I posted yesterday about things I noticed during my recent stay on America’s west coast. An occasional PBer who lives in the US got in touch and said that I shouldn’t have been so negative. For the sake of balance, then, and because I’m jetlagged, here are some random great things I have noticed about that wonderful part of the world on this and previous trips: - The great outdoors: simply better than ours, especially in California. - Weather: difficult to beat, if like me you like sunshine and warmth. - Houses: bigger and cheaper than ours. Googling, I find an average price/sq ft of around $122 for American residential property, around half or a third of ours. And, comparing like with like, London is about 20-30% more expensive per square foot than San Francisco - Bin collections: American cities still collect reasonable amounts of domestic rubbish (‘garbage’), meaning that throwing away a TV or similar isn’t a major headache - Political system: far from perfect, but unlike us they have made direct democracy and federalism work - Donald Trump isn’t the President any more: ‘nuff said - GM food: they don’t have our bizarre and unscientific prejudice against it - Enterprise culture: again, better than ours, despite Mrs Thatcher’s go at transplanting it. Do these counterbalance things like paying for healthcare, liberal gun laws and poorer public transport?
That looks like a very small rebellion indeed, and a crushing triumph for Boris Johnson. However, the Government won the vote by 319 to 248. Tom Newton-Dunn tweeted earlier that a maximum of 46 Conservative MPs therefore didn’t vote with the Government. Which means that 39 Tory backbenchers abstained."
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I posted yesterday about things I noticed during my recent stay on America’s west coast. An occasional PBer who lives in the US got in touch and said that I shouldn’t have been so negative. For the sake of balance, then, and because I’m jetlagged, here are some random great things I have noticed about that wonderful part of the world on this and previous trips: - The great outdoors: simply better than ours, especially in California. - Weather: difficult to beat, if like me you like sunshine and warmth. - Houses: bigger and cheaper than ours. Googling, I find an average price/sq ft of around $122 for American residential property, around half or a third of ours. And, comparing like with like, London is about 20-30% more expensive per square foot than San Francisco - Bin collections: American cities still collect reasonable amounts of domestic rubbish (‘garbage’), meaning that throwing away a TV or similar isn’t a major headache - Political system: far from perfect, but unlike us they have made direct democracy and federalism work - Donald Trump isn’t the President any more: ‘nuff said - GM food: they don’t have our bizarre and unscientific prejudice against it - Enterprise culture: again, better than ours, despite Mrs Thatcher’s go at transplanting it. Do these counterbalance things like paying for healthcare, liberal gun laws and poorer public transport?
Mostly agree with this, except I'm not 100% convinced the direct democracy bit is true.
In California, the voters were quite happy to pass ballot initiatives that simultaneously increased spending, required a balanced budget and mandated no changes to property taxes.
Pity the poor Governor who is trying to do everything he is asked to do.
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
The problems of the BoE, are also replicated at the Fed and the ECB, our two main currency pairs, which means they are all equally screwed.
How that translates into asset prices is anyone’s guess, but buying them as quickly as possible seems to be the optimal solution at the moment.
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I'm not sure a run on the pound would be the catalyst, but what about a situation where Conservative voters (i.e. pensioners) see their savings eroded by inflation? (Which, I admit would happen if there was a run on the pound.)
And don't forget, the BoE is obliged to try and keep inflation at 2%. What if it were 7 or 8 or 12 or 15%?
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I'm not sure a run on the pound would be the catalyst, but what about a situation where Conservative voters (i.e. pensioners) see their savings eroded by inflation? (Which, I admit would happen if there was a run on the pound.)
And don't forget, the BoE is obliged to try and keep inflation at 2%. What if it were 7 or 8 or 12 or 15%?
I'd have thought the biggest impact on interest rates will be where they stand in comparison to rates in the US/Eurozone etc.
For those seeking high yields there's basically nowhere to go. So unless the US decides to lift towards 'normalisation' the new normal will stay at rock bottom rates.
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I'm not sure a run on the pound would be the catalyst, but what about a situation where Conservative voters (i.e. pensioners) see their savings eroded by inflation? (Which, I admit would happen if there was a run on the pound.)
And don't forget, the BoE is obliged to try and keep inflation at 2%. What if it were 7 or 8 or 12 or 15%?
I'd have thought the biggest impact on interest rates will be where they stand in comparison to rates in the US/Eurozone etc.
For those seeking high yields there's basically nowhere to go. So unless the US decides to lift towards 'normalisation' the new normal will stay at rock bottom rates.
The problem is, of course, that ultra low rates encourages the better off to lever up and play the carry trade, driving the price of assets ever higher and widening income inequalities.
Plus, of course, it leaves a ton of zombie businesses alive.
I posted yesterday about things I noticed during my recent stay on America’s west coast. An occasional PBer who lives in the US got in touch and said that I shouldn’t have been so negative. For the sake of balance, then, and because I’m jetlagged, here are some random great things I have noticed about that wonderful part of the world on this and previous trips: - The great outdoors: simply better than ours, especially in California. - Weather: difficult to beat, if like me you like sunshine and warmth. - Houses: bigger and cheaper than ours. Googling, I find an average price/sq ft of around $122 for American residential property, around half or a third of ours. And, comparing like with like, London is about 20-30% more expensive per square foot than San Francisco - Bin collections: American cities still collect reasonable amounts of domestic rubbish (‘garbage’), meaning that throwing away a TV or similar isn’t a major headache - Political system: far from perfect, but unlike us they have made direct democracy and federalism work - Donald Trump isn’t the President any more: ‘nuff said - GM food: they don’t have our bizarre and unscientific prejudice against it - Enterprise culture: again, better than ours, despite Mrs Thatcher’s go at transplanting it. Do these counterbalance things like paying for healthcare, liberal gun laws and poorer public transport?
Mostly agree with this, except I'm not 100% convinced the direct democracy bit is true.
In California, the voters were quite happy to pass ballot initiatives that simultaneously increased spending, required a balanced budget and mandated no changes to property taxes.
Pity the poor Governor who is trying to do everything he is asked to do.
They also passed a Bill against ‘gig’ workers, then passed a Proposition exempting ‘ride share’ drivers - leaving all the comedians, journalists and other genuinely self-employed screwed. The original bill was of course designed to target the fake taxi companies, but now it applied to all the unintended consequences but not to Uber. Uber, of course, spent $200m on lobbying for the exemption.
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
It seems that people start to run out of income when they spend more than 40% of income on housing. If interest rates drop then affordability goes up, and prices with them.
To illustrate: in 1996 interest rates had halved from the high rates of the early nineties. I bought a nice 3 bed semi for £85 000 which I sold 5 years later for £165 000. That halving of interest rates doubled house prices in 5 years in Leicester.
House prices have shot up because of the drop in interest rates, with the percentage of income going on servicing that debt hardly changing by much at all, though the absolute scale of the debt is much larger as a percentage of income. Hence mortgages of 6 or 7 times incomes are affordable, roughly twice what we used to have.
The problem comes that increasing interest rates back to historic norms (a couple of percent over inflation rate) will hurt a lot of current mortgage holders as it will push them beyond that 40% ish share of their income. We can only therefore move interest rates back up slowly, but they cannot remain so low forever. It is massively distorting the economy, making saving pointless.
I posted yesterday about things I noticed during my recent stay on America’s west coast. An occasional PBer who lives in the US got in touch and said that I shouldn’t have been so negative. For the sake of balance, then, and because I’m jetlagged, here are some random great things I have noticed about that wonderful part of the world on this and previous trips: - The great outdoors: simply better than ours, especially in California. - Weather: difficult to beat, if like me you like sunshine and warmth. - Houses: bigger and cheaper than ours. Googling, I find an average price/sq ft of around $122 for American residential property, around half or a third of ours. And, comparing like with like, London is about 20-30% more expensive per square foot than San Francisco - Bin collections: American cities still collect reasonable amounts of domestic rubbish (‘garbage’), meaning that throwing away a TV or similar isn’t a major headache - Political system: far from perfect, but unlike us they have made direct democracy and federalism work - Donald Trump isn’t the President any more: ‘nuff said - GM food: they don’t have our bizarre and unscientific prejudice against it - Enterprise culture: again, better than ours, despite Mrs Thatcher’s go at transplanting it. Do these counterbalance things like paying for healthcare, liberal gun laws and poorer public transport?
Mostly agree with this, except I'm not 100% convinced the direct democracy bit is true.
In California, the voters were quite happy to pass ballot initiatives that simultaneously increased spending, required a balanced budget and mandated no changes to property taxes.
Pity the poor Governor who is trying to do everything he is asked to do.
American weather might be better than ours but surely that depends whereabouts in America you like. Stereotypically, rich New Yorkers winter in Florida. Sinatra sang about California being cold and grey – presumably the northern part. And in Britain, Hurricanes are old aeroplanes.
I posted yesterday about things I noticed during my recent stay on America’s west coast. An occasional PBer who lives in the US got in touch and said that I shouldn’t have been so negative. For the sake of balance, then, and because I’m jetlagged, here are some random great things I have noticed about that wonderful part of the world on this and previous trips: - The great outdoors: simply better than ours, especially in California. - Weather: difficult to beat, if like me you like sunshine and warmth. - Houses: bigger and cheaper than ours. Googling, I find an average price/sq ft of around $122 for American residential property, around half or a third of ours. And, comparing like with like, London is about 20-30% more expensive per square foot than San Francisco - Bin collections: American cities still collect reasonable amounts of domestic rubbish (‘garbage’), meaning that throwing away a TV or similar isn’t a major headache - Political system: far from perfect, but unlike us they have made direct democracy and federalism work - Donald Trump isn’t the President any more: ‘nuff said - GM food: they don’t have our bizarre and unscientific prejudice against it - Enterprise culture: again, better than ours, despite Mrs Thatcher’s go at transplanting it. Do these counterbalance things like paying for healthcare, liberal gun laws and poorer public transport?
Mostly agree with this, except I'm not 100% convinced the direct democracy bit is true.
In California, the voters were quite happy to pass ballot initiatives that simultaneously increased spending, required a balanced budget and mandated no changes to property taxes.
Pity the poor Governor who is trying to do everything he is asked to do.
They also passed a Bill against ‘gig’ workers, then passed a Proposition exempting ‘ride share’ drivers - leaving all the comedians, journalists and other genuinely self-employed screwed. The original bill was of course designed to target the fake taxi companies, but now it applied to all the unintended consequences but not to Uber. Uber, of course, spent $200m on lobbying for the exemption.
That’s a broken democracy. #RecallGavinNewsom
I'm no Newsom fan, but the recall is equally ridiculous. 46 candidates for Governor, and the leader in the polls (Larry Elder) is in the low teens.
It's highly likely that the vote leader on the second question in the recall election will be Blank.
It is unclear for me why a recalled candidate cannot run again. He's no longer in the position, sure, but if he's the most popular man for the job, surely he should get it?
I posted yesterday about things I noticed during my recent stay on America’s west coast. An occasional PBer who lives in the US got in touch and said that I shouldn’t have been so negative. For the sake of balance, then, and because I’m jetlagged, here are some random great things I have noticed about that wonderful part of the world on this and previous trips: - The great outdoors: simply better than ours, especially in California. - Weather: difficult to beat, if like me you like sunshine and warmth. - Houses: bigger and cheaper than ours. Googling, I find an average price/sq ft of around $122 for American residential property, around half or a third of ours. And, comparing like with like, London is about 20-30% more expensive per square foot than San Francisco - Bin collections: American cities still collect reasonable amounts of domestic rubbish (‘garbage’), meaning that throwing away a TV or similar isn’t a major headache - Political system: far from perfect, but unlike us they have made direct democracy and federalism work - Donald Trump isn’t the President any more: ‘nuff said - GM food: they don’t have our bizarre and unscientific prejudice against it - Enterprise culture: again, better than ours, despite Mrs Thatcher’s go at transplanting it. Do these counterbalance things like paying for healthcare, liberal gun laws and poorer public transport?
Mostly agree with this, except I'm not 100% convinced the direct democracy bit is true.
In California, the voters were quite happy to pass ballot initiatives that simultaneously increased spending, required a balanced budget and mandated no changes to property taxes.
Pity the poor Governor who is trying to do everything he is asked to do.
American weather might be better than ours but surely that depends whereabouts in America you like. Stereotypically, rich New Yorkers winter in Florida. Sinatra sang about California being cold and grey – presumably the northern part. And in Britain, Hurricanes are old aeroplanes.
I lived in Atlanta GA for 5 years. The weather there was quite nice in April and May, and again in September and October. The summer was far too hot and humid, the winter too cold. Like much of the South, no AC in the summer was miserable.
I am not entirely convinced by the methodology, but food for thought here. $51 Trillion is several multiples of the US national debt:
Racial and ethnic inequities have cost the U.S. economy some $51 trillion in lost output since 1990, San Francisco Federal Reserve President Mary Daly said, citing data from a paper she and three co-authors will present at The Brookings Institution https://t.co/yU1cOn6KXehttps://t.co/VY1OvmfPUV
I posted yesterday about things I noticed during my recent stay on America’s west coast. An occasional PBer who lives in the US got in touch and said that I shouldn’t have been so negative. For the sake of balance, then, and because I’m jetlagged, here are some random great things I have noticed about that wonderful part of the world on this and previous trips: - The great outdoors: simply better than ours, especially in California. - Weather: difficult to beat, if like me you like sunshine and warmth. - Houses: bigger and cheaper than ours. Googling, I find an average price/sq ft of around $122 for American residential property, around half or a third of ours. And, comparing like with like, London is about 20-30% more expensive per square foot than San Francisco - Bin collections: American cities still collect reasonable amounts of domestic rubbish (‘garbage’), meaning that throwing away a TV or similar isn’t a major headache - Political system: far from perfect, but unlike us they have made direct democracy and federalism work - Donald Trump isn’t the President any more: ‘nuff said - GM food: they don’t have our bizarre and unscientific prejudice against it - Enterprise culture: again, better than ours, despite Mrs Thatcher’s go at transplanting it. Do these counterbalance things like paying for healthcare, liberal gun laws and poorer public transport?
