QCFP Calls for the Reduction of the Debt Binge
In this property report, QCFP talks about the way in which people have been managing their funds over the years. A report published by Philip Aldrich in the Telegraph on May 14 mentions that the poorest in the country increased their spending by around 40% since 1997. Philip Aldrich has pointed out that the consumer led economic miracle of the labour years was directly related to unbridled borrowings, which led to people falling into a debt trap. The report has been backed by the think tanks from The Resolution Foundation and National Institute for Economic and Social Research. What does this report indicate? It is a clear signal that people who had no means to sustain themselves within their known sources of income were borrowing money to spend on non-essential commodities. With people spending a major portion of their income in this manner it would have been impossible for them to think about owning a property within the lifespan of their career.
QCFP Asks Whether a Reduction of the Debt Binge Will Change Conditions for People
Looking at the report which has been published people could very well think about cutting down on expenditure and begin living a frugal life. However, a question must be asked whether any changes which people begin implementing will be effective under the circumstances that are presently prevailing. It will still be difficult for people to think about purchasing a home because of numerous changes, which have been made effective by lending institutions and other financial organisations. People will be required to do a lot more before they can consider themselves eligible for the purchase of a property.
QCFP Looks at the Options Which People Can Today Consider
Merely thinking about staying away from a debt trap will not prove beneficial for people because they will be required to sustain themselves in times that are difficult. People will not only have to cut down on their expenditure for non-essential commodities but will also have to make an effort to try to save money in every way possible. This will mean staying away from a holiday or even cutting down on any celebrations, which may have been planned. This is the only way by which people can make themselves eligible for the purchase of a home is perhaps in a few years from making a start. They will have to combat difficult times while ensuring that they stay away from any financial misdemeanours if they ever wish to own a home for themselves.
QCFP Says Sellers Still Demanding Higher Prices
This property report from QCFP talks about the higher asking prices which are being demanded for homes by people that are looking forward to selling them. This has been a problem which has been reported repeatedly. When looking forward to selling a home for any reason people in the country do not consider the prevailing conditions in the market but make an attempt to recover the money they invested in the property. People would not be wrong to believe that they have a right to curtail their losses and recover every pound of their investment. However, trying to do this in conditions that are adverse to property sales is something that is not advised. If people desire to sell their property for any reason and need to complete a deal in a hurry they will have to accept realistic prices that are prevailing in the market. They can never hope to make a full recovery of the investment.
QCFP Points out That Buyers Holding Back Because Of Several Reasons
There are a number of reasons why buyers are staying away from completing property purchases. This is not an indicator about the drop in demand for homes in the country but is a pointer towards other factors which people depend upon before they can complete a property deal. Unlike in the past people are no longer able to get interest-only mortgages, unless they make a large down payment for the property. Even in cases where lenders are willing to approve mortgages with a down payment of only 5% people are required to pay higher interest rates, which make it impossible for them to complete a purchase.
QCFP-Reality Has to Sink in If Property Market Has To Improve
Any improvement in the conditions of the property market will only be seen if the market as a whole will begin to consider the reality which is evident. There are no disputes about the fact that property prices have dropped while lenders have made it increasingly difficult for people to obtain mortgages. The lack of availability of interest-only mortgages is another factor, which is affecting property deals. People from all walks of life will have to realise that they cannot buy or sell properties, unless they are willing to compromise with the market conditions. Lenders too will have to consider the economic conditions before demanding higher down payments or interest for the approval of mortgages. Unless these factors are considered by all, it will be difficult for the property market to make an improvement.
QCFP Says Housing Policy Will Collapse without Support from Banks
QCFP investigates the truth into the new buy scheme which was announced by Prime Minister David Cameron this year. The scheme was to allow first-time home buyers in the country an opportunity to purchase a home with a down payment of just 5%. Prices of properties were slated to be in the region of £ 125, 000-£ 250,000. In conditions where banks were demanding down payments of 15 to 25%, this scheme had given rise to optimism among people that wanted to purchase a property for themselves. They were hopeful that the authorities had finally done something, which would alleviate the crisis in the housing market. Unfortunately, mortgage lenders have chosen to increase interest rates at a time when they could have delayed the matter. The increase in interest rates has made the new buy scheme a nonstarter because people just cannot afford to repay the mortgage as they borrow at high interest rates. This policy by the government is likely to collapse without adequate support being provided by mortgage lenders.
QCFP Looks at the Housing Crisis As It Currently Stands
It is very well known that the country needs around 250,000 homes every year while construction is languishing behind. 110,000 properties were constructed in 2011 against a demand which is over twice the number. This is in stark contrast to 1968 when 350,000 homes were constructed. The figure is down even when compared to 2008 when construction activity stood at 200,000. Today the population of the country is increasing at fast pace and making demands for affordable housing to be made available. The government had taken a step in the right direction but is now being held back by mortgage lenders who have decided to take advantage of the situation and increase interest rates for mortgages.
