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Could the UK housing rental market be about to crack?
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shortchanged wrote: »But the simple fact is ISTL if people can't afford it they can't afford it.
There simply isn't a bottomless pit of money which is what some LL's seem to think there is.
Agreed, there isn't a bottomless pit of money, therefore people have to consider prioritising their expenditure.
Generali posted a good link to the breakdown of household expenditure and listed their weightings in this post from another threadThis simple version (link) opens as a .pdf.
2011 weights for the RPI:
Food......118
Catering...47
Alcohol.....60
Tobacco...28
Housing...238
Fuel and light...42
Household goods..65
Household services..63
Clothing and footwear..44
Motoring...137
Fares & other travel..20
Leisure goods.....36
Leisure services..64
They will correspond pretty well with how the average person in the UK spends his or her money. The above is out of 1,000 so the average person spends £2.80 on tobacco of every £1,000 they spend in total (that's spend not earn). A smoker will most likely spend a lot more than that and a non-smoker a lot less (probably £0) but Mr Average spends £2.80.
Here is a really good explanation of the RPI & CPI.
To which I gave re-ordering into a list of prioritiesIveSeenTheLight wrote: »Very Good.
Now, forgetting about the percentages for a second, what would most people priorities lie in order of necessities
For me: -
Food......118
Housing...238
Fuel and light...42
Household services..63 (Not sure what this is for given Fuel and Light are above)
Motoring...137
Clothing and footwear..44
Leisure goods.....36
Leisure services..64
Catering...47
Fares & other travel..20 (Motoring is above)
Household goods..65
Alcohol.....60
Tobacco...28
Taking clothing downwards, that's 36.4% that could be reallocated to higher priority on the list.
So you can see that using the average, I've highlighted that there is at least 36.4% of disposable income that could be reallocated to higher priorities of which housing has to be a pretty high priority
A question back to you then....
If your wages increased by 3% but Housing, Food and Utilities all increased by 5%, where would you find the funds to pay these from?:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
Predicting what will happen with rents is very difficult. In my opinion even more complex than house prices. As we don't have an epidemic of homelessness in the UK at the moment it implies that we have sufficient supply to cover demand (though some demand may be mitigated by sharing property). On that basis if housing benefits and incomes are squeezed then rents should decrease and lower rents are very likely to decrease property prices (landlords trying to get out of the rental market).Having a signature removed for mentioning the removal of a previous signature. Blackwhite bellyfeel double plus good...0
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:cool:
Have to agree with this. There is no doubt that there is a shortage of accomodation, and there is no doubt that there has been increased rental demand over the past few years, but once again there are some on here who seem to think rents will continue to increase forever which of course cannot be the case.
Who knows, maybe rents will continue to rise and people will just stop eating
If it came to it (and there may be examples already) you will find that people change their eating habits i.e. choose supermarket brand instead of higher priced equivalents
I would think that there are other things that people might cut back on first such as: -
Clothing and footwear..44
Leisure goods.....36
Leisure services..64
Catering...47
Fares & other travel..20
Household goods..65
Alcohol.....60
Tobacco...28:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
Predicting what will happen with rents is very difficult. In my opinion even more complex than house prices. As we don't have an epidemic of homelessness in the UK at the moment it implies that we have sufficient supply to cover demand (though some demand may be mitigated by sharing property). On that basis if housing benefits and incomes are squeezed then rents should decrease and lower rents are very likely to decrease property prices (landlords trying to get out of the rental market).
Could you explain that a bit more please?
Most stats are showing and increasing population with property building not keeping pace with the population requiremements.
Of course people can choose to share (just increases household income to support the prices) or stay at home (live with parents).
The stay at homes naturally are reducing effective demand but that potentially is just balancing the increasing population weight.
The only real sustainable way to reduce prices and rents is for housing supply to outstrip the increasing population requirements.:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
IveSeenTheLight wrote: »If it came to it (and there may be examples already) you will find that people change their eating habits i.e. choose supermarket brand instead of higher priced equivalents
Or just say s*d it and find a cheaper property to rent.0 -
If you can afford to rent you can afford to buy, the problem is deposits.
