Cable Forum - Pay millennials £10,000 and tax working pensioners

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Re: Pay millennials £10,000 and tax working pensioners

Quote:

Originally Posted by nomadking (Post 35946340)

Where properties in London are being sold to investors, they are the top-end expensive properties that people couldn't afford even with an extra £10,000.

The central problem is this nonsense of "getting on the property ladder". It is this notion of getting easy free money was a large cause of the banking crisis. It was people not paying back their loans/mortgages that caused the problems. That was the source of the bank losses.

People complained that unaffordable mortgages had been too easy to obtain, so the rules were changed to make to more difficult, and now people are complaining about that.

The Economist summarised it well.

https://www.economist.com/news/schoo...-years-article

Quote:

THE collapse of Lehman Brothers, a sprawling global bank, in September 2008 almost brought down the world’s financial system. It took huge taxpayer-financed bail-outs to shore up the industry. Even so, the ensuing credit crunch turned what was already a nasty downturn into the worst recession in 80 years. Massive monetary and fiscal stimulus prevented a buddy-can-you-spare-a-dime depression, but the recovery remains feeble compared with previous post-war upturns. GDP is still below its pre-crisis peak in many rich countries, especially in Europe, where the financial crisis has evolved into the euro crisis. The effects of the crash are still rippling through the world economy: witness the wobbles in financial markets as America’s Federal Reserve prepares to scale back its effort to pep up growth by buying bonds.

With half a decade’s hindsight, it is clear the crisis had multiple causes. The most obvious is the financiers themselves—especially the irrationally exuberant Anglo-Saxon sort, who claimed to have found a way to banish risk when in fact they had simply lost track of it. Central bankers and other regulators also bear blame, for it was they who tolerated this folly. The macroeconomic backdrop was important, too. The “Great Moderation”—years of low inflation and stable growth—fostered complacency and risk-taking. A “savings glut” in Asia pushed down global interest rates. Some research also implicates European banks, which borrowed greedily in American money markets before the crisis and used the funds to buy dodgy securities. All these factors came together to foster a surge of debt in what seemed to have become a less risky world.

Start with the folly of the financiers. The years before the crisis saw a flood of irresponsible mortgage lending in America. Loans were doled out to “subprime” borrowers with poor credit histories who struggled to repay them. These risky mortgages were passed on to financial engineers at the big banks, who turned them into supposedly low-risk securities by putting large numbers of them together in pools. Pooling works when the risks of each loan are uncorrelated. The big banks argued that the property markets in different American cities would rise and fall independently of one another. But this proved wrong. Starting in 2006, America suffered a nationwide house-price slump.

The pooled mortgages were used to back securities known as collateralised debt obligations (CDOs), which were sliced into tranches by degree of exposure to default. Investors bought the safer tranches because they trusted the triple-A credit ratings assigned by agencies such as Moody’s and Standard & Poor’s. This was another mistake. The agencies were paid by, and so beholden to, the banks that created the CDOs. They were far too generous in their assessments of them.

Investors sought out these securitised products because they appeared to be relatively safe while providing higher returns in a world of low interest rates. Economists still disagree over whether these low rates were the result of central bankers’ mistakes or broader shifts in the world economy. Some accuse the Fed of keeping short-term rates too low, pulling longer-term mortgage rates down with them. The Fed’s defenders shift the blame to the savings glut—the surfeit of saving over investment in emerging economies, especially China. That capital flooded into safe American-government bonds, driving down interest rates...

...Complex chains of debt between counterparties were vulnerable to just one link breaking. Financial instruments such as credit-default swaps (in which the seller agrees to compensate the buyer if a third party defaults on a loan) that were meant to spread risk turned out to concentrate it. AIG, an American insurance giant buckled within days of the Lehman bankruptcy under the weight of the expansive credit-risk protection it had sold. The whole system was revealed to have been built on flimsy foundations: banks had allowed their balance-sheets to bloat (see chart 1), but set aside too little capital to absorb losses. In effect they had bet on themselves with borrowed money, a gamble that had paid off in good times but proved catastrophic in bad.

Re: Pay millennials £10,000 and tax working pensioners

All the hiding did was delay matters and transfer who had to bear the losses. It was a sort of "pass the parcel" with the "winner" taking the losses. Those losses were a result of unpaid debts.

