House Waiting Lists between 10 and 33 YEARS

the_ash_and_the_oak

IveSeenTheLight wrote: »

BTL therefore picked up the gap in available rental properties as social housing was sold off.
It wasn't BTL as the root cause of pricing out FTBers, it was the government selling off social housing stock.

Don't really remember every suggesting any of the above tbf (not even sure I remember saying FTBs were priced out - to me it looked like cheap credit was allowing more of them in)

HAMISH_MCTAVISH

JonnyBravo wrote: »

Hmmmm..... I like posts which actually make me think and this one has.
I voted for the expansion of credit in that "what has driven house prices" thread the other day, but this really does make me think perhaps supply and demand plays a larger part.

And I'd love to hear a good counter argument, but as of yet nobody has managed to come up with one.

Sure the wage differential plays a large part in it but not to the extent of the price differences seen surely???

Which is the thing. The average wage in London is higher than the average wage in the north. But it's not ten times higher. Or even four times higher for houses without such a huge differential.

Mind, comparing a 60k and a 600k 3 bed isn't really fair as I think the 600k is likely to be a good one and the 60k one a below average one (even taking area into account in all but a few extreme examples), but the point stands whether we use 600k or 350k.

Oh absolutely, I have no doubt that the 600K house will be immaculate, that the levels of fixtures and furnishing will be far better, as would be the case with anyone that can afford a 600K house versus a 60K house.

But the size, construction type, and cost to rebuild one if it burned down would be similar.

In fact, the main difference in cost is actually the difference in cost between land. Which shows a similar differential. Building plots in London can cost 100's of grand, or even millions, and a plot up north can be had for 30K or 40K.

So why the difference in price if not down to supply and demand?

The branch of HSBC in Notting Hill has no different lending standards than the branch of HSBC in Nuneaton...... Yet houses cost far more in one than the other.

the_ash_and_the_oak

would prob need a table of ave salary vs ave price here by area here imo

(would still have preferred to have compared like for like - as not really feeling the 60k house and the 600k house "almost identical" - also feel you could still have made decent argument along these lines comparing like with like rather than using the above figures)

HAMISH_MCTAVISH

ruggedtoast wrote: »

Because someone who can afford to pay / borrow £600k to live in a 3 bed terrace in the SE wants to pay that much.

And don't you think they would pay less if they could? The only thing that drives up price is competition between buyers. Surely not even you believe that people walk around saying, "well, I know that house is only 400K, but I'll just pay them 600K for the hell of it".

There are plenty of 3 bed terraces in the SE that are much cheaper.

And why is that? Do banks in Kent have different lending standards than banks in London?

Why are seats at the back of the theatre cheaper than the ones at the front?

Because the seats at the front offer a better view but are limited in supply. If the theatre only had one row of seats all prices would be the same. And in fact far higher than the existing prices.

Emy1501

HAMISH_MCTAVISH wrote: »

And I'd love to hear a good counter argument, but as of yet nobody has managed to come up with one.



Which is the thing. The average wage in London is higher than the average wage in the north. But it's not ten times higher. Or even four times higher for houses without such a huge differential.



Oh absolutely, I have no doubt that the 600K house will be immaculate, that the levels of fixtures and furnishing will be far better, as would be the case with anyone that can afford a 600K house versus a 60K house.

But the size, construction type, and cost to rebuild one if it burned down would be similar.

In fact, the main difference in cost is actually the difference in cost between land. Which shows a similar differential. Building plots in London can cost 100's of grand, or even millions, and a plot up north can be had for 30K or 40K.

So why the difference in price if not down to supply and demand?

The branch of HSBC in Notting Hill has no different lending standards than the branch of HSBC in Nuneaton...... Yet houses cost far more in one than the other.

Wealthy foreignerswhen it comes to central london? There was a piece on the other day suggesting that many of high end properties in Central London were being bought by Italians etc?

Your supply and demand argument has a point but the next year or so will tell us how much credit has been involved in the housing bubble. IMF have said the world will not accept another bailout and credit agencys have said a credible plan has to be in place to reduce debt after the elections or a downgrade of the UK is possible. QE will be over and interest rates will be on their way up. We will then see how well you supply and demand arguments stand up.

HAMISH_MCTAVISH

As I've yet to see a credible response, I'll help you all along.....;)

So is the house price critic's theory then that you admit supply and demand increases differentials between areas, but that all areas are too expensive because of credit?

HammerSmashedFace

HAMISH_MCTAVISH wrote: »

Well obviously not..... as despite credit reducing by 50% from peak, prices are now just over 10% down from peak.

It ain't rocket science Hamish, two points

1) Transactions are way down, almost 50% down, of those tranasactions many are cash rich purchasers requiring less borrowing, this will (and has probably started to end.)

2) Believe it or not, prices are still way off peak price, if you are buying and have a good deposit and mortgage ready you should easily be able to get 20% or even more off the peak price of a given house, in most areas. Only in relatively small pockets of the country (probably where houses are selling), would you struggle to get this kind of discount.

Emy1501

HAMISH_MCTAVISH wrote: »

As I've yet to see a credible response, I'll help you all along.....;)

So is the house price critic's theory then that you admit supply and demand increases differentials between areas, but that all areas are too expensive because of credit?

In 2004-2005 House price inflation stalled and only started again due to the increased credit ie. 125% mortgages etc. When these ran out the market stalled and collapsed in 2007.

its now being held up by low interest rates and QE.

the_ash_and_the_oak

the_ash_and_the_oak wrote: »

yes I mean i know the differential exists but think we should try and compare like with like a little bit if poss

imo whats being said here is "credit expansion based on wages" = the credit expansion is the multiplier but it still has to multiply *something*. ie lets just accept 60k and 600k - any changes in credit would be a product not a sum = eg it wouldnt change to 90k and 630k imo

prob something along these lines imo

HAMISH_MCTAVISH

Emy1501 wrote: »

In 2004-2005 House price inflation stalled and only started again due to the increased credit ie. 125% mortgages etc. When these ran out the market stalled and collapsed in 2007.

its now being held up by low interest rates and QE.

Yes thats nice and all but it still doesn't answer the question.

Why does a house in london often cost 10 times what a similar house in the north costs?