YAWN YAWN YAWN! If you're as fed up as I am of hearing repetitive rhetoric in the mainstream nanny state news, well join the club. Guess what, property has always been over priced and out of reach of twenty somethings with no savings. So why are so many journalists bitching about it?
Who ever remembers a time when it was anything less? Back when I left school neither myself nor my parents had any aspirations to be property owners, let alone property Millionaires. Today an average Londoner with a three bed semi IS A PROPERTY MILLIONAIRE, but it is Meaningless. If a Million gets you a small home, it is no better than the lira was two decades past, just an inflated number with little meaning.
Property price is a function of the governments credit policy. Intrinsically it is worth what a cash payer could afford to pay. But demand is boosted by credit availability. Plain and simple, once credit is available the demand increases, and guess what follows? Correct genius, the bloody price. Economics 101.
More property exists than people can occupy, each and every year developers churn out the newfangled shoe boxes by the skyscraper full, and put a dafter than last years price tag on them and just wait to see if they get a bite.
They then lobby government to offer first time buyer loans, tax incentives, shared equity schemes and all other manner of crazy help to buy manipulations. Housing markets are simply rigged to bolster the Financial Services industry and support lending. Lending is pushed like a drug on the unsuspecting youth of today, as if it is a necessary thing. IT is most certainly not, austerity has been transformed into a dirty word. Frugality was once prized as a desirable quality in a person, today it is shunned. The culture of consumerism is promoted and the idea of actually saving for things we want is frowned upon. Must buy it today! Might be gone tomorrow!
No it won't. But then the complaints come in, and yes people are priced out of the government induced credit inflation linked price tags. But they're not real. Just ask Ray Dalio founder of Bridgewater Associates, remove the artificial stimulus i.e. the printed money we are all supposed to borrow gleefully, and the prices will, just like dominoes, fall back to where they should be.
As the great Kevin McCloud so amply illustrates on the Channel 4 series Grand Designs, houses can be erected in under a week, using the right structures, so the idea that they are too expensive is a nonsense.
The market for Real Estate has been so badly manipulated it is distorted beyond all recognition. A major correction and nothing less will be required if the youth of today are ever to escape the rental trap that is creating a Slum Dog millionaire playground out of London and similarly effected big cities.
Once the government stops artificially supporting the banks and removing the barriers to entry for innovative developers, prices would correct naturally, as Ray Dalio describes, a Beautiful Deleveraging! London has more empty homes than anywhere, all priced at art collectors prices. Just like the art market, collectors are incentivised to limit the supply by artificially inflating value. This is because their assets are tied up in it. The same is true of Property, rather than being what it actually is , a commodity we all need, it has become an asset class. This distorts value. People are told to invest in a home, but a home is not an investment. An asset is something with future revenue generating capability. So unless you're planning to let your property it should not be viewed as an asset class.
In truth it is anything but, the value you generate is more than outweighed by the mortgage interest you repay over the life of your 25 year home loan, do the maths to see where the real value is in borrowing to buy a so called asset.
You will always need a home, so you can't exactly spend it. So it is not an asset, it is a necessity. Homes are commodities by and large, and should not command premium prices, in the main, some should of course, but they are the exception. Most three bed semis are not Picasso s, and are readily replaceable. Prices are inflated largely because institutional investor property holdings, would become worthless overnight if the market where allowed to correct. If people could simply save and avoid the temptation of loans they absolutely do not need, prices would correct. But don't hold your breath!
YAWN YAWN YAWN! If you're as fed up as I am of hearing repetitive rhetoric in the mainstream nanny state news, well join the club.
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This blog is probably essential reading for anyone who owns or is planning to buy a home in the UK. Articles are designed to guide you through the property maze, saving you time, hassle and thus money!!
It is packed with the kind of vital information to help you avoid disasters that could turn your dream home into bottomless money pit
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We all love a bargain. OMB curated content incorporates such articles as price comparison pages. Visitors to these pages are given the option to enter their email and receive a free quote from the supplier. These qualifying leads are worth more to the service or product provider company than any number of paid page clicks as it creates engagement. The conversion rates should be measurably higher and thus it follows the advertisers ROI. The key is to offer quality content and valid price comparison. It is all too easy to see skewed comparison data that misleads a reader and typically doesn't fool them. Shoppers are smart and can easily price check themselves, so if the deal on offer is genuine and makes sense to the reader, I believe the likelihood of conversions is that much better.
I recall when I was at Lloyds TSB the deals the bankers offered typically compared their offer to the incumbent, however it is easy to beat the price of a monopolist and so for true comparison it is necessary to spread the basket of products across a fair sample of providers. Customers know that when you only mention the one or two major players, they are not seeing the lesser know but perhaps more competitively priced deals.
There is always an element of low balling and rate discounting that amounts to teaser rates, and this has proven to be not only ethical as was the case of US, mid west, sub prime mortgage rates, it also proved to be a disaster for the economy at large. Deals by definition require discount as a the price to acquire the customer but the duration and sustainability of the pricing must be transparent. In other words to be truly valuable and ethical and transparent the deals offered should be marketed using the true cost to the customer, not the temporary discounted cost, other wise your comparing apples and oranges so to speak. This might be why energy and banking products that typically attempt to acquire long term contracts often fail miserably contrasted to travel and hotel deals that are based on the price this week or month.
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