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House prices under a Labour government - what will happen?


Mandalorian

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goldbug9999
On 29/05/2024 at 11:41, Axeman123 said:

Restating a theory I am developing: Muslims have priced themselves out of being a cheap bloc vote for the left over Gazza, and are going to be replaced by the young.

Once they are in a Labour government would have no interest in prolonging the house price bubble, which is really a boomer benefit, and would solely target increased home ownership by their new voting demographic. They wouldn't want a crash due to the implied economic instability, but likely would embrace sustained falls.

If the Tories are to be the pantomime-villain boomer-party in opposition labour could even turn against help-to-buy and celebrate price declines bringing more supply to market etc. Maybe the black hole they intend to find after the election to justify changes to taxes that weren't in the manifesto will be HTB?

It sounds logically plausible but history has shown that Labour are the party of existing home owners and speculators, remember it was Labour that essentially invented BTL when brown deregulated mortguage lending.

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Axeman123
2 minutes ago, goldbug9999 said:

It sounds logically plausible but history has shown that Labour are the party of existing home owners and speculators, remember it was Labour that essentially invented BTL when brown deregulated mortguage lending.

Its worth noting though that wasn't labour doing what they had always done, that was a radical pivot. Not many years before they had been committed to taking back RTB properties, and in some cases senior figures AIUI would talk of doing so on a compulsory basis at the RTB selling price (ie below market value, and regardless of resale since).

He may have been the antichrist, but Blair was a visionary of a sort, and obviously the question is can labour pivot again or is the party just mid-wits all the way down that just will cling to Blair era policy and double down on it?

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PatronizingGit

What is publicly popular, or seemingly electorally sound isnt usually what politicians do. I think at this stage it would be popular to let house prices fall. But one just need look at immigration to see that irrespective of public opinion, politicians can keep something high, or even increase it, and get re-elected anyway. Afterall, people know that housing will be unaffordable under the 'other' party too.

 

All I know is 1) Reeves is getting very friendly with the banks & investment houses. They also seem to be loading up on residential rental properties. It seems very unlikely they'll want to see their portfolios fall in value, or rents to go down.

2) Huge numbers of indians seem to love property. I worked with one who seemed to be doing short stints in various university towns across the UK as a researcher, and buying a property to live in while he was there, renting it out when he moved on to the next town. He now had rental properties in Glasgow, Belfast, Loughborough & was in the process of buying one in that new town just outside Cambridge. Alongside his researcher job he worked nights in warehouse. A lot of Indians do all the overtime they can get...and then a few hours just eat/deliveroo. Even in these kinds of jobs, if you are doing 14 hour days, 7 days a week, a 70 or 80k annual income is quite feasible. 

 

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PatronizingGit
On 05/06/2024 at 10:48, Axeman123 said:

Its worth noting though that wasn't labour doing what they had always done, that was a radical pivot. Not many years before they had been committed to taking back RTB properties, and in some cases senior figures AIUI would talk of doing so on a compulsory basis at the RTB selling price (ie below market value, and regardless of resale since).

He may have been the antichrist, but Blair was a visionary of a sort, and obviously the question is can labour pivot again or is the party just mid-wits all the way down that just will cling to Blair era policy and double down on it?

Its a lot easier to be that when you have the entire media (or at least the media that matters) on side. 

Bliar may have benefitted from that, but im sure he didnt arrange it all personally in the first place. 

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Axeman123
26 minutes ago, PatronizingGit said:

Its a lot easier to be that when you have the entire media (or at least the media that matters) on side. 

Bliar may have benefitted from that, but im sure he didnt arrange it all personally in the first place. 

Indeed, he had every tailwind possible etc.

Its still interesting how Starmer is the classic managerial mid-wit, clumsily attempting to season a cup of cold-sick Blairism with a pinch of Faragist Nationalism and a sprig of Old-Labour as garnish - Old ideas reheated and presented without any panache. A visionless "buzzword bingo" bullshitter of the kind you commonly find in middle management.

