Article What Next for U.K. House Prices?

T2W Bot

Staff member
1,498 115
In 2008 I wrote an article for T2W entitled: Housing Boom – is the party over? in which I categorically stated that I expected house prices to fall substantially and that investors should look to invest in the stock market from 2008 onwards. I was right on both counts. House prices in some areas have dropped as much as 25%, while the average stock market index has nearly doubled. 
After a decade long boom due to lower interest rates and easy lending, the party finally came to a sticky end for U.K. property prices in 2009. According to Land Registry, property prices in the U.K. rose by an astronomical 200% in a decade.
Five years on, I find it difficult to make a case for increases in house prices in the U.K. based on numerous factors. To start with, the major U.K. banks are effectively owned by the governments, and they are not much more secure now than they were a few years ago. In addition to that, to balance the books, we have...

Continue reading...
 
Last edited by a moderator:

romski

Junior member
41 0
Help to buy

Interesting article, do you think help to buy will increase the boom and bust situation, e.g when (if) it is withdrawn from the housing market....
 

timsk

Legendary member
7,600 2,375
Just a 'heads up' post . . .
This article is a follow up article to one T2W published 5 years ago by Jay Lakhani entitled UK Housing Boom - Is the Party Over? That article received a lot of interest and the associated discussion thread continues to bubble away to this day with over 500 posts. So, anyone interested in the original article (regardless of whether you agreed or disagreed with it), might find the follow up piece equally thought provoking.
Tim.
 

bhavin987

Junior member
13 1
with the Govt interference, Highly unlikely we should see a drop in the prices, which is sad as many first time buyers have simply given up hope! What you are seeing is MADNESS, the prices were dropping steadily, but as soon as the stupid government comes up with scheme to "help buyers" immediately in some areas the prices went up by +10%
My view is don't mess about with the markets! let it crash!
 

dealer911

Well-known member
436 24
with the Govt interference, Highly unlikely we should see a drop in the prices, which is sad as many first time buyers have simply given up hope! What you are seeing is MADNESS, the prices were dropping steadily, but as soon as the stupid government comes up with scheme to "help buyers" immediately in some areas the prices went up by +10%
My view is don't mess about with the markets! let it crash!

I must admit I dont really understand this assumption that everyone should have the right to buy their own home - where did this "right" come from ?
 

whitehouse123

Newbie
1 0
House prices fell a few percent and the Government turned on the printing presses to pour billions of pounds into the housing market to create a bubble. Things are heating up, It'll all end in tears, and probably bankruptcy for Britain, since now its the poor old taxpayer guaranteeing all these subprime mortgages that Cameron is obsessed with creating.

Houses in general are big Joke, even if the immigration is solved and property are released when it comes to quality UK is pathetic. It appears that houses and apartments in central london is a salvation place 1 bed room price 1 million; and the walls are not even worth 5 strong kicks. UK looted many countries invaded without permission but when it comes to their own house keeping they proved they are British
 

bhavin987

Junior member
13 1
Arab and Russian money is helping the London property market. was talking to an upmarket estate agent, and he says 50%+ buyers has been from the Arab world!

UK will become the first non-Muslim country to issue an Islamic bond, and there are plans for a new Islamic index on the London Stock Exchange. This will further increase the inflow of oil money into UK, thus driving prices up.

Sheer madness!
 

NVP

Legendary member
37,758 2,100
interesting piece ..........but like most articles it treats the housing market as 1 sector when in truth it is a multitude of different sectors and segments with different weightings on the drivers mentioned

hence you cannot truly say that the market did this ........also the generally approved measures regarding valuation are all flawed as well - mainly lagging andf some sadly lacking in data or integrity


the following serments have vastly differing performance and dynamics....