Mostly agree with this, except I'm not 100% convinced the direct democracy bit is true.
In California, the voters were quite happy to pass ballot initiatives that simultaneously increased spending, required a balanced budget and mandated no changes to property taxes.
Pity the poor Governor who is trying to do everything he is asked to do.
American weather might be better than ours but surely that depends whereabouts in America you like. Stereotypically, rich New Yorkers winter in Florida. Sinatra sang about California being cold and grey – presumably the northern part. And in Britain, Hurricanes are old aeroplanes.
I lived in Atlanta GA for 5 years. The weather there was quite nice in April and May, and again in September and October. The summer was far too hot and humid, the winter too cold. Like much of the South, no AC in the summer was miserable.
In California, the Spring tends to be a little on the cool side, perhaps dropping as low as a daily high of 19 or 20, then in summer it can get a bit warm, with highs sometimes in the low 30s. Autumn is pretty much the same. And then in winter, it's really tough, because the clear blue skies mean you feel every bit of the daily highs of say 19 or 20.
I posted yesterday about things I noticed during my recent stay on America’s west coast. An occasional PBer who lives in the US got in touch and said that I shouldn’t have been so negative. For the sake of balance, then, and because I’m jetlagged, here are some random great things I have noticed about that wonderful part of the world on this and previous trips: - The great outdoors: simply better than ours, especially in California. - Weather: difficult to beat, if like me you like sunshine and warmth. - Houses: bigger and cheaper than ours. Googling, I find an average price/sq ft of around $122 for American residential property, around half or a third of ours. And, comparing like with like, London is about 20-30% more expensive per square foot than San Francisco - Bin collections: American cities still collect reasonable amounts of domestic rubbish (‘garbage’), meaning that throwing away a TV or similar isn’t a major headache - Political system: far from perfect, but unlike us they have made direct democracy and federalism work - Donald Trump isn’t the President any more: ‘nuff said - GM food: they don’t have our bizarre and unscientific prejudice against it - Enterprise culture: again, better than ours, despite Mrs Thatcher’s go at transplanting it. Do these counterbalance things like paying for healthcare, liberal gun laws and poorer public transport?
Mostly agree with this, except I'm not 100% convinced the direct democracy bit is true.
In California, the voters were quite happy to pass ballot initiatives that simultaneously increased spending, required a balanced budget and mandated no changes to property taxes.
Pity the poor Governor who is trying to do everything he is asked to do.
They also passed a Bill against ‘gig’ workers, then passed a Proposition exempting ‘ride share’ drivers - leaving all the comedians, journalists and other genuinely self-employed screwed. The original bill was of course designed to target the fake taxi companies, but now it applied to all the unintended consequences but not to Uber. Uber, of course, spent $200m on lobbying for the exemption.
That’s a broken democracy. #RecallGavinNewsom
I'm no Newsom fan, but the recall is equally ridiculous. 46 candidates for Governor, and the leader in the polls (Larry Elder) is in the low teens.
It's highly likely that the vote leader on the second question in the recall election will be Blank.
It is unclear for me why a recalled candidate cannot run again. He's no longer in the position, sure, but if he's the most popular man for the job, surely he should get it?
The recall process itself is equally bonkers, indeed.
Newsom could get 48% support and be removed from office, only for someone with 15% support to replace him.
A two-stage process would be better, as is the case in the UK with MP recall. The first ballot vacates the position, and the second decides who is the replacement.
Watching (from afar) California run by a Republican might be fun though!
Border Force authorised to turn back migrants, 50 years of Genesis and Radacando! Another day in Normalania.
Will there now be a race between BF vessels and the RNLI to reach the boat people?
I should imagine that the Border Force boats will patrol the maritime boundary to try to catch the dinghies, the occupants of the dinghies will throw themselves into the water (or just fall in when the authorities try to shunt or tow their pathetic, flimsy vessels back towards France,) and the Border Force officers will then be obliged to fish them out.
Any that get through the screen will then be met by RNLI welcome committees instead. So, it'll make no difference to anything. Just one more example of something-must-be-done-ism.
I posted yesterday about things I noticed during my recent stay on America’s west coast. An occasional PBer who lives in the US got in touch and said that I shouldn’t have been so negative. For the sake of balance, then, and because I’m jetlagged, here are some random great things I have noticed about that wonderful part of the world on this and previous trips: - The great outdoors: simply better than ours, especially in California. - Weather: difficult to beat, if like me you like sunshine and warmth. - Houses: bigger and cheaper than ours. Googling, I find an average price/sq ft of around $122 for American residential property, around half or a third of ours. And, comparing like with like, London is about 20-30% more expensive per square foot than San Francisco - Bin collections: American cities still collect reasonable amounts of domestic rubbish (‘garbage’), meaning that throwing away a TV or similar isn’t a major headache - Political system: far from perfect, but unlike us they have made direct democracy and federalism work - Donald Trump isn’t the President any more: ‘nuff said - GM food: they don’t have our bizarre and unscientific prejudice against it - Enterprise culture: again, better than ours, despite Mrs Thatcher’s go at transplanting it. Do these counterbalance things like paying for healthcare, liberal gun laws and poorer public transport?
The problem with the American outdoors is that almost all of it is out of bounds and they have a habit of charging you to access the parts that aren’t. The weather is better when it isn’t extreme, but you don’t want to run into the extremes. The houses are bigger and cheaper but remarkably wasteful of resources. The garbage collections haven’t, in the main, ever heard of recycling. Their political system is pants, verging on corrupt. Their food is, unless you are prepared to pay a lot, pretty dreadful. The enterprise culture is good but throws up a lot of cranks including some dangerous ones, and in areas such as religion or medicine has to be seen to be believed.
I posted yesterday about things I noticed during my recent stay on America’s west coast. An occasional PBer who lives in the US got in touch and said that I shouldn’t have been so negative. For the sake of balance, then, and because I’m jetlagged, here are some random great things I have noticed about that wonderful part of the world on this and previous trips: - The great outdoors: simply better than ours, especially in California. - Weather: difficult to beat, if like me you like sunshine and warmth. - Houses: bigger and cheaper than ours. Googling, I find an average price/sq ft of around $122 for American residential property, around half or a third of ours. And, comparing like with like, London is about 20-30% more expensive per square foot than San Francisco - Bin collections: American cities still collect reasonable amounts of domestic rubbish (‘garbage’), meaning that throwing away a TV or similar isn’t a major headache - Political system: far from perfect, but unlike us they have made direct democracy and federalism work - Donald Trump isn’t the President any more: ‘nuff said - GM food: they don’t have our bizarre and unscientific prejudice against it - Enterprise culture: again, better than ours, despite Mrs Thatcher’s go at transplanting it. Do these counterbalance things like paying for healthcare, liberal gun laws and poorer public transport?
Mostly agree with this, except I'm not 100% convinced the direct democracy bit is true.
In California, the voters were quite happy to pass ballot initiatives that simultaneously increased spending, required a balanced budget and mandated no changes to property taxes.
Pity the poor Governor who is trying to do everything he is asked to do.
American weather might be better than ours but surely that depends whereabouts in America you like. Stereotypically, rich New Yorkers winter in Florida. Sinatra sang about California being cold and grey – presumably the northern part. And in Britain, Hurricanes are old aeroplanes.
I lived in Atlanta GA for 5 years. The weather there was quite nice in April and May, and again in September and October. The summer was far too hot and humid, the winter too cold. Like much of the South, no AC in the summer was miserable.
In California, the Spring tends to be a little on the cool side, perhaps dropping as low as a daily high of 19 or 20, then in summer it can get a bit warm, with highs sometimes in the low 30s. Autumn is pretty much the same. And then in winter, it's really tough, because the clear blue skies mean you feel every bit of the daily highs of say 19 or 20.
Sounds much like the Malawian climate, which was lovely.
To quote Ian Botham returning to England after his time in Australia:
Whilst I would be delighted to see Gove at the Ministry of Sound, I mean Home Office, I am not sure that Patel will be moved. That would alienate a significant faction against Boris, especially if he replaced her with someone more liberal. Patel has defanged Farage by being every bit as unpleasant. Would Boris really be willing to risk that flank being opened?
On departures, surely Jenrick has to go too. He should have gone some time ago.
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
I’ll take whatever odds you are offering, since I would never have to pay
In the first six months of this year, German imports of British goods sank nearly 11% year-on-year to 16.1 billion euros ($19.0 billion), Federal Statistics Office data reviewed by Reuters showed.
While German goods exports to Britain rose 2.6% to 32.1 billion euros, that could not prevent a decline in bilateral trade, by 2.3% to 48.2 billion euros - pushing Britain down to 11th spot from ninth, and from fifth before it voted to leave the EU in 2016.
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
I paid 19% on my first mortgage, shortly after Thatcher became PM.
I posted yesterday about things I noticed during my recent stay on America’s west coast. An occasional PBer who lives in the US got in touch and said that I shouldn’t have been so negative. For the sake of balance, then, and because I’m jetlagged, here are some random great things I have noticed about that wonderful part of the world on this and previous trips: - The great outdoors: simply better than ours, especially in California. - Weather: difficult to beat, if like me you like sunshine and warmth. - Houses: bigger and cheaper than ours. Googling, I find an average price/sq ft of around $122 for American residential property, around half or a third of ours. And, comparing like with like, London is about 20-30% more expensive per square foot than San Francisco - Bin collections: American cities still collect reasonable amounts of domestic rubbish (‘garbage’), meaning that throwing away a TV or similar isn’t a major headache - Political system: far from perfect, but unlike us they have made direct democracy and federalism work - Donald Trump isn’t the President any more: ‘nuff said - GM food: they don’t have our bizarre and unscientific prejudice against it - Enterprise culture: again, better than ours, despite Mrs Thatcher’s go at transplanting it. Do these counterbalance things like paying for healthcare, liberal gun laws and poorer public transport?
The problem with the American outdoors is that almost all of it is out of bounds and they have a habit of charging you to access the parts that aren’t. The weather is better when it isn’t extreme, but you don’t want to run into the extremes. The houses are bigger and cheaper but remarkably wasteful of resources. The garbage collections haven’t, in the main, ever heard of recycling. Their political system is pants, verging on corrupt. Their food is, unless you are prepared to pay a lot, pretty dreadful. The enterprise culture is good but throws up a lot of cranks including some dangerous ones, and in areas such as religion or medicine has to be seen to be believed.
But you’re right, Trump isn’t President any more.
Recycling, where it is done at all, is better in America because they sort rubbish into categories at the recycling end rather than demand householders do the work for them, as here. We should adopt this system.
What has Patel done to deserve to be removed? Sure she has some hardline views, but that was the case before she went in place, not after it.
There's been the tittle-tattle about bullying, but there's not been (that I can think of) any real scandals at the Home Office along the lines of Windrush that preceded.
I'd like to see her removed, but that's because she has different politics to mine, not because she has done anything that deserves to see her go. I'd like to have not seen her appointed in the first place.
Raab, Williamson, Jenrick and now IMO Sunak deserve to be replaced but I'm not sure they will be.
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
It seems that people start to run out of income when they spend more than 40% of income on housing. If interest rates drop then affordability goes up, and prices with them.
To illustrate: in 1996 interest rates had halved from the high rates of the early nineties. I bought a nice 3 bed semi for £85 000 which I sold 5 years later for £165 000. That halving of interest rates doubled house prices in 5 years in Leicester.
House prices have shot up because of the drop in interest rates, with the percentage of income going on servicing that debt hardly changing by much at all, though the absolute scale of the debt is much larger as a percentage of income. Hence mortgages of 6 or 7 times incomes are affordable, roughly twice what we used to have.
The problem comes that increasing interest rates back to historic norms (a couple of percent over inflation rate) will hurt a lot of current mortgage holders as it will push them beyond that 40% ish share of their income. We can only therefore move interest rates back up slowly, but they cannot remain so low forever. It is massively distorting the economy, making saving pointless.
That is exactly the problem. Printing money has caused asset price inflation
As I have bored on about quite a lot recently excessive consumption and poor investment leading to a major trade deficit is our largest economic problem by far. We need to recalibrate our economy by reducing consumer debt, reducing government debt, encouraging savings and utilising those savings as investment.
I think that extremely low interest rates such as we have at the moment are a positive hindrance in most of these objectives. Consumer debt is generally cheap (not for those who fall behind on credit cards of course) and saving seems pointless. In theory very low interest rates should make investment more attractive since the cost of capital is low but what seems to happen is that existing businesses which are using sites survive and this reduces investment opportunities.
Low interest rates have also distorted asset prices as the expected rate of return on an asset falls. This has greatly increased wealth inequality and hugely distorted the housing market making it more difficult for young people to become Conservative voters.
So we need higher interest rates. Given that we have had these distortions ever since 2008 this is going to be a very difficult and painful challenge but the BoE should be getting on with it not only increasing base rates by 0.25% but also by being clear about the direction of travel. We are currently having what is probably a blip in inflation. Rather than "seeing through it" the Bank should be taking the opportunity to move interest rates up.
I drove through Austria yesterday and they, like Germany, have election posters up everywhere, for a date later this month. That one passed me by.
Meanwhile some good news from Morocco:
Morocco’s liberal RNI party has won the most seats in the country’s parliamentary elections, while the co-ruling moderate PJD Islamists suffered a crushing defeat, preliminary results showed.
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
I paid 19% on my first mortgage, shortly after Thatcher became PM.
Yes, I remember my dad being very squeezed at the same time.
There was much more inflation though, and the principle from the Seventies to the Noughties was to buy the most expensive house possible, pay eye watering mortgages and let inflation reduce the mortgage to affordable levels after a number of years. It worked to a fashion for both me and my dad.
