One thing I've previously lamented is how IPv6 requires parens for IP:port pair string - particularly problematic if you want to be able to have a default port when the suffix is missing.
I don't know about "notoriously difficult to live as a foreigner in Japan." I mean, you DO need a visa (residence status), but it's easier to get than a lot of countries.
You don't legally need to even be a resident to buy a property here, so there's that.
And yes, beautiful homes in beautiful places can be found for quite cheap here. But what social media doesn't tell you is that most of those places need a lot of work, are very far away from anything, and there is no "growth" of any kind in those areas. If you have the cash, no kids, work remotely and are willing to learn the language/culture... totally doable.
It's hardly about a company having a "right" to stop you from saying anything, it's about what your reaction to life events says about you.
If you get fired and your reaction is to go to your blog and whine about losing email access and not being able to deliver a talk that you had prepared for x time I, as a prospective employer, am going to draw some conclusions about your personality that won't help you get the job I'm offering.
Over the last 50-70 years the UK made the choice to stop building social housing and to sell off the existing stock with aggressive government subsidies.
Complaining now is a bit like complaining there's no milk after you sold the dairy farm to build a casino.
I read TFA but I'm not seeing anything but useless outrage that would have been better placed 20-30 years ago
I became a first time property owner at 36 and it took a top 2-3% percentile income + my partners more median salary to do it on the outskirts of London
My mortgage runs until I'm 70 and I, like most owners now, are entirely dependent on the housing casino game continuing. If houses ever return to good affordability I'm screwed.
I have to refinance every 5 years, because that's the game in the UK, so if rates spike I'm also screwed.
Everyone in UK housing, owner or rented, is screwed and it's been this way for decades.
So, I'm really into municipal finance and fixing the housing crisis, which got me into Strong Towns. There is a solution, but it's not one that is going to make everyone happy (obviously), it is the state facilitating or even gently subsidizing incremental development.
If everyone is, by right, allowed to build the next larger "unit" of housing (for simplicity's sake, suppose 2x sqft[m2], height, and housing units of the median residential building within a half-mile radius), but not allow to massively build piles of housing on one site, then we effectively solve both problems.
Firstly, this allows for a massive amount of housing construction, with market incentives driving it. Out of the gate, you have the potential to easily double the housing supply. Secondly, the profits from the housing must be more-or-less distributed to the existing homeowners, and the potential to lower property values by building non-like for like housing doesn't exist. Neighborhoods slowly evolve, they don't rapidly change. Third, it incentivizes homeowners to build-to-last with the next stage of growth built in, because it's much cheaper in the long run to build a structure with the capacity to stack another unit on top than it is to tear down a building and rebuild the unit at double the capacity. Finally... and this is the thing that most people miss. It's fast. Smaller-scale developments need a much smaller planning phase, and there are many, many more of them to be constructed. This supports economies of scale, instead of the existing system, with all it's red tape that only allows a few actors to wade through the legal system for large developments. This should create a wide construction industry instead of a narrow one.
I really think the housing crisis is solvable with the top level government insisting that incremental development be allow by right, and that larger scale developments be put up for local review. This allows a city to grow organically, instead of all at once, but only at specific sites.
This is what the planning system in the UK prevents. It is complex to get permission to build, so it is done by property developers of landowners and for one large site at a time.
The government might also be pushed into actions that reduce house prices for other reasons.
The biggest reason for nigh house prices (particularly relative to incomes) is the affordability of mortgage payments as a result of low interest rates. Interest rates may have to be raised to control inflation.
It is a mistake to think of supply vs demand as "how many people want a house" vs "how many houses are there". Both supply and demand are curves against price. Interest rates shift the demand curve. As the supply curve is inelastic it has an even greater impact in the short term
And this discussion is hard because to just maintain current pension levels young people will need to be a LOT more productive (ie. work more, and keep less of the fruits of their labour) ... and if we're going to assign blame, the reason is that the pensioners refused to have enough kids. It's not really the kids' fault.
We all know what's going to happen too, in general. Some economic upheaval, some drastic event will create enormous disruption and then, finally, it will be politically acceptable to make the hard choice.
> the reason is that the pensioners refused to have enough kids
I thought they did have enough kids but that the next generation(s) need to breed faster.
