http://news.bbc.co.uk/1/hi/business/8286028.stm

The headline's a bit deceptive :

First everyone was moaning that house prices were too high and that first-time buyers couldn't afford them.

Now that they're lower everyone's complaining that house prices are below previous levels!

I don't really care as I plan to live in my current house for another three or four decades. All I care about is interest rates, and even those won't bother me for the next four years or so. I started a new five year fixed rate one yesterday.

House prices are still grossly overvalued. The problem is that too many people have a vested interest in keeping the prices high. Banks, estate agents and the government. The real problem for the government is that high house prices cause chaos in its housing policy. It pushes up housing benefit, and motivates council house tenants to buy.

I'm stuck at the minute - have a fair chunk of cash and probably access to more if it came to it, but the interest rate's sh1te in the meantime (I'm all ISA'd and savings schemed up)...

I expect I'll be buying a house sooner rather than later though, basically when it becomes obvious that house prices are actually widely on the rise, taking into account the things I quoted above.

We've "enjoyed" living in a bubble based entirely on Money and Credit, whilst the bulk of the World's poulation has become increasibly impoverished.
Whatever happens to house prices is largely irrelevant over anything other than the short term. Privatisation of Council properties, increased Home "ownership" and artificial scarcity ensure that housing issues loom large for us in the UK. Think how much worse it will be when the kids born today live to be 100!

The problem we have is mirrored world wide. We are trying to implement doctrinaire ideologies from the 1980's in a world that has changed radically The Free Market does not and has not provided enough to support us, and as long as we pretend it will, the worse things will get.

Thankfully I never went in for all that "borrow then pay" crap. I've always "saved then spent".
Good thing too, I'm having to eat into my savings at the moment due to a lack or work. I don't know how people who are in debt cope.

Quite easily. They either disappear for 6 years or go for bankruptcy, or even make a repayment deal with the Court. It's not anywhere near as socially unacceptable as it was, and people are so much happier when the great debt mountain gets lifted. Sure, you lose your shiny things, but then you just save for new shiny things (or hide them).

I don't know if any of you remember in the 90's they were even talking about the possibility of 100 year mortgages like in Japan to help people get on the property ladder. The real problem is that house prices have been staying around 3 times median wages for hundreds of years and anyone who says that we now have affordability which supports higher prices is talking out of their bottom. That includes a lot of politicians estate agents and economists. House prices have still a way to go to fall to the correct level. All that the extra bank support has done is price youngsters out of the property market. It is like a generational tax on the young by the old. Even with two incomes house prices still do not justify the high prices. The reason is that people split up and have to buy two homes and no way can they afford the double price on each.

In America house prices really need to get back to the 1980 level. As that is when median wages stopped increasing.


I agree but the bigger problem is that politicians and economists do not realise that. Paul Krugman said as much recently in the New York Times. Too many are still followers of the Chicago school, and even Maryland University has closed its Keynesian school in favour of the Chicago school. I never thought self regulation of light touch regulation was sensible. Too many escape routes to get away with something illegal.

If you want to live in a truly free market then the best place is Somalia, otherwise you have to live in a mixed economy with a bit of state and private enterprise. The trick is to get the balance right.