In contrast Blair seemed dangerous from the off, even if people couldn't fully see the big picture he was planning to permanently embed with WTC and Quangos. The criticsim of Blair IIRC was that he wasn't as clever as he thought, or that his schemes would cause problems down the road. Of course those "problems" were the intended outcome, and people underestimated his evil.

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PatronizingGit
12 minutes ago, Axeman123 said:

Indeed, he had every tailwind possible etc.

Its still interesting how Starmer is the classic managerial mid-wit, clumsily attempting to season a cup of cold-sick Blairism with a pinch of Faragist Nationalism and a sprig of Old-Labour as garnish - Old ideas reheated and presented without any panache. A visionless "buzzword bingo" bullshitter of the kind you commonly find in middle management.

In contrast Blair seemed dangerous from the off, even if people couldn't fully see the big picture he was planning to permanently embed with WTC and Quangos. The criticsim of Blair IIRC was that he wasn't as clever as he thought, or that his schemes would cause problems down the road. Of course those "problems" were the intended outcome, and people underestimated his evil.

Even in 1996, Spitting image mocked bliars superficiality

They also personified Mandelsohn as a snake. 

I dont quite remember the 97 election, i started becoming politically conscious around 1998 perhaps, first sangatte, rising petrol prices, wee willy hagues save the pound campaign, but I know my father voted for labour, purely to 'get rid of the tories' & pretty much instantly regretted it after Gordon Brown scrapped the dividend tax credit, taking however many thousands he did from his pension assumptions. My mother, who was always more conservative than my father seemed to see through bliar from the off. As they say, tories lost, labour didnt win. Bliars landslide still got him fewer votes than majors narrow victory 5 years prior.

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PatronizingGit
1 hour ago, crashmonitor said:

 Biggest change that occurred when Labour took charge was to make the Housing Market the Economy.     

 In 1997 house prices had hit  a twin post war low (similar to 1985), compared to wages. House prices were normal and you could aspire to virtually any house, no matter how good. It was a wonderful time to be young. We then got the nominal tripling of house prices between 1997 and 2004 against the backdrop of moderate inflation and we have been living  with the fallout ever since. Young families now require tax credits to get by, and we have a huge Housing Benefit bill. Also  Gen Z is unwilling to take on Service Sector and Caring roles because the salary just doesn't cover Housing ( it would have done in the 90s) . So we are importing entry level labour (( latterly from Africa ( and particularly Nigeria) by the 100,000s per year))   who also require recourse to Housing Benefit and tax credits. And their stamina to continuing working is questionable when you can live just as well on bennies if you have no Equity. And these immigrants are coming with zilch Equitywise.

We can't disappear the Equity gains indigenous families enjoyed under Labour, and life chances tend to be determined by Bank of Mum and Dad as opposed to your own efforts. That certainly was not the case when I entered the housing Market in the 1980s.

 

Labour won't change anything. They created the Housing Market economy and lefties are religious about "TheLadder". Look how London votes.

All that is true, but the reality is the tories engineered a bubble in the 80s, and every other western nation that had a centre right govt in the 2000s, be it australia, the US or elsewhere in Europe, also had similar bubbles then. Its not a lab con thing, its a thatcherite/neolib thing. 

 

The biggest reason house prices became so affordable during the 1990s...a bigger proportional drop than most other western nations, and stayed there for a couple of years was the straightjacket of the ERM. Rates stayed higher, and for longer, till we dropped out...who knows, possibly because they didnt want house prices to remain depressed. Everyone talks about the ERM as a grave mistake which sealed the tories fate (even though, proportionally, even more Lab MPs supported it...it was a cross party thing) and yet argurably it cleared out a lot of bad debt & set us on stable course by the mid 1990s.

 

Had it not been for the ERM it would not surprise me one bit if the tories in 1990 or so enacted vast 'stimulus' plans to ensure high house prices post 1989 just as the labcon uniparty did from 2008 on. 

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Lightly Toasted
7 minutes ago, PatronizingGit said:

All that is true, but the reality is the tories engineered a bubble in the 80s, and every other western nation that had a centre right govt in the 2000s, be it australia, the US or elsewhere in Europe, also had similar bubbles then. Its not a lab con thing, its a thatcherite/neolib thing. 

