My view is that the government need to encourage some institutional money back into the housing market. This would be best facilitated by allowing Pension Funds to buy residential property and Gordon now needs to U-Turn on his U-Turn and make this happen. This would make City centre flats slightly more attractive than they are now and if this supply is not taken up and used by the private rented sector we will store up a big problem in deed. Not only will large developers go bust leaving scores of unfinished schemes (and big logistical problems), but if nothing is done we will just have created the first slums of the 21st C! Part occupied buildings will fail due to lack of service charge payments being received or at best affordable only occupiers might fill some of the void (put forward by Housing Associations if allowed), but these occupiers will not be able to afford the service charge originally envisaged and blocks will slip rapidly into a state of poor repair and management.

The market could be stimulated by a moratorium on stamp duty payments for a 6-12 month period on transactions below £250k and a 50% rebeate on properties upto £500k. This will get the market moving and at least get some money flowing into the Government – better than nothing!

There is a big storm brewing and even if some of the above measures are implemented now, I feel that the planning system will not be able to respond if and when the market does improve in order to keep pace with the bounce of demand thus creating a surge in prices. The Planning System is a joke in that too many flats in areas where people dont want to live have been encouraged by government policy. We need to build more family homes in areas where people want to live. Planners have manipulated new guide lines which are meant to speed up the process by refusing to accept planning applications which dont meet their more stringent creteria which is loosley defined – they then use this time to negotiate the scheme prior to the same being submitted, resulting in more pre ap discussions and a new 13 week period (previously 8) in which they can determine the same. The av time to get planning by my experience is about 12 -15 months!

By the same token we should also be looking at a 10p cut in fuel duty for a limited period of time so we are not getting it from all sides!

Keep up the good work to make things happen!

Donald

I feel you may be on the money. I guess real inflation is running at 10% – Ouch!

I agree with your sentiments with regards to savings and ivestment, but its only the minority that are fortunate enough to be considering this type of financial planning.

Basic common sense financial planning requires debts to be cleared well before any savings should commence.

To give the majority of the UK nation any chance to save or invest they at least need to be able to afford the repayment of their cuurent debts. And as we all know, everybody is feeling the pain of raised interest payments on historical borrowings. Lets deal with the severe current problems not the specualtive ones.

Great comments, keep them coming.

In a real sense, the economy is already in recession. With real disposable incomes falling at an alarming rate, we can also expect growing industrial action. Some forecasts suggest that domestic energy prices will rise by a further 25% later this year. Staggering.

We are now starting the see the fundamental structural weaknesses in the UK economy that had been masked for so long (often with bogus data, but still). Our lack of long-term investment in infrastructure is being sorely exposed. This, at a time when the country can ill afford the bottomless pits of expenditure like the Olympics. God help London with a looming Crossrail debacle as well. Europe as a whole is exposed to the risk of policy error due to the narrowly defined mandates of the Central Banks. This will exacerbate the underlying economic situation.

One point on the £50bn: It’s important to get the terminology correct. This sum is designed solely to monetise worthless debt in the financial system. It is there to mask the insolvency of the banking system. There was never any chance that it would filter down to consumers. The tangible effect of the credit crunch is that underlying funding costs have soared, as reflected by spreads on credit insurance. There is really no effective mechanism for general reliquification other than to continuously write off worthless paper.

We are therefore at the start of an alarming spiral with real inflation rampant, disposable incomes falling sharply and inept government and Central Bank policy. In the latter part of the year, we will see much higher food prices and certain foodstuffs could be in noticeably short supply. There is no leadership on the horizon. Even if there were, the problems are not easily solved. Instead, all we have is an incompetent PM pretending that the problems are temporary, or don’t exist at all. Hang on to your hat, Trumpo.

Low interest rates were the biggest factors that got us into this mess. They have fuelled the house price bubble and personal debt bubble. All the while, the labour government has spent far too much money during the boom years, so there is little they can do to stimulate the economy.

Trumpo writes:

“The UK are a nation of borrowers, if the tills cease ringing it’s because consumer debt can’t be serviced…”

Isn’t it sad that it comes to this. We are a nation of borrowers.

It’s time we became a nation of savers and investors.