QCFP Wants Mortgage Lenders to Reconsider Policy
Mortgage lenders will have to reconsider their policy of increasing interest rates at a time when the economy is facing its worst crisis. The Housing policy announced by the Prime Minister would have made homes available to people while giving a boost to the economy. The construction industry had fared badly in the first quarter of the year, and the policy by the government would have given them the impetus to make a recovery. It would also have created a number of jobs, which would have helped in reducing the numbers of unemployed. Unfortunately, the steps taken by mortgage lenders is proving to be a setback and is likely to ensure that none of the above can turn into reality. Mortgage lenders will certainly have to reconsider their policy of increasing interest rates because this will help the economy in a major way. At the same time, the government will also have to take some steps to curtail the hikes which are proving to be a deterrent for prospective home buyers. Steps will have to be taken in this direction failing which the housing market, and the economy will be headed towards a ruin.
QCFP Mentions Figures Available Are Deceptive
QCFP takes a look at the latest figures put out by the Telegraph which shows that mortgage borrowings increased dramatically in the month of March 2012. The reasons for the increase are attributed to the exemption of the stamp duty which ended on March 24. Mortgage approvals climbed up to 49,860 from 49,029 in February. It can be said that people who want to complete the stamp duty exemption deadline would have rushed to obtain mortgages to complete the purchase of a property. However, no drop has been seen in mortgage approvals, which have remained steady at around 90,000 a month even after the expiry of the stamp duty exemption. What are people borrowing money for as no increases have been noticed in the sales of properties in the country? Are the people in the country looking forward to re-mortgaging properties in an attempt to move away from mortgage bankers who are today charging higher interest rates?
QCFP Looks at Higher Consumer Borrowing in March
Consumer borrowing in March also saw an increase with figures available showing that people borrowed £ 400 million in comparison to £ 300 million in February. This is a 25% increase which again points to the fact that people have not stopped borrowing money in spite of the difficult conditions they face. Even worse are the figures of people who borrowed money by using their credit cards where an increase of hundred percent was seen over February. Credit card borrowings rose by hundred million pounds to £ 200 million in March. A boost in retail sales was also noticed which could have been fuelled by the increase seen in credit card debts.
QCFP Looks at the Reasons behind the Borrowings
It was earlier reported that the people in the country did not have enough funds in their accounts to meet everyday expenditure and were looking forward to making amends by borrowing money. Reports had appeared that people were using credit cards and in some cases even borrowing money from payday loan lenders to make mortgage repayments. It is possible that a part of the higher figures which are now being reported has been used by people for the same reasons as before. The increase seen in mortgage borrowings was only a phase to beat the stamp duty exemption. However, the sustained borrowings, which are being reported is certainly a sign of more trouble to follow. The reasons for the increase could be entirely different from those that were mentioned earlier. It is only a closer look that will reveal the real facts behind the borrowings which people are obtaining at a high cost.
QCFP Remains Pessimistic about the Future of House Prices in the Country
In this property report, QCFP talks about the double-dip recession which has hit the country and is going to affect the economy like never before. Recessions have been seen since 1955 and have continued to this day. Downfalls in the prices of properties had been felt before, and the same phenomenon is being seen now. The recession which has hit the country over the last four years is proving difficult for all as the general cost of living has risen beyond comparable levels. The news about the double-dip recession has come from an authority like Howard Archer, who is the UK chief economist at IHS Global Insight. Mr. Archer has predicted that the news, which is available, is certainly not good for the housing market in general. Under the circumstances, it can be said that people in the country cannot have any kind of optimism that house prices will see a change for the better soon.
QCFP Asks People to Consider Market Realities
Last week, it was reported that people felt an increase in property prices was imminent by the end of 2012. With a double-dip recession in place one wonders as to how property prices can increase as people just do not have the funds required to purchase homes for the prices demanded. An increase in the value of properties has definitely been seen, but this is largely because of the inflation and not due to a real term increase in the value of the property. People will have to consider market realities and understand that it is a shortage of housing, which is perhaps keeping house prices higher than normal. People would never be able to get the kind of prices being demanded if more construction were to take place without delays.
QCFP Wants People to Prepare for a Long Haul
People will do well to prepare themselves for more difficulties in the coming months if no change is seen in the predictions that are being made. It must be mentioned that they will do better by bracing themselves for a downfall in property prices, which cannot be avoided. Government measures, which are being implemented, will not go a long way in helping in a recovery of prices in the housing market. On the contrary, the availability of more houses under the new buy scheme could push prices lower adding to the pressure which is already being felt by the market.