Nowadays there are eye-watering mortgages, but no inflation to reduce the debt, so they stay eye watering.
In the first six months of this year, German imports of British goods sank nearly 11% year-on-year to 16.1 billion euros ($19.0 billion), Federal Statistics Office data reviewed by Reuters showed.
While German goods exports to Britain rose 2.6% to 32.1 billion euros, that could not prevent a decline in bilateral trade, by 2.3% to 48.2 billion euros - pushing Britain down to 11th spot from ninth, and from fifth before it voted to leave the EU in 2016.
I posted yesterday about things I noticed during my recent stay on America’s west coast. An occasional PBer who lives in the US got in touch and said that I shouldn’t have been so negative. For the sake of balance, then, and because I’m jetlagged, here are some random great things I have noticed about that wonderful part of the world on this and previous trips: - The great outdoors: simply better than ours, especially in California. - Weather: difficult to beat, if like me you like sunshine and warmth. - Houses: bigger and cheaper than ours. Googling, I find an average price/sq ft of around $122 for American residential property, around half or a third of ours. And, comparing like with like, London is about 20-30% more expensive per square foot than San Francisco - Bin collections: American cities still collect reasonable amounts of domestic rubbish (‘garbage’), meaning that throwing away a TV or similar isn’t a major headache - Political system: far from perfect, but unlike us they have made direct democracy and federalism work - Donald Trump isn’t the President any more: ‘nuff said - GM food: they don’t have our bizarre and unscientific prejudice against it - Enterprise culture: again, better than ours, despite Mrs Thatcher’s go at transplanting it. Do these counterbalance things like paying for healthcare, liberal gun laws and poorer public transport?
Mostly agree with this, except I'm not 100% convinced the direct democracy bit is true.
In California, the voters were quite happy to pass ballot initiatives that simultaneously increased spending, required a balanced budget and mandated no changes to property taxes.
Pity the poor Governor who is trying to do everything he is asked to do.
American weather might be better than ours but surely that depends whereabouts in America you like. Stereotypically, rich New Yorkers winter in Florida. Sinatra sang about California being cold and grey – presumably the northern part. And in Britain, Hurricanes are old aeroplanes.
I lived in Atlanta GA for 5 years. The weather there was quite nice in April and May, and again in September and October. The summer was far too hot and humid, the winter too cold. Like much of the South, no AC in the summer was miserable.
In California, the Spring tends to be a little on the cool side, perhaps dropping as low as a daily high of 19 or 20, then in summer it can get a bit warm, with highs sometimes in the low 30s. Autumn is pretty much the same. And then in winter, it's really tough, because the clear blue skies mean you feel every bit of the daily highs of say 19 or 20.
Sounds much like the Malawian climate, which was lovely.
To quote Ian Botham returning to England after his time in Australia:
What has Patel done to deserve to be removed? Sure she has some hardline views, but that was the case before she went in place, not after it.
There's been the tittle-tattle about bullying, but there's not been (that I can think of) any real scandals at the Home Office along the lines of Windrush that preceded.
I'd like to see her removed, but that's because she has different politics to mine, not because she has done anything that deserves to see her go. I'd like to have not seen her appointed in the first place.
Raab, Williamson, Jenrick and now IMO Sunak deserve to be replaced but I'm not sure they will be.
In the case of Williamson, at risk of winning a gold medal for boring repetition while he is useless there is little benefit in getting rid of him only. Gibb and Spielman both need to be removed as a matter of urgency, but there also needs to be root and branch reform of the department itself with many sackings of many very useless and dangerous civil servants therein.
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
I paid 19% on my first mortgage, shortly after Thatcher became PM.
Yes, I remember my dad being very squeezed at the same time.
There was much more inflation though, and the principle from the Seventies to the Noughties was to buy the most expensive house possible, pay eye watering mortgages and let inflation reduce the mortgage to affordable levels after a number of years. It worked to a fashion for both me and my dad.
Nowadays there are eye-watering mortgages, but no inflation to reduce the debt, so they stay eye watering.
When we bought our current house the mortgage was right on the edge of affordability and we really struggled towards the end of each month but within a few years some modest inflation and increased nominal earnings made it very affordable and we were able to start paying down the capital. My daughter has been determined to overpay her mortgage and reduce the debt too but it has been so much harder for her with the very slow increases in nominal wages.
I posted yesterday about things I noticed during my recent stay on America’s west coast. An occasional PBer who lives in the US got in touch and said that I shouldn’t have been so negative. For the sake of balance, then, and because I’m jetlagged, here are some random great things I have noticed about that wonderful part of the world on this and previous trips: - The great outdoors: simply better than ours, especially in California. - Weather: difficult to beat, if like me you like sunshine and warmth. - Houses: bigger and cheaper than ours. Googling, I find an average price/sq ft of around $122 for American residential property, around half or a third of ours. And, comparing like with like, London is about 20-30% more expensive per square foot than San Francisco - Bin collections: American cities still collect reasonable amounts of domestic rubbish (‘garbage’), meaning that throwing away a TV or similar isn’t a major headache - Political system: far from perfect, but unlike us they have made direct democracy and federalism work - Donald Trump isn’t the President any more: ‘nuff said - GM food: they don’t have our bizarre and unscientific prejudice against it - Enterprise culture: again, better than ours, despite Mrs Thatcher’s go at transplanting it. Do these counterbalance things like paying for healthcare, liberal gun laws and poorer public transport?
Mostly agree with this, except I'm not 100% convinced the direct democracy bit is true.
In California, the voters were quite happy to pass ballot initiatives that simultaneously increased spending, required a balanced budget and mandated no changes to property taxes.
Pity the poor Governor who is trying to do everything he is asked to do.
They also passed a Bill against ‘gig’ workers, then passed a Proposition exempting ‘ride share’ drivers - leaving all the comedians, journalists and other genuinely self-employed screwed. The original bill was of course designed to target the fake taxi companies, but now it applied to all the unintended consequences but not to Uber. Uber, of course, spent $200m on lobbying for the exemption.
That’s a broken democracy. #RecallGavinNewsom
I'm no Newsom fan, but the recall is equally ridiculous. 46 candidates for Governor, and the leader in the polls (Larry Elder) is in the low teens.
It's highly likely that the vote leader on the second question in the recall election will be Blank.
It is unclear for me why a recalled candidate cannot run again. He's no longer in the position, sure, but if he's the most popular man for the job, surely he should get it?
He’s been weighed in the balance but found wanting.
But imagine how it would look: a majority of Californians vote for him to be dismissed. He is then re-elected on 20% of the vote.
As I have bored on about quite a lot recently excessive consumption and poor investment leading to a major trade deficit is our largest economic problem by far. We need to recalibrate our economy by reducing consumer debt, reducing government debt, encouraging savings and utilising those savings as investment.
I think that extremely low interest rates such as we have at the moment are a positive hindrance in most of these objectives. Consumer debt is generally cheap (not for those who fall behind on credit cards of course) and saving seems pointless. In theory very low interest rates should make investment more attractive since the cost of capital is low but what seems to happen is that existing businesses which are using sites survive and this reduces investment opportunities.
Low interest rates have also distorted asset prices as the expected rate of return on an asset falls. This has greatly increased wealth inequality and hugely distorted the housing market making it more difficult for young people to become Conservative voters.
So we need higher interest rates. Given that we have had these distortions ever since 2008 this is going to be a very difficult and painful challenge but the BoE should be getting on with it not only increasing base rates by 0.25% but also by being clear about the direction of travel. We are currently having what is probably a blip in inflation. Rather than "seeing through it" the Bank should be taking the opportunity to move interest rates up.
And we need to discourage foreign takeovers of British business. Recently the government has paid lip-service to this but rarely acts. It is not just about security. If ACME plc is bought by Americans, say, its IP heads across the Atlantic, followed by its profits, and in any downturn it will be first to close in order to protect operations back home. None of which helps the trade deficit!
I posted yesterday about things I noticed during my recent stay on America’s west coast. An occasional PBer who lives in the US got in touch and said that I shouldn’t have been so negative. For the sake of balance, then, and because I’m jetlagged, here are some random great things I have noticed about that wonderful part of the world on this and previous trips: - The great outdoors: simply better than ours, especially in California. - Weather: difficult to beat, if like me you like sunshine and warmth. - Houses: bigger and cheaper than ours. Googling, I find an average price/sq ft of around $122 for American residential property, around half or a third of ours. And, comparing like with like, London is about 20-30% more expensive per square foot than San Francisco - Bin collections: American cities still collect reasonable amounts of domestic rubbish (‘garbage’), meaning that throwing away a TV or similar isn’t a major headache - Political system: far from perfect, but unlike us they have made direct democracy and federalism work - Donald Trump isn’t the President any more: ‘nuff said - GM food: they don’t have our bizarre and unscientific prejudice against it - Enterprise culture: again, better than ours, despite Mrs Thatcher’s go at transplanting it. Do these counterbalance things like paying for healthcare, liberal gun laws and poorer public transport?
Mostly agree with this, except I'm not 100% convinced the direct democracy bit is true.
In California, the voters were quite happy to pass ballot initiatives that simultaneously increased spending, required a balanced budget and mandated no changes to property taxes.
Pity the poor Governor who is trying to do everything he is asked to do.
American weather might be better than ours but surely that depends whereabouts in America you like. Stereotypically, rich New Yorkers winter in Florida. Sinatra sang about California being cold and grey – presumably the northern part. And in Britain, Hurricanes are old aeroplanes.
I lived in Atlanta GA for 5 years. The weather there was quite nice in April and May, and again in September and October. The summer was far too hot and humid, the winter too cold. Like much of the South, no AC in the summer was miserable.
In California, the Spring tends to be a little on the cool side, perhaps dropping as low as a daily high of 19 or 20, then in summer it can get a bit warm, with highs sometimes in the low 30s. Autumn is pretty much the same. And then in winter, it's really tough, because the clear blue skies mean you feel every bit of the daily highs of say 19 or 20.
Down South it’s even more boring - 27C with a variance of 4 degrees. Every damn day of the year.
As I have bored on about quite a lot recently excessive consumption and poor investment leading to a major trade deficit is our largest economic problem by far. We need to recalibrate our economy by reducing consumer debt, reducing government debt, encouraging savings and utilising those savings as investment.
I think that extremely low interest rates such as we have at the moment are a positive hindrance in most of these objectives. Consumer debt is generally cheap (not for those who fall behind on credit cards of course) and saving seems pointless. In theory very low interest rates should make investment more attractive since the cost of capital is low but what seems to happen is that existing businesses which are using sites survive and this reduces investment opportunities.
Low interest rates have also distorted asset prices as the expected rate of return on an asset falls. This has greatly increased wealth inequality and hugely distorted the housing market making it more difficult for young people to become Conservative voters.
So we need higher interest rates. Given that we have had these distortions ever since 2008 this is going to be a very difficult and painful challenge but the BoE should be getting on with it not only increasing base rates by 0.25% but also by being clear about the direction of travel. We are currently having what is probably a blip in inflation. Rather than "seeing through it" the Bank should be taking the opportunity to move interest rates up.
And we need to discourage foreign takeovers of British business. Recently the government has paid lip-service to this but rarely acts. It is not just about security. If ACME plc is bought by Americans, say, its IP heads across the Atlantic, followed by its profits, and in any downturn it will be first to close in order to protect operations back home. None of which helps the trade deficit!
If we reduce our trade deficit this will reduce. At the moment the UK needs to sell £85bn of assets every year to foreigners to balance the books. Even in London there are only so many flats that you can build so we end up selling other things, some of which have much more negative effect on our future income. But we cannot do one without the other: the books must balance.
I posted yesterday about things I noticed during my recent stay on America’s west coast. An occasional PBer who lives in the US got in touch and said that I shouldn’t have been so negative. For the sake of balance, then, and because I’m jetlagged, here are some random great things I have noticed about that wonderful part of the world on this and previous trips: - The great outdoors: simply better than ours, especially in California. - Weather: difficult to beat, if like me you like sunshine and warmth. - Houses: bigger and cheaper than ours. Googling, I find an average price/sq ft of around $122 for American residential property, around half or a third of ours. And, comparing like with like, London is about 20-30% more expensive per square foot than San Francisco - Bin collections: American cities still collect reasonable amounts of domestic rubbish (‘garbage’), meaning that throwing away a TV or similar isn’t a major headache - Political system: far from perfect, but unlike us they have made direct democracy and federalism work - Donald Trump isn’t the President any more: ‘nuff said - GM food: they don’t have our bizarre and unscientific prejudice against it - Enterprise culture: again, better than ours, despite Mrs Thatcher’s go at transplanting it. Do these counterbalance things like paying for healthcare, liberal gun laws and poorer public transport?
Mostly agree with this, except I'm not 100% convinced the direct democracy bit is true.
In California, the voters were quite happy to pass ballot initiatives that simultaneously increased spending, required a balanced budget and mandated no changes to property taxes.
Pity the poor Governor who is trying to do everything he is asked to do.
They also passed a Bill against ‘gig’ workers, then passed a Proposition exempting ‘ride share’ drivers - leaving all the comedians, journalists and other genuinely self-employed screwed. The original bill was of course designed to target the fake taxi companies, but now it applied to all the unintended consequences but not to Uber. Uber, of course, spent $200m on lobbying for the exemption.
That’s a broken democracy. #RecallGavinNewsom
I'm no Newsom fan, but the recall is equally ridiculous. 46 candidates for Governor, and the leader in the polls (Larry Elder) is in the low teens.
It's highly likely that the vote leader on the second question in the recall election will be Blank.
It is unclear for me why a recalled candidate cannot run again. He's no longer in the position, sure, but if he's the most popular man for the job, surely he should get it?
He’s been weighed in the balance but found wanting.
But imagine how it would look: a majority of Californians vote for him to be dismissed. He is then re-elected on 20% of the vote.