If you lose your job whilst renting then you will only have to find the rent till the end of the rental period probably 6 to 12 months. Banks are lending for potentially 25 years to a FTB. The risks are greater over the long run. Also lot easier for a landord to get back their property than it is for a bank to repossess0 -
IveSeenTheLight wrote: »Could you explain that a bit more please?
Most stats are showing and increasing population with property building not keeping pace with the population requirements.
The disparity between houses built and population change isn't all that vast. In 2010-2011 there was a shortfall of about 50,000 new houses, which was the lowest year for house building since shortly after WWI. That's 0.02% less houses per household. Emptyhomes.com, guess what they track, reckon there are nearly a million empty homes in the UK. However, this is largely irrelevant to what a change in housing allowance will do to pricing.
If you take £5,000,000 in money available for renting out of a local rental market then all the properties currently being rented can only continue to be rented if their is enough demand from new renters willing to pay the same price unfulfilled. It is possible that some areas with severe housing shortages may have this, however it is also likely very rare and even then the knock on effects may drop prices.Having a signature removed for mentioning the removal of a previous signature. Blackwhite bellyfeel double plus good...0 -
shortchanged wrote: »Or just say s*d it and find a cheaper property to rent.
Quite possibly you could.
That's a life choice and some may choose not to live in those areas.
If enough are happy to, wouldn;t that increase the demand for those areas?
What would happen then?
Until the supply is addressed to meet or indeed exceed the demand, then the will always be pressure for higher prices.:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
The disparity between houses built and population change isn't all that vast. In 2010-2011 there was a shortfall of about 50,000 new houses, which was the lowest year for house building since shortly after WWI. That's 0.02% less houses per household.
What is the figure compounded?
??k 2011 - 2012
50k 2010 - 2011
??k 2009 - 2010
??k 2008 - 2009
??k 2007 - 2008
??k 2006 - 2007
??k 2005 - 2006
??k 2004 - 2005
??k 2003 - 2004
What's the likelyhood of supplying exceeding population going forward?Emptyhomes.com, guess what they track, reckon there are nearly a million empty homes in the UK. However, this is largely irrelevant to what a change in housing allowance will do to pricing.
If there are so many empty houses, then why are rents increasing?
Housing allowance may affect some areas, but it will only put pressure on elsewhere (see Newham)If you take £5,000,000 in money available for renting out of a local rental market then all the properties currently being rented can only continue to be rented if their is enough demand from new renters willing to pay the same price unfulfilled. It is possible that some areas with severe housing shortages may have this, however it is also likely very rare and even then the knock on effects may drop prices.
A little bit hypothetical, but it could mean the difference is minimal per property.:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
Predicting what will happen with rents is very difficult. In my opinion even more complex than house prices. As we don't have an epidemic of homelessness in the UK at the moment it implies that we have sufficient supply to cover demand (though some demand may be mitigated by sharing property). On that basis if housing benefits and incomes are squeezed then rents should decrease and lower rents are very likely to decrease property prices (landlords trying to get out of the rental market).
If rents do not come down a long way when the big benefit cuts come in next year then we could see an epidemic of homelessness in the UK. I personally see rents coming down as the more likely reality.:cool:
Who knows, maybe rents will continue to rise and people will just stop eating
Yes bunch of lazy benefit scroungers, they should be on 1 meal a day its their fault for being in a low paid job. They should sleep less as well and get a night job so that rents do not come down next year when the big benefit caps come in.It is basic supply and demand and the demand keeps arriving and the rate at which it is arriving is increasing.
This demand that keeps arriving on our shores that you talk about, of course they came over on the back of a lorry with a plastic bag over their head to not get caught by boarder agents, but they had pockets overflowing with cash. Easily enough to keep rents and property prices held up where they are.Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam0
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