Wednesday, September 03, 2008
Hazel Learns Alistair's Lesson
Money Week has ripped to shreads yesterday's advice by Hazel Blears that she would encourage people to buy a house in the current economic climate. Mind you, I feel for my little chipmunk (don't I always?). She was asked on Today if someone came to her and asked whether they should buy a house, what would her answer be? She replied: "Yes, go for it. It's your dream". While that answer created headlines, imagine what the headlines would have been if she had said the opposite. Alistair Darling could probably tell her.
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23 comments:
Terrible time to buy a house if you're planning to trade up every year or two property ladder style. But if you're planning to stay somewhere for 10 years and can get a five year interest free 30% that allows you to get a mortgage and if you believe the market will be going upward again in five years plus or minus a few years? Then it isn't a bad time to buy.
Funnily enough the dreaded stamp duty concession looks like the least useful of the measures announced.
I agree with Chris Paul: if you are hoping to buy a house then watch it magically go up in value through no effort of your own then this is not a good time to buy. If you are looking to have a place of your own and can afford the payments then why not?
I am in negative equity but while I have a job I am happy and the interest is much less than renting!
i share your odd affection for Hazel Blears.
With Harman or Beckett or Jowell or Hewitt nannying and condescending on the radio, I'm chewing my fists. Little Hazel's chirpiness, on the other hand, doesn't grate nearly as much, and she does do well in Today programme bingo ("let me be clear", "robust", etc).
hazel blears advice makes sense if you are an mp and the taxpayer is picking up the tab
now is not the time to buy a house. glad you are all so sure of your jobs with unemployment set to potentially double during the next year.
What next? Encouraging everyone to buy shares in housebuilders and banks?
Since when is the government a good source of financial advice.
I'd feel sorry for Blears and Darling had they not tied their careers to two "chancers" Blair and Brown.
Interesting. Of course Peston was on R5L last afternoon conflating all the measures. The stamnp duty one may have some marginal effect on FTBs but it is more use to sellers and estate agents and 2nd, 3rd homers. The 30% free loan is the thing for the FTBs. And the safety net on arrears helps with the job risk.
I've not looked at the detail of that. Income support will pick up some mortgage interest etc. But mean tested in a way that means a two worker household does not get this slight protection if one loses job but cannot get IS as other is FT and over threshhold (16k? 24k?).
I hope that means test is not included in this safety net as it would make it much less useful.
On the jobs thing ... what if most of the losses were among the temporarily migrant workers? And less among the long term residents of whatever type.
This would have two effects. They might well go to other global locales - home state or otherwise - where there is more or better work so not appearing in unemployed statistics BUT the economy would experience negative result when they did this.
Already happening in fact. Probably.
Retail chains do like for like comparisons. Perhaps Gordon or indeed the OECD should try a bit of that if this phenomenon is having a more than trivial effect on the headline figures?
Gordon Brown's house building drive will see three million homes built by 2020
Ministers will pledge to "unblock the planning system" in a race to build an extra 100 houses a day for the next 13 years to meet the growing demand for new homes...Nov 2007
And the big Brown blob hasn't revised this forecast by as much as one home.
Carolion Flinty says "Still on target to meet our housebuilding quota..."
Really? How so? and more importantly, what for?
Cityunslicker is Alistair Darling and I claim my £5!!
Tell you something, the arrangement costs for these joint state/bank mortgages will cost a packet no doubt the buyer's solicitor will charge a packet too.
We do not yet know what the 'state's' fee will be and as yet no bank has signed up to the scheme what interest rates they will offer . It is also thought that the 30% loan will not count as a deposit and the banks will insist that the buyer will still have to cough up at least 10%. also what happens if the buyer defaults on the 70% mortgage and the bank repossesses?
Does the state take a charge on the property or is it an unsecured loan?
A stupid stupid stupid idea.
chris paul
Property ladder? What ladder? There is no ladder.
What gives you the impression that house prices will be higher in 5 years than they are now? Please listen to those siren voices of doom. They're right - the West and, in particular, the UK is finished for the forseeable future.
Sorry.
Chris Paul - You do not get 30% interest free, everyone else and you pays for it through tax, or at very least as an opportunity cost.
If cannot afford to buy a house, you cannot afford to buy a house. All these schemes to get houses bought just ends up in a house price bubble - oh yes, sorry just forgot for a moment.
And yes CP you are right. If you buy a house now and plan to stay in it for at leat ten years then you may be OK. But if you are FTB what you are going to do is sacrifice your hard saved deposit on the alter of everyone else's house move up the chain. If you are trading to a home that you really really want then maybe. If that home is a 'commodity house' as opposed to something 'special' then don't bother. You'll lose. And in any event the average house move time is about 7 years, so you are screwed. And suppose you have to move to where the work is and you cannot sell because of negative equity? Or you have a child/another child and need to move?
