MSE news 'House price crash is over'

Newbeginning

chucky wrote: »

if you just look at the last recession you could be right but no recession is comparable.

• early 1980s recession - return to peak prices happened in less than 12 months
• mid 1970s recession there was no drop in house prices
• early 1990s recession it took 5/6 years to return to peak house prices

it all depends on what you read and hwat they're trying to present to you

But was there a housing boom in the 70s/early 80s? Were house prices out of line with average salaries?

chucky

Newbeginning wrote: »

But was there a housing boom in the 70s/early 80s? Were house prices out of line with average salaries?

definitely in the 1970s not sure about the 1980s.

http://en.wikipedia.org/wiki/Secondary_banking_crisis_of_1973%E2%80%931975

Newbeginning

chucky wrote: »

definitely in the 1970s not sure about the 1980s.

http://en.wikipedia.org/wiki/Secondary_banking_crisis_of_1973%E2%80%931975

The Secondary Banking Crisis of 1973–75 was a dramatic crash in property prices in Great Britain which caused dozens of small ("secondary") lending banks to be threatened with bankruptcy.

This article contradicts what you have just said.

chucky

Newbeginning wrote: »

The Secondary Banking Crisis of 1973–75 was a dramatic crash in property prices in Great Britain which caused dozens of small ("secondary") lending banks to be threatened with bankruptcy.

This article contradicts what you have just said.

apologies - i understood the question as pre-mid 1970s

in the late 70s there was Year on year HPi of between 25% and 30%
http://www.nationwide.co.uk/hpi/downloads/UK_house_price_since_1952.xls

Newbeginning

chucky wrote: »

apologies - i understood the question as pre-mid 1970s

in the late 70s there was Year on year HPi of between 25% and 30%
http://www.nationwide.co.uk/hpi/downloads/UK_house_price_since_1952.xls

But in the late 70s the country was not in recession (as far as i can see from a quick dig around the net), so it does not relate to what I was trying to say in my first post.

Also, from more digging around online, it does not seem that there is a general consensus that house prices in the early 80s recovered after 1 year. This article says that they actually took 4 years:

http://www.housepricecrash.co.uk/forum/lofiversion/index.php/t120918.html

the_ash_and_the_oak

the 70s had rampant inflation, in purely nominal terms the crash never happened

dgl1001

Newbeginning wrote: »

What is so different about the housing situation in the UK compared to 15-20 years ago? (That's a genuine question by the way, as I find all this stuff really interesting).

Its different this time because of the lack of supply in housing. Is this a real issue which few bears want to acknowledge. Over the next 20 years, the average household size will fall from 2.4 persons per household to 2.2 persons. That doesn't sound alot, but it will require the housing stock to be increased by 10% (say 2.4million additional homes), just to house the existing population. Then we have

• an aging population, who are living longer
• Births exceeding the death rate (see above)
• and immigration.

So, the easy thing to do is to build more housing. Kate Barker (Bank of England) beleives we need to build 240,000 new homes a year just to keep up with demand, let along build enough to decrease prices. I think we're building just over £100k per annum at the mow. Even if the political will was there, we would struggle to build that many - and here lies the problem - as a county we haven't got the money, infrastructure or the political will to build more housing - but households are still going to form.

So that's the future, how about now, why are haven't prices dropped futher now? Well, believe it or not, we haven't been building enough housing for the last 20 to 30 years and the massive increase in prices is partly due to the lack of supply, and partly due to the easy availibilty of credit. Now, if we had built sufficent houses over the last 30 years, and we'd of have the credit crunch, prices would have gone down alot further - but they haven't, they've been sustained because of the lack of supply.

I'm sure everyone thinks this is a load of rubbish, but remember this as an example how badly we have been building new homes. In 2001, Leiecester had to produce it's 20 year plan to accomodate future housing needs. An assumption was made for the imigration of people from the indian sub-continient (india/ pakistan etc etc). Guess how many new homes were set aside to accomodate this immigration per year? 3,000 new homes? 6,000 new homes? answer .......35 new homes were set aside a accomodate immigration from the indian sub- continient every year. And guess what, evry single authroity has been doing the same for years and years..... hense the massive problem we have now.

If you think house prices are expensive now, give it 20 years

Newbeginning

dgl1001 wrote: »

Its different this time because of the lack of supply in housing. Is this a real issue which few bears want to acknowledge.

If you think house prices are expensive now, give it 20 years

I can see the logic of everything you are saying, but there are estimated to be a million homes sitting empty in the UK at the moment, which makes me sceptical that a shortage of homes will affect whether prices rise or fall within the next year or so. I don't think that anybody is saying that prices are falling because people don't want or need to buy property - they are falling because a huge chunk of the population cannot afford to buy property.

Over the long term, yes, the facts suggest that house prices will be scarily expensive in 20 years time - but I'm not talking about the next few decades, just what will happen until the economy recovers.

not_loaded

Newbeginning wrote: »

The Secondary Banking Crisis of 1973–75 was a dramatic crash in property prices in Great Britain which caused dozens of small ("secondary") lending banks to be threatened with bankruptcy.
This article contradicts what you have just said.

Mmm… Being engaged and looking to get married, use our savings, and buy a house in 1973 to 1975, neither of us spotted this ‘dramatic crash in property prices’. We were in a brilliant position to take advantage of it if it were there. :rolleyes:

dgl1001 wrote: »

Its different this time because of the lack of supply in housing… …Kate Barker (Bank of England) beleives we need to build 240,000 new homes a year just to keep up with demand, let along build enough to decrease prices. I think we're building just over £100k per annum at the mow. Even if the political will was there, we would struggle to build that many - and here lies the problem - as a county we haven't got the money, infrastructure or the political will to build more housing - but households are still going to form…

…Well, believe it or not, we haven't been building enough housing for the last 20 to 30 years and the massive increase in prices is partly due to the lack of supply, and partly due to the easy availibilty of credit. Now, if we had built sufficent houses over the last 30 years, and we'd of have the credit crunch, prices would have gone down alot further - but they haven't, they've been sustained because of the lack of supply.

I'm sure everyone thinks this is a load of rubbish…

I for one do not think this is a load of rubbish.

You quote well-known facts. Thank you! :T

I can’t think how many times I’ve spoken and typed the words 'law of supply and demand' in the last few years.

The US problem (and the Spanish problem) is a drastic over supply of housing. It ain’t so here.

ManAtHome

On the supply and demand thing - what makes you think house prices can rise spectacularly, the population can increase, but the average household size can decrease?

Alternative view - we end up back in the 50s when 3 generations living in the same house was not uncommon (or maybe you can send the kids off to live in a cardboard box/park bench until they're in their 40s...).