Why house prices are certain to fall

macaque_2

Cleaver wrote: »

Can I just point out how sweet I think it is that you've come up with a nice, simple formula to try and quanitfy such a hugley complex and variable market that can be influenced by hundreds of factors.

A good effort Mr Cleaver but no cigar. There are hundreds of influencing factors but these are only sub categories of the three components in my formula (population, disposable income and sentiment). To illustrate the point, here are three questions.

1. Population - What is a house worth in a land with no people.
2. Disposable income - What is a house worth in a land where people have no money?
3. Sentiment - What is a house worth in a land where peope have no desire to buy houses?

If there is a fourth question that is not a subsidiary to the 3 questions above, perhaps you could tell me what it is. (I will acknowledge that 3 does have a sub category that is almost worth a category on its own. That applies where impairments to ownership exist which are protected by law)

new_home_owner_3

1. Population - What is a house worth in a land with no people.

Theres plenty of people, just not enough houses.

2. Disposable income - What is a house worth in a land where people have no money?

People who dont have money wont buy houses, and most likely they wont sell them either, they still need somewhere to live.

3. Sentiment - What is a house worth in a land where peope have no desire to buy houses?

A house is only worth what people are willing to pay for it, if no ones got a desire to buy then no one will be selling them.

so answer these questions

1. Are you saying the population is not growng?

2.Whos got no money? Unemployments bad, but nowhere near as bad as in the 90s

3, i know people who are buying im buying, last time i looked i was a person, so are you so sure people have no deisre to buy? Or is that you and a few other people.

Cleaver

macaque wrote: »

1. Population - What is a house worth in a land with no people.

Nothing.

macaque wrote: »

2. Disposable income - What is a house worth in a land where people have no money?

Nothing.

macaque wrote: »

3. Sentiment - What is a house worth in a land where peope have no desire to buy houses?

Nothing.

But...

To answer point number one, obviously our land will never have no people, but I will take your argument in the spirit in which you meant it. But even if our populations dwindle in general terms, it doesn't mean that in certain areas house prices cannot rise in the face of populations decreasing. In the same way that populations can rise and house prices increase. For example, the city of Salford, where the population has been falling steadily over the past 30 years as house prices rapidly increase (in general).

Point two. It's simplistic in the extreme to link disposable income directly to house prices. For example, if someone spends a percentage on their income on housing does that mean they are at the limit of what they can spend? Not necessarily. They could maybe afford to spend double what they currently spend. And maybe not. Who knows?

What I'm struggling with in point three is that the desire to own a home might fluctuate somewhat, but most people given the choice would like a nice pad to live in. And if they own it, even better. Yes it's a factor, but what are the reasons you are presenting why desire would drop?

What I'm trying to say is that I could come up with a formula that says:

FS = PH x DI x FA

Where:

FS = food sales
PH = people's hunger
DI = disposable income
FA = food availability

Well, so what? What does it prove? That food sales are going to drop?

I've just re-read this post and have no clear or cohesive idea of where I'm going with it. I'm like an unfunny Eddie Izzard. Apologies for that my simian friend.

Cleaver

new_home_owner wrote: »

If the house falls come then fair enough, what goes down always go back up, im looking at the bigger picture and in about 10 years away, most graphs prove house double every 10 years.

I have a feeling that the next 10 years, and possibly the decade or two after that might blow your theory clean out of the water.

new_home_owner_3

Cleaver wrote: »

I have a feeling that the next 10 years, and possibly the decade or two after that might blow your theory clean out of the water.

we will have to wait and see, if only you or me knew the answers, all you can go on is whats happened in the past, some things do change.

Are you saying we might not see house prices double in the next 20 years?

macaque_2

Cleaver

For example, the city of Salford, where the population has been falling steadily over the past 30 years as house prices rapidly increase

Agreed but the equation has 3 components. High scores for sentiment and disposable income can easily offset low or falling populations.

For example, if someone spends a percentage on their income on housing does that mean they are at the limit of what they can spend? Not necessarily. They could maybe afford to spend double what they currently spend. And maybe not. Who knows?

A person with a high disposable income may choose not to spend it on an expensive home but the corollary is that a person with a low disposable income cannot push up house prices.

What I'm struggling with in point three is that the desire to own a home might fluctuate somewhat, but most people given the choice would like a nice pad to live in. And if they own it, even better. Yes it's a factor, but what are the reasons you are presenting why desire would drop?

Sentiment plays a big factor in how much a person is willing to sacrifice of their disposable income. In recent years we have seen sentiment go off the scale as people beggar themselves to buy 2nd and 3rd homes.

Generali

new_home_owner wrote: »

we will have to wait and see, if only you or me knew the answers, all you can go on is whats happened in the past, some things do change.

Are you saying we might not see house prices double in the next 20 years?

Inflation adjusted house prices won't double in the next 20 years or at least I'd be amazed if they do. Too many current holders will need to sell to suppliment their pensions or FTBs will be financially crippled trying to pay for pension promises that were never provided for.

nembot

Here is my formula for determining future house price inflation.

1. Remove head from sand
2. Open eyes
3. Kettle on
4. Smell coffee

Simple really...

:T

new_home_owner_3

Generali wrote: »

Inflation adjusted house prices won't double in the next 20 years or at least I'd be amazed if they do. Too many current holders will need to sell to suppliment their pensions or FTBs will be financially crippled trying to pay for pension promises that were never provided for.

i understand inflation related house prices may not go up, but im not on about that im on about houses prices, my dad bought his house 40 years ago and he paid 3500 pound, he was only on 1.50 a week.

if someone buys a house now in 10 years time i would think it would be valued higher than what it is now in pounds.

If i knew 10 years ago what has happened i would have broke my balls to have bought more properties 10 years ago.

But anyway back onto the subject why are house prices certain to fall?

The last time it was due to high interest rates which forced sales, when are the high interest rates coming back and when?

Snooze

new_home_owner wrote: »

1. Population - What is a house worth in a land with no people.

Theres plenty of people, just not enough houses.

Sorry but that is BS. There are plenty of houses available. The problem is that they are all in places where people don't want to live. Go down your local $hithole area of your town and you'll find thousands of them all tinned up and empty.

Everyone wants to live in a 'nice area' but nice areas = ££££££££ = can't afford = blame it on there not being enough houses.

R