Do you feel the economy is improving or not?

[monkeybarry]

I agree that if you only earn x amount of money, then your standards have to be realistic. But where I think the housing market is dysfunctional is that for people on low pay, their rents have kept going up and up beyond any wage increases. I think this has happened all over the UK. This has caused more reliance on top-ups like housing benefit. The lack of social housing means less secure tenancies in the private sector, along with higher rents. Then the people who Monkey Barry talks about, having to rent because they can't buy, meaning rental prices get driven up further. At the moment, the market is skewed towards ever increasing rents and the solution, imo, is to build a lot more social housing that provides secure and affordable tenancies. At some point, wages have to be allowed to catch up with the cost of rents.

I agree with the social housing ethos you talk of, however it needed to happen and continue during the Blair years. I don't think the money is there to achieve it short term.
However, making entry to the whole housing market easier (not just new builds) is needed, and tbf tbr Tories have done an OK job of that, as well as controlling rental prices by ensuring increases are not greater than base rate for example and making it harder for LL's to remove tenants where no breach of contract exists and controlling estate agent fees. Free up some income for renters to allow for greater savings, as many renters can afford mortgage payments, they just struggle to get deposits together.

 

[scaramanga]

Or Europe: Portugal, France, better weather, amazing fresh food and houses for the price of garage in London. Literally (old sense of the word). If you have a remote skill like programming you could earn London wages too.

Absolutely. The handover from the previous set of directors to me and my peers was awful - a load of old traditionalist who believed you had to be where you worked (and that you had to work at the site you were working for). I've worked to alter that so that I don't spend all my time travelling and will be looking to semi-retire somewhere remote and warm when it comes time for me to hand over.

But Scara, isn't it a shame that people grow up without much of a community? Kids benefit from extended family, friends neighbours etc. But with transient populations moving just for a house, a place to live, and people working harder to pay for housing, as a society we suffer - kids growing up without the support found in more stable communities.

No, it's not a shame. Just an irrelevance.

Homogenous communities are not good - look at Luton, Tower Hamlets or the many parts of Spain that are full of English speaking, fat, lazy ex pats.

Edit: Or, for that matter, Liverpool where state support has become a contest and a badge of honour. The entire city has become a race to the bottom.

The other interesting stat that has economists scratching their heads is the UKs trade balance. Each year the UK looses cash. As a nation we buy more than we sell. Traditionally this is a big issue for economists - the country is effectively losing cash. How can this be sustainable? Well it is more complex, things like foreign property buyers are not accounted for in the trade balance figures. But the essence of the data is worrying: we don't produce a great deal any more and we buy in billions of pounds more worth of goods than we sell.

I wouldn't worry too much about that.

The goods deficit is small, decreasing and very nearly offset by the services surplus. At this rate the overall deficit will be 0 or a surplus in the near future. Considering we're coming out of a recession and buy a lot of goods from countries that aren't, we're actually pretty healthy.

Communists will try and convince you that services cannot balance goods and that there's something inherently bad about doing stuff rather than making stuff. That's because their entire ideology rests on them being more important than investors as they are creating the goods. A service-driven society makes them irrelevant as well as wrong.

 

[SpurMeUp]

Absolutely. The handover from the previous set of directors to me and my peers was awful - a load of old traditionalist who believed you had to be where you worked (and that you had to work at the site you were working for). I've worked to alter that so that I don't spend all my time travelling and will be looking to semi-retire somewhere remote and warm when it comes time for me to hand over.


No, it's not a shame. Just an irrelevance.

Homogenous communities are not good - look at Luton, Tower Hamlets or the many parts of Spain that are full of English speaking, fat, lazy ex pats.

Edit: Or, for that matter, Liverpool where state support has become a contest and a badge of honour. The entire city has become a race to the bottom.

Just because communities exist in poor areas it does not follow that 'a community' is per say bad. How does business work? How are things developed, sold, how do teams function? All with strong personal interactions and connections. Unsurprisingly social life is similar. People develop, learn, build values etcetera within their social surroundings. We complaint about kids attitudes, a lack of respect and so on, but there is often a lack of guidance and people to help kids. Instead they get a computer game, parents are at work, no local extended family or friends to fill in or take on some responsibility, is it any wonder you get kids rioting?

