As safe as houses
This government of ours probably can't believe their luck. Not only have they been given the perfect excuse, but they've also been given the perfect scapegoat. Nobody loves the banks.
They've been (the government) presiding over a slowly cooking pot for these past few years. Houses just kept going up in value. In one sense, that wasn't a bad thing. It seemed to keep everybody happy; people improved their property, sold it, bought into something better, estate agents and property maintenance firms lived off the steady demand for sales and care, and the government lived off the taxes it took from everything involved with the housing market. Everybody was a winner.
Everybody who had a house, that is. Of course, it was a nightmare for those who didn't own one yet and whose incomes didn't allow them to raise the deposit and costs, let alone qualify them for a mortgage. The banks and building societies found ways around this with a range of clever deals that "leveraged" a relatively puny income into something powerful enough to get someone onto the property ladder. Of course, voices were still heard muttering about the paucity of affordable housing in rural areas, and the difficulty of getting new development sites that weren't on flood plains and yet didn't cut into any of the precious green belt.
It was obvious, to anybody who looked and thought about it, that it couldn't continue, but what government in their right minds would want to be the ones to put the brake on the rising prices so that young families could afford to own a home? It was a classic dilemma. If you didn't act to create affordable housing, a large chunk of the voting population would become disenchanted, possibly actually aggrieved. But if you did act, and caused the perceived value of existing houses to be reduced, an equally large chunk of the population would become disenchanted, perhaps even aggrieved. Both groups paid taxes, both groups could be expected to express their displeasure with the ballot-box. And so, the government chose to do nothing that would be perceived as drastic, while at the same time doing anything possible that might appear to be capable of filling the gap at the bottom of the ladder.
And suddenly, house prices are under threat. Not the slow percentage creep that has been reported over the past few months as the Bank of England played ever so gently on the financial keyboard a soothing lullaby called "Let's not borrow more than we ought". This is a big (predicted) "house prices must fall, and bigly so, because buyers can't afford them since the lenders won't provide the funds."
And it came in a rush, to those who hadn't been muttering for some time that this country was turning into Monopoly for real. Suddenly, the banks and building societies just aren't lending the sort of money they used to. No more 125% mortgages. No more cheap fixed-rate deals for a couple of years. They're actually scared of lending money to each other, let alone the public. They're even having to be bailed out and nationalised themselves.
And it's all their fault. There's no way you can blame the government for the banks own folly in lending money to people with a poor history of repaying loans. Nobody forced them to do it, or to then try packaging up some of the dodgy mortgages and selling the debt on to other banks. They alone brought about their downfall, all the while making almost the largest profits any industries in the country were capable of reporting.
And so, house prices are probably going to have to fall, rapidly, and by significant percentages. Not because of any government pressure to keep a certain amount of housing affordable enough for first-time buyers and key workers, but because the banks have sliced their balls into the long grass and are way off the fairway. The green is no longer in sight for them, or for any of us who are used to borrowing it.
And we're all going to blame them for it. Especially the government. That's what you get for letting free-marketeers play games with reality.
I saw a quote on a news site recently. "The only people who are going to be hurt by this crisis are those who've bought houses beyond their means".
That, to me, is everyone with a mortgage and no means of paying it off in the short-term. We are all going to have to suffer because of someone else's greed and stupidity.
They've been (the government) presiding over a slowly cooking pot for these past few years. Houses just kept going up in value. In one sense, that wasn't a bad thing. It seemed to keep everybody happy; people improved their property, sold it, bought into something better, estate agents and property maintenance firms lived off the steady demand for sales and care, and the government lived off the taxes it took from everything involved with the housing market. Everybody was a winner.
Everybody who had a house, that is. Of course, it was a nightmare for those who didn't own one yet and whose incomes didn't allow them to raise the deposit and costs, let alone qualify them for a mortgage. The banks and building societies found ways around this with a range of clever deals that "leveraged" a relatively puny income into something powerful enough to get someone onto the property ladder. Of course, voices were still heard muttering about the paucity of affordable housing in rural areas, and the difficulty of getting new development sites that weren't on flood plains and yet didn't cut into any of the precious green belt.
It was obvious, to anybody who looked and thought about it, that it couldn't continue, but what government in their right minds would want to be the ones to put the brake on the rising prices so that young families could afford to own a home? It was a classic dilemma. If you didn't act to create affordable housing, a large chunk of the voting population would become disenchanted, possibly actually aggrieved. But if you did act, and caused the perceived value of existing houses to be reduced, an equally large chunk of the population would become disenchanted, perhaps even aggrieved. Both groups paid taxes, both groups could be expected to express their displeasure with the ballot-box. And so, the government chose to do nothing that would be perceived as drastic, while at the same time doing anything possible that might appear to be capable of filling the gap at the bottom of the ladder.
And suddenly, house prices are under threat. Not the slow percentage creep that has been reported over the past few months as the Bank of England played ever so gently on the financial keyboard a soothing lullaby called "Let's not borrow more than we ought". This is a big (predicted) "house prices must fall, and bigly so, because buyers can't afford them since the lenders won't provide the funds."
And it came in a rush, to those who hadn't been muttering for some time that this country was turning into Monopoly for real. Suddenly, the banks and building societies just aren't lending the sort of money they used to. No more 125% mortgages. No more cheap fixed-rate deals for a couple of years. They're actually scared of lending money to each other, let alone the public. They're even having to be bailed out and nationalised themselves.
And it's all their fault. There's no way you can blame the government for the banks own folly in lending money to people with a poor history of repaying loans. Nobody forced them to do it, or to then try packaging up some of the dodgy mortgages and selling the debt on to other banks. They alone brought about their downfall, all the while making almost the largest profits any industries in the country were capable of reporting.
And so, house prices are probably going to have to fall, rapidly, and by significant percentages. Not because of any government pressure to keep a certain amount of housing affordable enough for first-time buyers and key workers, but because the banks have sliced their balls into the long grass and are way off the fairway. The green is no longer in sight for them, or for any of us who are used to borrowing it.
And we're all going to blame them for it. Especially the government. That's what you get for letting free-marketeers play games with reality.
I saw a quote on a news site recently. "The only people who are going to be hurt by this crisis are those who've bought houses beyond their means".
That, to me, is everyone with a mortgage and no means of paying it off in the short-term. We are all going to have to suffer because of someone else's greed and stupidity.
posted by Sopwith-Camel | 6:58 pm
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