I was living in the UK for a couple years between 2000 and 2003 and watched housing explode there nationwide. That show Flip Your House first started as a program called Property Ladder on the BBC and was an export to the US after they saw the market doing the same things here. About 2 years ago I was reading about 40 and 50 year fixed rate loans being offered there and first time homeowners using them to get on the no pun intended “Property Ladder”. The sad part about all of this is I watch intelligent people take these loans which are not much different then renting when you look at the cost to borrow from the bank. The suffer from the same “Pride of Ownership” issues we have here.
I know this website has been posted up here before but some of you may want to take a peek. Its like Pigginiton’s with a British accent, but its scary how much it reads the same. When you look at the housing prices consider that middle class wages(the American definition of) in the UK are 2/3’s to 1/2 of what they are here and you will see that they are in a tight spot also. The UK has also been suffering from a very large increase in Council Tax (Property Tax) increases over the last 6 years. As property values rose so did the tax bills for many residents and their system is based on a series of Bands which determine your annual payment, once your get above a certain threshold the bills can become staggering.
On a side note I find it to be very troubling how none of the US banks have been pressured by the Bank of England into writing down their losses like HSBC, Barklays and Northern Rock (UK version of Country Wide without the cheerleader CEO) did after they were bailed out. It seems like the government there is trying to head off a problem the smart way by not putting “lipstick on the pig” and trying to sell it to the public. If the banks here down start writing down their losses isn’t that going to make problems worse? Instead of working on a rate freeze should we have all the major places fully disclose their finiancial positions? I would like to hear some comments on this so please chime in. The websites below reference the above discussion.