The difference bewteen me and you is that I am qualified licenced and very experinced indeed in retail financial services, personal financial planning and personal financial risk management and the house market. Whereas you are a berk. (Iain's rules do not let me describe you accurately). The difference also applies to me and the stupid government, especially the plonker in chief.
I recently met Hazel Blears and I have to say I am rather impressed with her to be honest. Politically, her and her party have destroyed this country, decimated our values and traditions, squandered our public finances and relegeted our international status, but personally Blears is probably one of the most down to earth senior politicans I have met. She takes insults on the chin and will clearly fight for her party til the bitter end.
For someone coming from where she has, to the position she is in, I find her presence in the Cabinet reassuring.
If only she'd joined the Tories she might be more universally liked.
Chipmonk's starry-eyed romanticism about home ownership goes a long way to explain why these silly measures have been structured as they have.
Instead of much help to those recent buyers already suckered in, she wants to sucker in more, at the same time pushing down the relative price of "second-hand" homes which are mostly what recent first time buyers trapped by negative equity might be trying to sell.
Instead of more help to get new homes built as rented accommodation, she biases it towards owner occupation.
Instead of being even-handed to different parts of the country, she (or the Treasury) offer stamp duty free purchase of a large £175,000 house up north but not for a £200,000 one or at most two bedroom flat in most parts of London.
Darling's answer in an interview that the decision on whether to buy is something that people must make for themselves was much more sensible. On the other hand, if the Govt wants to go into giving financial advice, it should employ Chris Paul (first comment on this thread) to write its lines for it.
The chipmonk is grating and, strangely enough, chippy. Whether this comes from her small stature or from her origins can only be a matter for conjecture. One of the many pleasures of the prospect of a potential change of Govt is that we will see and hear a lot less of her.
I agree with Lola , every freebee Gordon hands out is on Dave’s credit card which is ours so its all just a conjuring trick. The correct answer on house prices , is to let prices fall until they are attractive . I doubt , at this point, it would be all that far .I personally know of two property speculators buying like crazy and it looks a like a good bet to me .Given the promise of a Conservative government the corner might well turn pretty soon. Buying aint the problem is it .Its selling that’s tough
Of course had we not been taxed into penury and borrowed into a cul-de-sac, we would be less concerned . Think of all the growth we have sacrificed by sustaining the Chris Paul tribe of public sector lay-abouts quango -crats and scroungers not to say the far more important populations of immigrants who do nothing and are going nowhere .
Lola given your CV you are lucky you have not been carted off to a New Labour Gulag in the Hebrides .I am in small Insurance , mostly SMEs private sector , obviously , Southern heterosexual white married and with children . Save me a comfy cell.
The stamp duty thing has been pitched at an interesting level. I live in London, so this will sound like special pleading, but the fact is that you're going to find it pretty tough to find a flat in an area you want to live in for much less than £200,000 and that's pushing it. To live somewhere you might actually like you're more likely looking at a starting price of £220 (K) - 230, and we're still talking about 1-beds in zones 3 and above.
Now, I'm not complaining - that's the market and I'm happy renting. If I were desperate to own a house, there are lots of options; move to some armpit of a stabbing arena in SE london, commute from Kent / Herts, etc etc. Or move out of london. I'm not. But it's interesting that the stamp duty exemption threshold has been set at £175K. I can't help wondering if it is deliberately done so as to look like they're helping out first time buyers (and in some parts of the country that does) whilst keeping all the lovely revenue from Londoners. And no-one will care if londoners whinge because people who don't live in the capital resent the fact that so much is london-centric.
So it's fine, but it means that 'helping first time buyers' is a bit disingenuous. More accurate would be 'looking like we're helping first time buyers whilst continuing to rake in as much as we can.'
Being an old sexist I have a simple classification for ladies. I speculate as to whether they are enthusiasts or not. I reckon Hazel is just such one enthusiast. She has that look in her eyes. mmmmmm
No, I do NOT feel sorry for her. She's a useless fool, and her advice yesterday was shocking and totally irresponsible, with the on-going state of the housing market. She has been promoted - along with all her colleagues, way way beyond her capabilities, and we are all suffering for it.
No, I never feel sorrow for her, I just wish she'd shut up and go away. And not come back. And her mates.
You have to be regulated by the Financial Services Authority to offer loans and advice thereon.
I suspect Hazel has just broken the law!
Hmm. I'm a Chartered Accountant, but lack the necessary licence to give investment advice. I am breaking the law if I attempt to do so.
Is Mrs Blears above this law simply because she is a goverment minister? (with a vested interest - so presumably the ethical question of conflict of interest also arises)
Blears would be a waste of a bullet,,,
Go into rental for two years and save 30% off the current asking price.
Prices will still be falling
Well, chaps, I AM licensed to give investment and mortgage advice. But there again Spike Milligan was sane and had the certificate to prove it.
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