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

edgex

increased availability of credit

i went for 'increased availability of credit'

population increase is only a partial affect, as an increase in population does not lead to the same increase in household numbers
eg. if a family have a 3rd child, it has increased the population, but hasnt increased the household numbers, as they arnt going to buy a 2nd house just to house an extra family member.



the increased availability of credit, together with the increase in risk that individuals & banks were willing to take on, in return for a supposed never ending line of HPI, led to an increase in speculation, ie. the BTL market.
much of BTL has never been profitable on a revenue basis, it was all based on continuing high levels of HPI.
as many of those getting into BTL had some ready funds available, & usually no mortgage on their main residence, they simply pushed up the cost of housing in the market. 'real' buyers, those that wanted to live there, were then forced to up their bids, & stretch their credit to the limits.



it wouldnt have mattered how many new houses/flats were built, there was too much ready cash, & credit, floating around, looking to get into property.
it would have continued to push up the prices of any amount of new properties.

ukcarper

that never happened in 70s still big increase in property prices

StevieJ

It is linked to increased credit, but what about a large reduction in long term interest rates that improved affordability

Thrugelmir

increased availability of credit

ukcarper wrote: »

that never happened in 70s still big increase in property prices

I remember wage inflation in excess of 20% in one year.

NumeroDeux

increased availability of credit

Joeskeppi wrote: »

All of them, plus a big culture shift towards dual incomes

Really good answer that I'd totally forgotten.


Anyway, I'm all about option 4, but agree that they're all factors. I'm currently investigating the psychological factors which influenced the credit crunch and I wanted to see what other people thought before going ahead with the most convenient argument.

ukcarper

inflation was high in the seventies but house price increased by over 4x

ruggedtoast

increased availability of credit

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.

Its not always helpful averaging house prices based on population. By that paradigm rents should have risen instead of nominally fallen over the last few years.

There also shouldnt be any unsold cheap properties languishing on the market - but there are.

Undoubtedly an increase in population equals more people wanting to live in nicer areas, but it was the availability of credit that was responsible for pushing prices up in the less desirable places.

ukcarper

Joeskeppi wrote: »

All of them, plus a big culture shift towards dual incomes

Was it a culture shift or that the banks allowed both partners salary to be taken into consideration

Really2

ukcarper wrote: »

Was it a culture shift or that the banks allowed both partners salary to be taken into consideration

More women work now than 30 years ago so I would say it is a culture shift.

I would dare say there is a fair bit of correlation between dual income households and HPI over the last 50 years.

bryanb

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?

Isn't that about 2.4 people per house, sounds about right to me.