Over the course of the last few days we have been warned of the calamity to come because of the number of first time buyers into the UK housing market is fast drying up. There may well be huge numbers of those wanting to buy, but so few with the savings, mortgage borrowing ability or access to the bank of mum and dad to be classed as proper first time buyers.
This means of course that there is no-one at the bottom of the chains so that others can upgrade or move to new areas.
Strangely the report comes from the internet property advertiser Rightmove, that just posted huge profits and gains (40%). One does of course have to ask where the profits came from. Are agents ploughing more of their dwindling profits into advertising with them? Or are they diverting what meagre budget they have left away from other channels of advertising like newspapers?
At the same time it is mooted that mortgages may be capped in the future to ensure that another housing bubble does not start to form. This will require even larger deposits from the first time buyers.
Both of these many pundits say, will cause the housing market to crash again. But they forget that there are two sides to a bargain. To trade a house you need buyer and seller, the house therefore becomes worth the combination of what buyer will part with and what seller will accept. So, as long as sellers can hang on house prices will not move fast in one way or another. The only thing that could change this is if there were a flood of forced sellers coming onto the market, those that have to sell at any price.
Now today according to a report in the Mail based on a National Housing Federation report thousands of people who bought a house in 2007 will remain in negative equity until 2014.
But then in the Express we see that house prices are to rise by 20% in the next five years. It says both the National Housing Federation and the Centre for Economics and Business Research think that house prices will rise into the future.
So who to believe, especially as the NHF is cited in both reports? But this is the sort of confusion you get when a house is seen as an investment not as a home.
For me house prices will continue to decline in real terms over the next five or so years and more people will end up renting throughout their lives. Both government and financial system will bend every sinew to prevent a real crash.