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

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Except certain areas like London and the south east will always be high in demand regardless of the outcome of the election, brexit is not going to stop Russian oligarchs buying property in London.

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:

Reply 21

The_Internet

Original post by Reue

I think one way would be for new developments to only be allowed to sell to 'local' buyers?

This is true. People should have to live in London for five years, before being able to buy property there, but on the flip side, London is no longer the place for investment either. It's places like Oxford and Cambridge, where investment is going to..

Reply 22

inhuman

Guys, I think the point is that house prices would drop because of less foreign interest (for obvious reasons I suppose).

This is in fact good news for the British people.

Reply 23

nulli tertius

Original post by ChaoticButterfly

http://www.theguardian.com/politics/2016/may/20/eu-referendum-george-osborne-house-prices-brexit

Oh no! House prices may go down???? How terrible! :eek3:

How ever will home owners manage.

Look last week we were told WWIII would break out in the event of Brexit. Earlier they told us that Zika virus had spread to Africa. However, clearly they have been trying to shield us from the really bad news. :tongue:

Reply 24

Alfissti

Ahhhhh thanks Gideon for the absolutely fantastic news.

*Opens up RIghtMove*

This I must say is perhaps the absolute best reason for a vote to leave.

Reply 25

username1799249

Original post by inhuman

This is in fact good news for the British people.

It is good news for people wishing to buy for the first time. It is bad news for people who have already bought, looking to remortgage, because the Loan to Value will go down resulting in being able to get a less favourable rate. Something that will impact on the monthly repayments. i.e. a real change in circumstances for anyone paying a mortgage.

Reply 26

Rakas21

It's probably worth starting by saying that there's actually no price fall forecast.. It's a price fall vs what was forecast.

"he Office for Budget Responsibility predicts a rise of 9.4% over the next two years, meaning the government forecast suggests homes would be worth between 0.6% and 8.6% less in cash terms than they are now."

Secondly, i'm all for it and consider monetary policy to be far too lax.

Original post by The_Internet

See I'm a capitalist, but I do think we need some control on house prices, so they're not astronomically high. I think Norway has the right idea. Their wages are higher sure, but even in Oslo, houses cost some £200-300K which isn't all that bad, when you consider that their wages are also higher.

Not many capital cities allow people not from the capital to own property there. It's getting pretty bad for the entire south east.

This being said, I highly doubt leaving the EU would do any thing really for house prices, especially as you'll still have foreign investors. I'm all for foreign investment, but tbh, this isn't providing jobs - it's taking money from the UK, to someone abroad, who then pays for things in their own country. It's not how foreign investments used to be ie: invest in a company, make a profit, and employ people at the same time.

Agreed. I don't really think that we need to discourage property investment but then i don't think natives have a god given right to live in London (possibly a tad biased living in Leeds). Property investment does spur growth in the construction industry in London (both commercial and residential) which supports jobs and provides tax revenues. One of the limiting factors for natives are the restrictions around the London border greenbelt.

Original post by Reue

Agreed, but im not sure how best to limit it.

In 2010-2012 we actually saw banks learn their lesson from the recession and mortgage lending fell to its lowest levels since the late 1970's which meant that outside London prices were actually still slowly falling. I would simply argue that we should once again get government out the way and only aid first time buyers with fiscal policy via either phase 1 of Help To Buy (it was capped at £100k and only applied to new homes) or the starter home idea (remove the burden of taxation from property purchasing and pass the discount to the consumer).

Alternative measures would either include setting a floor for mortgage rates (since 6% of people on average default, in theory mortgage rates across a banks portfolio should reflect this)
or more aggressive monetary policy in terms of having a house price inflation target.

Reply 27

Treeroy

I am in Cambridge and would LOVE to see house prices fall so that I can actually move out from living with my parents. Doubt they will fall by 20% but any fall is welcome. The cost of housing is probably the single biggest worry of mine at the moment, so if it is true that housing value will fall (both sides seem to agree it will) then I think i will vote leave.

Reply 28

Jammy Duel

Original post by Treeroy

And this is why the plan failed. It was targeted at those with homes and debts and instead is swaying those with savings and want homes

Posted from TSR Mobile

Reply 29

Treeroy

Original post by Jammy Duel

And this is why the plan failed. It was targeted at those with homes and debts and instead is swaying those with savings and want homes

Posted from TSR Mobile

what plan?

Reply 30

inhuman

Original post by ByEeek

If you need to remortgage, then you shouldn't have bought in the first place.

Reply 31

inhuman

Original post by Rakas21

I think that is overblown.

And no, you can't just focus on the business this brings. What about all the small earners in London? Should they commute an hour and more just because they can't afford to actually live where they work?

The problem is that some land is up for sale, and a construction company decides whether to build new homes. Well, are they gonna build cheap ones? Sure they would cost a lot less but the margin will also be smaller. So no, they build expensive ones (and with foreign interest in London being so high) they will have no problem selling them.

Reply 32

Jammy Duel

Original post by Treeroy

what plan?

To scare people away from voting to leave so as to avoid higher borrowing costs and a lower value on their home.

Posted from TSR Mobile

Reply 33

username1799249

Original post by inhuman

If you need to remortgage, then you shouldn't have bought in the first place.

I think you mistake how mortgages currently work. You sign up for a 2, 3, 4 or 5 year deal where your mortgage may be fixed at a special rate. When the fixed period is up, you remortgage with a new deal. But if your house has fallen in value the better deals tend not to be available.

Reply 34

inhuman

Original post by ByEeek

Then don't do a special deal...

Reply 35

username1799249

Original post by inhuman

Then don't do a special deal...

Eh?

Why would I want to pay more for my mortgage?

Reply 36

inhuman

Original post by ByEeek

Eh?

Why would I want to pay more for my mortgage?

You just said the problem is that there are special deals.

But these special deals are only a few years.

Reply 37

username1799249

Original post by inhuman

You just said the problem is that there are special deals.

But these special deals are only a few years.

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.

Reply 38

MagicNMedicine

The politics of this statement are interesting.

Osborne knows that this announcement will be received in different ways by the property owning, and non-property owning classes in society. The non-property owners are desperate for affordable housing to give them a chance of escaping rental servitude, so why would they not be pleased by the prospect of a significant fall?

Most likely Osborne is thinking that renters are most likely to be Labour voters/left leaning and probably will vote Remain anyway. He feels like the group he needs to convince are the core Tory vote who are more likely to vote Brexit so he's saying this to target them.

However I think it will backfire as Tory home owners that support Brexit probably see it as a matter of principle and aren't going to be swayed by Osborne's scare tactics.

Reply 39

ChaoticButterfly

Original post by MagicNMedicine

Also the turn out of the sorts of people who rent and can not afford to buy a home will be lower than the turn out of propertied people who read the telegraph.