In New Zealand and Australia ~30% of population were born in another country. I suspect our government will try and fix the working-age population hole by more immigration? New Zealand is building houses (necessary when increasing population by 50% through immigration). You can see both higher density and new suburban growth (replacing farmland) in my city of Christchurch.
It is silly to plan your retirement by looking at the situation right now. The economics of demographics will require grim changes. I'm sceptical of retirement funding, superannuation, and house sales. Even preppers seem like they have some sense. There's little information on potential solutions - everything is based on the presumption that decades away will be just like it is today.
> It is silly to plan your retirement by looking at the situation right now. The economics of demographics will require grim changes.
This is doom talk. Of course it isn't. One thing is for sure: you are going to be responsible for your own retirement, because superannuation is only meant to drive up house prices and will collapse along with house prices ... "eventually". It may not be clear when exactly this will happen, but of course in Australia it will have to happen near 2054 (when Australia's population growth will go into reverse until at least 2084).
Perhaps easier to say in Australia: Australia seems to be doing better than many countries so perhaps you don't recognise the problem. Japan and Italy already have some ~$0 houses due to demographics. Children from New Zealand go overseas so demographics in NZ are worse than Australia. An article[1] this morning asked:
"Have you seriously considered moving to Australia in the last year?" 37% said YES (and 40% of those have 'looked into it').
This thread is started by nly in London who clearly hasn't retired yet:
My mortgage runs until I'm 70 and I, like most owners now, are entirely dependent on the housing casino game continuing. I have to refinance every 5 years, so if rates spike I'm also screwed.
Try to ignore the bullshit in both but do attend to the facts.
I'm over a decade away from retirement in New Zealand, but all the signals I see here are pointing towards the country taxation base not being able to afford retirees in the future. I haven't considered Australia yet since I assume Oz won't escape the demographic wall, and if there is a future problem then being a kiwi in Oz could become unpleasant.
The narrative a year ago was that we should invest a good proportion of retirement savings into the US stock market. Recent events indicate that might not be an effective long term strategy.
A rental property was the traditional investment vehicle goal for many New Zealanders - but I've been becoming more sceptical about that idea (even though I've seen the past success).
I've no idea what the solution is, but I'm certain that the strategy that worked for my parents won't work for me.
Politicians are not going to provide a solution, nor are private developers. The solution is a crash that can't be avoided. As hinted at, this could be caused by a sustained increase in interest rates. It has happened before and it will happen again. I would even go so far as to say it is already happening in some property markets (>30% down in real terms in my city already, with no end in sight).
Well, the renters will reward any government that pushes down house prices i.e. builds more houses. And I assume there are more renters than home owners.
^^^ this
I don't think people consider the fact that a very good portion of these landowners were once renters that worked their way up and don't want to make it easier for the ones who have to do the same after themselves. It's easy to point fingers from the bottom until suddenly you're looking down from the top and the view ain't that bad
> It's easy to point fingers from the bottom until suddenly you're looking down from the top and the view ain't that bad
I wish we had specific words for this type of hypocrisy. Seeing people in wealthy USA complain about people relatively wealthier than them, rather than looking at their own wealth versus the poor in other countries. Obviously the poor in the USA aren't living the life of Reilly, but they're far beyond the wealth of the poor in India. How wealthy were the 99% Occupy Wall Street protesters?
You can't make people see what they don't want to.
> The 2011 Census tells us … around 64% of UK households owned their home
That’s not the same as the number of voters, obviously, but I’m not sure it’s a safe assumption, even before it gets into the actual voting dynamics from FPTP… there’s also presumably a lot of renters with their eyes on Mom and Dad’s home as an inheritance.
If they inherit the house they would be out of the mortgage casino and lower housing prices won't affect them so much.
Of course it won't be as valuable as an asset, but assuming they are primarily using it as a house rather then an asset then lower housing prices may not significantly affect their voting behaviour.
I would assume home owners are more likely to vote. But even with a lower voter turn out, there could still be more voting renters.
A sibling post has stats from 15 years ago but a lot has changed since then. My gut feeling is that more people are struggling to buy than to pay back mortgages but I have no stats to back that up.
