X

Sign Up

or

By signing up I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Sign Up

Sign Up With Facebook, Twitter, or Google

or


By signing up, I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Log In

or


Don't have an account? Sign Up

Forgot Password

To reset your password just enter the email address you registered with and we'll send you a link to access a new password.


Already a PT member? Log In

Don't have an account? Sign Up

  • Property Prices

    Labour plans to control property prices



    Labour is proposing two methods of controlling house price rises should it win the next General Election with the ideas have provoking a furious response from some sectors of the estate agency industry.

    Under the proposals The Bank of England could be set a target for house price inflation, like the one currently in place for inflation, with tougher powers to restrict mortgage lending to close the gap between property prices and average incomes.

    Outlined by Shadow Housing Minister John Healey, as with base rate, this would be kept under review by the Bank, which could use the control of mortgage lending as a method of reducing house price growth if it exceeded any target figure.

    The Bank of England already restricts loan-to-income ratios to 4.5 times earnings for 15 per cent of new mortgages to stop banks from lending to economically-vulnerable consumers.

    The second Labour proposal involves more direct government intervention, with politicians deciding a formal target for house price growth which could be one of several economic and social targets which Labour feels could lead to a reduction in house price growth as part of a wider package of economic controls.

    Full/source article

    SEE ALSO  -      Labour advocating Indefinite Tenancies

    UP NEXT -          Labour announce plans to tax holiday lets 
                
    DON'T MISS -     Labour gaining traction with Rent Controls   

    NOW WATCH:

    0
    0

    Yes the bank of England should have powers tocontrol out of control house price inflation like they use too. The move from RPI to CPI caused the 2 biggest house bubbles we have ever seen, resulting in a credit crunch and another downturn onthe close horizon. House prices if maintained should rise with inflation if propperly maintained. Double didgit growth in a 5 year period is a speculative bubble fueled by lose cheap lending, fraud, money laundering. If prices are going out of control the BOE should have the right to raise interest rates to slow it down for a more sustainable economy. We have more personal debt than at the start of the credit crunch and are addicted to ultra low interest rates which has resulted in the the miss allocation of resources from davings into asset bubles such as property.  Before anyone say but we are a small island with limited land and homes then you just have to look at Japan who tried the same ultra low interest rates, longer mortgages experiment 20 years before us. Their properties crashed fromrecord highs and never recovered.


    Sustainable price rises based on wage rises at levels people can afford their homes is what is needed. It would mean lower rents for landlords but landlords being able to buy at cheaper prices allowing the tennants more money left to stimulate the economy.

    1
    1

    Double digit property price growth over 5 yrs can be as little as 1.91% compound pa - hardly bubble inflation.

    It also depends on which 5 yr period is chosen for comparison - late 1990s had 15% pa price growth doubling in 5 yrs - but after having fallen by around 30% in 1989/90 - so overall the 1990s decade saw around 55% growth - or a tad over 4% cagr over the whole decade. Wage growth in 1990s was at 5% cagr per Hansard.

    Plus the above was largely SE related - whereas elsewhere growth was far more muted or even negative.


    2
    0

    It’s a good job that they will not get in then !... ?

    1
    1

    Muppets.

    Price is irrelevant apart from psychological impact.

    Accessibility and affordability are the important measures.

    Plus all flavours of government for decades have used property price growth as a cheap way to prop up GDP instead of real industry - they're all too addicted to that drug.

    This economist is a GR board member and has some refreshingly contrarian views. Shame the rest of the board of GR don't seem to listen to him.
    https://medium.com/@ian.mulheirn/part-2-...ece570c6d7

    1
    2

    DISCLAIMER just my personal opinion - for legal advice consult a qualified professional grown-up.

    so to make houses more affordable, they are going to make houses less affordable? 

    Did I just make that up?

    2
    0

    Sounds a reasonable summary - the lower income group who need loans to buy will potentially be offered smaller loans - thereby mandating larger deposits.

    Also seems Labour's plans ignore CML data which shows that nationally average FTB borrows just 3.11 x income of £38k and using a 17%/£24k deposit pays just £142k for their first home - around 60% of the average property price.

    DCLG say 75% of FTBs are couples - showing as ever that 2 can live as cheaply as one!

    1
    0

    The Bank of England together with the other central banks round the world put us into this mess. Kept interest rates too low for too long resulting in a massive asset price bubble. Their duty is to control the economy through financial stability  and not run the governments policies. That's why it was given independence back in 1977. The problem today is some running it ie Governor has forgotten this.

    0
    1