Then someone else should have gotten 21%, or 48%, that's democracy, most votes wins. 🤷♂️
Its worth noting that the only time a recall has actually been successful versus a Californian Governor, the replacement (the Governator) won more votes than were cast against recalling the incumbent.
I posted yesterday about things I noticed during my recent stay on America’s west coast. An occasional PBer who lives in the US got in touch and said that I shouldn’t have been so negative. For the sake of balance, then, and because I’m jetlagged, here are some random great things I have noticed about that wonderful part of the world on this and previous trips: - The great outdoors: simply better than ours, especially in California. - Weather: difficult to beat, if like me you like sunshine and warmth. - Houses: bigger and cheaper than ours. Googling, I find an average price/sq ft of around $122 for American residential property, around half or a third of ours. And, comparing like with like, London is about 20-30% more expensive per square foot than San Francisco - Bin collections: American cities still collect reasonable amounts of domestic rubbish (‘garbage’), meaning that throwing away a TV or similar isn’t a major headache - Political system: far from perfect, but unlike us they have made direct democracy and federalism work - Donald Trump isn’t the President any more: ‘nuff said - GM food: they don’t have our bizarre and unscientific prejudice against it - Enterprise culture: again, better than ours, despite Mrs Thatcher’s go at transplanting it. Do these counterbalance things like paying for healthcare, liberal gun laws and poorer public transport?
Mostly agree with this, except I'm not 100% convinced the direct democracy bit is true.
In California, the voters were quite happy to pass ballot initiatives that simultaneously increased spending, required a balanced budget and mandated no changes to property taxes.
Pity the poor Governor who is trying to do everything he is asked to do.
They also passed a Bill against ‘gig’ workers, then passed a Proposition exempting ‘ride share’ drivers - leaving all the comedians, journalists and other genuinely self-employed screwed. The original bill was of course designed to target the fake taxi companies, but now it applied to all the unintended consequences but not to Uber. Uber, of course, spent $200m on lobbying for the exemption.
That’s a broken democracy. #RecallGavinNewsom
I'm no Newsom fan, but the recall is equally ridiculous. 46 candidates for Governor, and the leader in the polls (Larry Elder) is in the low teens.
It's highly likely that the vote leader on the second question in the recall election will be Blank.
It is unclear for me why a recalled candidate cannot run again. He's no longer in the position, sure, but if he's the most popular man for the job, surely he should get it?
He’s been weighed in the balance but found wanting.
But imagine how it would look: a majority of Californians vote for him to be dismissed. He is then re-elected on 20% of the vote.
A more sensible way would be to have a separate run off election, because it is entirely possible that someone who would lose a head-to-head against almost any other candidate becomes Governor.
Who will, in turn, be recalled.
While the voters continue to pass ballot propositions that are mutually contradictory.
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
I paid 19% on my first mortgage, shortly after Thatcher became PM.
Border Force authorised to turn back migrants, 50 years of Genesis and Radacando! Another day in Normalania.
Will there now be a race between BF vessels and the RNLI to reach the boat people?
I should imagine that the Border Force boats will patrol the maritime boundary to try to catch the dinghies, the occupants of the dinghies will throw themselves into the water (or just fall in when the authorities try to shunt or tow their pathetic, flimsy vessels back towards France,) and the Border Force officers will then be obliged to fish them out.
Any that get through the screen will then be met by RNLI welcome committees instead. So, it'll make no difference to anything. Just one more example of something-must-be-done-ism.
I suspect either the Border Force won't do much, because they won't agree with it, or the people smugglers and migrants (who aren't stupid) will adjust their tactics very quickly as you suggest.
Fundamentally, the French are being very uncooperative and stubborn over this as today's Times article demonstrates - basically, the only thing they do is send the odd gendarmerie out to try and catch them on the beach but they miss most of them and it's a giant Gallic shrug once they launch, unless they call for help (which they never do of course because they want to get to the UK).
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
It seems that people start to run out of income when they spend more than 40% of income on housing. If interest rates drop then affordability goes up, and prices with them.
To illustrate: in 1996 interest rates had halved from the high rates of the early nineties. I bought a nice 3 bed semi for £85 000 which I sold 5 years later for £165 000. That halving of interest rates doubled house prices in 5 years in Leicester.
House prices have shot up because of the drop in interest rates, with the percentage of income going on servicing that debt hardly changing by much at all, though the absolute scale of the debt is much larger as a percentage of income. Hence mortgages of 6 or 7 times incomes are affordable, roughly twice what we used to have.
The problem comes that increasing interest rates back to historic norms (a couple of percent over inflation rate) will hurt a lot of current mortgage holders as it will push them beyond that 40% ish share of their income. We can only therefore move interest rates back up slowly, but they cannot remain so low forever. It is massively distorting the economy, making saving pointless.
That is exactly the problem. Printing money has caused asset price inflation
The trouble is that the effects, whilst deeply damaging, are slow and pernicious, whereas the effects of not going down the QE route were anticipated to be quick and severe. And no-one really understands that many of the growing problems we face - rising inequality, inter-generational unfairness - are down to QE in the first place. So for politicians it remains such an attractive option.
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
I paid 19% on my first mortgage, shortly after Thatcher became PM.
Yes, I remember my dad being very squeezed at the same time.
There was much more inflation though, and the principle from the Seventies to the Noughties was to buy the most expensive house possible, pay eye watering mortgages and let inflation reduce the mortgage to affordable levels after a number of years. It worked to a fashion for both me and my dad.
Nowadays there are eye-watering mortgages, but no inflation to reduce the debt, so they stay eye watering.
When we bought our current house the mortgage was right on the edge of affordability and we really struggled towards the end of each month but within a few years some modest inflation and increased nominal earnings made it very affordable and we were able to start paying down the capital. My daughter has been determined to overpay her mortgage and reduce the debt too but it has been so much harder for her with the very slow increases in nominal wages.
Yes, for decades I too was running a very tight budget to pay the mortgage, as every few years when it became more affordable, I would trade up to a more expensive house. Hence property ladder.
That ladder no longer exists, as inflation was required in order to move rungs, so now they are much further apart. Not only to people struggle to buy in the first place, but struggle to trade up.
I think half the houses in the country are owned outright, and a considerable number must have very small residual mortgages, so while mortgage costs matter a lot to youngsters it doesn't matter to all of us.
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
I paid 19% on my first mortgage, shortly after Thatcher became PM.
Yes, I remember my dad being very squeezed at the same time.
There was much more inflation though, and the principle from the Seventies to the Noughties was to buy the most expensive house possible, pay eye watering mortgages and let inflation reduce the mortgage to affordable levels after a number of years. It worked to a fashion for both me and my dad.
Nowadays there are eye-watering mortgages, but no inflation to reduce the debt, so they stay eye watering.
When we bought our current house the mortgage was right on the edge of affordability and we really struggled towards the end of each month but within a few years some modest inflation and increased nominal earnings made it very affordable and we were able to start paying down the capital. My daughter has been determined to overpay her mortgage and reduce the debt too but it has been so much harder for her with the very slow increases in nominal wages.
The more I think about the more angry I am about the amount of tax young people are paying.
And I find lots of young people really annoying, particularly their narcissism, veganism and off-the-scale Wokeness - but it's still totally wrong and they don't deserve it.
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
I paid 19% on my first mortgage, shortly after Thatcher became PM.
Yes, I remember my dad being very squeezed at the same time.
There was much more inflation though, and the principle from the Seventies to the Noughties was to buy the most expensive house possible, pay eye watering mortgages and let inflation reduce the mortgage to affordable levels after a number of years. It worked to a fashion for both me and my dad.
Nowadays there are eye-watering mortgages, but no inflation to reduce the debt, so they stay eye watering.
When we bought our current house the mortgage was right on the edge of affordability and we really struggled towards the end of each month but within a few years some modest inflation and increased nominal earnings made it very affordable and we were able to start paying down the capital. My daughter has been determined to overpay her mortgage and reduce the debt too but it has been so much harder for her with the very slow increases in nominal wages.
The more I think about the more angry I am about the amount of tax young people are paying.
And I find lots of young people really annoying, particularly their narcissism, veganism and off-the-scale Wokeness - but it's still totally wrong and they don't deserve it.
The biggest problem for me, which is becoming more and more of a feature now, is student debt. It increases their tax burden by 7-8% compared with lucky sods like me who didn't have to take on such loans for my education. The consequences of this on their life chances are horrendous. Reducing that burden should be a priority for any civilised government but there are so many priorities and so little money.
The next step with the boats will be to "accidentally" sink them and then blame the "very tragic" drowning of the migrants on the evil French.
What is sadder is that many many Mail and Express readers are already calling for this strategy.
I have Greek friends with knowledge of their Coastguard. Some of their vessels apparently are known to do this, though more on their own initiative than under direction
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
I paid 19% on my first mortgage, shortly after Thatcher became PM.
Yes, I remember my dad being very squeezed at the same time.
There was much more inflation though, and the principle from the Seventies to the Noughties was to buy the most expensive house possible, pay eye watering mortgages and let inflation reduce the mortgage to affordable levels after a number of years. It worked to a fashion for both me and my dad.
Nowadays there are eye-watering mortgages, but no inflation to reduce the debt, so they stay eye watering.
When we bought our current house the mortgage was right on the edge of affordability and we really struggled towards the end of each month but within a few years some modest inflation and increased nominal earnings made it very affordable and we were able to start paying down the capital. My daughter has been determined to overpay her mortgage and reduce the debt too but it has been so much harder for her with the very slow increases in nominal wages.
Yes, for decades I too was running a very tight budget to pay the mortgage, as every few years when it became more affordable, I would trade up to a more expensive house. Hence property ladder.
That ladder no longer exists, as inflation was required in order to move rungs, so now they are much further apart. Not only to people struggle to buy in the first place, but struggle to trade up.
I think half the houses in the country are owned outright, and a considerable number must have very small residual mortgages, so while mortgage costs matter a lot to youngsters it doesn't matter to all of us.
I have the same experience. I flipped my first flat and then our first married home to buy this house within 5 years. We have now been here 30 years and when we move we will be going back down that ladder.
As I have bored on about quite a lot recently excessive consumption and poor investment leading to a major trade deficit is our largest economic problem by far. We need to recalibrate our economy by reducing consumer debt, reducing government debt, encouraging savings and utilising those savings as investment.
I think that extremely low interest rates such as we have at the moment are a positive hindrance in most of these objectives. Consumer debt is generally cheap (not for those who fall behind on credit cards of course) and saving seems pointless. In theory very low interest rates should make investment more attractive since the cost of capital is low but what seems to happen is that existing businesses which are using sites survive and this reduces investment opportunities.
Low interest rates have also distorted asset prices as the expected rate of return on an asset falls. This has greatly increased wealth inequality and hugely distorted the housing market making it more difficult for young people to become Conservative voters.
So we need higher interest rates. Given that we have had these distortions ever since 2008 this is going to be a very difficult and painful challenge but the BoE should be getting on with it not only increasing base rates by 0.25% but also by being clear about the direction of travel. We are currently having what is probably a blip in inflation. Rather than "seeing through it" the Bank should be taking the opportunity to move interest rates up.
And we need to discourage foreign takeovers of British business. Recently the government has paid lip-service to this but rarely acts. It is not just about security. If ACME plc is bought by Americans, say, its IP heads across the Atlantic, followed by its profits, and in any downturn it will be first to close in order to protect operations back home. None of which helps the trade deficit!
If we reduce our trade deficit this will reduce. At the moment the UK needs to sell £85bn of assets every year to foreigners to balance the books. Even in London there are only so many flats that you can build so we end up selling other things, some of which have much more negative effect on our future income. But we cannot do one without the other: the books must balance.
Meanwhile, German imports to the UK rise and UK exports to Germany fall.
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
I paid 19% on my first mortgage, shortly after Thatcher became PM.
Yes, I remember my dad being very squeezed at the same time.
There was much more inflation though, and the principle from the Seventies to the Noughties was to buy the most expensive house possible, pay eye watering mortgages and let inflation reduce the mortgage to affordable levels after a number of years. It worked to a fashion for both me and my dad.
Nowadays there are eye-watering mortgages, but no inflation to reduce the debt, so they stay eye watering.
When we bought our current house the mortgage was right on the edge of affordability and we really struggled towards the end of each month but within a few years some modest inflation and increased nominal earnings made it very affordable and we were able to start paying down the capital. My daughter has been determined to overpay her mortgage and reduce the debt too but it has been so much harder for her with the very slow increases in nominal wages.
I made a complete mess of my life, mainly unemployed for two decades, and bought a hovel on a fixed rate mortgage just before interest rates fell to zero. But one day I'd picked out four horses before disaster struck a customer at work so the first horse won unbacked. As I dialled back to a conference call, I was struggling to back the rest in a £5 trixie, total cost £20. Anyway they all won, to return about £7,000. But when I logged in that night, Corals had paid £30,000. In my haste, and thinking of the total planned stake, I'd accidentally placed a £20 trixie. Goodbye mortgage.
So get your daughter down to the betting shop. What could go wrong?
Except I should not have paid off the mortgage at all, but invested in, well, almost anything. Or taken a month following then PB regular and freelance travel writer @SeanT round 3-star restaurants and 5-star hotels.
Border Force authorised to turn back migrants, 50 years of Genesis and Radacando! Another day in Normalania.
Will there now be a race between BF vessels and the RNLI to reach the boat people?
I should imagine that the Border Force boats will patrol the maritime boundary to try to catch the dinghies, the occupants of the dinghies will throw themselves into the water (or just fall in when the authorities try to shunt or tow their pathetic, flimsy vessels back towards France,) and the Border Force officers will then be obliged to fish them out.
Any that get through the screen will then be met by RNLI welcome committees instead. So, it'll make no difference to anything. Just one more example of something-must-be-done-ism.