This is the thing I never see addressed. Wouldn't fixing the housing crisis necessarily involve slashing down property values? Which are for a lot of people their only form of savings?
Genuine question by the way, I would like an answer.
> Which are for a lot of people their only form of savings?
It's fake savings unless you are speculating on properties.
Most people only own the place they actually live in and only resell to buy another place. A general property market crash doesn't affect the value of your house compared to other house so it's mostly neutral in this regard.
Of course people who borrowed before the crash will be in debt for longer than people who bought after but that doesn't actually change their debt situation. You might say it's unfair but well, not wanting other to be better of doesn't seem like a good reason to not solve the housing crisis.
In the end the only people who trully stand to lose are multi-owners but they are a significant part of the problem in the first place so that doesn't make me sad.
A case where it isn't fake savings is where people who work and live an a very expensive urban area, like london, may use the home as a retirement investment. So when they retire they move to a less expensive area and can use the difference in housing costs in the two areas as a retirement nest egg.
It's an interesting way to try to save, and assumes anyone will want and be able to buy it.
And that you will be able to keep the expensive property with expensive costs. Plus compare if living in the expensive vs cheap place gets you more savings...
No, it does not make sense. I can see holding a property for a child, but not as retirement.
You misunderstand I think. When you retire you sell the expensive property and then buy a less expensive property in a cheaper area. If retired, then potentially have fewer restrictions on where you live because you don't have to commute to work any more. The difference in property costs between the old and new areas is your nest egg.
You will still earn the difference between the expensive property and the less expensive one. It will just be a lot less and that’s a good thing.
Using properties as store of value or betting on them becoming more expensive have too many externalities.
Your case for exemple is directly leading to people actually living and working in the less expensive places being displaced by retirees from the city which is very much undesirable for local life.
It's not neutral if you've borrowed to buy the home...
If you're in negative or reduced equity your mortgage costs can increase dramatically when you refinance. This alone can easily cripple a large % of the population and tank the consumer economy
Why would you refinance if you're underwater? Wouldn't you walk away from the property in most cases?
Of course that doesn't eliminate the economic impact. It just shifts it elsewhere.
An decent case can probably be made for the government to take on such loans and offer some scheme to forgive the difference if certain criteria are met.
A sharp fall in house prices might hurt some people, although the number who would be in negative equity is probably smaller than you'd think. A quick Google says only 28% of homes are owner occupied with a mortgage, and the vast majority of those will have paid off substantial capital.
I think the premise is worth questioning though:
It's true that many people have most of their wealth tied up in their house. But unless they want to substantially downsize, they can't access these savings.
In general it seems bad that it's common for people to have most of their wealth in an illiquid, undiversified investment that they also live in.
The best answer I've seen is gradually increasing land value tax (yes, Georgist style). Would slowly deflate the market - but much more at the top end than the low end. Would also encourage efficient use of land. And be a new source of revenue that can replace other taxes.
Yes and no.. Slashing the problem completely is no worse than not fixing it since a climb into the stratosphere also has to burst.. I.e. with a new generation rejecting traditional lifestyles.
I think the solution is to artificially build new cities with ideal logistics. Distant cities inevitably draw away housing consumers but by least influential first and are outside each others influence for NIMBYs.
A nominal increase in value, while becoming more affordable in real terms might be feasible.
However to do this would require inflation of other goods, matched by wage rises, which would require actions that the British political establishment is not willing to take.
Making prices stagnant over 10-20 years would allow wages to catch up. This hurts speculators and finance way more than individual families and allows for a more gradual transition.
It's probably only something you can fix across generations.
You're totally right. It would be better for home owners since high houses prices make everything about buying and selling houses more expensive. You can't realise your housing gains except by dying. Or downsizing, but many old people rattle around in 3+ bedroom houses until they die or are forced to go into a retirement home.
It would also involve building more houses, which is bitterly and loudly opposed by a subset of home owners. Home owners are also richer, older, and vote much more than the (generally) poorer, younger renters.
If you're not planning on selling your house it's future value is irrelevant. All I care about is the purchase price of my "forever home".