1) Area (eg Aberdeen > London)

2) property type (1 bed flat > 6 bed house > 70 acre Estate)

3) Residential vs Commercial

4) Owner domiciled vs Let

Specialisation is key if you are looking to make money or just predict future performance

NVP
 
  • Like
Reactions: rsh01 and 0007

Atilla

Legendary member
19,821 3,091
Supply and Demand

Points raised are factors yes but the lack of any reflection on the Supply of housing stock and the Demand for accommodation coupled with popullation demographics renders this article not very accurate assessment of future property prices.
 

WR1

Active member
206 9
it would help if every government did n't continue Maggies vote bribe
why on earth (apart from a vote winner) do people have the right to buy a council house on the cheap and then sell it in the boom
this has depleted supply and not exactly rocket science to see it might be a problem

a bubble is already being talked about in London as Londoners and many rich non doms are buying up anything

when interest rates eventually go up, some are in for a nasty surprise
and the Tories won't look quite so clever, not even to Sun and Mail readers

the market should of been allowed to correct and then would nt be such a problem when the rates go up as Houses would be cheaper in the first place

but no-one will complain while the prices go up, least of all Sarah Beeny and such like
until the next crash, but this time it will be the Tories fault again
 
L

Liquid validity

0 0
Points raised are factors yes but the lack of any reflection on the Supply of housing stock and the Demand for accommodation coupled with popullation demographics renders this article not very accurate assessment of future property prices.
Doesn't matter how high demand gets if no one can afford to consume
the limited supply.
So Buy to let landlords step in, rents rise to cover mortgages in the event
of rate rises (unless you assume rates are stuck where they are for all eternity)
BTL stock is then voluntarily or forcibly put back into market as supply at a lower price.

The only thing that will stop house prices falling in the long term
(once gov.t intervention ends) are wages increasing to reduce the high
income multiples.
Currently we have wage deflation due to no or low wage rises that don't
keep track of manipulated inflation figures.
So currently unless there are strong signs of any of that changing,
the outcome painted in this article looks ok to me.

London is an entirely separate case, as real estate there has been a safe haven
for foreign cash for quite some time now, still hard to see how that won't turn
into a bubble, if it isn't already.
 

counter_violent

Legendary member
11,267 3,005
Points raised are factors yes but the lack of any reflection on the Supply of housing stock and the Demand for accommodation coupled with popullation demographics renders this article not very accurate assessment of future property prices.

I think it's pretty much spot on the money.

Long may your kids live with you and off you :LOL:
 
  • Like
Reactions: Liquid validity

Atilla

Legendary member
19,821 3,091
Doesn't matter how high demand gets if no one can afford to consume
the limited supply.
So Buy to let landlords step in, rents rise to cover mortgages in the event
of rate rises (unless you assume rates are stuck where they are for all eternity)
BTL stock is then voluntarily or forcibly put back into market as supply at a lower price.

The only thing that will stop house prices falling in the long term
(once gov.t intervention ends) are wages increasing to reduce the high
income multiples.
Currently we have wage deflation due to no or low wage rises that don't
keep track of manipulated inflation figures.
So currently unless there are strong signs of any of that changing,
the outcome painted in this article looks ok to me.

London is an entirely separate case, as real estate there has been a safe haven
for foreign cash for quite some time now, still hard to see how that won't turn
into a bubble, if it isn't already.

Demand and rising prices does matter as it will stimulate increase in supply with builders chasing profits.

As mentioned if UK residents can't afford prices then foreign money coming in can. UK citizens will move out of London & SE to more affordable areas.

Before the crises some were talking about 50% falls and more with housing in the doldrums for years. House prices have been sticky downwards and 5 years is a reasonable period for stagnation.

My personal experiences is very positive and I still hold the view there is much money sloshing about in the system with even more coming in from; the Chinese millionaires, Russian billionaires and now rich & French tax dodgers.

My new colleague at work who has moved from Milan to London and is already looking to buy with a 2-bed with a budget of 500K.

I have heard of an Afghan man with multiple wives and properties in London and Italy. He offered to buy a friends freehold property approx 800K in cash. I hear money is coming in from really all directions.

Another firend is buying property in Exeter to rent to students. She currently has a house in Richmond.