In the UK it was the Labour government(eg Homebuy scheme) and the media pressurising people to buy, in order to make easy money. There was a TV programme were a very recent graduate had bought a 3 bed house just for themselves as an investment, not as a home. This belief that anybody should be able to buy a house is nonsense. As with any "crash" the lure of easy money to be made by simply waiting, was the problem. They felt that they didn't have to repay the loan, just wait for the "inevitable" profit and sell.

The point remains that people are bleating about it being more difficult nowadays, and in the past complained about it being too easy. The 2 eras are not comparable in terms of number of people buying houses.

Re: Pay millennials £10,000 and tax working pensioners

What will 10k get you in the housing market, especially towards the south.

I do think though that something should be done to curb property as an investment (or simply as an investment). There will be a need for rental properties and since most people do borrow to buy property values should rise else why take the loan? We have a problem that there is too much property as an investment, not helped by all the TV programmes showing how you can buy cheap, do up and sell high.

One problem is not just prices but the price differential. This can stop people moving up, vacating smaller properties to let people in at the "bottom". We can't afford to move to a bigger house so (like many others) we've extended (loft) and added 2 more bedrooms and a bathroom for far less than moving. This could be also due to people living longer and not moving "down" once the children have flown the nest, often because it's the "family home" and the place everyone can gather.

Re: Pay millennials £10,000 and tax working pensioners

Too many buying homes as an investment, not enough houses being built, selling off social housing cheap and a rise in the number of people coming to live here have all played their part IMO.

Re: Pay millennials £10,000 and tax working pensioners

Quote:

Originally Posted by RichardCoulter (Post 35946360)

Too many buying homes as an investment, not enough houses being built, selling off social housing cheap and a rise in the number of people coming to live here have all played their part IMO.

As I pointed out, the properties bought purely for investment are high-end ones, so no real impact on availability. People are living in the social housing that was sold off, so again no impact. Enough are being built, but you can't let in this many people for there not to be a problem. Especially when so many of them make no real contribution to the country, apart from the crime rates and benefits bill.

Re: Pay millennials £10,000 and tax working pensioners

Quote:

Originally Posted by nomadking (Post 35946361)

As I pointed out, the properties bought purely for investment are high-end ones, so no real impact on availability. People are living in the social housing that was sold off, so again no impact. Enough are being built, but you can't let in this many people for there not to be a problem. Especially when so many of them make no real contribution to the country, apart from the crime rates and benefits bill.

Although they are using land which could have been used for affordable housing. Maybe not in the most prime locations, such as Hyde Park, but there is little reason to build high-end apartments in Stratford (London) other than profit. To be honest even high-end isn't a big problem, people should be allowed to buy and live in nice houses/flats, so long as people live in them.

Reduce the land available for high-end development and increase taxes on those who buy from abroad. Stop it being used as an investment. It's mad.

Re: Pay millennials £10,000 and tax working pensioners

Quote:

Originally Posted by nomadking (Post 35946361)

The land and labour required to build them could be better utilised if people were prevented from buying them to stay empty. This activity is also contributing to the gentrification of businesses who have traded for many years who are being forced to close.

Most council houses that were sold off cheap are now in the hands of private landlords charging much higher rents than the council, thus increasing the Housing Benefit bill even more.

Even the Government has said it intends to take action because it recognises that not enough affordable homes are being built.

I do agree that unfettered immigration has bound to have pushed up demand for homes and fuelled house prices upwards.

Re: Pay millennials £10,000 and tax working pensioners

Quote:

Originally Posted by nomadking (Post 35946361)

https://www.theguardian.com/society/...st-time-buyers

Quote:

Foreign investors are buying up thousands of homes suitable for first-time buyers in London, using them as buy-to-let investments and often holding them in offshore tax havens, research for the London mayor, Sadiq Khan, has revealed.

Led by investors from Hong Kong and Singapore, foreign buyers snapped up 3,600 of London’s 28,000 newly built homes between 2014 and 2016, according to the most comprehensive survey yet of international investment in London housing. About half of those were priced for first-time buyers between £200,000 and £500,000.