailouts etc.
The most laughable thing about the entire article is that it's now abundantly clear there never was a house price bubble in the UK., just a critical shortage of housing.
After all, we removed 70% of mortgage lending from the market, yet prices are now just 10% below peak. Hardly the mark of a speculative housing bubble.
And as for those who's like to attribute this to ZIRP, monetary interventions, help for homeowners, etc...... Well those things didn't make the slightest difference in the USA where prices are down 40% from peak, or in Ireland where prices are down 50% from peak.
There is of course one far more relevant difference between those three markets though, which points the finger straight at a good old fashioned supply/demand imbalance being the real culprit for UK hpouse prices rising to where they did.....
Empty House Percentage:
ROI = 17%
USA = 13%
UK = 3%
The thing is - it's beyond parody now. The real question now must surely be - what is the way out of this mess?
The government have no clue. People on here think the answer is more lending by the banks (regardless of the fact the banks do not have the money to lend) - that everything will be back to normal soon.
Time to face the facts. Borrowing is out of control. We spend £4 for every £3 we raise in tax. Our grandchildren will be paying this debt back all their lives - and paying for our care and our pensions - where the hell they'll get the money to pay a mortgage too is anyone's guess. Even government figures say we'll owe 1.4 trillion before we are in a position to start paying it back. That's based on 2"% + economic growth every year. Currently we have next to none. With the best will in the world we'll probably owe 2 trillion before the economy is in surplus. At what point does debt interest overwhelm the economy and make the whole thing ustainable. Even paying back the capital at 10 billion a year it will take 140 YEARS to repay the debt.
Even at 3% the interest on 1.4 trillion is 42 billion a year.
Still, who cares eh? It will all be alright if we just keep on borrowing and buying houses off each other.
The Daily Express are trying the comedy approach on their front page too:
HOUSE PRICES TO SOAR BY 15%
http://www.express.co.uk/posts/view/285847/House-prices-to-soar-by-15-