Why are prices rising so much and so fast?

ILW

Harry_Powell wrote: »

Oh well, it looks like you'll just have to work hard, save up and get a huge mortgage, just like the rest of us.

Not me, Im over 50 and paid the mortgage off a few years ago. Still cannot see the advantage of high house prices.

Harry_Powell

ILW wrote: »

Not me, Im over 50 and paid the mortgage off a few years ago. Still cannot see the advantage of high house prices.

They make for good dinner party conversations?

ruggedtoast

Harry_Powell wrote: »

They make for good dinner party conversations?

They really dont!

Harry_Powell

ruggedtoast wrote: »

They really dont!

lol. No, they really don't.

ln1234

ruggedtoast wrote: »

The only alternative to home occupancy is homelessness. And there seems to be a concerted effort to make the former as expensive as possible. Whether you rent or buy.

However as M. Thatcher says, you can't buck the market.We'll see.

Anyone getting a mortgage these days has had to go through the banks vetting process and put a hefty deposit down. Most likely they can afford their mortgage comfortably (otherwise they wouldn't have got the mortgage in the first place) so if interest rates went up substantially, at what point would they throw in the towel and let the bank reposess or sell up at a low value?
My thinking is that all the luxuries would go first (holiday, cars, socialising) before the mortgage was affected, so putting it in those terms house prices are still affordable to those buying at these current high prices.

Charterhouse

zappahey wrote: »

I still wonder if there is a change in the quality mix, that is having an effect on the indices.

If we make the assumption (admittedly fairly big) that the area I watch* is typical, then only the good stuff is selling and anything average or poor just sits there, unloved.

So while the mix of house types may be taken into account in the stats I don't see how they can account for differences in quality.

Yes. You have hit the nail on the head. The methodology that they use i.e. hedonic regression attempts to quality and mix adjust. The problem is that it does not deal with selection bias i.e. only "nice" houses are selling. So houses are selling better in the better areas. That bias is not excluded by the Halifax's methodology. Basically houses where a bedroom/kitchen/bathroom/whatever costs more are selling better than those where they are cheaper. The stats are a mockery and will be til volumes rise a lot.

HAMISH_MCTAVISH

Charterhouse wrote: »

The stats are a mockery and will be til volumes rise a lot.

And I take it they were fine when prices were falling, even though the volumes have doubled since then?

When prices were falling, on even lower volumes than now, were people only buying houses in cheaper areas?;)