The only difference it makes it that if your lender gives more favourable interest rates when your loan to value ratio improves. So if you purchase a house and the price doubles, your LTV is already 50%. Conversely if it drops after you paid off half the mortgage, your LTV might be shit
I'm not sure if the thing about LTV is true considering the whole picture, since the loan is larger. A larger loan at a lower interest rate still has large monthly payments. (I'd have to do the maths to be sure ...)
I looked up one of the major banks in my country and the difference in mortgage rates and monthly repayments for different LTV ratios is as follows for a €500k property with €50k down payment:
LTV <50%: 3.75% €2668pm
LTV >80%: 4.15% €2762pm
Over the lifetime of the loan you'll spend roughly half of the time paying the upper rate and half paying the lower rate.
However, if, over the first 10 years of the mortgage, your house halves in value due to a recession then you won't break the 50% LTV mark until year 15 (2040).
On the other hand, if house prices were to increase by 50% over that period then you might hit the 50% LTV mark within 7 years (2032).
The difference between the total mortgage interest in these two scenarios is €9216. The only thing that changed was the valuation of the home.
Yes, but that doesn't mean the people who had houses that lost value are screwed. It just means that they didn't pocket as much profit as they could have. They bought a value and a rate they could afford. They're no more or less screwed if the value of the house goes down. They're screwed if they can't pay the mortgage. Lots of people are screwed by high housing costs. The only rational conclusion is to lower housing costs. I say this as someone paying a mortgage.
Exactly. At some point a lot of people are going to discover that they are the bag-holders.
It's unfortunate, and at an individual level you can't blame people that felt compelled to purchase a home (only one!). However, if people are honest with themselves, they would admit that the only reason they were willing to pay such a high price is because they expected the price to increase. In other words they were speculating. After a certain point, nobody was buying for the actual ROI (i.e. income potential or substituted rental value). Not only was this mistake made, but it was made using massive leverage in most cases.
TLDR; Nobody was willing to admit that they were making a risky investment. A risk that it may turn out that they couldn't afford to make.
Yes. But that's just like any fake token being used by olds as a retirement plan.
Seeing as the olds control almost all of the wealth of industrialized nations, they should as a group be held entirely responsible for paying for entitlements and benefits for other elderly. The young should not be burdened with this. They have more burdens than they can handle already and are soon genetically extinct unless the olds take the boot from their neck.
Please stop spreading generational divide. Those olds were burdened with this just like today's young. Somehow some people think olds had it easy. Housing issues are not us(young) vs them(old).
I have more things in common with any young person from the other side of the world than I have with the olds from my own nation, city or street. It is what it is.
The olds have been waging a vicious economic war of extermination against the young for the entire 21st century. And now the cycle has to stop, because there are almost no more youth to exploit, and will be even less in the future.
No previous generation behaved like the current olds. We have to be much better than them, and let their twisted ways be forgotten.
"Now", it is 2025, not 2021, and there are one billion empty apartments in China, and the local government selling land to developers magic money tree ponzi scheme is running out of road.
A prior condition for building houses is having permission to build them. We have
found that the planning system is exerting a significant downward pressure on the
overall number of planning permissions being granted across Great Britain. Over
the long-term, the number of permissions being given has been insufficient to
support housebuilding at the level required to meet government targets and
measures of assessed need.
In particular, we have seen evidence of three key concerns with the planning
systems which we consider are limiting its ability to support the level of
housebuilding that policymakers believe is needed:
(a) Lack of predictability;
(b) Length, cost, and complexity of the planning process; and
(c) Insufficient clarity, consistency and strength of LPA targets, objectives, and
incentives to meet housing need.
We have also seen evidence that problems in the planning systems may be
having a disproportionate impact on SME housebuilders.
1) Green belt policies prevent the expansion of cities outwards. Compare the footprint of London to other major European cities and you'll see it's barely moved at all for decades.
2) Discretionary planning policies that mean local councils can turn down development, even when it adheres to stated rules. See for example this brownfield development in Brighton, a city that has one of the worst housing delivery records in the country: https://www.bbc.co.uk/news/articles/cwygkz57k1vo
The professional planning board recommended it for approval, but it was turned down by the political committee because of local complaints. A well specified zoning system would avoid this. Reduced uncertainty would make it possible for smaller builders to enter the market
3) affordable housing mandates (known as Inclusionary Zoning elsewhere). These specify that some amount of the new building must be offered at below market rates. Although there's a strong moral case for capturing some of the value produced by giving planning permission, this effectively acts as a tax on building homes in places with shortages. Ideally, people would be most incentivised to build where prices are highest, but this policy removes that incentive.
