Article What Next for U.K. House Prices?

[Atilla]

Understanding the supply and demand of money makes me one dimensional now! I suppose that makes me as one dimensional as every Central Bank on Earth.

Prices for everything is driven by affordability. Perhaps you should watch Storage wars as you would learn an important lesson. It doesn't matter how much somebody wants something (demand), they have to have the money to pay for it.

Do you get it? You can rant and rave about a shortage of houses but that still doesn't drive prices up. People who can't afford to buy a house would rent instead, keeping a lid on prices.

How much would the average house in the UK be worth if people had to put down a 50% deposit and there was no Government assistance? How much would a house be worth right now if mortgage interest rates were 15%?

Keep ranting about funnymentals.

I think you prove my point!

I'm sure you don't mean your off the cuff remark below.

I'll leave this exchange with you as it isn't going anywhere we haven't been before.

Best regards

 

[Liquid validity]

Short term price bubbles do occur. Yes.

However, long term fundamentals determine prices. Because the supply of houses are inelastic there is a longer term of adjustment.

One can observe any number of factors in the price fluctuations of houses.

Not disputing all the inputs and factors.

Good interesting article. Read the last paragraph and it simply make inferences pointing out house prices remain above rents and incomes and leads to an uncomfortable conclusion house prices in many countries still have room to fall.

One can not generalize like this imo. Spain has had a major adjustment. UK somewhat of an adjustment perhaps not as much as desired. Factors, countries and pretty much everything else is different.

NT being NT has peddled his angle I know that house prices have almost zero to do with real supply and demand of housing and almost everything do with supply and demand of credit, which is distorted by Government for Political purposes.

Each to their own.

Thats because he is right.
There is no physical supply problem with housing in this country.
There is an aspirational supply problem.
Think about that.

Its all about want, not need.
Want spare bedroom as office.
Want bedroom for each kid.
Want garage.
Want own flat.
Want larger house.
Want flat / house in desirable location.

Don't want lodgers.
Don't want to share with relatives / friends.
Don't want to live in undesirable location.
Don't want ex-council.
Don't want to rent.

All the things people don't want now, are things that people routinely did in the 1970's,
back then they couldn't afford choice, choice was removed.
Same as now, difference is people won't accept it, not when ludicrous
credit gearing is available.

Now do you get it?
There is ZERO problem with physical supply.
The above points are examples of aspirational supply 'problems'.

There are plenty of houses to give everyone in this country a roof over their head.
Don't believe me?

Liverpool:
http://liverpool.gov.uk/housing/homes-for-a-pound/
http://www.telegraph.co.uk/property...-Liverpool-to-be-sold-for-just-one-pound.html

Stoke on Trent:
http://www.stoke.gov.uk/ccm/content...ng/empty-homes/cluster-homes---next-stages.en
http://www.bbc.co.uk/news/uk-england-stoke-staffordshire-22247663
http://www.theguardian.com/money/2013/jun/22/houses-1-pound-charity-empty-homes

Thats just 2 examples of specific cities, there are plenty more.
There is no physical supply problem.
Its purely aspirational - nobody wants to live there until regeneration is complete.

The bubble has been fueled by that location location location mentality,
and banks, unrestrained by legislation, only too willing to fuel the bubble with
excessive income multiples and low or no deposit.

That bubble burst, then the Govt. decided to fill the role of the banks in
securing sub prime loans for muppets to win votes.
Despite evidence and comment from - IMF, U.S. sub prime crisis,
most other euro nations having legislation to prevent excessive income multiples
and so on.

I fail to see how you can still argue that there is a real physical supply problem after reading that.

 

[Atilla]

Thats because he is right.
There is no physical supply problem with housing in this country.
There is an aspirational supply problem.
Think about that.

Its all about want, not need.
Want spare bedroom as office.
Want bedroom for each kid.
Want garage.
Want own flat.
Want larger house.
Want flat / house in desirable location.

Don't want lodgers.
Don't want to share with relatives / friends.
Don't want to live in undesirable location.
Don't want ex-council.
Don't want to rent.

All the things people don't want now, are things that people routinely did in the 1970's,
back then they couldn't afford choice, choice was removed.
Same as now, difference is people won't accept it, not when ludicrous
credit gearing is available.

Now do you get it?
There is ZERO problem with physical supply.
The above points are examples of aspirational supply 'problems'.

There are plenty of houses to give everyone in this country a roof over their head.
Don't believe me?

