The Booming Housing List

[Coldicote]

Some news programmes lack explanation. For instance, ‘The Governor of the Bank of England warns that the booming housing market poses a threat to Britain’s economy.’ In what way does it pose a threat?

[EDDIE51]

Once intrest rate rise as they must a lot of people will find they can't afford to pay the increased mortgage rates. We will have a repeat of the bust of 2003 or when ever it was. House prices can't rise for ever ahead of earnings.,

[buildersmate]

People then find themselves in negative equity, some chuck the towel in and end up homeless.
Also for those trying to get on the ladder, moving from the rental sector to buy becomes harder.
Finally for those in a house, rising prices encourage some of them to borrow money against the equity value then squander it on frivolous purchases. This creates more net total debt.

[EDDIE51]

Plus as house prices rise so do rental rates.The most costly 'benefit' by far is not job seekers allowance or any sickness/incapacity benefit it is housing benefit paid to those who do not earn enough to afford their rent. Housing benefit payments are far higher than all other benefits combined and 85% of housing benefit is paid to people who are in full time work not to 'work shy benefit scroungers' as a lot of people think. For example a 3 bedroom house in London will cost over £1500 a week in rent how many people even in a full time job can afford that?

[New Judge]

They cannot Eddie, so they have to do what people not in receipt of HB have to do - move somewhere cheaper.

[Colmc54]

We live in a society where we have been conditioned by Labour and their allies into believing that all our problems are someone else's fault.

What the governor tried to say (he got his last sentence a bit wrong) was that lenders should loan only to those that can afford to borrow. Of course it is true that raising interest rates might risk some people becoming unable to afford their mortgage, and of course that is between them and their lender to sort out.

However, the huge plus from higher interest rates will be the prospect that money in the bank might actually become worth leaving where it is. It is because this hasn't been the case for far too long that has helped make it harder for first time buyers to buy a home. That's because they are at the end of the queue with cash buyers seeking to buy to rent at the front.

[mikey4444]

This might help Coldicote :::

http://www.bbc.co.uk/news/business-27253097

[EDDIE51]

NJ Yes some London councils are now having to relocate housing benefit recipients as far away as Norfolk where of course there is no work so they end up being permanently on unemplyment benefit.
If you work in London and have to move out due to high rents you then get hit by high transport costs, a years season ticket into London from my home town in Hertfordshire is nearly £7000 a year( plus another £2,000 for a station car park season ticket if you need to get to the station by car)

[Gromit]

We all agree that inflation is a very bad thing. It makes things more expensive, so our money buys less and less.

But when inflation means our houses are worth £20K more than they were last year, we siddenly think inflation is wonderful.

[atalanta]

The more of your income you pay out for housing, whether mortgage or rent, the less you have to spend on consumer goods, like cars, furnishings, clothes, leisure pursuits, dining out, and holidays. So the suppliers of those things will suffer, some of them will fail, their staffs will be put out of work, their premises will lie empty . . . .
Alternatively, the more you need to live on, the more likely you are to demand more pay from your employers. So if you succeed in getting more pay, inflation rises.

[New Judge]

And so it has been from the beginning of time (or at least since I became interested in such matters).

Inflation was a huge problem in th Seventies. The modest inflation we are seeing now is but nothing compared to that. At the other end of the scale some analysts are forecasting doom and gloom in some euro countries because they may see deflation.

[Gromit]

// analysts are forecasting doom and gloom in some euro countries because they may see deflation. //

That makes it sound like a small localised problem. Analysts are worried about deflation WORLDWIDE (including UK).

[Coldicote]

A lot here about deflation and inflation. When are they good or bad and why?

[Colmc54]

I believe in steady state global economics. Without it the reality is most of us will have to work till we die, and the rest of will have to hope our country will be able to be solvent for long enough to continue to provide us with the state benefits so many of us depend on until we die.

David Cameron has tried to start negotiations on a global standard in banking and investment regulation. It is vital. It only takes one state to refuse and the whole casino circus moves there, impoverishing everyone else. It is tragic that the politics in this country is so tribal and career based that the blatantly obviously vital mission the PM is on cannot receive more cross-party support.

Anyone possessed of more than one functioning neuron in their brain can see that it is the only way to settle down the spastic volatility in the markets that saw Royal Mail shares, for example, fall by 10% today.

Imagine a global agreement that all shares had to be bought outright (not borrowed or rented) and held until the first dividend payment. Things would settle down and there's even a chance of rationality returning to the way the world goes about it's business.