Its stupid and dangerous to be messing around with people in the water. Anyone in the water should be removed from the water.
The only sustainable way to deal with it is to determine what happens next once they're out of the water. If they know they'll end up in the UK, people will continue doing it, risking more lives on a very dangerous and deadly crossing.
If they know that they'll end up in somewhere like Nauru or Papua New Guinea as has been done by the Australian Labor and Liberal governments, or Rwanda as has been proposed by Denmark's Social Democrat government, then that would actually stop the dinghies getting in the water in the first place.
Remain supporters particularly keen on it before it was actually introduced
More evidence of politics becoming like football. Plenty of people in favour of the policy, now appear to be against it purely because it’s a Conservative proposal. Plenty of Conservatives were previously against it but now standing behind the government.
NI was still the wrong tax to increase IMHO, and I’m surprised that not one junior bag-carrier in government saw fit to resign.
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
I paid 19% on my first mortgage, shortly after Thatcher became PM.
Yes, I remember my dad being very squeezed at the same time.
There was much more inflation though, and the principle from the Seventies to the Noughties was to buy the most expensive house possible, pay eye watering mortgages and let inflation reduce the mortgage to affordable levels after a number of years. It worked to a fashion for both me and my dad.
Nowadays there are eye-watering mortgages, but no inflation to reduce the debt, so they stay eye watering.
When we bought our current house the mortgage was right on the edge of affordability and we really struggled towards the end of each month but within a few years some modest inflation and increased nominal earnings made it very affordable and we were able to start paying down the capital. My daughter has been determined to overpay her mortgage and reduce the debt too but it has been so much harder for her with the very slow increases in nominal wages.
I made a complete mess of my life, mainly unemployed for two decades, and bought a hovel on a fixed rate mortgage just before interest rates fell to zero. But one day I'd picked out four horses before disaster struck a customer at work so the first horse won unbacked. As I dialled back to a conference call, I was struggling to back the rest in a £5 trixie, total cost £20. Anyway they all won, to return about £7,000. But when I logged in that night, Corals had paid £30,000. In my haste, and thinking of the total planned stake, I'd accidentally placed a £20 trixie. Goodbye mortgage.
So get your daughter down to the betting shop. What could go wrong?
Except I should not have paid off the mortgage at all, but invested in, well, almost anything. Or taken a month following then PB regular and freelance travel writer @SeanT round 3-star restaurants and 5-star hotels.
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
I paid 19% on my first mortgage, shortly after Thatcher became PM.
Yes, I remember my dad being very squeezed at the same time.
There was much more inflation though, and the principle from the Seventies to the Noughties was to buy the most expensive house possible, pay eye watering mortgages and let inflation reduce the mortgage to affordable levels after a number of years. It worked to a fashion for both me and my dad.
Nowadays there are eye-watering mortgages, but no inflation to reduce the debt, so they stay eye watering.
When we bought our current house the mortgage was right on the edge of affordability and we really struggled towards the end of each month but within a few years some modest inflation and increased nominal earnings made it very affordable and we were able to start paying down the capital. My daughter has been determined to overpay her mortgage and reduce the debt too but it has been so much harder for her with the very slow increases in nominal wages.
The more I think about the more angry I am about the amount of tax young people are paying.
And I find lots of young people really annoying, particularly their narcissism, veganism and off-the-scale Wokeness - but it's still totally wrong and they don't deserve it.
How many young people do you know? I think of my kids and their mates, as well as the under-40s I work with, and I don’t recognise your description of them. Mostly they are just trying to make their way in a world created by and run for people much older than them.
Remain supporters particularly keen on it before it was actually introduced
It's a warning to take policy-based opinion polls with a massive pinch of salt.
However, this Government makes its decisions by opinion poll and focus group so it doesn't surprise me.
It’s not even a one off poll, there have been three, over seven years, three different Tory leaders, all with a majority saying this is an idea they support
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
I paid 19% on my first mortgage, shortly after Thatcher became PM.
Yes, I remember my dad being very squeezed at the same time.
There was much more inflation though, and the principle from the Seventies to the Noughties was to buy the most expensive house possible, pay eye watering mortgages and let inflation reduce the mortgage to affordable levels after a number of years. It worked to a fashion for both me and my dad.
Nowadays there are eye-watering mortgages, but no inflation to reduce the debt, so they stay eye watering.
When we bought our current house the mortgage was right on the edge of affordability and we really struggled towards the end of each month but within a few years some modest inflation and increased nominal earnings made it very affordable and we were able to start paying down the capital. My daughter has been determined to overpay her mortgage and reduce the debt too but it has been so much harder for her with the very slow increases in nominal wages.
Yes, for decades I too was running a very tight budget to pay the mortgage, as every few years when it became more affordable, I would trade up to a more expensive house. Hence property ladder.
That ladder no longer exists, as inflation was required in order to move rungs, so now they are much further apart. Not only to people struggle to buy in the first place, but struggle to trade up.
I think half the houses in the country are owned outright, and a considerable number must have very small residual mortgages, so while mortgage costs matter a lot to youngsters it doesn't matter to all of us.
I have the same experience. I flipped my first flat and then our first married home to buy this house within 5 years. We have now been here 30 years and when we move we will be going back down that ladder.
Yes, I will trade down in time, but am a decade or so off calling it a day. One problem is that I have got rather used to being in a 4 bed house with several reception rooms, large kitchen-diner etc. The boys are only occassional guests now, and Mrs Foxy and I were very content with a 2 up 2 down terraced house when we were newlyweds, but I just don't think that we could live like that now.
I am not entirely convinced by the methodology, but food for thought here. $51 Trillion is several multiples of the US national debt:
Racial and ethnic inequities have cost the U.S. economy some $51 trillion in lost output since 1990, San Francisco Federal Reserve President Mary Daly said, citing data from a paper she and three co-authors will present at The Brookings Institution https://t.co/yU1cOn6KXehttps://t.co/VY1OvmfPUV
Which is almost certainly complete bollocks.
What you're seeing here is an example of anchoring, so the authors can maximise the amount of federal and state funding redirected towards their favoured community outreach and social programmes.
Border Force authorised to turn back migrants, 50 years of Genesis and Radacando! Another day in Normalania.
Will there now be a race between BF vessels and the RNLI to reach the boat people?
I should imagine that the Border Force boats will patrol the maritime boundary to try to catch the dinghies, the occupants of the dinghies will throw themselves into the water (or just fall in when the authorities try to shunt or tow their pathetic, flimsy vessels back towards France,) and the Border Force officers will then be obliged to fish them out.
Any that get through the screen will then be met by RNLI welcome committees instead. So, it'll make no difference to anything. Just one more example of something-must-be-done-ism.
Its stupid and dangerous to be messing around with people in the water. Anyone in the water should be removed from the water.
The only sustainable way to deal with it is to determine what happens next once they're out of the water. If they know they'll end up in the UK, people will continue doing it, risking more lives on a very dangerous and deadly crossing.
If they know that they'll end up in somewhere like Nauru or Papua New Guinea as has been done by the Australian Labor and Liberal governments, or Rwanda as has been proposed by Denmark's Social Democrat government, then that would actually stop the dinghies getting in the water in the first place.
Yes, but as I understand it neither PNG nor Rwanda are willing.
Good morning everyone. Cooler and cloudier today, and I've got a new experience to come; Mrs C and I are going on a bus.
I've got an appointment at the local hospital early this afternoon, and parking there being what it is, the only sensible way of getting there is to drive to a Park 'n Ride and get the bus from there. First time we've done such a thing since February 2020!
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
I paid 19% on my first mortgage, shortly after Thatcher became PM.
Yes, I remember my dad being very squeezed at the same time.
There was much more inflation though, and the principle from the Seventies to the Noughties was to buy the most expensive house possible, pay eye watering mortgages and let inflation reduce the mortgage to affordable levels after a number of years. It worked to a fashion for both me and my dad.
Nowadays there are eye-watering mortgages, but no inflation to reduce the debt, so they stay eye watering.
When we bought our current house the mortgage was right on the edge of affordability and we really struggled towards the end of each month but within a few years some modest inflation and increased nominal earnings made it very affordable and we were able to start paying down the capital. My daughter has been determined to overpay her mortgage and reduce the debt too but it has been so much harder for her with the very slow increases in nominal wages.
I made a complete mess of my life, mainly unemployed for two decades, and bought a hovel on a fixed rate mortgage just before interest rates fell to zero. But one day I'd picked out four horses before disaster struck a customer at work so the first horse won unbacked. As I dialled back to a conference call, I was struggling to back the rest in a £5 trixie, total cost £20. Anyway they all won, to return about £7,000. But when I logged in that night, Corals had paid £30,000. In my haste, and thinking of the total planned stake, I'd accidentally placed a £20 trixie. Goodbye mortgage.
So get your daughter down to the betting shop. What could go wrong?
Except I should not have paid off the mortgage at all, but invested in, well, almost anything. Or taken a month following then PB regular and freelance travel writer @SeanT round 3-star restaurants and 5-star hotels.
Great story.
Don't do this.
The putting £20 on the horses bit, or the paying off your mortgage with an unexpected £30k windfall bit?
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
It seems that people start to run out of income when they spend more than 40% of income on housing. If interest rates drop then affordability goes up, and prices with them.
To illustrate: in 1996 interest rates had halved from the high rates of the early nineties. I bought a nice 3 bed semi for £85 000 which I sold 5 years later for £165 000. That halving of interest rates doubled house prices in 5 years in Leicester.
House prices have shot up because of the drop in interest rates, with the percentage of income going on servicing that debt hardly changing by much at all, though the absolute scale of the debt is much larger as a percentage of income. Hence mortgages of 6 or 7 times incomes are affordable, roughly twice what we used to have.
The problem comes that increasing interest rates back to historic norms (a couple of percent over inflation rate) will hurt a lot of current mortgage holders as it will push them beyond that 40% ish share of their income. We can only therefore move interest rates back up slowly, but they cannot remain so low forever. It is massively distorting the economy, making saving pointless.
But, you've hit the nail on the head. The BoE doesn't really have the tool of raising interest rates to combat inflation anymore because people are so invested in their homes according to the norms of the last 12 years that it would bankrupt and crash the whole economy.
They could tick up slowly to 2-3% (and I think they should) but I doubt they'll go much higher than that for decades now.
Remain supporters particularly keen on it before it was actually introduced
More evidence of politics becoming like football. Plenty of people in favour of the policy, now appear to be against it purely because it’s a Conservative proposal. Plenty of Conservatives were previously against it but now standing behind the government.
NI was still the wrong tax to increase IMHO, and I’m surprised that not one junior bag-carrier in government saw fit to resign.
Yes indeed. People are so desperate for their side to be in power, and politicians so desperate to be seen to be appalled, that they are incandescent when their rivals do something they support
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
I paid 19% on my first mortgage, shortly after Thatcher became PM.
Yes, I remember my dad being very squeezed at the same time.
There was much more inflation though, and the principle from the Seventies to the Noughties was to buy the most expensive house possible, pay eye watering mortgages and let inflation reduce the mortgage to affordable levels after a number of years. It worked to a fashion for both me and my dad.
Nowadays there are eye-watering mortgages, but no inflation to reduce the debt, so they stay eye watering.
When we bought our current house the mortgage was right on the edge of affordability and we really struggled towards the end of each month but within a few years some modest inflation and increased nominal earnings made it very affordable and we were able to start paying down the capital. My daughter has been determined to overpay her mortgage and reduce the debt too but it has been so much harder for her with the very slow increases in nominal wages.
Yes, for decades I too was running a very tight budget to pay the mortgage, as every few years when it became more affordable, I would trade up to a more expensive house. Hence property ladder.
That ladder no longer exists, as inflation was required in order to move rungs, so now they are much further apart. Not only to people struggle to buy in the first place, but struggle to trade up.
I think half the houses in the country are owned outright, and a considerable number must have very small residual mortgages, so while mortgage costs matter a lot to youngsters it doesn't matter to all of us.
I pointed this out to MaxPB years ago - and he claimed at the time that it was still true now (its not). The thing is that it was, wage inflation attached to inflation meant that you £40,000 house bought in 1981 was worth £80,000 and wage inflation meant that your £35,000 was now 15% of your income not 30%. That gave you both extra equity and extra income to move to up the ladder.
One thing I should mention regarding your story about 1995 to 2000 is that during that time Banks also loosened their lending criteria from the old 3+1 format to 3 or even 4 times joint income. That explains a lot of the increase in places further north (albeit around here it occurred in 2003).
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I'm not sure a run on the pound would be the catalyst, but what about a situation where Conservative voters (i.e. pensioners) see their savings eroded by inflation? (Which, I admit would happen if there was a run on the pound.)
And don't forget, the BoE is obliged to try and keep inflation at 2%. What if it were 7 or 8 or 12 or 15%?
I'd have thought the biggest impact on interest rates will be where they stand in comparison to rates in the US/Eurozone etc.
For those seeking high yields there's basically nowhere to go. So unless the US decides to lift towards 'normalisation' the new normal will stay at rock bottom rates.
The problem is, of course, that ultra low rates encourages the better off to lever up and play the carry trade, driving the price of assets ever higher and widening income inequalities.
Plus, of course, it leaves a ton of zombie businesses alive.
Higher productivity plus zombie businesses being put in their coffins are perhaps the future we need, given that we essentially have full employment and a large productivity deficit.
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
I paid 19% on my first mortgage, shortly after Thatcher became PM.
Yes, I remember my dad being very squeezed at the same time.
There was much more inflation though, and the principle from the Seventies to the Noughties was to buy the most expensive house possible, pay eye watering mortgages and let inflation reduce the mortgage to affordable levels after a number of years. It worked to a fashion for both me and my dad.
Nowadays there are eye-watering mortgages, but no inflation to reduce the debt, so they stay eye watering.
