The blame for stock market fluctuations has been pinned on young men. The
testosterone hormone encourages traders (mostly male) to take greater risks,
according to new research.
But the profits to be made from such escapades can also propel the traders
into reckless loss-making decisions. The resulting stress produces cortisol,
another hormone, which deters them from even potentially lucrative deals;
they subside into “learned helplessness”.
It is not known whether, in the cause of gender equality, the academics behind
this study are also investigating the role of hormones in the housing
market, where women tend to have the upper hand in choosing a house.
However, learned helplessness, paralysis of a sort, sums up the current mood
of homebuyers. They are fearful of repeating the mistakes made by purchasers
in previous slowdowns. But even in this state of mind homebuyers are still
looking for someone to be held accountable for the gloom that has descended.
This resentment could influence votes in the local elections on May 1. As we
reported last week, Experian, the credit reference agency, has listed the
average mortgage debt and average house price in every constituency,
indicating residents' susceptibility to repossession. This is highest in
some neighbourhoods of Birmingham, Chatham, Manchester, Newcastle and
Nottingham, as our table on page 4 shows. Could aggrieved owner-occupiers
make their views felt at the polling station?
Mindful that the Experian data could prompt a backlash in the May elections,
the Government has been trying to pin the blame for lower house prices on
the banks. But mortgage lenders evidently care little about the Prime
Minister's opinion, or the threat of his big clunking fist. For, within
hours of their credit crunch solution “summit” on Tuesday with Gordon Brown
at No 10, Abbey, Halifax, HBOS and Woolwich had all raised their rates on
various of their loan offers.
This kind of behaviour is, presumably, the reason why most of the estate agent
members of the Royal Institution of Chartered Surveyors (RICS) are now more
mad at the banks than at the press over the change in market sentiment. In
its latest survey, its most downbeat to date, RICS states: “Price falls are
being driven by the inability of many to secure finance rather than an
influx of supply onto the market.”
The slump in transactions being produced from the lack of mortgage funds is
likely to send some estate agencies to the wall. This is one side effect of
the credit crunch, which is seen as glad tidings by those who responded
online to the report in The Times this week that the sector could shrink by
one third. There are some who contend that estate agents' greed caused the
market's upward spiral and its subsequent decline.
And so the blame game continues. But it might be more profitable to examine
instead the mistakes made in previous downturns.
The most obvious mistake is to buy a home that is still overvalued.
Fortunately, the huge amount of price information available online today
should make this less likely than in the past.
Scanning these figures will be those who live by the principle that, in
nervous times, you buy “before you see the light at the end of the tunnel”,
as one of these risk-takers described it to me this week. The credit crunch
may, however, hold even him back from this adrenalin sport.
GENDER IMBALANCE
Just in case those responsible for the research linking testosterone levels to
the ups and downs of the Footsie 100 do not get around to the connections
between female hormones and house prices, we conducted an informal study of
our own. There was general agreement that the wife or girlfriend decides
which house to buy, with the bloke ceding to her wishes.
The roles are almost invariably reversed, however, in sales of £4 million or
more, “because, in such cases, it's the husband who's the investment
banker”, as one agent put it. But just in case you were thinking that
couples revert to Fifties stereotypes in property purchases, Liza-Jane
Kelly, the sales director of Marsh & Parsons, finds that men are more
likely to be impulsive in these situations.
THE MAX FACTOR
The website Semper Eadem (Latin for always the same) celebrates 15 places in
Leicester that have not changed for at least 25 years, something of a feat.
These include the St Barnabas library, pictured above, which opened in 1963.
Its minimalist style will make it highly attractive to some.
But if you retain a soft spot for Eighties “maximalism”, turn to pages 14-15,
where we report on the sale of the Knightsbridge mews house that was the
backdrop for the iconic Volkswagen TV ad starring Paula Hamilton. If you
could not understand why anyone would walk away from such a property and
throw the key down a drain, it could be yours - if you have £2.25 million.
the planning system, supply and demand and higher numbers of households are to blame,a scarce product eqauls inflated prices, free up planning, build more houses and the prices will drop, just look at the car market, don't rely on interest rates to control pricing Mr Brown.This will also create jobs
Carl, Congleton, UK
Who is to blame? you/me everyone who made the decision to buy a home that's who is to blame. No one forced anyone to buy a home just as no one force you to pay the price you paid.
Stop moaning and blaming others the person responsible is YOU so accept it and get on with life.
Dave, Mold, Flintshire
Er, lifestyle "journalists" such as yourself?
