[Philip Gawith]

http://www.cityam.com/article/1384246518/golf-courses-use-more-land-uk-homes

[Frank Pont]

That's what happens when desperate central banks keep interest rates at zero for far too long, its called an asset bubble. Some people are going to get badly hurt ( again)......

[Sean_A]

I agree Frank - the market is mainly interest rate driven.  Set the interest rate at a decent 5%, require a decent down payment and then gauge the demand.  This "article" is more about building and selling homes that it is objective.  Stupid arguments like this could be made about road capacity.  Does this mean loads more countryside should be paved?

Ciao

[Thomas Dai]

I note the author doesn't seem to understand the difference between the 'UK', 'Great Britain' and 'England', mind you, he's probably not alone in his lack of understanding of this difference!
All the best

[Adam Lawrence]

It's a rubbish piece, and the one it's based on is even worse....

[Adrian_Stiff]

Frank - Keeping interest rates at 0.5% has been the main reason the UK has not gone under. Largely it is a good thing, though its still not easy to actually borrow new money at less than 4%. It is good that golf courses take up more land currently than houses, if a golf club closed it makes others nearby work, what we dont need is more new golf courses, naturally no golf architect is going to want to hear that but its going to be a long long time perhaps never again that we see the volume of courses built over the last 25 years in the UK.

99% of golf course owners would be delighted if their golf course got the right coloured line around it and you could build on. Probably 95% of members owned courses would see it as hitting the jackpot too. There will be a few on here that wont see it the same way, but the UK model is different and golf course land is probably worth £8000 per acre whilst building land was £1,000,000 per acre not so long back, when you have 150 acres of land in the city thats worth £1.5 Billion, divide that up between 700 members and you have enough for those members to have some sauce on their chips. With a big cash pot 'the club' could buy another nearby, or buy some land to build another, something for the architects to look forward too there perhaps.

We do of course need Open space and parks in the cities, but maybe not 150 acres worth.

UK golf courses are often in a very valueable position, sometimes you can buy distressed ones for around agricultural land values, I am suprised some high rollers have not sussed it out, its not the same for all courses, some are not on valueable land at all.

Like most things that key word is Location.

[Tony_Muldoon]

MMM.  I’m not confident about the maths here.  I drive around the country a lot and though I keep a sharp eye out, I’m not seeing golf courses 1% of the time.


Golf seems to attract these odious and hard to disprove comparisons. We have a dear Irish friend who occasionally, late at night,  will work herself up into a fury about the iniquities of life. I’m always waiting for her to say “ it’s wrong that there are more golf courses than Childrens Playgrounds in Ireland…”.  Once I asked her the next day where she’d got that nugget of info from. She sheepishly smiled and said it was often trotted out by politicians of a certain hue.

[Paul Gray]

With interest rates where they are I'm going to have, at the tender age of 36, a few years of intentionally overpaying on what will be our first mortgage. Problem is, most people fail to look beyond their own nose and fail to understand the position they are likely to face in years to come.

Having studied economics I'd like to think I have a better grasp than most on housing policy. Never before have I been aware of such a staggeringly stupid policy as that recently introduced by George Osborne. Enabling people to get themselves into debt which, when rates rise, they won't possibly be able to repay, has to be the most inept piece of strategy yet devised by this government. Only an increase in the supply of housing will allow for an equilibrium to be met where a life of debt isn't the only option for those wishing to escape the rental market.  

[Adrian_Stiff]

Paul, how about this: The Government issue a Housing Bond (effectively quantative easing) the coupon is worth £150,000, for which the first time buyer pays £15,000 (his deposit). The interest is 5%, so in 20 years the bond is cleared. Means everyone basically can live in a home for £650 per month. Cuts out the greedy middleman (bank), creates lots of construction jobs and money flowing back through the arteries again.

[Paul Gray]

Adrian,

A nice idea but..........

That would be socialism. Well, it would actually be state sponsored banking and although I don't deride the idea per se, I'm not convinced that the public would back mass lending to people that, in many instances, would otherwise be regarded as subprime. That said, Karl Marx did, to the belittlement of capitalism, predict that capitalist markets (and capitalist governments therein) would always find a way to make the poor keep buying.

