House prices face 18% hit if Britain quits EU, says George Osborne

OP

@ChaoticButterfly

I don't see how this would benefit people who can't afford homes. My parents are looking at selling their home. If their house falls to less than what they paid for it, there's no way in hell they're selling. This factored in with the recession predicted to occur post brexit would mean that nobody would sell anything for s***

Are they moving somewhere else to live? It's not a problem if you are moving house since the houses all go down. It's only bad if you are downsizing as then more expensive houses loose more. Or something like that anyway. It's bad if say you inherit a house and just want to sell it to get the cash.

Government builds or pays people to build lots of cheap houses? Stimulates house economy.

The current set up sure as heck is not good for first time buyers.

It seems to be working :beard:

"Tory EU referendum voters are switching to remain, says poll"

http://www.theguardian.com/politics/2016/may/21/tory-eu-referendum-voters-switching-remain-opinium-observer-poll

@Jammy Duel

(edited 7 years ago)

Reply 61

Rakas21

21

Original post by Davij038

* how would it be credible to you, other than if it was a Brexit source saying it?

Awesome. Let's go Brexit so that a tiny percentage of homes will be a bit cheaper.

In fairness the OBR is forecasting GDP to only be around 6% smaller than it would have been by 2030. That's still growth, just about 0.5% less than would have been the case.

It's the same with this article about house prices. Osbourne is not saying your home will be 18% less valuable, he's saying that house prices will rise 18% less than otherwise would have done (in this case the OBR forecasts house prices to rise about 9% so he's predicting 0% growth).

Reply 62

Rakas21

21

Original post by jelly1000

Fully agreed with you- I'm also a Capitalist in favour of controlling house prices. Not sure how it can be done whilst encouraging housebuilders to still build and people to sell their houses, but I don't agree with one bed flats being marketed at £300,000+

There's nothing socialist about controlling house prices unless you go around banning second homes ect.. Indeed, the reason house prices are so high is because government has actively attempted to inflate the credit supply via Help To Buy and before the recession, just generally pushing for more credit growth (based on a belief in Hydraulic Keyensianism which asserts that infinite growth in the supply of credit will lead to infinite GDP growth).

I myself want government to get out of the credit markets and leave the supply of credit to the BOE who can manipulate it via leverage ratios and fractional reserves or even a floor in the mortgage rate. Secondly i'd like the starter home idea to be rolled out on a larger scale for first time buyers (remove the burden of taxation and pass the discount onto the first time buyer) although we would have to pay for that via deeper cuts in spending or taxation elsewhere.

If all else fails i do accept political reality and voter pressure so the easiest thing to do if we are not prepared to tackle credit is simply to have the state build say a million homes (distribute them between London, Manchester, Liverpool, Leeds, Nottingham, Sheffield) and then simply have a very generous right to buy on them. The ultimate combination of MacMillan and Thatcher.

Reply 63

MJ1012

18

Original post by Reue

That did not add to the question at all:

"Why would anyone want to see the value of their property fall?"

To which I just answered :smile:

It's relevant because it means people are going to be and more trapped into specific areas/ countries and will make London an even more unobtainable place to live for many if their house falls and London doesn't.

Reply 64

inhuman

2

Original post by ByEeek

Would you do a bit of research into how the mortgage market currently works please? There isn't such a thing as a 25 year mortgage and hasn't been for a long time. Sure, your mortgage is for 25 years, but if it is fixed, it will only be so for 2 - 5 years. After that, the rate reverts to the banks mortgage rate which is usually the BofE base rate + 2 - 5% depending on the bank. So my mortgage was 3.35% fixed for 3 years. At the end of 3 years it goes to 4.99% which basically adds £150 a month. To combat that I will get a new fixed rate mortgage. This is what everyone with a mortgage does. It is nothing special. Because I have paid down the debt and because my house as gone up in value the loan to value rate will have gone down from 85% (three years ago) to 80% which means I can get a better rate. I therefore pay less on my monthly repayments.

If house prices fall, the LTV value will go up (say 90%) which means that the better deals offered on better LTV rates are unavailable to me. As a result I end up with a higher interest rate and pay more.

Of course, if you don't have a mortgage, you probably don't care - except that the landlord of your rented accommodation probably does and is suffering the same problem. So your rent goes up to cover increased interest.

