House Prices

[Bill Walker]

Banks create money. Unless you have your own printing press at home you can't.

Maybe I'm a bit thick with finance etc but I dont see how a bank can just create money on a computer.

When you pay a seller for a house it has to be real money, like actual money. Banks cant give you pretend money. They have to get that money from investors.

 

[Uwe Already]

Maybe I'm a bit thick with finance etc but I dont see how a bank can just create money on a computer.

When you pay a seller for a house it has to be real money, like actual money. Banks cant give you pretend money. They have to get that money from investors.

I‘m no expert, but cash as we know it is just a “promissory“ note - hence the phrase “I promise to pay the sum of” on it. Blame the templars, but real cash is gold and silver held in reserve. Thinking that as we have Apple Pay and such like, it’s not even a note nowadays

 

[Mr Kobayashi]

Maybe I'm a bit thick with finance etc but I dont see how a bank can just create money on a computer.

When you pay a seller for a house it has to be real money, like actual money. Banks cant give you pretend money. They have to get that money from investors.

No they don't. Anyone who has told you this or believes this doesn't know how money works in the real world.

Banks can originate loans, they are not merely intermediaries.

Mainstream economist discovers that banks create money (Krugman vs. Keen continued) - Positive Money

If you don’t realise something is broken, how do you know you need to fix it? One of the major problems monetary reformers face is that by and large the economics profession does not understand money and banking. This leads to them giving bad advice to policymakers, with bad policy leads to bad...

positivemoney.org

 

[Mr Kobayashi]

I‘m no expert, but cash as we know it is just a “promissory“ note - hence the phrase “I promise to pay the sum of” on it. Blame the templars, but real cash is gold and silver held in reserve. Thinking that as we have Apple Pay and such like, it’s not even a note nowadays

You were almost "on the money' and then go down the route of implicitly mentioning the gold standard bollocks.

What Is Money And How Is It Created?

These should be two of the easiest questions to answer in economics; after all, money is the one thing that we all use in an economy—surely we know what it is, and where it comes from? Unfortunately, we know what money is the same way the fabled Blind Men of Hindustan [...]

www.forbes.com

 

[sniff]

we left the gold standard in the 30s and im sure the labour government sold of most of the reserves in the 90s. we live i a world of financial invention at the moment seemingly

Im not sure any government still uses the gold standard in 2022

 

[Mr Kobayashi]

we left the gold standard in the 30s and im sure the labour government sold of most of the reserves in the 90s. we live i a world of financial invention at the moment seemingly

Im not sure any government still uses the gold standard in 2022

Correct. Gold standard bollocks was shorthand for the theory that true money is precious metals or other commodities.

The Forbes article above explains why that's not the case.

 

[Onholiday(somemightsay)]

At the moment my house is worth £80k more than what I paid for it 8 years ago (granted I spent £15k on doing it up with a personal loan which is now cleared) and I've got around £100k in equity on it at today's values...

Problem is, I'd never get anything like the same size of property/gardens in a nicer area, without mortgaging myself to way more than what I'd be comfortable with...

I think I'll stick to sunny smackhead central and should hopefully be mortgage free before I'm 40.

Brilliant position to be in.........

 

[Cheadle_hulmeBlue]

Managed to get my first house a year ago for 165. 3 bed house in offerton. Think I got lucky. The house next door has recently gone for 210. Same size, but not as well done up.

prices are ridiculous. The new build apartments all seem to be small ‘luxury’ apartments as well

 

[Manc in London]

I remember when we were looking to buy our first place in London around 2004. We had to save up for a deposit. Our aim was to save £30k (£25k deposit, £5k for some furniture and white goods). As we started saving, we looked at houses we were interested in. We could afford a 3-bed semi with a drive and in the catchment area for very good schools (we did not have a child at that point). Fast forward 18 months later and the houses we were interested in had gone up over £130k - £150k. It was bonkers. At that point, we could only afford a 2-bed terrace with no drive, required plenty of work and the local schools were dreadful. Even then, houses were selling before 'for sale' signs had been erected. This is in outer London (Enfield and Barnet areas), not the very expensive areas.

 

[inbetween]

they've got capital already. That's the only way.
They got in and bought in the previous decades when house prices were a multiple of income up to about x3.5 at most.
And/or they've got access to capital from parents who bought previously.

Households earning enough to be a first time buyers now surely aren't numerous enough (I've zero research to back this up....)

I doubt many people have the capital. The only people who have serious money nowadays are those above 50 which indeed fits what you're saying but nobody else. Any profit anyone makes on their house usually goes into the next one and how many people downsize or get a cheaper house for their next one?

We bought our first house years ago in our mid 20's, the deposit was around £25k. It took 2-3 years to save up that and we didn't get any direct financial help from our parents but we were lucky enough to live at home rent free. We're looking next at upsizing but we'll have to compromise on the next house or put up more equity to keep the mortgage affordable.

The salary to house value thing doesn't really matter, all that matters is that you can afford mortgage repayments and most people renting already pay more in rent than a mortgage so they can. It's saving the deposit that is the hard part.

Perhaps one problem is young people are moving out early but they're moving to go into education and not to go into work. I know people my age who were at uni well into their mid 20's. Back in the day most people left school and were working full time from 16.