 

The biggest reason house prices became so affordable during the 1990s...a bigger proportional drop than most other western nations, and stayed there for a couple of years was the straightjacket of the ERM. Rates stayed higher, and for longer, till we dropped out...who knows, possibly because they didnt want house prices to remain depressed. Everyone talks about the ERM as a grave mistake which sealed the tories fate (even though, proportionally, even more Lab MPs supported it...it was a cross party thing) and yet argurably it cleared out a lot of bad debt & set us on stable course by the mid 1990s.

 

Had it not been for the ERM it would not surprise me one bit if the tories in 1990 or so enacted vast 'stimulus' plans to ensure high house prices post 1989 just as the labcon uniparty did from 2008 on. 

Interesting idea, that ERM supplied monetary discipline and was an overall positive. OTOH the effects of the over-enthusiastic squeeze are hard to imagine for those who are too young to remember it. I knew a guy who lost his IT/ops job, couldn't find anything else, and ended up hawking encyclopaedias from door to door, managing to keep his house by the skin of his teeth. All the job losses and repossessions and "Tory meanness" caused massive reputational damage to the party, which culminated in Blair/New Labour.

The factors that stoked Brown's boom were:

  1. tacitly deregulating the mortgage market -- not by repealing any rules, but by ceasing to enforce them. Fake earnings statements were openly solicited/accepted by lenders and brokers. This decoupling of loans from incomes eased credit far more than interest rates per se.
  2. linked to the above: re-organising financial regulation into a tri-partite system* where nobody carried the can.
  3. setting monetary policy through inflation targeting at a time of relentless global deflation due to the rise of mercantilist China.
  4. expanding public spending from approx 30% of GDP to 40% of GDP -- at a time when GDP was also being massively flattered by the housing and spending booms.

Of these I think that the Tories would have fallen into trap #3 but would have avoided the others.

* “[O]ver the past few years the government of Britain removed from the Bank of England most of its supervisory authorities. When the crisis hit – for example when the Northern Rock bank came under stress – the Bank of England was completely in the dark and unable to deal effectively with what turned out to be a destructive run and a major problem for the British economy.” -- Ben Bernanke

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PatronizingGit
9 minutes ago, Lightly Toasted said:

Interesting idea, that ERM supplied monetary discipline and was an overall positive. OTOH the effects of the over-enthusiastic squeeze are hard to imagine for those who are too young to remember it. I knew a guy who lost his IT/ops job, couldn't find anything else, and ended up hawking encyclopaedias from door to door, managing to keep his house by the skin of his teeth. All the job losses and repossessions and "Tory meanness" caused massive reputational damage to the party, which culminated in Blair/New Labour.

The factors that stoked Brown's boom were:

  1. tacitly deregulating the mortgage market -- not by repealing any rules, but by ceasing to enforce them. Fake earnings statements were openly solicited/accepted by lenders and brokers. This decoupling of loans from incomes eased credit far more than interest rates per se.
  2. linked to the above: re-organising financial regulation into a tri-partite system* where nobody carried the can.
  3. setting monetary policy through inflation targeting at a time of relentless global deflation due to the rise of mercantilist China.
  4. expanding public spending from approx 30% of GDP to 40% of GDP -- at a time when GDP was also being massively flattered by the housing and spending booms.

Of these I think that the Tories would have fallen into trap #3 but would have avoided the others.

* “[O]ver the past few years the government of Britain removed from the Bank of England most of its supervisory authorities. When the crisis hit – for example when the Northern Rock bank came under stress – the Bank of England was completely in the dark and unable to deal effectively with what turned out to be a destructive run and a major problem for the British economy.” -- Ben Bernanke

Sure...my dad was in the same boat, jobs wise, and forever berates himself for selling our house at the time & downsizing to eliminate the risk of repossession. In the event he got another (lower paid & no company car with fuel paid) job  within a year & we could have kept the bigger house. Regardless, the whole repossession obsession seems typical one sided media emotion driven story to me. Houses dont disappear 

For every 'we was reposessed sob story, the media, in the interest of balance, should revisit that same property five years later & cover who was able to buy, trade up, whatever it & illustrate its a zero sum thing. Someone, possibly irresponsible & overextended lost the property, & someone prudent got it instead. It may be a set back for some, but an opportunity for others. 