George, London, UK
As in any asset price bubble, the blame lies with anyone who subscribed to the "greater fool" investment strategy - in other words, anyone who knowingly bought an overpriced house in the hope of selling it to an even greater fool later on.
In short, most of the people who've moved house in the past 6-8 years.
One can argue that banks should have cracked down hard on people who lied abut their income. Or that once one started offering incautious products, the rest should have resisted the forces of natural selection that make them follow suit. But the latter certainly would require degree of moral fibre rare indeed in business -- and an absence of litigious shareholders!
Ian Kemmish, Biggleswade, UK
Those who ewperienced the very hard times during the eary 1990's didnt participate in the recent boom.It was hard at the time as everybody seemed rich in 2003 -2007 but I think that many people will feel poor between 2008 and 2012 when things will get better.
stephen hulton, eure, france
Britain will be wise to replace its money and adopt the Euro.
Dan Berlinski, Geneva, Switzerland
Greed is to blame. Greed - from homeowners, prospective homeowners, the media (if only you took responsibility for your own words and the impact it has with the average Joe) but, primarily, BANKS.
And who's going to bail out these babies and their multi-million pound bonuses? Why not start with those earning between £5,500 and £17,500 a year by increasing their income tax? As an aside, don''t forget, when this credit crunch really starts to get nasty I think you'll find an awful lot of workers only too pleased to be earning that level of income.
Rob, Isle of Wight,
I agree that whoever is responsible for the falling prices needs congratulations, not blame. The idea that inflation in the cost of shelter is a benefit to society is lunatic.
Dylan, Rossendale,
It's all the fault of young first time buyers... It is their social responsibility to borrow ten times their annual earnings and more to buy one bedroom flats to keep prices rising in perpetuity....
Michael Geoffrey, Harrogate, North Yorks
Asking who is to blame for the slowdown can only be answered after the question of what is to blame has been answered. Anyone blaming HIPS, scrapping of the 10% tax band or people "talking the UK into recession", clearly misunderstands what caused house prices to boom in the first place. The very simple and clear fact is that inflation in the supply of credit caused the inflation in the price of houses. Now that the credit is being withdrawn, house prices are falling.
A prudent approach to lending and a sensible level of lending would have prevented the bubble forming and there would be no impending bust. The prudent approach was dumped in the headlong rush to make money out of housing instead of using it for its real purpose - living in.
Who was involved in this headlong rush for "free" money? The banks, speculators, the BTL brigade, the estate agents, the media who told people the lie that property was a one way bet (that's you Anne), the government and the people who "believed".
Simon, Bangor,
Whos to blame...you! Yes the very person reading this article who has been manipulating the excel spreadsheet to show his/her ever increasing wealth caused by pure speculation and greed. Please stop trying to blame everyone else, so you think you can own a rental and take two holidays a year not to mention the new car, renovate etc etc....all on $45kpa ....do me a favour, sell the car because I think getting a re-mortgage this time round is going to be somewhat difficult!!
dan, nz, nz
Property bust and boom, economy, the full cycle.
It was only a matter of time.
Lee, Pontypool, Gwent
The moment HIPS came in on an over extended property market,this was the best way to start a downturn .Until it is removed we will not see any revival for some considerable time. More money pumped into the market will not help at this stage with prices at current levels. We will need a shakeout of those who have overcommited themselves now that other costs are going up, ie food ,utility and petrol etc
It seems each generation has to learn the lesson of not overstretching by personal experiance.
Paul, Droitwich Spa, UK
Greed and fear are human nature.... there is not one of us alive which does not feel these emotions... prices are simply an expression of these emotions
Jon, London, UK
No one body is to blame - this has all the classic signs of a bubble - Google "Lifecycle of a bubble" to see the graph.
Whatever bubble, commodities, gold, tulips, dot coms, houses there are always triggers that set the bubble off, and triggers that eventually pop the bubble. It's all driven by public pyschology - fundamentals don't mean a thing.
Ed, Harrogate, Yorkshire
Why of why do so many like Gareth Jones confuse hard work with priviledge.
Its a fact that many home owners have reached that state for no other reason than their own hard work and sacrifice while others have put more value on booze, fags silly mobile phone contracts satelite TV packages and sunburn holidays.
wayne, huntingdon, cambridgeshire
I wonder how many people this column has led into negative equity and false expectations. Statistics aren't taken so we'll never know unless Anne is suddenly replaced by a less obsessive property pundit.