 

[SpurMeUp]

I wouldn't worry too much about that.

The goods deficit is small, decreasing and very nearly offset by the services surplus. At this rate the overall deficit will be 0 or a surplus in the near future. Considering we're coming out of a recession and buy a lot of goods from countries that aren't, we're actually pretty healthy.

Communists will try and convince you that services cannot balance goods and that there's something inherently bad about doing stuff rather than making stuff. That's because their entire ideology rests on them being more important than investors as they are creating the goods. A service-driven society makes them irrelevant as well as wrong.

Hasn't there been a deficit on and off for circa 30 years? So its not just recession related. If stats are to be believed we have a deficit of as much as 7% of GDP - that is not small. I have never heard the Telegraph describe as 'communist'! They have an array of articles looking at the deficit: http://www.telegraph.co.uk/finance/economics/10880806/UK-trade-deficit-widest-in-five-months.html Right and left find this a real issue. Shouldn't we think beyond simple minded dichotomies of right and left? That's a whole other discussion.

 

[scaramanga]

Hasn't there been a deficit on and off for circa 30 years? So its not just recession related. If stats are to be believed we have a deficit of as much as 7% of GDP - that is not small. I have never heard the Telegraph describe as 'communist'! They have an array of articles looking at the deficit: http://www.telegraph.co.uk/finance/economics/10880806/UK-trade-deficit-widest-in-five-months.html Right and left find this a real issue. Shouldn't we think beyond simple minded dichotomies of right and left? That's a whole other discussion.

The longer term deficit is simply a taste one. Ever since we have been able to buy foreign goods, we've chosen to do so.

That's simply a sign of an economy where enough people earn enough money to have some expendable income.

The Telegraph may be concerned about the overall deficit, but if they're ignoring the services surplus they're being fools. Some economists don't like any deficit, many now believe (like I do) that a small one such as ours is a result of a comparatively strong economy.

 

[SpurMeUp]

Economists are not really too sure on this. I think the data is lacking. In the past a tiny deficit, of say 0.2% of GDP was seen as woeful. Now we're at 7% apparently!

One thing is for sure, everyone would like to see the deficit reversed. You can't contest that buying more than you sell is not a good thing?

What is Germany's trade balance as a % of GDP? I don't really understand economics, have no formal training, but if confidence in the UK was lost (e.g a right wing gov), the underlying issues with the economy - would be exposed - reliance on borrowing and the housing market as a driver of growth, and our trade deficit.

 

[scaramanga]

Economists are not really too sure on this. I think the data is lacking. In the past a tiny deficit, of say 0.2% of GDP was seen as woeful. Now we're at 7% apparently!

One thing is for sure, everyone would like to see the deficit reversed. You can't contest that buying more than you sell is not a good thing?

What is Germany's trade balance as a % of GDP? I don't really understand economics, have no formal training, but if confidence in the UK was lost (e.g a right wing gov), the underlying issues with the economy - would be exposed - reliance on borrowing and the housing market as a driver of growth, and our trade deficit.

If we're selling more than we buy then that could equally suggest that people in other countries have more expendable income than we do or that our currency is weak.

My personal belief (and I agree, better data are needed) is that it's not the level of the deficit that matters, it's the delta.

 

[SpurMeUp]

Okay interesting. What is delta? Not one of these I take it

 

[Gilzeantoscore]

Rather than taking cheap shots, if it's not overly taxing, would you mind explaining why people can't move for jobs/houses?

People cannot easily determine where they live, as it is dependent on all sorts of factors. also, how efficient is it for an economy, if workers have to spent long periods commuting because they are forced to live away from where they work, due to unaffordable housing? Not to mention the expense. Structural problems of this sort have been affecting local economies in America for years, i.e. teachers, nurses and police officers not being able to afford to live anywhere near where they have jobs and commuting huge distances. This is not rational economically. Cheap shots? Are you kidding? If you are going to make silly comments, don't expect people to come over all touchy feely regarding your delicate sensibilities.

 

[the dza]

I agree with the social housing ethos you talk of, however it needed to happen and continue during the Blair years. I don't think the money is there to achieve it short term.
However, making entry to the whole housing market easier (not just new builds) is needed, and tbf tbr Tories have done an OK job of that, as well as controlling rental prices by ensuring increases are not greater than base rate for example and making it harder for LL's to remove tenants where no breach of contract exists and controlling estate agent fees. Free up some income for renters to allow for greater savings, as many renters can afford mortgage payments, they just struggle to get deposits together.