 

Of course, Browns expansion of public debt was an obscenity when private credit was expanding at record pace. Irrespective of whether he says 'i will only borrow to invest, not to fund services' is obviously nonsense given it all comes from one pot. But then, once again, the centre right elsewhere, particularly the yanks, did the same. And had he not, he'd have probably got it in the neck for 'not taking advantage of low borrowing rates'

 

Dont disagree with anything you say. Just given all the tories generally blabbed on about from 1997-2010 was 'stealth taxes' (ie fuel duty, the escalator of which they introduced), political correctness gone mad, which they have never once reversed & uncontrolled immigration...and we all know their stance on that one. They spent very little time worrying about Browns economic legacy as he was generally pro-city, neolib, & pro housing bubbles. 

Its perhaps understandable. Rarely do the public reward politicians for being responsible, and rarely do they punish them when they are not. And the inertia of when changes are made, and when the problems that causes manifest can be some time, with a change of government in the meantime, i'd go so far to say its in the interest of the politicians to be as irresponsible as they can get away with. 

To this day Lamont was considered a disaster of a chancellor for ERM. Ken Clarke a 'stable pair of hands' 

Yet bear in Mind wrt the inertia of decision making

Clarke was one of the chief Europhiles responsible for signing us up to ERM. Lamont was not.

Lamont had to deal with the fallout from ERM. Clarke was elsewhere. 

Clarke took over from Lamont once Lamont had cleared up Clarkes mess.

The lesson is just get your timing right. Blair seemed a master of this. Brown less so. 

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Lightly Toasted
4 minutes ago, PatronizingGit said:

Dont disagree with anything you say. Just given all the tories generally blabbed on about from 1997-2010 was 'stealth taxes' (ie fuel duty, the escalator of which they introduced), political correctness gone mad, which they have never once reversed & uncontrolled immigration...and we all know their stance on that one. They spent very little time worrying about Browns economic legacy as he was generally pro-city, neolib, & pro housing bubbles. 

"Heir to Blair", isn't it? Cameron actually saw himself that way.

I don't think the Major government would have gone that way though, had they been able to continue. Looking back the messes they made (which seemed awful at the time) were small beer.

 

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PatronizingGit
3 minutes ago, Lightly Toasted said:

"Heir to Blair", isn't it? Cameron actually saw himself that way.

I don't think the Major government would have gone that way though, had they been able to continue. Looking back the messes they made (which seemed awful at the time) were small beer.

 

Never know. I will say however, immigration policy was already being liberalized pre bliar, with increasing flows from outside the commonwealth becoming available. 

It is my contention that the tories, while being committed to controlling immigration all the way from 1961-1991, essentially threw in the towel after then as they lost their 'surinder singh route' case, and thus our borders, by implication, could only ever be as strong as they were in the EU state with the weakest immigration controls.

In the 1990s that was Sweden, Denmark, Norway, and as such, by the early 1990s we started to see people who had got asylum in those countries, Mainly Iranians, somalis & turks enter the UK. 

Even bliar wasnt quite enough insane to allow Somalis in directly, but come they did, almost exclusively via somewhere else in Europe. 

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M S E Refugee
3 hours ago, crashmonitor said:

My opinion is there is no way Labour will want to disturb the status quo of the Housing Market, for most lefties the Housing Market is the economy and any adjustment would have their Core support up in arms.

There is a huge correlation between leftist voting and constitutes  with high prices, yes that will include some disaffected Gen Zers renting, but it doesn't explain why almost the entire population in these areas vote either Lib or Lab. St Alban's the most expensive city, outside Central London, can only muster 20% support to parties on the right.

 

My experience of lefties is that the Housing Market and the Ladddr are a religion, Gordon Briwn must have seemed like the Messiah. Like Angela Rayner they would sell their grannies if it meant getting up the housing ladder 

It makes me laugh when the lefty's demonise BTL'ers as many of those greedy landlords are public sector or ex-public sector workers and staunch Labour supporters.

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