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The US isn’t the only place with a few housing issues affecting it. The UK housing market has been hit by a triple whammy of lender problems and exposure to the US mess, credit crunch and prices. The squeeze on mortgages caused by the credit crunch has made it difficult for first-time buyers to secure a mortgage deal, even though house prices are falling.
A first-time buyer couple on low incomes must save a year's worth of their take-home pay to buy their first home, the Royal Institution of Chartered Surveyors (Rics) said last week.
A couple in the bottom quarter of earners in the UK would need £27,738 to pay the up-front fees even before paying any of their mortgage, Rics said.
There are more than a few problems with the plan. Buyers have to come up with a deposit, renting at a discount to help them save. That £27,738 could be a real obstacle. That’s around $50 grand, US.
Plans are also being made for local government to create housing schemes, but that part of the scheme isn’t as clear about what the financial conditions are likely to be. There’s some talk about additional funding.
The UK is the first country to try this approach in the current housing market, but it’s not the only country with these problems. The various housing booms in Western countries may have fueled a boom, but they’ve done nothing for their economies, in the rebound.
Criticism of the UK scheme is currently based on the affordability and housing supply factors, including, ironically, an oversupply porblem in some areas. Those are fixable things, if affordability can be locked in. If a rent and buy program can be made workable, it has major ramifications for the housing market, which has neither the credit nor the cash to support prices.
It might, in fact, with some modifications, even help out the US housing market, where capital isn’t likely to be available to cover payments on the old scales.
Whether it helps the mentality that’s been kicking out people who were paying under the old rates remains to be seen.
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Certainly a difficult pill to swallow for the UK Paul.
I can't help but think that a whole segment of the housing crisis has been ignored. "Flipping" was a huge market until about 18 mos ago. Until last September, you couldn't view any "home" cable channel or weekend programming without being inundated by show after show about flipping property to make a profit.
The UK had a famous show, I believed it was called "Million Dollar Challenge" where the two decorators flipped 7 properties starting at approximate £150 K until they were able to finally sell the last property for over £1 M.
Here, on the other side of the Great Pond, there were dozens of shows dedicated to renovation, re-decorating to increase profits, dash-and-grab cosmetic fixing, and all kinds of questionable tactics designed to give property the appearance of $$. All the while, the public was encouraged to get ARM and other dishonest mortgages .... the bill would never come due as one could flip the property, make an ungodly profit and move on.
There are certainly a host of "players" that could be held to account for their involvement in this crisis. In the end, I hope that the public has returned to the viewpoint that if they truly want to own real estate, then perhaps they should have some of their own money to invest before looking for a mortgage. That's what our parents did, isn't it?
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@ Sykos Masters
Certainly a difficult pill to swallow for the UK Paul.
I can't help but think that a whole segment of the housing crisis has been ignored. "Flipping" was a huge market until about 18 mos ago. Until last September, you couldn't view any "home" cable channel or weekend programming without being inundated by show after show about flipping property to make a profit.
The UK had a famous show, I believed it was called "Million Dollar Challenge" where the two decorators flipped 7 properties starting at approximate £150 K until they were able to finally sell the last property for over £1 M.
Here, on the other side of the Great Pond, there were dozens of shows dedicated to renovation, re-decorating to increase profits, dash-and-grab cosmetic fixing, and all kinds of questionable tactics designed to give property the appearance of $$. All the while, the public was encouraged to get ARM and other dishonest mortgages .... the bill would never come due as one could flip the property, make an ungodly profit and move on.
There are certainly a host of "players" that could be held to account for their involvement in this crisis. In the end, I hope that the public has returned to the viewpoint that if they truly want to own real estate, then perhaps they should have some of their own money to invest before looking for a mortgage. That's what our parents did, isn't it?
Yeah the housing boom in Australia worked much the same way. Our parents didn't have the nutcases operating the securities market, though. Just on the basis of requirement for disclosures, the securities have gone beyond fraud into fantasy, and this is the result at the retail end. -
@ Paul Wallis (Wanderlaugh)
Yeah the housing boom in Australia worked much the same way. Our parents didn't have the nutcases operating the securities market, though. Just on the basis of requirement for disclosures, the securities have gone beyond fraud into fantasy, and this is the result at the retail end.
But Paul, why actually invest your own money or, heaven's forfend, actually work at some level, when you can make a profit trading in "securities". The adage used to be, "Don't invest money that you can't afford to lose." That has now been modified to, "Not to worry ... someone else will pick up the tab when everything goes south." -
@ Sykos Masters
But Paul, why actually invest your own money or, heaven's forfend, actually work at some level, when you can make a profit trading in "securities". The adage used to be, "Don't invest money that you can't afford to lose." That has now been modified to, "Not to worry ... someone else will pick up the tab when everything goes south."
Hmm. Do I somehow detect a certain lack of mindless faith in non existent things? -
@ Paul Wallis (Wanderlaugh)
Hmm. Do I somehow detect a certain lack of mindless faith in non existent things?
Absolutely not!!! I continue to nurture a belief in dragons, faery, and dryads ..... I just don't expect others to "invest" in my belief .... lol Add a Comment
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Rent now, maybe buy later: UK housing plan has a few snags