Liverpool:
http://liverpool.gov.uk/housing/homes-for-a-pound/
http://www.telegraph.co.uk/property...-Liverpool-to-be-sold-for-just-one-pound.html

Stoke on Trent:
http://www.stoke.gov.uk/ccm/content...ng/empty-homes/cluster-homes---next-stages.en
http://www.bbc.co.uk/news/uk-england-stoke-staffordshire-22247663
http://www.theguardian.com/money/2013/jun/22/houses-1-pound-charity-empty-homes

Thats just 2 examples of specific cities, there are plenty more.
There is no physical supply problem.
Its purely aspirational - nobody wants to live there until regeneration is complete.

The bubble has been fueled by that location location location mentality,
and banks, unrestrained by legislation, only too willing to fuel the bubble with
excessive income multiples and low or no deposit.

That bubble burst, then the Govt. decided to fill the role of the banks in
securing sub prime loans for muppets to win votes.
Despite evidence and comment from - IMF, U.S. sub prime crisis,
most other euro nations having legislation to prevent excessive income multiples
and so on.

I fail to see how you can still argue that there is a real supply problem after reading that.

That's like telling the man in Africa there is all the water he can possibly want at the North Pole.

I did indicate there are empty homes - Over 700,000 homes in England are empty, and around 270,000 of those have been empty for over 6 months. Where are the empty homes? investing £160 million in bringing over 11,200 problematic empty homes back into use as per government stats.

Why don't squatters in London want to go on squat in one of those empty homes up North?

I think Newcastle is a fantastic place to live and have spent little time up there. But such is life I've ended up due South. Never planned these things. Life just happens.

Sometimes people get into red mist and to spite their faces will cut off their noses.

LOOK I REPEAT - I consider your factors as reasonable, true and accurate factors as well as that article you've put up. Why you guys keep banging your drums supply of housing is not important beggars belief.

Ok so you are expecting house prices to adjust and come down to what ever long/term average income/rent/mortgage ratios you think it should be. BIG DEAL. Knock your selves out. In the long run we are all dead. :cheesy:

What have you guys got in your bonnet that says supply is of no consequence.
http://www.telegraph.co.uk/news/uknews/9406877/Census-reveals-housing-shortage.html

SHOCKING!

As for the original article by Jay for What's next for UK house prices? There is no mention of housing stock / supply at all. I was going to give 5 but he is basically pushing one view - his view. So I deduct 5 marks for not considering supply and deduct 4 penalty points for a biased article. I gave it 1.

Sorry if it upsets your logical thinking processes but that's life learn to deal with it.

If you choose to buy it. Do so. Sell your homes whatever in anticipation.

He does mention he was expecting much bigger falls but believes the market was propped up by umpteen factors. AND yes they are valid points but nevertheless the article was one sided as you guys are pushing the same piece of string.

Now after all that out of curiosity I'd be interested to know which county you live in?

 

[Liquid validity]

Go back and read that post again.
I said there is an aspirational supply problem.

If people share with relatives, lodge, live in places they wouldn't by choice,
there are enough houses.
To a certain extent they are already doing that - staying at home longer etc.
Everybody wants a champagne lifestyle on beer money - that is the real problem.

Oh and if the which county do you live in comment is a ruling class tory snipe,
barking up the wrong tree mate.
Born in an average area in northern England, lived in council houses when younger,
went to state school.
So stick that up your pipe
Background and class is a non issue - its irrelevant.
I'm a realist not an idealist.

 

[Atilla]

Go back and read that post again.
I said there is an aspirational supply problem.

If people share with relatives, lodge, live in places they wouldn't by choice,
there are enough houses.
To a certain extent they are already doing that - staying at home longer etc.
Everybody wants a champagne lifestyle on beer money - that is the real problem.

Oh and if the which county do you live in comment is a ruling class tory snipe,
barking up the wrong tree mate.
Born in an average area in northern England, lived in council houses when younger,
went to state school.
So stick that up your pipe
Background and class is a non issue - its irrelevant.
I'm a realist not an idealist.

No! There is a real supply problem.

If there were no green belt rules and permitted developments, land would be much cheaper and there certainly would be many more houses built where people wanted them.

I'm off the same block as you so take it easy LV. However, you are not a realist from the sound of your posts imo. You can't fix unrealistic housing price problem by telling people how or where they should be living. As for my question which county you live in - I was wondering whether you were going to heed your own recommendations and buy up in Liverpool or Manchester that's all. John o' Groats even?

