The Housing Shortage Timebomb

blue_monkey_2

RabbitMad wrote: »

The doubling is due to cheap credit and low inflation / interest rates and higher standards of living. Average wages have gone from £15K in early to mid 90's to £25K now. If our average income has nearly doubled why can't certain assets.

Lets look at a few other prices - petrol back in 1993 ish 48p per litre - now £1.10 per litre and most of that increase is tax. A tin of quality streets at christmas early 90's £8, now £5, a VCR £200 ish, now a DVD harddisc recorder £200.

If you look at how much cheaper things are in real terms its easy to see that we have much more disposable income and therfore are able to direct that towards property.

Because it has not doubled, it has quadrupled and more. Back when we got married - 1999 - you could buy a 3 bed semi house in town for 43k, maybe a touch more. By 2002 that house was on the market for £100k and we knew we had missed the boat. That same house now is 'valued' for £200k and more.

Our salaries have not gone up by that amount.

stueyhants

There comes a point when we shouldn't build any more houses. I don't want the UK to become a big concrete mess. So do we stop now and restrict building houses forcing prices up and self limiting demand (i.e. less Imigration and smaller birth rates) Or do we keep building like mad and in 50 years time having the same problem but now having ruined the countryside.

We can not keep growing at the same rate with finite resources, the sooner we put a brake on this the better for the environment for everyone.

blue_monkey_2

My friend has a beautiful big house she owns. The garden is so small she can only just a trampoline in for the kids. Another friend in the same road has the same garden but on a slope so cannot even have a trampoline or paddling pool for the kids. We have a huge garden, the kids have all the toys they want, they can ride their bikes and play football. While their kids cannot. Its allvery well having huge beautiful houses but at what cost? Kids cannot even go into their own garden and run around and get some exercise - and then we start moaning about kids getting too fat as they do not get enough fresh air and exercise.

I know we are veering off from the point but while they stack houses on top of each other the quality of life of those occupants is decreasing surely?

I know we don't own this place but we have a secure tenancy and will be here forever as far as we are concerned. I don't think we need to buy because we have got the security we need. We have a decent sized house (only got no room because I hoard way too much - I disappeared to try and sort some of it out!!) and a HUGE garden. We are happy with our lot really.

Oh also tosound a bit morbid but a generation ago there was a higher turnover of people in social housing but people are living much longer so there is another generation of people to consider. I know lots of people who are either in a 3 bedroom HA/Coucnil house with just 1 or 2 occupants. 20/30 years ago they would be very lucky to live into their 70's let alone their 90's. I know that sounds morbid and I am sorry about that but it is a factor also.

lostinrates

stueyhants wrote: »

There comes a point when we shouldn't build any more houses. I don't want the UK to become a big concrete mess. So do we stop now and restrict building houses forcing prices up and self limiting demand (i.e. less Imigration and smaller birth rates) Or do we keep building like mad and in 50 years time having the same problem but now having ruined the countryside.

We can not keep growing at the same rate with finite resources, the sooner we put a brake on this the better for the environment for everyone.

I agree with this, but I'd rather have more concrete (actually I'd rather have more alternative, green family friendly housing: I'd live in a hobbit house wih some joy, and imagine how pretty a hobbit village could be!) than a lot of homeless people. Cardboard shanty towns are't exactly aesthetically better. Numbers are, as you say, the big problem, and one that there seems no nice answer too...which is the problem, because there needs t be an answer that will get some one elected and empowered in order to tackle it, not just keep plugging holes. The BNP will never offer a solution I could vote for.

System

chucky wrote: »

prices are fine in relation to wages - check the affordability indexes. granted they've been more affordable but it's only those that can't afford are the ones that can't buy property

But, (and it's become clear reading this as to what Hamish has been on about) they don't need to be affordable to everyone. If only 50% of the homes needed are being built then only the 50% richest people will be able to afford them. Which emphasises pefectly why the shortage is locking people out of the market.

chucky

Joeskeppi wrote: »

But, (and it's become clear reading this as to what Hamish has been on about) they don't need to be affordable to everyone. If only 50% of the homes needed are being built then only the 50% richest people will be able to afford them. Which emphasis pefectly why the shortage is locking people out of the market.

that's exactly the point that many people refuse to see because there has been a reversal in the number of home owners

forget 600,000 homes on Rightmove it's not really the point

ukcarper

blue_monkey wrote: »

Because it has not doubled, it has quadrupled and more. Back when we got married - 1999 - you could buy a 3 bed semi house in town for 43k, maybe a touch more. By 2002 that house was on the market for £100k and we knew we had missed the boat. That same house now is 'valued' for £200k and more.

Our salaries have not gone up by that amount.

I don’t think house prices have quadrupled since 1999, I don’t think they have even doubled. You must live in an unusual area. My house was £60k in 1985 and a similar one sold last year for £277k and that had a conservatory mine doesn’t. That’s 4.6x in 25years not 10.

HAMISH_MCTAVISH

blue_monkey wrote: »

I am saying that IF there is a shortage of housing then people will deal with it.

There IS a shortage of affordable/social housing.

.

Please don't take this the wrong way or anything, but how is it possible you can read a forum devoted to debating house prices and economics, and not grasp the basic concept of supply and demand?

The shortage of affordable housing is a direct result of the shortage of housing.

You cannot have rising prices when there is a surplus. Prices can only rise above inflation with a shortage.

Nor is the fact that there are many houses for sale, in any way indicative of there not being a shortage. A market needs a certain level of available stock to maintain stability. Prices will rise when the level of available stock is below that needed for price neutrality.

There are 650,000 houses for sale in the UK. This is down from 1.1 million just 3 years ago. And even with 1.1 million on the market, prices were rising.

The numbers needing to be built to avoid prices rises are vast. Over 400,000 a year, as dgl pointed out in an earlier post.

The simplest way to think of it is as follows......

Supply and demand ALWAYS match perfectly..... Only the price changes.

HAMISH_MCTAVISH

ukcarper wrote: »

I don’t think house prices have quadrupled since 1999, I don’t think they have even doubled. You must live in an unusual area. My house was £60k in 1985 and a similar one sold last year for £277k and that had a conservatory mine doesn’t. That’s 4.6x in 25years not 10.

And when you adjust out inflation, house prices have not even doubled in real terms in the last 25 years.

From the peak of the last boom, to the peak of the one before, prices rose just 80% or so.

HAMISH_MCTAVISH

Joeskeppi wrote: »

But, (and it's become clear reading this as to what Hamish has been on about) they don't need to be affordable to everyone. If only 50% of the homes needed are being built then only the 50% richest people will be able to afford them. Which emphasises pefectly why the shortage is locking people out of the market.

Precisely.

And when only 33% of the houses needed are being built, then only the top earning 33% of households need to be able to afford them.

Given that the average income of the top earning 33% of households is going to be around the £60K level, and given the low rates likely over the next decade or two, an average house price of 250K to 300K in todays money looks to be a certainty in the not too distant future.