I don't own one, and frankly, if in 3 years time house prices have plummeted, then so be it. I imagine that this is the way the majority of non home-owners feel, in particular undergraduates, who will almost certainly be going into a much more affordable market. House prices have been getting out of hand for years now, and this is clearly the result of the over-inflated cost of buying a home. Around a year ago, house prices in Britain were said to be overvalued by 65%, a terrifying figure for first-time buyers. It is surely about time that the market returned to a sensible, affordable level.
I think it is a bit rich of banks to expect the government to bail out the market, as has been proposed. Fortunately for people who don't own homes, it appears that both Alistair Darling and Mervyn King have indicated their unwillingness to support any such plans. It seems unfair to me that a business should be bailed out with the taxpayers money when it seems it is almost certainly there fault that this has happened.
There is no doubt in my mind that the housing market had gotten out of hand. Although few saw it coming, in hindsight, it had clearly become unsustainable. How long this goes on for can only be guessed at, with many experts suggesting that house prices may continue to fall until 2010 before improving. I think that in reality, for every winner in this whole affair, there will be a loser. The good news for me is, it doesn't seem to be going too badly on the student side at the moment.
With thanks to the Fleet Street Invest daily
With thanks to the Fleet Street Invest daily
3 comments:
Reading that makes my brain hurt as you are constantly contradicting yourself. A bit of background reading may help your blog.
In the last 8 years house prices have risen on average by 70%ish, depending on who you listen to and where you live, and the worst prediction is a 12% fall this year meaning that we need 4 years of this before houses become a poor investment, although admittedly you can only make a killing if you own more than one or you can downsize at some point, as everybody needs somewhere to live.
The reason for the decline in house prices at the moment is not because there is of a lack of demand, merely because people cannot get mortgages from their usual lenders and banks. The government have said we are 3m houses below the current requirement.
However, this will not continue for long as, despite the fact that the reckless greedy bankers are now scared to lend to any one, including each other, ultimately they have to start lending money to people again as that is the business they are in. If a butcher has a bad year he doesn't stop selling meat.
When this starts moving again there will also be an upturn in the economy as currently people and businesses can't borrow, nothing is bought and therefore nothing is sold etc, etc.
The house price fall will not all be grabbed back quickly but the decline will be stabilised within 2or 3 years depending on how quickly the economy turns round.
It will also be harder to borrow more than you can afford as banks have been burnt, but ultimately that isn't a bad thing.
"Reading that makes my brain"
Thank you for the constructive feedback, perhaps you could post the link to your blog next time, that way we can see how it should be done...
"In the last 8 years"
Interesting points, thanks for the comment.
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