Now I am one average citizen, labourer, working class, peasant :cheesy: and I see and hear all these stories around me. I hazard a guess as to what kind of deals the rich and well connected are conducting. :cool:

With respect to the housing stock, 1/3 of UK property is in flood plains. More people living in single households and going through divorce. This trend is likely to continue increasing demand for more homes. Won't mention immigration.

My solution would be to loosen up greenbelt rules and permitted developments and allow individuals to build their eco-friendly, off-grid, energy efficient homes. Stimulate the green industry and re-generate the country-side whilst improving quality of peoples lives.

However, as many vested interests lie in the pockets of politicians I doubt this will be an option for some time to come.

I re-iterate no matter what anyone thinks without looking at the number of houses and population growth, one is not realistic in their reflection of house prices. One can not write an article on house prices, without mentioning the stock of houses and demand for those properties.

Market is booming and will continue to do so because demand is there and supply is not.

Even in Spain now US companies are circling with a view to buying up properties at 40-60% discount.

We are on the cusp of a new era and people still talking about doom and gloom. Shocking.


Can't see the green shoots cause we are standing on them - (y)
 
C

cablemonster

0 0
Demand and rising prices does matter as it will stimulate increase in supply with builders chasing profits.

As mentioned if UK residents can't afford prices then foreign money coming in can. UK citizens will move out of London & SE to more affordable areas.

Before the crises some were talking about 50% falls and more with housing in the doldrums for years. House prices have been sticky downwards and 5 years is a reasonable period for stagnation.

My personal experiences is very positive and I still hold the view there is much money sloshing about in the system with even more coming in from; the Chinese millionaires, Russian billionaires and now rich & French tax dodgers.

My new colleague at work who has moved from Milan to London and is already looking to buy with a 2-bed with a budget of 500K.

I have heard of an Afghan man with multiple wives and properties in London and Italy. He offered to buy a friends freehold property approx 800K in cash. I hear money is coming in from really all directions.

Another firend is buying property in Exeter to rent to students. She currently has a house in Richmond.

Now I am one average citizen, labourer, working class, peasant :cheesy: and I see and hear all these stories around me. I hazard a guess as to what kind of deals the rich and well connected are conducting. :cool:

With respect to the housing stock, 1/3 of UK property is in flood plains. More people living in single households and going through divorce. This trend is likely to continue increasing demand for more homes. Won't mention immigration.

My solution would be to loosen up greenbelt rules and permitted developments and allow individuals to build their eco-friendly, off-grid, energy efficient homes. Stimulate the green industry and re-generate the country-side whilst improving quality of peoples lives.

However, as many vested interests lie in the pockets of politicians I doubt this will be an option for some time to come.

I re-iterate no matter what anyone thinks without looking at the number of houses and population growth, one is not realistic in their reflection of house prices. One can not write an article on house prices, without mentioning the stock of houses and demand for those properties.

Market is booming and will continue to do so because demand is there and supply is not.

Even in Spain now US companies are circling with a view to buying up properties at 40-60% discount.

We are on the cusp of a new era and people still talking about doom and gloom. Shocking.


Can't see the green shoots cause we are standing on them - (y)

Yes you are correct. Governments have made it clear they will not let anything fail. If economies falter again they will turn the taps back on. The only way to win here is to buy assets at any cost. People who dont take risks will get punished. People who hold sovereign debt could be in for a shock soon. Asset prices are going to the moon you cant print like that and expect them to stagnate. Property will soon be a closed shop for first time buyers and will just be passed between generations. Fill your boots.
 
L

Liquid validity

0 0
Demand and rising prices does matter as it will stimulate increase in supply with builders chasing profits.

Either way, prices cannot keep going up if, this isn't a case of a
finite few who are willing and able to keep paying higher and higher prices.
Strong demand does exist, yet if it cannot afford to consume supply,
what happens then?
Builders either ration supply to take advantage of increasing prices,
which leads to unaffordable prices, which then come down.

The other way is Govt. subsidises private sector building programs,
leading to an easing of the supply problem.