Start effectively offering £150,000 houses for £15,000 upfront and those houses don't stay at £150,000 for more than a minute. Well, they don't in a market economy anyway. It's just a mortgage with a 10% deposit which, instead of being funded by the banks, is funded by the taxpayer.

And anyway, try buying a property in many parts of the country for £150,000. Again, an increase in supply is the only viable solution if housing prices are not going to continue to exponentially outpace income.  

[Adrian_Stiff]

I was thinking more of the principle, most places you could buy for £150,000, London and home counties perhaps not, but maybe different postcodes could stretch it to £200,000+
The idea is it gives everyone a start, subject to getting the £15,000 of course.
If the £135,000 Lent was paid back at £750 per month, the note would be cancelled in 15 years, and the remaining 10 years would earn £90,000 which is a nice lump to help fund our future pension problem.
Its all just funded by a piece of paper that gets repaid each month by 1/180th, the money that comes in needs to be burned of course, you could not use that money until the start of year 16.

[Paul Gray]

I'm in no way objecting to your thinking. There's a lot of sense in what you say and it rings with a more caring chime that what we currently have.

However, you can't ultimately get away from the fact that we've under build in this country for a good many years now. The result is that supply and demand currently meet at a price point which is out of many peoples reach and increasing demand by providing more creative borrowing options is only ever going to send prices one way.

[Sean_A]

I'm in no way objecting to your thinking. There's a lot of sense in what you say and it rings with a more caring chime that what we currently have.

However, you can't ultimately get away from the fact that we've under build in this country for a good many years now. The result is that supply and demand currently meet at a price point which is out of many peoples reach and increasing demand by providing more creative borrowing options is only ever going to send prices one way.

Paul

Your thinking only works if we assume that everyone should own a house and that it is incumbant upon the government to make it happen.  I seriously question that premise. 

Ciao

Ciao

[Jud_T]

Paul

Your thinking only works if we assume that everyone should own a house and that it is incumbant upon the government to make it happen.  I seriously question that premise.  

Ciao

Bingo- this is exactly the thinking that got us into trouble on this side of the pond.  There was a study published in the New York Times a few years back about the history of real estate in Amsterdam going back 600 years.  Apparently the nice section of Amsterdam has always been the nice section, i.e. no significant gentrification, and they have a detailed history of every transaction going back to the 1400's.  Aside from the massive booms and busts that inevitably occur, what do you think the real return (above inflation) on real estate in the nice part of Amsterdam has been over the past 600 years?  0.5%.  In other words, a money market type return minus the liquidity.  Aside from the forced savings component of conventional mortgages, which everyone shuns due to the higher payments these days, a house is where you hang your hat, not a great investment opportunity.  If only I hadn't had to learn this lesson the hard way....

[Jon Wiggett]

Paul

Your thinking only works if we assume that everyone should own a house and that it is incumbant upon the government to make it happen.  I seriously question that premise.  

Ciao

Bingo- this is exactly the thinking that got us into trouble on this side of the pond.  

No, it was irresponsible lending due to wanting to make a quick buck coupled with a lack of any real oversight and enforcement of regulations. I agree though that it is not the governments job to ensure everyone has the right to buy their own home but they should have the chance.

Jon

[Bill_McBride]

I agree Frank - the market is mainly interest rate driven.  Set the interest rate at a decent 5%, require a decent down payment and then gauge the demand.  This "article" is more about building and selling homes that it is objective.  Stupid arguments like this could be made about road capacity.  Does this mean loads more countryside should be paved?

Ciao

We bought our first home with a 7% mortgage in 1972.  Since then we never had a mortgage for less, and in 1981 had one at 14%.  Happily we are mortgage free today.  I agree the current rates are building another bubble - unless the lenders are using more common sense in whom they lend to.

