The Mystery of Rising House Prices......

HAMISH_MCTAVISH

Cannon_Fodder wrote: »

Maybe, as usual, I haven't thought this through, but what the heck...

If sellers are not putting their houses on the market, because of restricted lending/lack of equity/poor deals at high LTV/poor credit history, etc etc...then supply is restricted - which Hamish and the article attribute house price rises to...have I got that right?

But, if they are not selling, then neither are they trying to buy, so doesn't that correspondingly restrict demand...and shouldn't the two halves of the same non-transaction to a large degree cancel themselves out...??

Yes, and no....

It is true that for the existing household population, sales more or less equal purchases, and those two cancel each other out.

But there is also an ongoing channel of people moving out of rented having saved (or being gifted) their deposit, who become FTB's.... And old people die, vacating their housing. But old people are living much longer, and the numbers no longer balance each other out in a growing population.

Which is why an ADDITIONAL 250,000 households are being created per year, (mostly, one would assume, going into rented to replace the renters who are now buying) and only 80,000 houses are being built...... There is currently a shortfall of 170,000 houses a year being taken out of existing stock levels.

Interestingly, the number of houses on the market has declined by 40% from peak, and now stands at just over 690,000.... Which fits in pretty well with the above shortfall.

chucky

HAMISH_MCTAVISH wrote: »

Yes, and no....

It is true that for the existing household population, sales more or less equal purchases, and those two cancel each other out.

But there is also an ongoing channel of people moving out of rented having saved (or being gifted) their deposit, who become FTB's.... And old people die, vacating their housing. But old people are living much longer, and the numbers no longer balance each other out in a growing population.

Which is why an ADDITIONAL 250,000 households are being created per year, (mostly, one would assume, going into rented to replace the renters who are now buying) and only 80,000 houses are being built...... There is currently a shortfall of 170,000 houses a year being taken out of existing stock levels.

Interestingly, the number of houses on the market has declined by 40% from peak, and now stands at just over 690,000.... Which fits in pretty well with the above shortfall.

agree with your post but not totally and one small part - the would be renters that are meant to be replacing the FTB's are staying at home longer too.

HAMISH_MCTAVISH

chucky wrote: »

agree with your post but not totally and one small part - the would be renters that are meant to be replacing the FTB's are staying at home longer too.

Sure.

But that in no way changes the raw data.

Which is that 250,000 additional households are being formed a year. 80,000 new houses were built last year. There is a shortfall of 170,000 a year. And it does seem interesting that the total houses on the market have declined by about 2 years worth of this shortfall.......