I agree about London, that is exactly what I said, foreign cash using London
real estate as safe haven.
Not quite sure why you hammered home that point, that is not in contention,
at least not by me.
With respect to the housing stock, 1/3 of UK property is in flood plains. More people living in single households and going through divorce. This trend is likely to continue increasing demand for more homes. Won't mention immigration.
So you don't consider the fact that more people are more likely to
go multiple occupancy, or stay at home longer then?
There is plenty to suggest that is the case, when they are forced to, people
have a remarkable habit of adapting to the situation - they simply have no choice.
What drives prices higher then, as demand is removed by way of
multi occupancy and multi generational households?
That is quite easy to envisage, especially with an extension to an existing building.
Which brings me to the next point...
My solution would be to loosen up greenbelt rules and permitted developments and allow individuals to build their eco-friendly, off-grid, energy efficient homes. Stimulate the green industry and re-generate the country-side whilst improving quality of peoples lives.

However, as many vested interests lie in the pockets of politicians I doubt this will be an option for some time to come.

Green belt is not the only option, and I agree that is not likely to happen.
Brownfield is the target for new residential development.

Proposed relaxation of planning laws:
www.parliament.uk/briefing-papers/SN06418.pdf‎
One key point is going to the planning inspectorate if local permission refused.
http://www.planningportal.gov.uk/planning/planninginspectorate

Change of use - example, office space to residential, greater flexibility
with high street change of use:
http://www.nabarro.com/downloads/planning-new-planning-rules-in-force-from-30-may-2013.pdf

Relaxation of extension dimensions:
http://portaldirector.wordpress.com/2013/05/10/larger-house-extensions-regime-detailed/

So, supply becomes an issue, people keep up demand of that supply (prices keep rising),
or the demand dissipates as alternative supply is found.

Even in Spain now US companies are circling with a view to buying up properties at 40-60% discount.

Did it occur to you that U.S. companies may be doing that to diversify their
dollar risk, lets face it, there is an abundance of supply in Spain.
Globally, central banks have been re-balancing USD reserves for the last 10 years:
http://www.gold.org/download/pub_archive/pdf/Central_bank_diversification_strategies_paper.pdf

The Euro may not be great, but you can see CB's have increased Euro reserves,
so why not U.S. companies as well in the form of Euro denominated real estate.
Lets face it the Euro may not be great, but there are limitations on where you
can park that amount of money - namely supply, which Spain has.
We are on the cusp of a new era and people still talking about doom and gloom. Shocking.

Can't see the green shoots cause we are standing on them - (y)

Green shoots - you mean like indices inflated by printing money?
How about employment levels, OK U.S. figs are improving,
but UK figs are still shocking - set start date from 2000 or earlier:
http://www.tradingeconomics.com/united-states/unemployment-rate
http://www.tradingeconomics.com/united-kingdom/unemployment-rate

So what are these green shoots - a UK housing bubble that is being kept
inflated by the Govt?
If the UK housing market is so great, why did they take action in the first place...
Also what happens to that London bubble if people decide to put money into
Spain as you yourself have mentioned?

I do agree that we are on the cusp of a new era though:
At best, Japanese style stagflation of the developed west,
or the full fat depression thats been on ice for the last 5 years...
Why acknowledging that is considered doom and gloom I don't know,
you can either be a realist or an idealist, optimism should play no part.

1930's depression, 1970's stagflation, Japanese stagflation, Weimar, Zimbabwe etc.
So why will it be different this time round?
Printing money as the U.S has done, at best leads to the same situation
Japan has been in for years.
Personally I think 5-10 years of stagflation would be an amazingly good outcome.
The alternatives - read a history book.
 
  • Like
Reactions: Atilla
 
AdBlock Detected

We get it, advertisements are annoying!

But it's thanks to our sponsors that access to Trade2Win remains free for all. By viewing our ads you help us pay our bills, so please support the site and disable your AdBlocker.

I've Disabled AdBlock