Can't the government borrow money at historically low rates, at the moment, though? I don't see why they can't borrow money to build houses. In the long-term, they will get rental income and as they control the level of rent, they can hold them down whilst wages rise, meaning the hosing benefit bill gets lower and lower. All the while, people working and renting those houses have more spare money to spend in the general economy. Whilst the program of house building will also put money in people's pockets and generate jobs, apprenticeship places etc. It seems to me to be a big opportunity, if the government is willing to do it.

 

[Danishfurniturelover]

[QUOTE="SpurMeUp, post: 741173, member: 886"

But Scara, isn't it a shame that people grow up without much of a community? Kids benefit from extended family, friends neighbours etc. But with transient populations moving just for a house, a place to live, and people working harder to pay for housing, as a society we suffer - kids growing up without the support found in more stable communities.

The other interesting stat that has economists scratching their heads is the UKs trade balance. Each year the UK looses cash. As a nation we buy more than we sell. Traditionally this is a big issue for economists - the country is effectively losing cash. How can this be sustainable? Well it is more complex, things like foreign property buyers are not accounted for in the trade balance figures. But the essence of the data is worrying: we don't produce a great deal any more and we buy in billions of pounds more worth of goods than we sell.[/QUOTE]

On the first point, I totally agree it is sad with a lack of community which can come as a result of people having to move away from where they grow up. I think like they do in Jersey the should be two house prices one for people from the area and one from people from outside the area.

On the last point I think we in this country buy to much crap so if another recession comes along we would just have to stop buying crap. It was a liberal MP who in the last government said we should aim to be energy sufficient by 2050 it was actually a good idea and I am not sure why people did not look into it.

 

[monkeybarry]

Can't the government borrow money at historically low rates, at the moment, though? I don't see why they can't borrow money to build houses. In the long-term, they will get rental income and as they control the level of rent, they can hold them down whilst wages rise, meaning the hosing benefit bill gets lower and lower. All the while, people working and renting those houses have more spare money to spend in the general economy. Whilst the program of house building will also put money in people's pockets and generate jobs, apprenticeship places etc. It seems to me to be a big opportunity, if the government is willing to do it.

The Tories will not do anything that increases public spending, irrespective of potential return - it would go against mandate to be fair. But they need to do more to regulate and force the housing (existing and building) market and mortgage market to function better.

 

[scaramanga]

The Tories will not do anything that increases public spending, irrespective of potential return - it would go against mandate to be fair. But they need to do more to regulate and force the housing (existing and building) market and mortgage market to function better.

There's an argument to be made that it's government meddling that has increased prices to start with.

If you've broken a market with meddling, more meddling is not normally the way to fix it

 

[monkeybarry]

There's an argument to be made that it's government meddling that has increased prices to start with.

If you've broken a market with meddling, more meddling is not normally the way to fix it

I wouldn't disagree with that argument.

There is still work that needs doing that won't be fixed solely by market forces sadly.

Some real government (note the lower case g) is needed, and maybe with a full term and a majority we will see a bit of that. I suspect once the furore of the Corbyn protest vote dies down (4months?), we will see a few Conservative measures to address the kind of socioeconomic issues Corbyn will bring up.
And I do think the Cons have had a good stab at opening up the mortgage market, but they need to go a lot further to avoid a stagnant middle class. ( I'm sounding like a broken record now I think)

 

[scaramanga]

I wouldn't disagree with that argument.

There is still work that needs doing that won't be fixed solely by market forces sadly.

Some real government (note the lower case g) is needed, and maybe with a full term and a majority we will see a bit of that. I suspect once the furore of the Corbyn protest vote dies down (4months?), we will see a few Conservative measures to address the kind of socioeconomic issues Corbyn will bring up.
And I do think the Cons have had a good stab at opening up the mortgage market, but they need to go a lot further to avoid a stagnant middle class. ( I'm sounding like a broken record now I think)

I agree that it's far too late for the government to just disappear from the market - that would cause more problems than they already have.

My issue is that if a government (and its inherent, endless money supply) agrees to top up the rent of those who cannot afford it, there can never be any downward pressure on the cost of renting. If a market cannot correct itself then it cannot function properly as a market.