I don't like London either as we have managed to move out finally. Dream come true... Sadly I have to work in London but not for long. Planning great escape very soon.

 

[counter_violent]

No! There is a real supply problem.

If there were no green belt rules and permitted developments, land would be much cheaper and there certainly would be many more houses built where people wanted them.

I'm off the same block as you so take it easy LV. However, you are not a realist from the sound of your posts imo. You can't fix unrealistic housing price problem by telling people how or where they should be living.

I don't like London either as we have managed to move out finally. Dream come true... Sadly I have to work in London but not for long. Planning great escape very soon.

Wot ?

So, those living in central London who are on housing benefits to the tune of say 2k a month should be supported by me, the tax payer, to carry on cos that's where they want to live. Yeah, obviously, i'll vote for their right....... NOT

 

[Liquid validity]

No! There is a real supply problem.

If there were no green belt rules and permitted developments, land would be much cheaper and there certainly would be many more houses built where people wanted them.

I'm off the same block as you so take it easy LV. However, you are not a realist from the sound of your posts imo. You can't fix unrealistic housing price problem by telling people how or where they should be living. As for my question which county you live in - I was wondering whether you were going to heed your own recommendations and buy up in Liverpool or Manchester that's all. John o' Groats even?

I don't like London either as we have managed to move out finally. Dream come true... Sadly I have to work in London but not for long. Planning great escape very soon.

This is increasingly looking like an argument over definition.
You say there aren't enough houses, me CV and NT say there are.

My definition of enough houses - the vast majority have a roof over their head.
Your definition - a roof over their head that they desire.

If there literally aren't enough houses, where are all the tent cities, cardboard boxes etc.
Obviously that exists, but it is not a massive issue affecting a large % is it.

People can no longer afford what they desire, truth is they never could.
Its a simple and harsh economic truth - that is it.

 

[new_trader]

This is increasingly looking like an argument over definition.
You say there aren't enough houses, me CV and NT say there are.

My definition of enough houses - the vast majority have a roof over their head.
Your definition - a roof over their head that they desire.

If there literally aren't enough houses, where are all the tent cities, cardboard boxes etc.
Obviously that exists, but it is not a massive issue affecting a large % is it.

Government policy is obvious, housing supply is not. I hadn't been living in England for very long when the house price boom of the late 90's and early 2000's started. It was obvious to me that it was Government policy that was causing it, I didn't study housing stock at all. The property bubble was a worldwide phenomena, it wasn't unique to Britain. As I said, property prices are unlikely to collapse; instead the price of everything else is going to rise, so nobody is going to be any richer. A house in 1981 was 23K, today it's 170K...the average person is no better off. Rising house prices are nothing more than a transfer of wealth, from the buyer to the seller. The net effect on the economy is zero. Atilla believes wholeheartedly in the wealth effect nonsense.

 

[Atilla]

Wot ?

So, those living in central London who are on housing benefits to the tune of say 2k a month should be supported by me, the tax payer, to carry on cos that's where they want to live. Yeah, obviously, i'll vote for their right....... NOT

I'm against housing benefit. If unemployed they should be housed where ever government sends them.

If they are economic migrants and they have no jobs then they obviously need to go back to their country where ever they've come from after a certain grace period to find work. Give it 6 months.

They can always search from their home European town wherever it may be over the internet.

I bet that'll upset a lot of Conservative voters all living off BTLets...

 

[Atilla]

Good grief.

The circus is in town.

Good evening y'all now.

 

[jsenfx]

JAI HO !

Guess i am the last person to complain about the housing benefits! :
I own 5 properties in London, all are rented out, all the tenants are on Benefits paid for by the government
and what's more the UK government has subsidised the mortgage rates, have got it on a long term Fix.

the author makes logical points, but so long as there is State intervention the prices are UNLIKELY to collapse!
All I can say is "JAI HO"

 

[Liquid validity]

Guess i am the last person to complain about the housing benefits! :
I own 5 properties in London, all are rented out, all the tenants are on Benefits paid for by the government
and what's more the UK government has subsidised the mortgage rates, have got it on a long term Fix.

the author makes logical points, but so long as there is State intervention the prices are UNLIKELY to collapse!
All I can say is "JAI HO"

True, but state intervention will not and cannot last forever.
They are propping up a market that was in decline - partly due to
inflation and partly due to falling valuations (not London though).

Either way, a fall in prices in real terms is a lot lore likely than prices
continuing to rise, once state intervention ends.