When we bought our current house the mortgage was right on the edge of affordability and we really struggled towards the end of each month but within a few years some modest inflation and increased nominal earnings made it very affordable and we were able to start paying down the capital. My daughter has been determined to overpay her mortgage and reduce the debt too but it has been so much harder for her with the very slow increases in nominal wages.
The more I think about the more angry I am about the amount of tax young people are paying.
And I find lots of young people really annoying, particularly their narcissism, veganism and off-the-scale Wokeness - but it's still totally wrong and they don't deserve it.
How many young people do you know? I think of my kids and their mates, as well as the under-40s I work with, and I don’t recognise your description of them. Mostly they are just trying to make their way in a world created by and run for people much older than them.
Lots. I manage many in my job and come across them in my day-to-day life.
You don't recognise my description because you're a Lefty and you agree with things like radical ecosocialism and Wokeness so don't even register it.
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
It seems that people start to run out of income when they spend more than 40% of income on housing. If interest rates drop then affordability goes up, and prices with them.
To illustrate: in 1996 interest rates had halved from the high rates of the early nineties. I bought a nice 3 bed semi for £85 000 which I sold 5 years later for £165 000. That halving of interest rates doubled house prices in 5 years in Leicester.
House prices have shot up because of the drop in interest rates, with the percentage of income going on servicing that debt hardly changing by much at all, though the absolute scale of the debt is much larger as a percentage of income. Hence mortgages of 6 or 7 times incomes are affordable, roughly twice what we used to have.
The problem comes that increasing interest rates back to historic norms (a couple of percent over inflation rate) will hurt a lot of current mortgage holders as it will push them beyond that 40% ish share of their income. We can only therefore move interest rates back up slowly, but they cannot remain so low forever. It is massively distorting the economy, making saving pointless.
But, you've hit the nail on the head. The BoE doesn't really have the tool of raising interest rates to combat inflation anymore because people are so invested in their homes according to the norms of the last 12 years that it would bankrupt and crash the whole economy.
They could tick up slowly to 2-3% (and I think they should) but I doubt they'll go much higher than that for decades now.
My expectation is that in 3-5 years time they will have no choice in the matter as stagflation hits.
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
It seems that people start to run out of income when they spend more than 40% of income on housing. If interest rates drop then affordability goes up, and prices with them.
To illustrate: in 1996 interest rates had halved from the high rates of the early nineties. I bought a nice 3 bed semi for £85 000 which I sold 5 years later for £165 000. That halving of interest rates doubled house prices in 5 years in Leicester.
House prices have shot up because of the drop in interest rates, with the percentage of income going on servicing that debt hardly changing by much at all, though the absolute scale of the debt is much larger as a percentage of income. Hence mortgages of 6 or 7 times incomes are affordable, roughly twice what we used to have.
The problem comes that increasing interest rates back to historic norms (a couple of percent over inflation rate) will hurt a lot of current mortgage holders as it will push them beyond that 40% ish share of their income. We can only therefore move interest rates back up slowly, but they cannot remain so low forever. It is massively distorting the economy, making saving pointless.
But, you've hit the nail on the head. The BoE doesn't really have the tool of raising interest rates to combat inflation anymore because people are so invested in their homes according to the norms of the last 12 years that it would bankrupt and crash the whole economy.
They could tick up slowly to 2-3% (and I think they should) but I doubt they'll go much higher than that for decades now.
And yet the crazy thing is that house price/earnings multiples are no higher now at ~0% base rates than they were when base rates were ~7%
I don't think there's a snowball's chance in hell of seeing 7% base rates again any time soon though even though that's what they were when the house prices rose.
I am not entirely convinced by the methodology, but food for thought here. $51 Trillion is several multiples of the US national debt:
Racial and ethnic inequities have cost the U.S. economy some $51 trillion in lost output since 1990, San Francisco Federal Reserve President Mary Daly said, citing data from a paper she and three co-authors will present at The Brookings Institution https://t.co/yU1cOn6KXehttps://t.co/VY1OvmfPUV
Which is almost certainly complete bollocks.
What you're seeing here is an example of anchoring, so the authors can maximise the amount of federal and state funding redirected towards their favoured community outreach and social programmes.
I think that we have lots of people whose talents are squandered, though obviously different issues to America. I think though that marginalised communities here, which are often white, contain a lot of under utilised talent.
Getting them producing at the same rate as their peers in other communities would go a long way to solving our tax issues.
I can't see it happening though while the government is so keen on protecting inheritances.
Border Force authorised to turn back migrants, 50 years of Genesis and Radacando! Another day in Normalania.
Will there now be a race between BF vessels and the RNLI to reach the boat people?
I should imagine that the Border Force boats will patrol the maritime boundary to try to catch the dinghies, the occupants of the dinghies will throw themselves into the water (or just fall in when the authorities try to shunt or tow their pathetic, flimsy vessels back towards France,) and the Border Force officers will then be obliged to fish them out.
Any that get through the screen will then be met by RNLI welcome committees instead. So, it'll make no difference to anything. Just one more example of something-must-be-done-ism.
Its stupid and dangerous to be messing around with people in the water. Anyone in the water should be removed from the water.
The only sustainable way to deal with it is to determine what happens next once they're out of the water. If they know they'll end up in the UK, people will continue doing it, risking more lives on a very dangerous and deadly crossing.
If they know that they'll end up in somewhere like Nauru or Papua New Guinea as has been done by the Australian Labor and Liberal governments, or Rwanda as has been proposed by Denmark's Social Democrat government, then that would actually stop the dinghies getting in the water in the first place.
The solution is to do a deal with France where we and they intercept them all and land them back on French beaches. They will then never try again.
The quid pro quo for France is less "pull" for them into the Calais area, lots of money to help them out, and border force and RN boats in the Med to help them out in turn - it needs someone who can really flatter, understand and build strong relationships with the huffy and proud French.
Border Force authorised to turn back migrants, 50 years of Genesis and Radacando! Another day in Normalania.
Will there now be a race between BF vessels and the RNLI to reach the boat people?
I should imagine that the Border Force boats will patrol the maritime boundary to try to catch the dinghies, the occupants of the dinghies will throw themselves into the water (or just fall in when the authorities try to shunt or tow their pathetic, flimsy vessels back towards France,) and the Border Force officers will then be obliged to fish them out.
Any that get through the screen will then be met by RNLI welcome committees instead. So, it'll make no difference to anything. Just one more example of something-must-be-done-ism.
Its stupid and dangerous to be messing around with people in the water. Anyone in the water should be removed from the water.
The only sustainable way to deal with it is to determine what happens next once they're out of the water. If they know they'll end up in the UK, people will continue doing it, risking more lives on a very dangerous and deadly crossing.
If they know that they'll end up in somewhere like Nauru or Papua New Guinea as has been done by the Australian Labor and Liberal governments, or Rwanda as has been proposed by Denmark's Social Democrat government, then that would actually stop the dinghies getting in the water in the first place.
Yes, but as I understand it neither PNG nor Rwanda are willing.
If Rwanda are willing would you be happy for the UK to follow Denmark's Social Democrat government in doing that?
Good morning everyone. Cooler and cloudier today, and I've got a new experience to come; Mrs C and I are going on a bus.
I've got an appointment at the local hospital early this afternoon, and parking there being what it is, the only sensible way of getting there is to drive to a Park 'n Ride and get the bus from there. First time we've done such a thing since February 2020!
Good luck with your bus adventure! I took a bus the other day for the first time in 18 months only to find that the route had changed, so had to hop off and on other buses. But they were all sparsely occupied and I got to my appointment on time.
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
I paid 19% on my first mortgage, shortly after Thatcher became PM.
Yes, I remember my dad being very squeezed at the same time.
There was much more inflation though, and the principle from the Seventies to the Noughties was to buy the most expensive house possible, pay eye watering mortgages and let inflation reduce the mortgage to affordable levels after a number of years. It worked to a fashion for both me and my dad.
Nowadays there are eye-watering mortgages, but no inflation to reduce the debt, so they stay eye watering.
When we bought our current house the mortgage was right on the edge of affordability and we really struggled towards the end of each month but within a few years some modest inflation and increased nominal earnings made it very affordable and we were able to start paying down the capital. My daughter has been determined to overpay her mortgage and reduce the debt too but it has been so much harder for her with the very slow increases in nominal wages.
The more I think about the more angry I am about the amount of tax young people are paying.
And I find lots of young people really annoying, particularly their narcissism, veganism and off-the-scale Wokeness - but it's still totally wrong and they don't deserve it.
How many young people do you know? I think of my kids and their mates, as well as the under-40s I work with, and I don’t recognise your description of them. Mostly they are just trying to make their way in a world created by and run for people much older than them.
Lots. I manage many in my job and come across them in my day-to-day life.
You don't recognise my description because you're a Lefty and you agree with things like radical ecosocialism and Wokeness so don't even register it.
As do I and pre-pandemic most young people I know are far more bothered about going clubbing than they are about any of that.
Its a minority pursuit, but I suspect that you're more involved with that minority.
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
I paid 19% on my first mortgage, shortly after Thatcher became PM.
Yes, I remember my dad being very squeezed at the same time.
There was much more inflation though, and the principle from the Seventies to the Noughties was to buy the most expensive house possible, pay eye watering mortgages and let inflation reduce the mortgage to affordable levels after a number of years. It worked to a fashion for both me and my dad.
Nowadays there are eye-watering mortgages, but no inflation to reduce the debt, so they stay eye watering.
When we bought our current house the mortgage was right on the edge of affordability and we really struggled towards the end of each month but within a few years some modest inflation and increased nominal earnings made it very affordable and we were able to start paying down the capital. My daughter has been determined to overpay her mortgage and reduce the debt too but it has been so much harder for her with the very slow increases in nominal wages.
The more I think about the more angry I am about the amount of tax young people are paying.
And I find lots of young people really annoying, particularly their narcissism, veganism and off-the-scale Wokeness - but it's still totally wrong and they don't deserve it.
How many young people do you know? I think of my kids and their mates, as well as the under-40s I work with, and I don’t recognise your description of them. Mostly they are just trying to make their way in a world created by and run for people much older than them.
Lots. I manage many in my job and come across them in my day-to-day life.
You don't recognise my description because you're a Lefty and you agree with things like radical ecosocialism and Wokeness so don't even register it.
I would register narcissism and veganism. Not agreeing with you does not equate to supporting radical ecosocialism and being Woke!!
Remain supporters particularly keen on it before it was actually introduced
More evidence of politics becoming like football. Plenty of people in favour of the policy, now appear to be against it purely because it’s a Conservative proposal. Plenty of Conservatives were previously against it but now standing behind the government.
NI was still the wrong tax to increase IMHO, and I’m surprised that not one junior bag-carrier in government saw fit to resign.
Yes indeed. People are so desperate for their side to be in power, and politicians so desperate to be seen to be appalled, that they are incandescent when their rivals do something they support
Increasing NI wasn't necessarily wrong; doing so in a way that hit people at the bottom of the pay-scale was. Care workers are going to be worse off. Their employers might be able to negotiate prices with purchasers that could enable wages to rise, but there are a couple of conditionals in there.
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
I paid 19% on my first mortgage, shortly after Thatcher became PM.
Yes, I remember my dad being very squeezed at the same time.
There was much more inflation though, and the principle from the Seventies to the Noughties was to buy the most expensive house possible, pay eye watering mortgages and let inflation reduce the mortgage to affordable levels after a number of years. It worked to a fashion for both me and my dad.
Nowadays there are eye-watering mortgages, but no inflation to reduce the debt, so they stay eye watering.
When we bought our current house the mortgage was right on the edge of affordability and we really struggled towards the end of each month but within a few years some modest inflation and increased nominal earnings made it very affordable and we were able to start paying down the capital. My daughter has been determined to overpay her mortgage and reduce the debt too but it has been so much harder for her with the very slow increases in nominal wages.
Yes, for decades I too was running a very tight budget to pay the mortgage, as every few years when it became more affordable, I would trade up to a more expensive house. Hence property ladder.
That ladder no longer exists, as inflation was required in order to move rungs, so now they are much further apart. Not only to people struggle to buy in the first place, but struggle to trade up.
I think half the houses in the country are owned outright, and a considerable number must have very small residual mortgages, so while mortgage costs matter a lot to youngsters it doesn't matter to all of us.
I pointed this out to MaxPB years ago - and he claimed at the time that it was still true now (its not). The thing is that it was, wage inflation attached to inflation meant that you £40,000 house bought in 1981 was worth £80,000 and wage inflation meant that your £35,000 was now 15% of your income not 30%. That gave you both extra equity and extra income to move to up the ladder.
One thing I should mention regarding your story about 1995 to 2000 is that during that time Banks also loosened their lending criteria from the old 3+1 format to 3 or even 4 times joint income. That explains a lot of the increase in places further north (albeit around here it occurred in 2003).
Inflation is not a bad thing so long as you've got growth and wage inflation underpinning it.
Stagflation, when prices are going up but the economy isn't, is a massive problem.
The end of inflation, primarily brought about by importing everything from China at rock bottom prices as opposed to being brought about by controlling wages domestically, has been a disaster for many people.
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
I paid 19% on my first mortgage, shortly after Thatcher became PM.
Yes, I remember my dad being very squeezed at the same time.
There was much more inflation though, and the principle from the Seventies to the Noughties was to buy the most expensive house possible, pay eye watering mortgages and let inflation reduce the mortgage to affordable levels after a number of years. It worked to a fashion for both me and my dad.
Nowadays there are eye-watering mortgages, but no inflation to reduce the debt, so they stay eye watering.
When we bought our current house the mortgage was right on the edge of affordability and we really struggled towards the end of each month but within a few years some modest inflation and increased nominal earnings made it very affordable and we were able to start paying down the capital. My daughter has been determined to overpay her mortgage and reduce the debt too but it has been so much harder for her with the very slow increases in nominal wages.