QCFP Questions What People Are Basing Their Optimism upon
QCFP looks into a survey which has been conducted by the leading agency in the country and has reported that people are optimistic about house prices increasing over the rest of this year. According to the Housing Market Sentiment Survey published by Zoopla about 67% of people who were surveyed in the first quarter of 2012 have confirmed that they expect house prices to improve over the next few months. This is a 12% increase over the numbers of people that were surveyed in the same period in 2011. The figures are even higher in the city of London where 82% of the people surveyed feel that house prices will increase by 5.5%. Why is it that people are showing a sense of optimism related to housing prices in conditions that are certainly not conducive for property investments?
QCFP Asks Whether People Are Basing Their Optimism on Asking Prices
It has for long been mentioned that asking prices of properties are higher than what they really are worth. People in the country have often asked higher prices for their properties even when the market conditions were adverse. Analysts all around the country have predicted that house prices will continue to fall until 2020, and no recovery has been predicted. Under the circumstances, it must be questioned whether people are basing their optimism purely on the asking prices which they generally demand. No other factor can be attributed to this optimistic feeling, which has suddenly emerged among the minds of people. It is true that some areas of the country have seen an increase in the prices of properties, but this is largely due to the shortage of housing and not to an improvement in the property market.
QCFP Wonders What This Means for the Property Market
It will certainly be a turn for the better if the optimism of people becomes a reality. The confidence which people have in the economy, and the property market will be on a high if prices of houses increase. However, the reverse will become a reality if prices continue to fall as has been predicted by the analysts in the country. A major dent will be seen in the confidence of people who are presently hoping for the better soon. An increase in prices may satisfy a certain section of the population but will make it difficult for the others to own homes, which will not be a good sign for things to come. Only time will tell whether the optimism that is being shown by people will be better for the property market or not.
QCFP Says Britons Using Their Imagination to beat the Shortage of Housing
QCFP looks at the way one family in the country has managed to beat the housing crisis by using a little imagination and managing to get the additional space they wanted. The family of three was finding their rented accommodation growing smaller for their requirements while their financial conditions were making it impossible for them to purchase a bigger home. This brought to the forefront their imagination which allowed them to save a large amount of money apart from staying away from any kind of debts. This innovative family decided to purchase a garage for £ 6500 and convert it into a small place for themselves. In doing so they did not have to obtain a mortgage and today have the additional space they need for an affordable price. What does this mean for the vast numbers of people in the country that are looking forward to climbing up the housing ladder?
QCFP Asks Whether the Family Has Set an Example for Others to Follow
This family could certainly have set a trend which may soon be followed by the others. Not only have they managed to purchase a garage for an affordable price and converted it into living quarters but are also contemplating making similar investments in the vacant spaces beside them. They are now planning to purchase the garages beside them to increase the space of the one that has already been purchased. They plan to break walls in order to achieve their objective. As news about this story spreads across the country, it is likely that more people will be looking forward to thinking in a similar manner and could make a beeline for garages that are lying vacant in the country.
QCFP Questions Why People Are Forced to Adopt Such Measures
If the governing authorities of the country had considered the fact that there was a serious shortage of housing people would not have had to use their imagination in order to convert garages into homes. It is the desperation of people, which is forcing them to use such measures and create some additional space for themselves. The authorities will soon have to come up with innovative measures of their own failing which the country will witness a shortage of garages as well. People will understand that making such investments will only require them to use a part of their savings and there are not likely to lose money either. They can even think about renting out the garage which will bring in better returns than the interest they would earn if the money were left in a bank. The authorities will do well to begin thinking right away failing which they could witness a new trend which would become popular.
QCFP Comments Wage Increase Is a Must If Property Market Has to Improve
QCFP talks about the stagnation which has been seen in wage increases over the years. It is now being reported that wages in the country are at their lowest after the subject of inflation is taken into consideration. Yahoo! News has today reported that minimum wages in the country are at £ 6.19 per hour, which is lower than what it was in 2004. This certainly indicates that people have less money in their accounts and are required to meet everyday expenses on credit. Under the circumstances how can people even think about purchasing a home for themselves when they are barely able to meet household expenditure? Numerous reports have appeared in the recent past which has indicated a slowdown in wage increases. These factors will not help bring about an improvement in the housing market because people will just not have the money to make the investments.