 

[monkeybarry]

I agree that it's far too late for the government to just disappear from the market - that would cause more problems than they already have.

My issue is that if a government (and its inherent, endless money supply) agrees to top up the rent of those who cannot afford it, there can never be any downward pressure on the cost of renting. If a market cannot correct itself then it cannot function properly as a market.

I agree. But a truely competitive market needs a good balance of market forces and regulation. The housing market of course differs slightly from a normal market in that it is essential and directly impacts on the economy as a whole in a lot of ways (disposable income, workforce location, developer profit and corp tax receipts, etc etc etc) - and I know home ownership can be argued not to be essential, but in "aspirational Britain" it is a core aspiration and investment.

I'm not in favour of mass govt building in the current climate ( that became a non starter with Thatcher), but I do think govt needs to generate opportunity for aspirations in the population - and that is where getting control of cost of living and consumer market entry come in. But of course with (I) low housing stock, prices will stay high and (ii) the heightened risk assessment from mortgage lenders creates a barrier to entry. If you are happy to keep (I) (and there is little choice for the next 5-10 years) then you need to dictate a return to lower deposit mortgages across the sector (not just for new builds). Influence ( or legislate - and I know the strong argument against that, but if the market isn't responding, its either that, let it crash or continue to stagnate) all lenders to accept 5% down (20-25k savings is just about achievable for a professional middle class family) and take on some additional risk.

 

[scaramanga]

I agree. But a truely competitive market needs a good balance of market forces and regulation. The housing market of course differs slightly from a normal market in that it is essential and directly impacts on the economy as a whole in a lot of ways (disposable income, workforce location, developer profit and corp tax receipts, etc etc etc) - and I know home ownership can be argued not to be essential, but in "aspirational Britain" it is a core aspiration and investment.

I'm not in favour of mass govt building in the current climate ( that became a non starter with Thatcher), but I do think govt needs to generate opportunity for aspirations in the population - and that is where getting control of cost of living and consumer market entry come in. But of course with (I) low housing stock, prices will stay high and (ii) the heightened risk assessment from mortgage lenders creates a barrier to entry. If you are happy to keep (I) (and there is little choice for the next 5-10 years) then you need to dictate a return to lower deposit mortgages across the sector (not just for new builds). Influence ( or legislate - and I know the strong argument against that, but if the market isn't responding, its either that, let it crash or continue to stagnate) all lenders to accept 5% down (20-25k savings is just about achievable for a professional middle class family) and take on some additional risk.

If we are keeping (I) then I think the government should look at equity loans.

That's a good compromise that helps families get on the market (I think if someone has saved 20-25K then loaning the equivalent based on equity is reasonably safe), it means lenders get the deposit they need to take the risks we need, it keeps the housing market from crashing and it enables the government to invest some of the money they've stolen from us and be reasonably in control of future returns.

 

[monkeybarry]

If we are keeping (I) then I think the government should look at equity loans.

That's a good compromise that helps families get on the market (I think if someone has saved 20-25K then loaning the equivalent based on equity is reasonably safe), it means lenders get the deposit they need to take the risks we need, it keeps the housing market from crashing and it enables the government to invest some of the money they've stolen from us and be reasonably in control of future returns.

And hopefully this is something we will see extended very soon - although the rhetoric from the Conservatives doesn't seem to point thatvway.
But the key point is it should cover all purchases (which a cap on the value), not just new builds.
But with the prices accelerating as their current rate it will be very hard to save 5% and buy a family house within decent commutable distance of London

 

[scaramanga]

And hopefully this is something we will see extended very soon - although the rhetoric from the Conservatives doesn't seem to point thatvway.
But the key point is it should cover all purchases (which a cap on the value), not just new builds.
But with the prices accelerating as their current rate it will be very hard to save 5% and buy a family house within decent commutable distance of London

Agreed. When my wife and I bought our first place we'd managed to scrape together about £10K (quite a bit then). Her being a teacher enabled us to get an equity loan that added around another £7K to our deposit - that made a big difference to what we could buy.

 

[Baleforce]

I think there is an obsession in the UK with owning your own house, there are a lot of upsides to renting, i'm still on the fence but when I tell people that they tend to think i'm mad.