The British wake up!

[Mega]

http://www.dailymail.co.uk/news/arti...editors_choice

At Last!!!!!!!!!!!!
Mike

[Mega]

Re: The British wake up!

Homeowners are not so bubbly this time

A jump in house prices used to be cause for celebration. So why are homeowners wary about the latest increase?

Since the banking crisis, homeowners are better informed and less complacent about property wealth Photo: PA

By Richard Dyson

8:57PM BST 13 Aug 2013

House prices are rising again in most parts of the country, and strongly. So why aren’t we all whooping for joy? If they are honest, most homeowners would admit that news of prices going up is cause for satisfaction. Of course it would be tasteless to crow. It is not polite, especially given the years we have spent cultivating the etiquette of austerity, to remark delightedly on how much the neighbour’s house has just fetched. But it would be unnatural not to feel a twinge of pleasure at hearing that your biggest asset is back in demand and growing in value.


Yet a cloud seems to hang over this latest good news from the housing market. Is it, in fact, good?

This is the question that Brandon Lewis, a local government minister, stumbled over when pressed on the Today programme. Mr Lewis said the picture of rising prices was “generally a good thing”. But he added, somewhat vaguely, that it was “not as straightforward” as “good news” or “bad news”.

What is beyond doubt is that prices are now rising almost everywhere. For years data has poured out showing that prices in London and the South East keep on rising, but what is new about the latest tranche of figures is that they show recovery touching regions where the market has for years been utterly moribund. Buyers in the West Midlands and the North East are signing up in greater numbers today than at any time in the last decade, for instance, yet house prices in both regions fell so sharply during the crisis that they remain below their 2005 levels.

The figures made the front pages but Mr Lewis was not alone in giving them a muted welcome – or worse. Readers have been giving vent to their dismay on the Telegraph website. They say rising prices do not mark a recovery, but rather a relapse into the debt-fuelled malady that almost killed the patient the last time round. Many commentators, even before the latest release of positive figures, were using the word “bubble” in connection with the housing market.

That rising house prices could be less than cause for joy underlines how deeply the financial crisis has informed our attitudes and even changed them. In 2006, what appeared to be ever-rising prices were perceived as normal and a more or less unquestionable boon. A rapidly expanding mortgage market meant people could buy with little or no deposit or could even, in the notorious case of Northern Rock, borrow more than the value of the house.

No one was “excluded” from the bonanza. Poor credit history, no deposit – it didn’t matter, you could still borrow and buy. And in those pre-crisis days there was no embarrassment in being a private landlord with an expanding portfolio of buy-to-lets.

But the banking crisis changed all that. Any complacent sense of property wealth evaporated in early 2009 as house prices started to fall. The immediate and almost total withdrawal of mortgages from that point meant only the wealthy, with large deposits, could borrow.

And at the same time, the Bank of England’s drastic slashing of interest rates made millions of savers only too aware of what was really afoot: the banks and the borrowers who had over-gorged were being given time to rebuild their finances, benefiting from record low borrowing costs and lenders who were instructed to go easy on those who defaulted. The savers – those who had laid money aside – were the ones who must pay. For them, it was a bitterly unfair outcome of the crisis.

This more subtle grasp of how the housing market is linked to other aspects of the economy appears now to be prompting the soul-searching. There has been fierce criticism of the rebounding buy-to-let market, where landlords are accused of exploiting a housing shortage and profiting from tenants’ inability to raise a mortgage. Today’s landlords do not boast – as they may have done in 2006 or 2007 – about their huge yields or expanding portfolios. Many, ironically, are the same savers who complained of low returns on their cash and who have turned to property investments as a result.

Elsewhere, younger, aspirant homeowners have successfully mobilised themselves into lobby groups such as Pricedout.org, arguing powerfully that they are being excluded from a fundamental rite of passage older generations took for granted. They call themselves “generation rent” and argue that house price inflation has heaped wealth unfairly on their elders. And many of their parents, the same people who today experience a quiet pleasure at the thought of their property again rising in value, share their anxiety. They want their children to own property, too.

And so the doubts run through what has become an emotional debate. Housing, because of the status our culture attaches to owning a home, will always be complicated. But perhaps – at least for now – the doubts are overstated.
If you sweep aside the data from London – where most commentators are based and where, often, the media makes its focus – the recovery in the wider market is still early and weak. London is indeed extreme. A house bought in fashionable Notting Hill in 2005 is today, for instance, worth nearly three times as much. Inner London – where residential development is frenzied and properties are marketed in Singapore or Jakarta rather than in a local estate agent – has its own problems, but they are not remotely shared by the housing markets outside the capital.

Houses in the UK’s worst-performing regions, such as Northern Ireland, are still worth less today than they were a decade ago. There, talk of a bubble would be viewed as a joke – a bad one. Even if prices nationally rise at three or four per cent for the next few years, given the extent of the falls in 2009 and 2010 it will be some time before they recover their 2007 high-point. And if the effect of inflation is taken into account to give a “real” value, house prices would not recover at that level of growth until well into the 2020s.

The Government, the Bank of England and other authorities have intervened in the housing market through a range of policies since the crisis. Sustained low interest rates, the availability of cheap funding to lenders, schemes aimed specifically at younger buyers, such as Help to Buy, are just a few of the initiatives. This intervention, regardless of whether in the end it succeeds, itself sparks controversy, with claims that the public will be somehow manipulated into feeling prosperous by the next election.

But the ambivalence of the response to this week’s news of rising prices suggests the electorate is not so easily led. Having endured the crisis, homeowners are better equipped to draw their own conclusions about rising prices – blessing or curse. In any case, at least outside the capital, it is probably too early to read the trend.

Potential buyers are indeed on the horns of a dilemma – caught between fear on one hand that prices will rise further, and doubts on the other about the wisdom of borrowing hugely while rates are low – but these are informed anxieties. Among the plethora of housing data in recent weeks, for example, was the fact that four in five new mortgages are arranged on a fixed-rate basis.

Mark Carney, the new Governor of the Bank of England, may have indicated only last week that rates will stay low for years – but these borrowers are taking no chances and are trying to limit their risk. That behaviour, at least, doesn’t seem like the heedless greed typical of buyers in an asset bubble.

[Mega]

Re: The British wake up!

"They" wanted a boom or at lest a mini-boom.........they going to get a dead cat bounce !
Mike

[Forrest]

Re: The British wake up!

It would be nice if the tiny bit of sanity you are finding became a reality over here...people over here seem woefully unaware of what is going on. Being in California, I don't expect sanity, but I would like a bit of reality to intrude into dreamland.

[Mega]

Re: The British wake up!

Its coming!
Mike