Where’s the catch?
Here’s Dave Hansell in the comments on the Bank of England’s £50 billion ‘mortgage rescue plan’:
£50 billion would buy a £200,000 property for a quarter of a million families.
It’s very appealing on the face of it. What would be the catch in the government doing that and being a low or no interest mortgage broker?
Posted on April 22nd, 2008 at 2:02 pm
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The catch? You wouldn’t fit a family into a £200k property these days. (Or am I being London-centric again? Seriously - you’d be lucky to find a studio flat that can fit a double bed into it for £200k round these parts - to whack a family into one would be a revival of slum conditions…)
In other news, am I bad to feel precisely no sympathy for all the “poor unfortunates” (read: moaning morons) who, having bought a house during a period of record low inflation and record high house prices, are now getting walloped?
And is it so wrong of me - as someone with no hope in hell of getting on the property ladder living in the cheapest flat he could find within walking/cycling distance of his primary working areas - to be giggling with glee at the thought of a massive house price collapse that may finally enable me to afford to buy?
Nosemonkeys last blog post..links for 2008-04-21
In other news, am I bad to feel precisely no sympathy for all the “poor unfortunates”…?
But aren’t you worried about the UK’s buy-to-let landlord industry? They’re just about the only thing this country produces any more.
am I bad to feel precisely no sympathy for all the “poor unfortunates” (read: moaning morons) who, having bought a house during a period of record low inflation and record high house prices, are now getting walloped?
Yes, it’s objectionable of you. What option did people have if they wanted to buy their own place? Was it their fault that prices were so high? Do you think most people who buy do so as an investment? Do you not understand that most people who buy do so because it’s their only way to find genuinely secure accommodation? Do you really think it’s appropriate to call them “morons” because they took that wholly reasonable step in circumstances that were not of their choosing? Do you not realise that the perfectly valid goal of getting house prices down a good long way is rendered null and void by the pleasure you take in the misfortunes of other people who’ve done neither you nor anybody else any wrong?
ejhs last blog post..Miller’s tale
“What option did people have if they wanted to buy their own place? Was it their fault that prices were so high? Do you think most people who buy do so as an investment?”
But those people are fine - the fact that their house isn’t worth what they paid for it doesn’t matter until it’s time to sell. If they’re selling to trade up, then they’re still better off than they would have been because the new house will have fallen by even more. It’s only people who are selling their house for cash, whether because it’s a buy-to-let or because they’re moving to Spain, who’ll lose out - and the “moving to Spain” option was only an artificial artefact of crazy-high UK property prices in the first place.
john bs last blog post..A lie has a good ending
Ditto this. My thinking exactly. Paying off a mortgage is (usually) going to be cheaper than renting even if you are only paying off the interest, so why complain if your house is just somewhere to live? Prices go up as well as down - if people don’t realise that, they deserve to get smacked.
As for a long-term solution - agreed with the suggestion of using the £50bn to buy/build more council houses. Far more sensible long-term to have the government as landlord than as mortgage lender, surely?
Nosemonkeys last blog post..St George’s Day
so why complain if your house is just somewhere to live?
Because things like mortgage rate rises can happen and so can negative equity, and neither are things to casually wish on other people. Sometimes people need to move. Sometimes this happens when they didn’t expect it.
Prices go up as well as down - if people don’t realise that, they deserve to get smacked.
To be honest, if I were looking for someone who deserves to get smacked, it would be in a post not very far above this one.
ejhs last blog post..Miller’s tale
You are a tetchy sort, aren’t you?
For the record, I would like everyone who owns a house to be set on fire, then stabbed in the face. And the same goes for people who own cars worth more than £1,000, or push-chairs that take up the entire pavement.
Nosemonkeys last blog post..St George’s Day
You’re even being central-London centric, NM. My sis is looking for a two-bed flat out in the wilds of Zone 5 in North London and a 200k budget is doable.
Nosemonkey - you are being Londoncentric (up to a point; it’s probably more a North/South thing)
What’s the catch? The prospect of all the banks and building societies screaming about unfair competition. But then: if the govt. spent £50bn on council housing…
Fair point nosemonkey.
The £200,000 figure was just a nice round average. Some parts of the country - particularly some of our inner cities and the old council estates here up North could be bought wholesale for that price - leaving extra for the more expensive London property market. Although I’m sure there are poorer parts of London where the housing market is in a similar state relative to the rest of the capital.
For example, the bloke sitting alongside me lives on a large council estate in the north end of Sheffield. He bought his council house in the Thatcher era and since 1997 large parts of that estate (along with others) have been demolished. His house is worth something around £100K. Next door, which is nominally occupied but is in reality empty and just used as a drop off address for some unknown local “enterprise” would probably fetch half that amount - as would a lot of other properties left standing in that area.
The part of the council estate I was born and brought up on has been demolished for at least 15 years - with the land standing empty - as with other former council estates - whilst people struggle to find decent homes to live in and the land value “appreciates” to the point where some fat cat makes a lucrative killing out of it when they feel the time is right to build private houses.
One of the drivers in the current overvalued property market is the deliberate devastation of the council housing sector which has continued apace since this lot got in and carried on the Thatcher policies towards Council housing where Brown instructed local Councils to sell off as much land to the private sector as possible.
This has forced more people into competition with each other in the private sector property market pushing up both property prices and private rented accommodation which has only served to distort the housing mix in the UK and impoverish many families.
The point being that whether its used to purchase private or social housing (which would probably be less expensive overall) a direct injection of this sort of sum (£50 billion - and I’ll wager its at least double that by the end of the year) to where it’s needed would be far more effective and efficient than giving it to the private bankers who have milked too much out of us already whilst buggering up the system with their fiat currency and Ponzi schemes.
The simple answer is global markets would wildly object and through various mechanisms attack our currency and polite terms such as ‘credit rating’ and ‘investors confidence’ would mask this use of raw unaccountable power. Unless a country is significantly insulated (run for your lives he means protectionism!!!) from the global markets, particularly the currency exchanges it is unable to have full sovereign control of its economic policy. Such a move would be viewed simply as unacceptably socialistic by the financial elites, (state welfare for corporations is fine with them, for people- not so much) not that I think Gordon would ever think of such a thing his actions show he is largely orthodox.
@200k a cost, with the vast Govt land-banks, you would build mansions, 50k of a building cost….would make one million new homes and the social rent from this would pay ten fold……… but the wankers in the city……..