 

[neil]

True, but state intervention will not and cannot last forever.
They are propping up a market that was in decline - partly due to
inflation and partly due to falling valuations (not London though).

Either way, a fall in prices in real terms is a lot lore likely than prices
continuing to rise, once state intervention ends.

Yes -remember Tory Boy telling people to rein in their debt. That was until someone whispered in his ear that personal debt pushes demand and holds up prices. However, people are nervous about jobs, wages held down but other prices (utilities etc) rise. The elastic will snap back soon and house prices will have to settle to their true value (perhaps later in London as outsiders push up prices of housing thus distorting value). They can juggle house prices but there is a real danger the govt . (establishment) will run out of sticky plaster and the whole artifice will simply collapse.

 

[Atilla]

Yes -remember Tory Boy telling people to rein in their debt. That was until someone whispered in his ear that personal debt pushes demand and holds up prices. However, people are nervous about jobs, wages held down but other prices (utilities etc) rise. The elastic will snap back soon and house prices will have to settle to their true value (perhaps later in London as outsiders push up prices of housing thus distorting value). They can juggle house prices but there is a real danger the govt . (establishment) will run out of sticky plaster and the whole artifice will simply collapse.

Just heard some Arabian wishing to buy off the internet without even visiting the property - in Ickenham!

There is so much money that all asset values will be adjusted subject to S & D.

Property prices will maintain value. One also gets to benefit of usage and dare I say 'happiness' living in ones castle. (yes I am aware of inflation, nominal and real values and net worth Mr goldfinger ).


It's going to be a long wait

 

[neil324]

A Conservative government subsidizing and intervening in a market.

All those lives and communities ripped apart for an ideology in the 1980's.

 

[counter_violent]

This whole thread makes me laugh.

A house is somewhere to live...
Who gives a carp what the price is from month to month except for those who are up to their necks in it and obviously completely over leveraged with their debt fuelled living.

 

[bhavin987]

This whole thread makes me laugh.

A house is somewhere to live...
Who gives a carp what the price is from month to month except for those who are up to their necks in it and obviously completely over leveraged with their debt fuelled living.

hmmm.........
Millions of home owners wish to profit from it and use it as retirement pot.. so it matters
We now have NOT thousands but over a million + BTL investor properties, so it matters
and yes there are million+ morons out there who are over leveraged, so it matters

so YES it does matter
and yes the economy is driven on this
Fear and Greed!

 

[Liquid validity]

hmmm.........
Millions of home owners wish to profit from it and use it as retirement pot.. so it matters
We now have NOT thousands but over a million + BTL investor properties, so it matters
and yes there are million+ morons out there who are over leveraged, so it matters

so YES it does matter
and yes the economy is driven on this
Fear and Greed!

I'm pretty sure he was aiming that at a normal residential buyer,
not BTL.

The only time it applies to a normal residential buyer is with negative equity,
which only arises due to low deposit requirements.

Even with BTL, if you can't service the debt at higher rates, or negative
equity is an issue, you are over leveraged.

 

[counter_violent]

hmmm.........
Millions of home owners wish to profit from it and use it as retirement pot.. so it matters
We now have NOT thousands but over a million + BTL investor properties, so it matters
and yes there are million+ morons out there who are over leveraged, so it matters

so YES it does matter
and yes the economy is driven on this
Fear and Greed!

Micawber is known for asserting his faith that "something will turn up". His name has become synonymous with someone who lives in hopeful expectation. This has formed the basis for the Micawber Principle, based upon his observation:

"Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness.
Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery."

When I were a lad....if you didn't have money for something you wanted, you simply didn't get it. So I had a think about it and decided the only way to achieve anything was to save up and that's what I did.

From age 18 to 21 when others were continually in the pub on benders or tripping abroad on holidays, I managed to save approx 10k, of which I put 6.5k down on a 16.5k house and spent the other 3.5k on improvements and furnishings. So I was set on the right track from the get go. From memory, the mortgage payment each month was about 97 quid inc insurances. Easily affordable provided people do things the right way around...save first...spend later.

 

[Liquid validity]

Micawber is known for asserting his faith that "something will turn up". His name has become synonymous with someone who lives in hopeful expectation. This has formed the basis for the Micawber Principle, based upon his observation:

"Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness.
Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery."

Exactly, living within your means is an alien concept to most Brits.
Germans are totally different, much less take up of credit,
less personal debt, and their housing market is not as borked as ours.
Neither is their economy for that matter, which says a lot.