I can answer part of that. Very few areas are even opened up to allow building private housing, all kinds of "neighbours" can veto anything, just to name two problems
I much prefer the system the US, where you know your rate for longer. Some other countries, I think the Netherlands is one, also let you fix for longer than 5 years.
But why are you, and other people in your position, screwed if the prices return to affordability? High Loan-To-Value ratio so if the prices fall, the bank would force a sale?
I fully take your point, but I would point out, if housing prices drop 90% across the board, that would cause such an immense deflationary shock to the entire economy that $50k would go further than one would think.
Fixed rate for the full duration is also standard in France. People only refinance if the new rates are advantageous (and they find a bank which accepts).
Variable rates for mortgage are virtually unheard of.
I would assume it would be because the poster would find themselves in negative equity (depending on how much was left to repay on the mortgage) with all the potential pitfalls that come with it, such as if you want to borrow further money against the value of the property or if you want to sell up and move.
Let's say you buy a house at 500K with a 400K mortgage. House prices fall 50%, you owe 400K on a 250K house. Banks would repossess as the loan value can't be guaranteed by the asset. Separately, you could default on the loan if laws allow it, losing much of your wealth and making it impossible for you to get a loan for the 150K to move to another house. You could keep paying the loan, spending many years of income for exactly nothing in return. People tend to buy another house immediately, so there isn't that much "freed" money. So either banks lose a huge lot of money, or people do. Either way, massive financial crisis. That's an extreme case, adjust for lower fluctuations. I can be, and probably am, completely wrong about this.
In which country can Banks reposess if market value falls? In Germany that risk is 100% on the bank. No reprocessing without you failing to pay anyway.
I misspoke - you would not be able to remortgage and would need to repay the loan when the term expires, or be repossessed. In the UK, most people are on a 2 or 5 years fixed-rate mortgage, after which you don't need to remortgage but really want to, because the variable rate is typically a lot more expensive - so you're throwing even more money into the hole.
> If houses ever return to good affordability I'm screwed.
Uhh, why? Unless you were planning on selling up and spending it all on a cruise or something house prices are immaterial to home owners.
> I have to refinance every 5 years, because that's the game in the UK, so if rates spike I'm also screwed.
This is the real problem. It's partly our fault, of course, for agreeing to a mortgage which we couldn't afford if the interest rates doubled. You know exactly what you're signing up to, but you still do it.
The trouble is there's no choice. The finance industry has us by the balls. I don't even think of it as a housing crisis, I think of it as finance crisis. The real problem is banks control far too much of our lives. The entire money supply is essentially just mortgages. This abstraction we call money has been taken way too far.
Housing is a huge cut of your salary. If housing were affordable, that money could be saved for retirement. Instead, it's paid toward a mortgage by necessity. So there is little room for savings other than hoping the house sells when you retire.
It doesn't have to be. You could live in a small place in a shit area miles from anything. But most people choose to allocate a large amount of their income to housing. This is what sets the pricing for housing in the good areas.
In other words, housing will always be a huge chunk of your income because it's hugely important. The only way it could be less is if it stopped mattering where you live. Then housing would be essentially a commodity and priced accordingly.
It's important to realise that money is an abstraction that we use to do trade, but it's not trade itself. Pricing is a reflection of market forces. You can't just magically change the price of housing and suddenly have more of everything else with no compromises. You have to change the market.
People always say "more housing*, but that's incredibly naive. More housing in the UK means tiny plots of land crammed in next to a dual carriageway in the middle of nowhere. People don't want to live there, but there's no choice. As long as there's inequality there will be high house prices. Turning housing into a commodity such that you can allocate only a small part of your income to it would take a lot more fundamental changes towards equality like vastly improved public transport, decentralisation of business, turning the most beautiful areas into national parks instead of estates owned by the rich etc.
> Uhh, why? Unless you were planning on selling up and spending it all on a cruise or something house prices are immaterial to home owners.