Now if borrowing for the UK gets more expensive then it might be that interest rates go up and then we really are all screwed.

Everyone? Not everyone I know...you seem to be biased in this situation.

Reply 65

username1799249

19

Original post by inhuman

Everyone? Not everyone I know...you seem to be biased in this situation.

You are quite right. Everyone with a mortgage and most people that rent or have personal debt of some sort. So that is pretty much everyone.

Reply 66

inhuman

2

Original post by ByEeek

You are quite right. Everyone with a mortgage and most people that rent or have personal debt of some sort. So that is pretty much everyone.

I see. You know everyone, respect, must be hard to keep in touch.

Reply 67

Betelgeuse-

19

Original post by epic within

Why would anyone want to see the value of their property fall?

Because relative to everyone else it doesn't matter unless you are a property magnate or looking to sell up and emigrate.

For everyone else its win win and for 99% of students of here aswell as an entire generation looking at being trapped by not owning a property... it would be fantastic news

Reply 68

nulli tertius

21

Original post by jelly1000

Fully agreed with you- I'm also a Capitalist in favour of controlling house prices. Not sure how it can be done whilst encouraging housebuilders to still build and people to sell their houses, but I don't agree with one bed flats being marketed at £300,000+

The key thing with the housing market is to accept that London is different and be willing to have different property taxes set at different rates in respect of different policy objectives. You simply cannot set property taxes at a level suitable for both London and Hartlepool.

Moreover even in hotspot locations like Oxford the market functions differently to London. No-one is using North Oxford houses as a store of foreign wealth in the way that is occurring in London. London property is being used as a substitute for bullion.

Fortunately the Green Belt means that one can have a different taxation policy without having houses on one side of a street taxed differently to houses on the other

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Reply 69

username1799249

19

Original post by inhuman

I see. You know everyone, respect, must be hard to keep in touch.

Very funny. I take it you have never heard of economics. You should look it up. It's very interesting.

Reply 70

inhuman

2

Original post by ByEeek

Very funny. I take it you have never heard of economics. You should look it up. It's very interesting.

I must have wasted 6 years of my life then :wink:

Reply 71

username1799249

19

Ha. Definitely. What did economics ever do for you the world?! :smile:

Reply 72

username1204031

14

Original post by epic within

Why would anyone want to see the value of their property fall?

Because people seem to think that people can't get houses because house prices are too high. No, house prices are too high because there aren't enough houses, so people can't get houses. There still won't be enough houses after we leave the EU, but people think that, somehow, lower prices magically means everyone will be able to own a house. Bizarre.

Reply 73

Jammy Duel

21

Original post by JordanL_

Because people seem to think that people can't get houses because house prices are too high. No, house prices are too high because there aren't enough houses, so people can't get houses. There still won't be enough houses after we leave the EU, but people think that, somehow, lower prices magically means everyone will be able to own a house. Bizarre.

What you said made literally no sense. You said that it's not that people can't get houses because they're too expensive, it's because supply is too low and so they're too expensive.

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Reply 74

username1204031

14

Original post by Jammy Duel

What you said made literally no sense. You said that it's not that people can't get houses because they're too expensive, it's because supply is too low and so they're too expensive.

It made perfect sense. Supply will still be low. There still won't be enough houses for everyone. It doesn't matter if you can afford a house if nobody's selling any, because there aren't enough to go around.

Price will go down because of the economy suffering, nothing to do with a change in supply or demand.

Reply 75

Jammy Duel

21

Original post by JordanL_

It made perfect sense. Supply will still be low. There still won't be enough houses for everyone. It doesn't matter if you can afford a house if nobody's selling any, because there aren't enough to go around.

Price will go down because of the economy suffering, nothing to do with a change in supply or demand.

There are two sides to supply and demand arguments, I believe the basis of the argument that prices will fall is decreased supply

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Reply 76

ebam_uk

20

Original post by Reue

Why wouldn't we?
If all property falls by an equal percentage:

My £200k house goes down by £20k

The £400k house I want to move into goes down by £40k.

So house value drops benefit anyone wanting to either get on or move up the property ladder.. which will be the huge majority of users on here if not the entire UK population.