Yes, for decades I too was running a very tight budget to pay the mortgage, as every few years when it became more affordable, I would trade up to a more expensive house. Hence property ladder.
That ladder no longer exists, as inflation was required in order to move rungs, so now they are much further apart. Not only to people struggle to buy in the first place, but struggle to trade up.
I think half the houses in the country are owned outright, and a considerable number must have very small residual mortgages, so while mortgage costs matter a lot to youngsters it doesn't matter to all of us.
I pointed this out to MaxPB years ago - and he claimed at the time that it was still true now (its not). The thing is that it was, wage inflation attached to inflation meant that you £40,000 house bought in 1981 was worth £80,000 and wage inflation meant that your £35,000 was now 15% of your income not 30%. That gave you both extra equity and extra income to move to up the ladder.
One thing I should mention regarding your story about 1995 to 2000 is that during that time Banks also loosened their lending criteria from the old 3+1 format to 3 or even 4 times joint income. That explains a lot of the increase in places further north (albeit around here it occurred in 2003).
When I started buying houses it was only the husband's income which was taken into account.
Mr. Thompson, minority pursuits can yield results.
Witness the persecution of anyone with the temerity to draw a 7th century bearded fellow. Or pursuing a foolish energy policy to appease the 'greens' (I'm not opposed to using renewables but wind has obvious problems regarding reliability).
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
I paid 19% on my first mortgage, shortly after Thatcher became PM.
yet yesterday there was so much chat on here of how easy life had been for todays pensioners, they never had to struggle to pay for their property, it was basicaklly given to them without the need for hard work and sacrifice so of course the state should take it away from them.
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
I paid 19% on my first mortgage, shortly after Thatcher became PM.
yet yesterday there was so much chat on here of how easy life had been for todays pensioners, they never had to struggle to pay for their property, it was basicaklly given to them without the need for hard work and sacrifice so of course the state should take it away from them.
Remain supporters particularly keen on it before it was actually introduced
More evidence of politics becoming like football. Plenty of people in favour of the policy, now appear to be against it purely because it’s a Conservative proposal. Plenty of Conservatives were previously against it but now standing behind the government.
NI was still the wrong tax to increase IMHO, and I’m surprised that not one junior bag-carrier in government saw fit to resign.
Yes indeed. People are so desperate for their side to be in power, and politicians so desperate to be seen to be appalled, that they are incandescent when their rivals do something they support
Way too glib. The survey refers to the NHS which people think of as supporting everybody (the fact that a very high proportion of NHS expenditure is incurred on people in the last year of life isn’t widely appreciated). Whereas now the focus - somewhat misleadingly given the facts - is on care for the elderly, and comes after a pandemic during which the young have put so many aspects of their lives on hold for eighteen months to protect the elderly.
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
I paid 19% on my first mortgage, shortly after Thatcher became PM.
yet yesterday there was so much chat on here of how easy life had been for todays pensioners, they never had to struggle to pay for their property, it was basicaklly given to them without the need for hard work and sacrifice so of course the state should take it away from them.
Oh boo hoo. Will nobody think of the pensioners!?
You will be a pensioner one day, so you've been screwed too, unless a future government decides to uprate pensions for the missed 2021 triple lock. I wouldn't count on that.
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
I paid 19% on my first mortgage, shortly after Thatcher became PM.
Yes, I remember my dad being very squeezed at the same time.
There was much more inflation though, and the principle from the Seventies to the Noughties was to buy the most expensive house possible, pay eye watering mortgages and let inflation reduce the mortgage to affordable levels after a number of years. It worked to a fashion for both me and my dad.
Nowadays there are eye-watering mortgages, but no inflation to reduce the debt, so they stay eye watering.
When we bought our current house the mortgage was right on the edge of affordability and we really struggled towards the end of each month but within a few years some modest inflation and increased nominal earnings made it very affordable and we were able to start paying down the capital. My daughter has been determined to overpay her mortgage and reduce the debt too but it has been so much harder for her with the very slow increases in nominal wages.
Yes, for decades I too was running a very tight budget to pay the mortgage, as every few years when it became more affordable, I would trade up to a more expensive house. Hence property ladder.
That ladder no longer exists, as inflation was required in order to move rungs, so now they are much further apart. Not only to people struggle to buy in the first place, but struggle to trade up.
I think half the houses in the country are owned outright, and a considerable number must have very small residual mortgages, so while mortgage costs matter a lot to youngsters it doesn't matter to all of us.
I pointed this out to MaxPB years ago - and he claimed at the time that it was still true now (its not). The thing is that it was, wage inflation attached to inflation meant that you £40,000 house bought in 1981 was worth £80,000 and wage inflation meant that your £35,000 was now 15% of your income not 30%. That gave you both extra equity and extra income to move to up the ladder.
One thing I should mention regarding your story about 1995 to 2000 is that during that time Banks also loosened their lending criteria from the old 3+1 format to 3 or even 4 times joint income. That explains a lot of the increase in places further north (albeit around here it occurred in 2003).
When I started buying houses it was only the husband's income which was taken into account.
Of course, because the wife would leave work to bring up the children, assuming she was not in a job that required her to leave as soon as she married.
Border Force authorised to turn back migrants, 50 years of Genesis and Radacando! Another day in Normalania.
Will there now be a race between BF vessels and the RNLI to reach the boat people?
I should imagine that the Border Force boats will patrol the maritime boundary to try to catch the dinghies, the occupants of the dinghies will throw themselves into the water (or just fall in when the authorities try to shunt or tow their pathetic, flimsy vessels back towards France,) and the Border Force officers will then be obliged to fish them out.
Any that get through the screen will then be met by RNLI welcome committees instead. So, it'll make no difference to anything. Just one more example of something-must-be-done-ism.
Its stupid and dangerous to be messing around with people in the water. Anyone in the water should be removed from the water.
The only sustainable way to deal with it is to determine what happens next once they're out of the water. If they know they'll end up in the UK, people will continue doing it, risking more lives on a very dangerous and deadly crossing.
If they know that they'll end up in somewhere like Nauru or Papua New Guinea as has been done by the Australian Labor and Liberal governments, or Rwanda as has been proposed by Denmark's Social Democrat government, then that would actually stop the dinghies getting in the water in the first place.
The solution is to do a deal with France where we and they intercept them all and land them back on French beaches. They will then never try again.
The quid pro quo for France is less "pull" for them into the Calais area, lots of money to help them out, and border force and RN boats in the Med to help them out in turn - it needs someone who can really flatter, understand and build strong relationships with the huffy and proud French.
That's clearly not Patel.
I am still curious about the number of people who have died crossing the channel in this manner. Yet no one else seems interested.
if it is zero, then they are incredible seamen - we should follow my idea to press them into the Royal Navy.
If it is 10-20% then they are doing as well as the RN estimates for the "natural wastage" for Sea Lion.
Small, over crowded boats, in the tides and currents of the Channel. Add ships the size of office blocks charging around......
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
I paid 19% on my first mortgage, shortly after Thatcher became PM.
yet yesterday there was so much chat on here of how easy life had been for todays pensioners, they never had to struggle to pay for their property, it was basicaklly given to them without the need for hard work and sacrifice so of course the state should take it away from them.
Oh boo hoo. Will nobody think of the pensioners!?
Each generation, and each area, has different challenges! I remember my father, who left S Wales for Essex in the v.early 30's telling me that he'd met dock workers who complained of only being able to get a day or two's work a week. In S Wales that would have been an achievement.
One thing that is further dividing the generational voting is that some Labour MPs seem to be doing really well using TikTok which the Tories don't seem to be touching.
A Tory voting relative who's similarly annoyed as I am about the tax rise just shared this one with me and said that if anything's going to make them change their vote its this kind of thing: https://www.tiktok.com/@zarahsultanamp/video/7005666789178854661
That was something else my dad said which stuck with me a bit - any older person who isn't against this is a person without a conscience and has no empathy for the following generations. It matches up with my experience of posters in favour and against this policy on PB. He was ashamed of his own generation's selfishness tonight, he knows they've had it good with property prices being what they were when they were buying their houses in the 70s and 80s.
Well I am under 40 and disagree.
Yes here in the South housing is more expensive than it has been but I also know I will inherit far more than my parents or grandparents did too. So it works both ways
Phew. That's OK, then.
I don't but if anyone could convince me a 100% inheritance tax would be a good thing, its HYUFD.
People should be able to get on through their own efforts, not rely upon the inheritance from others.
I'm very comfortable with the inheritance thang; less so with self-proclaimed libertarians starting sentences "People should..."
What is wrong with a libertarian saying "People should be able to ..."
As a general phrase that's pretty much the fundamental principle of libertarianism - that people should be able to [insert here]. As opposed to saying they should have to, or should not be able to, saying they should be able to makes it their own choice.
Although (pedant mode) I guess with a 100% inheritance tax they wouldn't be able to choose to rely on an inheritance.
Of course and as I said I don't support that, but HYUFD makes it very tempting to support it. 😉
A 100% inheritance tax would turn the South to Labour, there is no way those on average incomes in London and the South East can afford to buy without an inheritance from parents or grandparents now.
So most would be renters without assets within a generation and reliant on a strong state unless a Tory government got in and reversed it before then
At which point, they might suddenly discover that the problem is the planning system / greenbelt, and vote to abolish it.
If the South ever gets below 50% home ownership, it becomes in most voters interest to demolish the planning system, build like crazy and crash the price of housing.
One of the interesting things about the economics of housing is that being so essential, it's very price sensitive to supply and demand. Ten people fighting over nine houses will result in the richest nine all putting at least more the maximum amount that the tenth man can afford. Ten people fighting over ten houses - whoever is willing to take the crummiest one pays nearly nothing, then it just comes down to the margin people will pay for the nicer ones. You only have to build one extra house to get from one of these scenarios to the other. I wonder how many extra houses it would take to collapse house prices in the SE back to the value of the agricultural land plus the building costs. Maybe a million - possibly half that, especially if it was obvious that anyone who wanted to pay the minimum could just buy a lump of farmland and build on it.
You've touched upon a very important point.
The wealth of Brits is tied up in their properties. If you collapse the housing price, you destroy the savings of millions of people. They will increase their savings rate to compensate (see Spain 2011).
It's a very fine line the government needs to walk.
You say that like its a bad thing. Our savings rate has been too long for a long time and is why we've run a long-term unsustainable structural trade deficit is it not?
Plus most people will never cash out their "savings" on their house, so its a faux saving anyway which completely warps and distorts both our economics and our politics.
A house is first and foremost somewhere to live. Making it harder for people to live, or harder for people to move about going where the job opportunities are etc just diminishes the economy.
And if people didn't think that they had a windfall lined up in a property inheritance then maybe we could have more sensible discussions about these things. The notion that some have that they need an inheritance, to pay for a house, because house prices are high, so therefore we need to keep prices high, so they can get their inheritance . . . is a rather circular and flawed logic. If house prices come down, you could get the house without an inheritance - and you'd no longer "need" that inheritance.
PS the one catastrophic thing with collapsing house prices is if you get negative equity, which is why we need inflation to mask the fall in prices so people don't get negative equity.
Spot on again. You are making a disturbing habit of this.
Apart from the bit about inflation. Philip never writes the explanation as to why rising prices is good for home owners (that interest rates will never go up and that pay will go up too). I think it’s brave to assume that pay would go up, though I think it’s safe to say interest rates will never go above 1.0% ever again.
"I think it’s safe to say interest rates will never go above 1.0% ever again."
I'm happy to offer you pretty good odds on that.
The "ever again" was hyperbole, but in what circumstances do you envisage the BoE putting up rates above 0.75%?
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
I paid 12% on my first mortgage in the nineties. Those were the negative equity days of hangover after the Thatcher House price boom.
I paid 19% on my first mortgage, shortly after Thatcher became PM.
Yes, I remember my dad being very squeezed at the same time.
There was much more inflation though, and the principle from the Seventies to the Noughties was to buy the most expensive house possible, pay eye watering mortgages and let inflation reduce the mortgage to affordable levels after a number of years. It worked to a fashion for both me and my dad.
Nowadays there are eye-watering mortgages, but no inflation to reduce the debt, so they stay eye watering.
When we bought our current house the mortgage was right on the edge of affordability and we really struggled towards the end of each month but within a few years some modest inflation and increased nominal earnings made it very affordable and we were able to start paying down the capital. My daughter has been determined to overpay her mortgage and reduce the debt too but it has been so much harder for her with the very slow increases in nominal wages.
Yes, for decades I too was running a very tight budget to pay the mortgage, as every few years when it became more affordable, I would trade up to a more expensive house. Hence property ladder.
That ladder no longer exists, as inflation was required in order to move rungs, so now they are much further apart. Not only to people struggle to buy in the first place, but struggle to trade up.
I think half the houses in the country are owned outright, and a considerable number must have very small residual mortgages, so while mortgage costs matter a lot to youngsters it doesn't matter to all of us.
I pointed this out to MaxPB years ago - and he claimed at the time that it was still true now (its not). The thing is that it was, wage inflation attached to inflation meant that you £40,000 house bought in 1981 was worth £80,000 and wage inflation meant that your £35,000 was now 15% of your income not 30%. That gave you both extra equity and extra income to move to up the ladder.
One thing I should mention regarding your story about 1995 to 2000 is that during that time Banks also loosened their lending criteria from the old 3+1 format to 3 or even 4 times joint income. That explains a lot of the increase in places further north (albeit around here it occurred in 2003).
When I started buying houses it was only the husband's income which was taken into account.
Of course, because the wife would leave work to bring up the children, assuming she was not in a job that required her to leave as soon as she married.
I was after that time. My mother-in-law, though had to leave her teaching job when she married. As war broke out immediately after their marriage it wasn't long before she was asked to come back!
Border Force authorised to turn back migrants, 50 years of Genesis and Radacando! Another day in Normalania.
