What was the main driver of the 300%+ house price rise from the mid 80s to mid 00s

NumeroDeux

I'm interested as to what people on this board think.

I have my own view, but I'll reveal later.

NumeroDeux

increased availability of credit

Hmmm, votes, but no voices.

Generali

Here's a voice and no vote.

I think it's 1, 2, 3 and 4. Oh and probably 5 too but I can't think of a good joke right now. And also 6, MIRAS. The Government used to subsidise the purchase of houses by subsidising interest payments.

HAMISH_MCTAVISH

increased demand (population increase and increased affluence)

I voted option one, as ultimately without a fundamental demand surplus and supply shortage prices simply will not rise much beyond inflation.

But without credit availability increasing, prices would certainly have risen less quickly, and we would have seen other forms of rationing the limited supply, like waiting lists, instead.

Also Inflation was a major component. Prices did not rise by 300% in real terms...... the long term trend over the last 30 years is inflation plus 2.9% per year.

But if we had a significant surplus of houses, instead of the long term shortage we have had and still have...... if there were 3 houses for every person instead of three people for every house, it wouldn't matter how much credit was available, how many council houses were sold, what people thought of buying versus renting, or what happened to inflation........ Prices would fall anyway. So supply and demand is the major influence on prices.

HammerSmashedFace

increased availability of credit

I think all are a factor, however the ease of credit has been probably the major force. Banks have just offered too much money to too many people at too low a rate. Back in the day, you used to have to have an untarnished account with a bank for years to prove your 'worthiness'.

From 2000 onwards, anyone with a pulse vould get vast amounts of credit without even having a job, nevermind an account (liar loans). This is the major factor in my opinion.

HAMISH_MCTAVISH

increased demand (population increase and increased affluence)

HammerSmashedFace wrote: »

From 2000 onwards, anyone with a pulse vould get vast amounts of credit without even having a job, nevermind an account (liar loans). This is the major factor in my opinion.

There are roughly 25 million houses in the UK.

If the population of the UK was reduced from 60 million people, to 25 million people, or if the number of houses was increased from 25 million, to 60 million, what do you think would happen to house prices?

Credit was a factor, but it doesn't matter how much credit you have, if there are more houses than people to live in them,, prices will fall.

Whereas if there are not enough houses, rationing of the limited supply must be achieved somehow. If not by price, then by waiting lists or other means.

purch

increased availability of credit

It's a no-brainer.

The availability of credit, always.

HammerSmashedFace

increased availability of credit

HAMISH_MCTAVISH wrote: »

There are roughly 25 million houses in the UK.

If the population of the UK was reduced from 60 million people, to 25 million people, or if the number of houses was increased from 25 million, to 60 million, what do you think would happen to house prices?

Credit was a factor, but it doesn't matter how much credit you have, if there are more houses than people to live in them,, prices will fall.

Whereas if there are not enough houses, rationing of the limited supply must be achieved somehow. If not by price, then by waiting lists or other means.

I see your point Hamish, but it comes down to money in the end........ it doesn't matter how much you want or need something, if you don't have access to the funds, you won't be able to buy it. Credit is the main, over riding factor.

JonnyBravo

HammerSmashedFace wrote: »

I see your point Hamish, but it comes down to money in the end........ it doesn't matter how much you want or need something, if you don't have access to the funds, you won't be able to buy it. Credit is the main, over riding factor.

I agree.

Sure Hamish is right with what he says and like you say it's down to all of them really but the increase in the availability of credit is the thing that changed the most, and therefore had the most impact.

HAMISH_MCTAVISH

increased demand (population increase and increased affluence)

HammerSmashedFace wrote: »

I see your point Hamish, but it comes down to money in the end........ it doesn't matter how much you want or need something, if you don't have access to the funds, you won't be able to buy it. Credit is the main, over riding factor.

Yes, I see your point too, and I would agree it's important in terms of the timescale of rises, but it is not the main factor in rises occurring over the long run. It is simply impossible for credit to drive up prices in a market where surpluses exist.

As I've said, it doesn't matter how much credit is out there, if there is less demand than supply, prices will fall.

Whereas if there is more demand than supply, even in a credit limited market, prices will rise eventually anyway. It will just force people to save for a decade or two first.

thriftybabe

increased availability of credit

We had about 10 credit cards and moved them around for the interest free deals. I think the credit limits of them all together was about £50 -£60k. We paid them off every month and got rid of them when the 0% deals went. If these were sent to someone who did not worry about debt and just spent, spent then they would be in trouble. It was so easy to get the cards but to be honest we have a good credit history.