[Jud_T]

Jon,

They do have the chance.  They can earn what's necessary to afford one.  Otherwise, perhaps they shouldn't be homeowners.  What exactly do you see as the main benefit of homeownership?  I'm renting for the first time in over 20 years and I feel as if a large weight has been lifted off my shoulders.

[Sean_A]

Paul

Your thinking only works if we assume that everyone should own a house and that it is incumbant upon the government to make it happen.  I seriously question that premise.  

Ciao

Bingo- this is exactly the thinking that got us into trouble on this side of the pond.  

No, it was irresponsible lending due to wanting to make a quick buck coupled with a lack of any real oversight and enforcement of regulations. I agree though that it is not the governments job to ensure everyone has the right to buy their own home but they should have the chance.

Jon

Hmmm, and here I thought everyone did have a chance.  I am not saying people should be on the street, but that is a far cry from owning a home.  Home ownership should be taken a very serious decision.  I think it is far less than that for a great many people, many of whom are nowhere near mature enough nor finacially stable enough to make such a committment.  It should not be the responsibility of the government to make up for these deficiencies.

Sure, bankers were very greedy, very stupid and weren't held anywhere near to account as they should have been, but it it takes at least two to tango. All I can say for each government for keeping low interest rates for so long is they were very stupid.  I especially loathe that Scots cretin, Gordon Brown.  

Ciao
 

[Jon Wiggett]

Sean, JudT,

I was not saying nor implying people didn't have the chance to buy their own house just saying that IMO that was where the government's responsibility lay. I suppose the UK fetish for importance of home ownership is historical and comes from the time when home ownership was not just financially but also legally restricted to the upper classes. I do not believe this has been the case in the US.

Sean, I think that most people do not understand what is involved in the mortgage market but that is why we rely on proper professional advise from the experts. It is the same principal as buying a car but not knowing how to service it, or an oven etc. I think there is a reasonable expectation that financial professional act responsibly within the area of their work.

Jon

[Paul Gray]

Paul

Your thinking only works if we assume that everyone should own a house and that it is incumbant upon the government to make it happen.  I seriously question that premise.  

Ciao

Bingo- this is exactly the thinking that got us into trouble on this side of the pond.  

No, it was irresponsible lending due to wanting to make a quick buck coupled with a lack of any real oversight and enforcement of regulations. I agree though that it is not the governments job to ensure everyone has the right to buy their own home but they should have the chance.

Jon

Hmmm, and here I thought everyone did have a chance.  I am not saying people should be on the street, but that is a far cry from owning a home.  Home ownership should be taken a very serious decision.  I think it is far less than that for a great many people, many of whom are nowhere near mature enough nor finacially stable enough to make such a committment.  It should not be the responsibility of the government to make up for these deficiencies.

Sure, bankers were very greedy, very stupid and weren't held anywhere near to account as they should have been, but it it takes at least two to tango. All I can say for each government for keeping low interest rates for so long is they were very stupid.  I especially loathe that Scots cretin, Gordon Brown.  

Ciao
 

And we're back to where I started. I stated that people tend not to look beyond their own noses when a property becomes available and that's the very reason why a reduction in property prices is the only sane way to get the market back on track. You can point out all you like that people are responsible for their own actions and you won't find anyone agreeing more than me but that doesn't mean I'm likely to hand a lunatic a knife and tell him to go play. And so, with that in mind, let me be absolutely clear on this point, governments should never be underwriting risk which enables insane lending to occur.

And as for the banks, once upon a time it was considered prudent to require banks to hold certain reserves in relation to their borrowing. Thatcher scrapped all that and, with the ensuing deregulation of Blair and his pals, we had the staggeringly predictable (and a lot of us did predict it) scenario of repayments not being met, people panicking and queueing for hours to get their hands on their money, world markets collapsing and the general public getting familiar with the term "sub-prime lending."

Not everyone will ever be able to afford a home. There's nothing wrong with that an there's certainly nothing to be ashamed of if you rent. However, lack of supply can make renting as expensive as buying. Property investors know this of course and are (not that I blame them personally for making money) cashing in while others can't find a deposit to take them out of the rental market and decrease demand therein by one. So, however you look at it, be it renting or buying, limited stock means higher prices.