Will there now be a race between BF vessels and the RNLI to reach the boat people?
I should imagine that the Border Force boats will patrol the maritime boundary to try to catch the dinghies, the occupants of the dinghies will throw themselves into the water (or just fall in when the authorities try to shunt or tow their pathetic, flimsy vessels back towards France,) and the Border Force officers will then be obliged to fish them out.
Any that get through the screen will then be met by RNLI welcome committees instead. So, it'll make no difference to anything. Just one more example of something-must-be-done-ism.
Its stupid and dangerous to be messing around with people in the water. Anyone in the water should be removed from the water.
The only sustainable way to deal with it is to determine what happens next once they're out of the water. If they know they'll end up in the UK, people will continue doing it, risking more lives on a very dangerous and deadly crossing.
If they know that they'll end up in somewhere like Nauru or Papua New Guinea as has been done by the Australian Labor and Liberal governments, or Rwanda as has been proposed by Denmark's Social Democrat government, then that would actually stop the dinghies getting in the water in the first place.
Yes, but as I understand it neither PNG nor Rwanda are willing.
If Rwanda are willing would you be happy for the UK to follow Denmark's Social Democrat government in doing that?
Why Rwanda? Why not Ramsgate?
What would the function be? To determine whether they have a legitimate claim to be in the UK.
Yes? Stay. No? Whatever the protocol is.
Where this processing happens shouldn't worry you.
Reshuffle betting – politicalbetting.com
Comments
- The great outdoors: simply better than ours, especially in California.
- Weather: difficult to beat, if like me you like sunshine and warmth.
- Houses: bigger and cheaper than ours. Googling, I find an average price/sq ft of around $122 for American residential property, around half or a third of ours. And, comparing like with like, London is about 20-30% more expensive per square foot than San Francisco
- Bin collections: American cities still collect reasonable amounts of domestic rubbish (‘garbage’), meaning that throwing away a TV or similar isn’t a major headache
- Political system: far from perfect, but unlike us they have made direct democracy and federalism work
- Donald Trump isn’t the President any more: ‘nuff said
- GM food: they don’t have our bizarre and unscientific prejudice against it
- Enterprise culture: again, better than ours, despite Mrs Thatcher’s go at transplanting it.
Do these counterbalance things like paying for healthcare, liberal gun laws and poorer public transport?
"The five Conservative MPs who voted against the Health and Social Care levy
Chope, Christopher.
Davies, Philip.
Hudson, Neil.
McVey, Esther.
Redwood, John.
That looks like a very small rebellion indeed, and a crushing triumph for Boris Johnson. However, the Government won the vote by 319 to 248. Tom Newton-Dunn tweeted earlier that a maximum of 46 Conservative MPs therefore didn’t vote with the Government. Which means that 39 Tory backbenchers abstained."
https://www.conservativehome.com/parliament/2021/09/the-five-conservative-mps-who-voted-against-the-health-and-social-care-levy.html
I started work in May 2009. In my working life the base rate has never been above 0.75%. We had serious inflation in 2011 (my commuting costs increased by 40%), and the BoE did nothing. The reality is, there are a lot of people with big mortgages who simply could not afford to pay them if the base rate goes much above 1%.
I think the only circumstances in which the BoE acts is if there is a run on the pound.
In California, the voters were quite happy to pass ballot initiatives that simultaneously increased spending, required a balanced budget and mandated no changes to property taxes.
Pity the poor Governor who is trying to do everything he is asked to do.
How that translates into asset prices is anyone’s guess, but buying them as quickly as possible seems to be the optimal solution at the moment.
And don't forget, the BoE is obliged to try and keep inflation at 2%. What if it were 7 or 8 or 12 or 15%?
For those seeking high yields there's basically nowhere to go. So unless the US decides to lift towards 'normalisation' the new normal will stay at rock bottom rates.
Will there now be a race between BF vessels and the RNLI to reach the boat people?
Plus, of course, it leaves a ton of zombie businesses alive.
That’s a broken democracy. #RecallGavinNewsom
It seems that people start to run out of income when they spend more than 40% of income on housing. If interest rates drop then affordability goes up, and prices with them.
To illustrate: in 1996 interest rates had halved from the high rates of the early nineties. I bought a nice 3 bed semi for £85 000 which I sold 5 years later for £165 000. That halving of interest rates doubled house prices in 5 years in Leicester.
House prices have shot up because of the drop in interest rates, with the percentage of income going on servicing that debt hardly changing by much at all, though the absolute scale of the debt is much larger as a percentage of income. Hence mortgages of 6 or 7 times incomes are affordable, roughly twice what we used to have.
The problem comes that increasing interest rates back to historic norms (a couple of percent over inflation rate) will hurt a lot of current mortgage holders as it will push them beyond that 40% ish share of their income. We can only therefore move interest rates back up slowly, but they cannot remain so low forever. It is massively distorting the economy, making saving pointless.
It's highly likely that the vote leader on the second question in the recall election will be Blank.
It is unclear for me why a recalled candidate cannot run again. He's no longer in the position, sure, but if he's the most popular man for the job, surely he should get it?
Racial and ethnic inequities have cost the U.S. economy some $51 trillion in lost output since 1990, San Francisco Federal Reserve President Mary Daly said, citing data from a paper she and three co-authors will present at The Brookings Institution https://t.co/yU1cOn6KXe https://t.co/VY1OvmfPUV
Newsom could get 48% support and be removed from office, only for someone with 15% support to replace him.
A two-stage process would be better, as is the case in the UK with MP recall. The first ballot vacates the position, and the second decides who is the replacement.
Watching (from afar) California run by a Republican might be fun though!
Any that get through the screen will then be met by RNLI welcome committees instead. So, it'll make no difference to anything. Just one more example of something-must-be-done-ism.
But you’re right, Trump isn’t President any more.
To quote Ian Botham returning to England after his time in Australia:
"You can only stand so much f***ing sunshine"
On departures, surely Jenrick has to go too. He should have gone some time ago.
I’ll take whatever odds you are offering, since I would never have to pay
While German goods exports to Britain rose 2.6% to 32.1 billion euros, that could not prevent a decline in bilateral trade, by 2.3% to 48.2 billion euros - pushing Britain down to 11th spot from ninth, and from fifth before it voted to leave the EU in 2016.
https://www.reuters.com/world/europe/exclusive-britain-no-longer-top-10-trade-with-germany-brexit-bites-2021-09-08/
Presumably because customs rules are not yet enforced by us, but clearly German importers are moving to other suppliers in the EU.
There's been the tittle-tattle about bullying, but there's not been (that I can think of) any real scandals at the Home Office along the lines of Windrush that preceded.
I'd like to see her removed, but that's because she has different politics to mine, not because she has done anything that deserves to see her go. I'd like to have not seen her appointed in the first place.
Raab, Williamson, Jenrick and now IMO Sunak deserve to be replaced but I'm not sure they will be.
I think that extremely low interest rates such as we have at the moment are a positive hindrance in most of these objectives. Consumer debt is generally cheap (not for those who fall behind on credit cards of course) and saving seems pointless. In theory very low interest rates should make investment more attractive since the cost of capital is low but what seems to happen is that existing businesses which are using sites survive and this reduces investment opportunities.
Low interest rates have also distorted asset prices as the expected rate of return on an asset falls. This has greatly increased wealth inequality and hugely distorted the housing market making it more difficult for young people to become Conservative voters.
So we need higher interest rates. Given that we have had these distortions ever since 2008 this is going to be a very difficult and painful challenge but the BoE should be getting on with it not only increasing base rates by 0.25% but also by being clear about the direction of travel. We are currently having what is probably a blip in inflation. Rather than "seeing through it" the Bank should be taking the opportunity to move interest rates up.
Meanwhile some good news from Morocco:
Morocco’s liberal RNI party has won the most seats in the country’s parliamentary elections, while the co-ruling moderate PJD Islamists suffered a crushing defeat, preliminary results showed.
There was much more inflation though, and the principle from the Seventies to the Noughties was to buy the most expensive house possible, pay eye watering mortgages and let inflation reduce the mortgage to affordable levels after a number of years. It worked to a fashion for both me and my dad.
Nowadays there are eye-watering mortgages, but no inflation to reduce the debt, so they stay eye watering.
But imagine how it would look: a majority of Californians vote for him to be dismissed. He is then re-elected on 20% of the vote.
And again here https://yougov.co.uk/topics/economy/survey-results/daily/2021/07/20/79fd0/3
Remain supporters particularly keen on it before it was actually introduced
Its worth noting that the only time a recall has actually been successful versus a Californian Governor, the replacement (the Governator) won more votes than were cast against recalling the incumbent.
Who will, in turn, be recalled.
While the voters continue to pass ballot propositions that are mutually contradictory.
Fundamentally, the French are being very uncooperative and stubborn over this as today's Times article demonstrates - basically, the only thing they do is send the odd gendarmerie out to try and catch them on the beach but they miss most of them and it's a giant Gallic shrug once they launch, unless they call for help (which they never do of course because they want to get to the UK).
Then they changed their minds when someone they dislike actually did it
https://yougov.co.uk/topics/politics/survey-results/daily/2021/09/07/fb53b/1
And again here https://yougov.co.uk/topics/economy/survey-results/daily/2021/07/20/79fd0/3
Remain supporters particularly keen on it before it was actually introduced
It's a warning to take policy-based opinion polls with a massive pinch of salt.
However, this Government makes its decisions by opinion poll and focus group so it doesn't surprise me.
That ladder no longer exists, as inflation was required in order to move rungs, so now they are much further apart. Not only to people struggle to buy in the first place, but struggle to trade up.
I think half the houses in the country are owned outright, and a considerable number must have very small residual mortgages, so while mortgage costs matter a lot to youngsters it doesn't matter to all of us.
And I find lots of young people really annoying, particularly their narcissism, veganism and off-the-scale Wokeness - but it's still totally wrong and they don't deserve it.
What is sadder is that many many Mail and Express readers are already calling for this strategy.
So get your daughter down to the betting shop. What could go wrong?
Except I should not have paid off the mortgage at all, but invested in, well, almost anything. Or taken a month following then PB regular and freelance travel writer @SeanT round 3-star restaurants and 5-star hotels.
The only sustainable way to deal with it is to determine what happens next once they're out of the water. If they know they'll end up in the UK, people will continue doing it, risking more lives on a very dangerous and deadly crossing.
If they know that they'll end up in somewhere like Nauru or Papua New Guinea as has been done by the Australian Labor and Liberal governments, or Rwanda as has been proposed by Denmark's Social Democrat government, then that would actually stop the dinghies getting in the water in the first place.
NI was still the wrong tax to increase IMHO, and I’m surprised that not one junior bag-carrier in government saw fit to resign.
Don't do this.
It shows the pettiness of tribal politics
What you're seeing here is an example of anchoring, so the authors can maximise the amount of federal and state funding redirected towards their favoured community outreach and social programmes.
...meanwhile well done our Emma, who was born in Canada to a Romanian father and a Chinese mother and moved to London as a two-year-old https://twitter.com/hendopolis/status/1435715074333810690
I've got an appointment at the local hospital early this afternoon, and parking there being what it is, the only sensible way of getting there is to drive to a Park 'n Ride and get the bus from there. First time we've done such a thing since February 2020!
They could tick up slowly to 2-3% (and I think they should) but I doubt they'll go much higher than that for decades now.
Turns out people dislike illegal immigration more than legal immigration.
Almost as if being law-abiding is an attractive quality.
One thing I should mention regarding your story about 1995 to 2000 is that during that time Banks also loosened their lending criteria from the old 3+1 format to 3 or even 4 times joint income. That explains a lot of the increase in places further north (albeit around here it occurred in 2003).
You don't recognise my description because you're a Lefty and you agree with things like radical ecosocialism and Wokeness so don't even register it.
I don't think there's a snowball's chance in hell of seeing 7% base rates again any time soon though even though that's what they were when the house prices rose.
Getting them producing at the same rate as their peers in other communities would go a long way to solving our tax issues.
I can't see it happening though while the government is so keen on protecting inheritances.
The quid pro quo for France is less "pull" for them into the Calais area, lots of money to help them out, and border force and RN boats in the Med to help them out in turn - it needs someone who can really flatter, understand and build strong relationships with the huffy and proud French.
That's clearly not Patel.
Its a minority pursuit, but I suspect that you're more involved with that minority.
Care workers are going to be worse off. Their employers might be able to negotiate prices with purchasers that could enable wages to rise, but there are a couple of conditionals in there.
Stagflation, when prices are going up but the economy isn't, is a massive problem.
The end of inflation, primarily brought about by importing everything from China at rock bottom prices as opposed to being brought about by controlling wages domestically, has been a disaster for many people.
Witness the persecution of anyone with the temerity to draw a 7th century bearded fellow. Or pursuing a foolish energy policy to appease the 'greens' (I'm not opposed to using renewables but wind has obvious problems regarding reliability).
Care Minster Helen Whately: "Um. Er, I honestly, I don't know."
NF: "So it could be racism?"
HW: "I can't believe for a moment that he is."
NF: "So he's incompetent then!"
https://twitter.com/rachaelvenables/status/1435862071338577922
if it is zero, then they are incredible seamen - we should follow my idea to press them into the Royal Navy.
If it is 10-20% then they are doing as well as the RN estimates for the "natural wastage" for Sea Lion.
Small, over crowded boats, in the tides and currents of the Channel. Add ships the size of office blocks charging around......
A Tory voting relative who's similarly annoyed as I am about the tax rise just shared this one with me and said that if anything's going to make them change their vote its this kind of thing: https://www.tiktok.com/@zarahsultanamp/video/7005666789178854661
As war broke out immediately after their marriage it wasn't long before she was asked to come back!
What would the function be? To determine whether they have a legitimate claim to be in the UK.
Yes? Stay. No? Whatever the protocol is.
Where this processing happens shouldn't worry you.