QCFP Looks at the People That Are Worst Affected
The stagnation of wages has affected Britons the most that were earlier accustomed to a different lifestyle. The ownership of a home was considered a priority which every Briton had but is no longer a reality which they can pursue. Lower wages that are being paid by employers is making these people rely on credit, which is available at high rates of interest. People from all walks of life have been affected by the downfall but the brunt has been faced by Britons, who are unable to make amends with the situation. These conditions will prevail until the authorities take steps, which will bring about a change and increase wages in line with the rate of inflation.
QCFP Says the Property Market Will Continue to Face Dire Straits
Any improvement in the conditions of the property market will depend upon whether people have the money to purchase properties or not. While short-term credit is certainly available to people to manage small expenses, they are unable to raise the finances required for the purchase of a property. The new buy scheme which was proposed by the government is also something that is likely to face problems because of the higher prices quoted for the properties. Under the circumstances, it can be said that the property market will continue to face dire straits and will not be looking up soon. The only change that will perhaps be seen will be after the economic conditions of the country have improved. Until such times arrive Britons will not be in a position to purchase homes for themselves.
QCFP Questions, Whether Lenders Are Increasing Costs without Considering Market Conditions
In this property report, QCFP raises a question that has been asked by large sections of the population in the country. People looking forward to purchasing homes and those that have already done so have been facing increasing pressure from lending institutions over a number of things. The first change which was seen was in the higher deposits that are being demanded by lenders from first-time home buyers. Then came the information that lenders wanted to increase the standard variable rates of mortgages, which saw interest rates rise by an average of 0.62%. The FSA then made an arrival into the scenario and imposed conditions on interest-only mortgages. Mortgage costs have increased by 30% over the last three years. These changes have come at a time when prices of properties in the country are not showing any signs of an improvement. People are looking at depreciation in the values of the property they purchased while first-time home buyers are finding it difficult to locate affordable housing. In these conditions, it must be asked whether lenders are considering the market conditions before going ahead and making changes, which are proving difficult for people.
QCFP Demands Introspection from Lenders
It is now time for lending institutions to introspect about the circumstances which are prevailing in the country. They must consider the kind of difficulties which people are going through and only then decide to make changes to lending regulations. Lending institutions have shown no inclination in cutting down on expenditure, which could have been avoided. People can regularly read about high bonuses, which are being taken by the top management of the lenders. These costs are invariably recovered from applicants for a mortgage which could have been curtailed. Lenders will have to understand that the Bank of England has made no changes to its base rate of 0.5%. They will have to consider these factors before looking forward to making it difficult for people to obtain mortgages.
QCFP States People Are Facing the Brunt of the Trouble
The people of this country are facing the brunt of the trouble is being heaped upon them by lenders and the authorities in command. They are being asked to spend more for everything they need while they do not have an opportunity to demand higher wages from their employers. Costs of essential commodities have shot through the roof along with the costs of credit, which was earlier cheaper. People are finding no respite from the troubles and could soon retaliate against the entire system. The authorities will have to bring in some changes, which will make things easier for people without which they would have to be prepared to face the trouble that will follow.
QCFP Asks Whether People Will Get respite from the Housing Shortage.
QCFP discusses a problem which is being faced by the vast majority of the population in the country and relates to the shortage of housing, which is well-known. People in the country are unable to purchase a home for themselves until they are well into their 40s. There are a number of reasons, which are holding people back from completing property purchases. However, the most prominent among the reason is a shortage in housing. This is a problem which has not been addressed by the government in spite of several proposals being put forward over the years. It has been estimated that the country needs around 200,000 homes immediately and at affordable prices. While the shortage in housing can be seen by all and sundry, it seems that the authorities can look no further than the numerous proposals, which they put forward and then put back in cold storage.
QCFP States Different Generations Are Forced to Live Together
It is now being reported that around 500,000, families have taken to living together to combat the shortage in housing, which does not look forward to improving. This figure is estimated to increase by another 56,000 by 2019. Earlier, it was believed that youngsters had to move out of their parent’s homes after they reached a certain age. The concept of living together was relegated to countries like Spain and Italy but was thought to be a shame in Britain. However, with the economic conditions worsening over time people have begun realising that their cause will be better served by living together. A glaring example is perhaps the large community from Asia, which resides in the country and continues to follow the age-old tradition of living as a joint family. People in the country may not prefer to follow traditions that have been adopted by other communities but are being forced to do so because of the economic conditions.
QCFP Questions, Whether the Present Generation Will Ever See a Change.
The slow progress that the government is making to bring about an improvement in the housing crisis is unlikely to change the scenario that is prevailing in the country. Under the circumstances, the possibility of the present generation witnessing a change looks improbable. Perhaps the time has now arrived for a change in the thinking of people who will have to make far more adjustments than before. They will have to compromise on their privacy and learn to live with the circumstances rather than think about having a separate dwelling for themselves.