Rob H, London,
Who is to blame for the house price bubble that has undermined the UK economy, made fortunes for get-rich-quick merchants, and priced out young people and families from decent affordable housing ?.
Anthony, London, UK
Our views on the housing market and the social impact it is having are obviously poles apart.
Whilst I believe housing should be available for all, you believe it should only be available to a privelaged few.
I would rewrite your headline to say "Who is to be CONGRATULATED for the housing market slowdown".
Gareth Jones, Dusseldorf, Germany
As Tim from City of London says, there is only 1 culprit........
BROWN
Louis Blanc, Liverpool, UK
Can you believe that television promotion is heavily to blame for the house price bubble (house price balloon perhaps) ?Anybody who watches (even briefly) day-time tele will remember frowning at price requests and future price projections that seemed totally unrealistic and in reality were unrealistic. This is house marketing and well -me oh my - Is it the supposedly non-commercial BBC that may have been heavily involved (perhaps ?-allegedly? )
Terry, Aquitaine, France
As always with our blame culture, when it is property related and as an agent for 21 years, I stick a virtual pin in the article to see how close I can get to the donkey that blames us.
Admittedly there are only a few lines of anti agent vitriol here, but for all the posturing over highbrow economics, it basically comes down to this.
Even in the rampantly rising years I was endlessly trying to manage sellers ridiculous price expectations. Even some of my competitors that flattered the client onto the market by agreeing with their inflated ideas, I find hard to blame. We are a mature nation but with selective memory. 1990-ish was still on the radar of most movers.
Overwhelmingly giddy homeowners were driving to upshift or downshift and always have enough loose change for a place in the sun, some Jimmy Choo's and and a temporary credit card clearance. As Thomas Hardy said, ' our impulses are stronger than our judgement'.
Steve Anderson, Cheltenham, engalnd
Giles from Singapore has got it. Australians too were subjected to the get rich quick schemes and mostly young buyers were led happily by the nose into negative gearing. As Giles points out, property prices go down as well as up (it's a supply and demand thing). Too many gullible, easy wealth seeking idiots believed they were smarter than the rest.
For those of you still alive in 15 years time watch it all happen again.
Mike, Sydney, Australia
It just seems a bit of a coincidence that house prices started to fall when this government introduced the Home Information Packs which is simply another tax. Why did they not listen and not introduce it ?
mark rosenberg, Manchester, UK
The blame lies primarily with the central banks and to a lesser degree the government. The Bank of England and for that matter the Irish central bank could have tightened up on lending by the simple expedient of invoking the Basle and Basle II capital adequacy requirements, which govern the capital ration (shareholders capital to depositors) capital a bank must have valuing the bank's loan portfolio on a risk weighted basis. When the banks started selling outrageous mortgage "products" such as 95-115% mortgages or going over 4-times income, the central banks should have told them to raise more capital -- this would have choked off the crazy mortgage supply that allowed buyers to bid up house prices to ludicrous levels. Similarly, buy to let should have been treated as higher risk lending -- it is in fact. It was this mad lending that allowed UK and Irish house prices to exceed 9 times average household income against a medium and long-run worldwide average of 4 1/2!
Colm MacKernan, London/Washington,
it's none of the suspects listed on the byline - it's idiot punters who thought they could make a big profit borrowing huge amounts of money and buying property because they were stupid enough to believe prices could only ever go up and interest rates would only ever be low. if they're going to treat property as an investment - ie treat housing as an asset rather than a place to live - then they should also have taken notice that, as with the stock market and all investments, prices can go down as well as up!
Giles, Singapore, Singapore
Gordon Brown
For changing the measure of infalation so it didn't include housing costs (which are some of the largest cost to most people). This ensure the interest rates were set too low and encouraged the reckless leanding (and borrowing).
Tim, City of London,
Wha's this obsession with blame? Isn't it the economic cycle which goes up and down regardless of who is in power or who lends money? A look at house price inflation in the last 100 years reveals peaks and troughs throughout that period. We're on the cusp of the rolloercoaster and just about to do the bit where the brave ones hold their arms above their heads and scream. Most though cling with white knuckles until the thing bottoms out. End of analogy.
Brian Roberts , Plymouth, Devon
Perhaps the disproportionate scale of the boom that preceded it?
Trevor, Romsey,
Who's to blame? Lets think. Communists, Freemasons, Jews, Jesuits, single mothers, Albanians, Prince Philip ? Come on. It's got to be one of them, surely, or I want my subscription to the Daily Mail back.
Eric Skelton, Cardiff, Wales