[Ally Mcintosh]

MMM.  I’m not confident about the maths here.  I drive around the country a lot and though I keep a sharp eye out, I’m not seeing golf courses 1% of the time.


Golf seems to attract these odious and hard to disprove comparisons. We have a dear Irish friend who occasionally, late at night,  will work herself up into a fury about the iniquities of life. I’m always waiting for her to say “ it’s wrong that there are more golf courses than Childrens Playgrounds in Ireland…”.  Once I asked her the next day where she’d got that nugget of info from. She sheepishly smiled and said it was often trotted out by politicians of a certain hue.

Let's see.

UK is 60m acres. There are approx 2,500 golf courses averaging - say - 150 acres each. That totals 375k acres of golf course which equals about 0.6 percent. Guess he could be right.

[Jud_T]

Not everyone will ever be able to afford a home. There's nothing wrong with that an there's certainly nothing to be ashamed of if you rent. However, lack of supply can make renting as expensive as buying. Property investors know this of course and are (not that I blame them personally for making money) cashing in while others can't find a deposit to take them out of the rental market and decrease demand therein by one. So, however you look at it, be it renting or buying, limited stock means higher prices.

Paul,

Buying can be cheaper than renting, assuming one is including ALL the associated costs, taxes, brokerage etc.  However,  just looking at the cash flow doesn't take into account the inherent risk of an illiquid leveraged investment and the opportunity cost of capital.  As a simple example, a 30 year old who invests $50,000 in real estate for 40 years with a real return of 0.5 would end up with $61,000 in today's dollars while if he/she invested in stocks with say a 4% real return, which is historically conservative, they'd end up with $240,000.

[Adrian_Stiff]

Jud- Totally different in the UK. The main aim is to own to your house its been drummed into us that it is the safest place to house your money. Our currency has always been the Castle, not the pound. Typically we buy a house for £20,000 struggle for a few years pay the mortgage perhaps borrow on the rising equity to start our own business. In 1960 A typical house was £2,500 by 1970 it was £10,000 by 1980 it was £20,000 by 1990 it was £30,000 by 2000 it was £100,000 and now its £150,000....Not the steadiest of lines but unless you got in on a go go stock before the boiler room knew about it, there are not many places to do better. Some crazy situations that defy gravity wherby at some stages peoples houses were increasing in value each week more than they were earning going to their normal work.

The banks had a very simple equation for probably 50 years, you could borrow up to three and a half times your income. As house prices rose at a different constant, they changed their tried and tested rules and suddenly you could borrow seven times yours and twice your partners.... the rest we know.

[Sean_A]

Adrian

What you are forgetting is one has gotta live somewhere.  It doesn't make much difference if you sell up only to buy in the same market!  Its often cheaper to renovate what ya got!  

Also, your clever plan of borrowing against the equity is in general a chump's idea.  Most people blow the (fake equity because we all know with interest rates so low the boom and bust will continue) equity on holidays, cars or other wasteful crap because they have a false sense of wealth.  The only money regular folks should count (and lets be serious, thast who we are talking about) on is money in the bank.  

Sometimes I wonder what goes on in people's heads they way they handle their finances - shocking stuff.  Its no wonder there is more personal debt than savings in the US.  My current generation has completely lost its way and I suspect it will only get worse.

Ciao

[Adrian_Stiff]

Sean - Hardly anyone keeps money (serious money) in the bank, I would say thats a fools way. What I outlined is not my plan, it is the typical way the UK worked for the last 50 years. We are an unusual nation in that we like to own property. We are reaching a time now where many people are getting left houses by their parents often mortgage free, some families will be able to help each other with large deposits or in some cases gift a house.

There is nothing wrong in borrowing against your equity, it is not wise to waste it but that is up to individuals.

When people count wealth, you add up the assetts and subtract the debts, generally people will have their money working for them, with less trust in banks and the financial sectors with bad advice its likely people will control their money even more in the future.

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