I don't know how it is in the UK, but in Paris, I hear from a lot of people that their retirement plan is to sell their Parisian apartment and move to a lower cost area with what they've gained. Doesn't work out if your "investment" is underwater.
If the Parisian apartments become undesirable and the low cost areas become desirable then, yeah, it wouldn't work out. But that's not what we're talking about. House prices going down across the board makes no difference. You sell your apartment for a lower number but you buy the new place for a lower number too.
The numbers are just made up and don't matter. You can't eat a number and it won't keep you warm or dry. It's so weird to me that even in a place like this people can't see beyond the numbers.
You don't need the high cost and low cost areas to flip to be caught out. You just need the high cost areas to decrease in price and then it's immaterial whether the low cost areas increase in cost or not. There's no way they can decrease the same amount as the high cost areas, seeing as there's a floor. Then that excess that people had planned for is no longer there.
> The numbers are just made up and don't matter.
You've asked why people care. They care because they've made their retirement plans on a made up number. Is that reasonable? I don't think so, and it's why I'm renting not buying. But you're tilting at windmills at this point to explain to people who have a vested financial interest why they're wrong.
Interest rates for individuals buying homes should be near zero. This needs to be subsidized by higher interest rates or taxes-on-businesses elsewhere.
> Uhh, why? Unless you were planning on selling up and spending it all on a cruise or something house prices are immaterial to home owners.
No, it's not immaterial. If you paid $1M for something and next year that something is worth $500K, it's a problem, regardless of whether you own it or it's mortgaged, regardless of whether you plan to sell it or live in it. You lost $500K, it's as simple as that.
Did you buy a home > 10 years ago? Given inflation, isn't your mortgage not easy to pay off at this point (even if you did pay the minimum?). I can imagine one of two scenarios: (a) at the start, you really stretched and got a nice place to live (bravo!! in hindsight that was a genius move as you enjoyed many years of good quality living) or (b) your income has been stagnant (sorry :( )
I got a place 5 years back and did not overstretch at all ... now, the biggest challenge is our place is too small and has other inconveniences (lack of commute) that is painful. Selling and rebuying is trauma I don't want to inflict again.
> I have to refinance every 5 years, because that's the game in the UK, so if rates spike I'm also screwed.
Could anyone explain why is that the case? If the mortgage is till 70 then why are you forced to remake the agreement every 5 years? Can't you stick to original one?
No idea how it works in other countries but in the UK there are fixed-rate mortgages and variable-rate mortgages. Fixed rate ones are where the interest rate is locked in at the time the mortgage is taken out so any changes to the national base rate (positive or negative) do not change how much you have to repay, variable-rate mortgages are when the interest rate will fluctuate as the national base rate rises and falls.
Fixed-rate mortgages are time-limited (typically between 2-5 years) and after that you either switch to a variable rate mortgage or you take out a new fixed-rate mortgage based on the interest rates at the time.
People that bought properties just before COVID got dirt-cheap fixed-rate mortgages as the Bank of England base rate was 0.5%. Anyone sensible locked it in for 5 years which is typically the maximum available. After those 5 years were up, the base rate was about 5% which is a huge jump. I think most people have locked theirs in for 2 years now in the hopes that in a couple of years the base rate will be much lower.
Most(?) UK loans are fixed for a 5 years or so and then revert to the standard variable rate of the bank. Variable rates can make financial planning uncertain. But the bigger issue is often just the standard variable rate you get put on isn't the best rate, so you are generally advantaged to review and move.
US loans on the other hand are government backed to allow for longer fixed terms (30 years etc.)
You can keep the loan without refinancing it, but you move to what's known as the "standard variable rate" which is generally unfavourable. Most people therefore remortgage to a new "introductory" offer which will be fixed for 2, 3 or 5 years. This is expensive, time-consuming and inconvenient, like much of the UK housing system. A few years ago interest rates shot up, and some people had to stay on the SVR as fewer banks were offering new fixes.
Fixed rates are possible, but often the margins are pretty significant especially when rates are very low. Say rate is 0.25%, margin is 0.5-1%, fixed rate might be 1.5%+0.5-1%... When leveraged to max this could be big chunk...
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