Cameron: House Prices Will "Continue To Rise"

Harry_Powell

IveSeenTheLight wrote: »

I think we do.
It's called a fact of life. Life moves on and people get on with it.

I recall a post earlier about someone who bought a house for £2,000 and sold it later for £10,000.
It was then sold again for somthing like £40k and again at £155k.

Do you believe that house should always have been sold at £2,000?

Inflation happens to all things.
How much is a loaf of bread or a pint of milk nowadays compared to historically?
Are car prices dearer or cheaper than in the past?

I don't remember car prices (or bread or anything else) increase in price by 300% over a 10 year period. I think the bear argument is that house prices in line with inflation are the way to go, but they forget that owning a home is a luxury, not a necessity.

IveSeenTheLight

Harry_Powell wrote: »

I don't remember car prices (or bread or anything else) increase in price by 300% over a 10 year period. I think the bear argument is that house prices in line with inflation are the way to go, but they forget that owning a home is a luxury, not a necessity.

The thing is, that this can be controlled by affecting the supply / demand for each area.
An increase of 300% is reflective of the demand (desire and financial ability) for property.
If there was not so much competition, then prices would not have risen by so much.

I'm in agreement with inflation linked rises. I'm not personally in a position to change the fundamentals for such.

Edit: - Just looked at the 300% in 10 years. House prices were around about £77,000 in 2000 and is now just over £160k, so this represents just over 100% increase over the last 10 years.

This can be seen in many areas on the following link: -
http://www.nationwide.co.uk/hpi/historical/q1_2010.pdf

Incidently, just looked up petrol prices since I've heard them going above £1.20 a litre.
10 years ago they were £0.769 per litre representing an increase of 64% in the last 10 years.
http://www.speedlimit.org.uk/petrolprices.html

I don's really want to cause alarm, but there are many integrated enegery companies are expecting petrol prices to be double by 2012.
that would represent a circa 400% increase in 10 years.

mr_fishbulb

Harry_Powell wrote: »

I don't remember car prices (or bread or anything else) increase in price by 300% over a 10 year period.

There weren't constant TV programs telling you how you could buy a 3-door car, stick another 2 doors on and then sell it at a nice profit

chucky

Harry_Powell wrote: »

I don't remember car prices (or bread or anything else) increase in price by 300% over a 10 year period. I think the bear argument is that house prices in line with inflation are the way to go, but they forget that owning a home is a luxury, not a necessity.

some posters with very suspect anecdotals claim that house prices rose 100% in less than 6 months

the_flying_pig

IveSeenTheLight wrote: »

I think we do.
It's called a fact of life. Life moves on and people get on with it.

I recall a post earlier about someone who bought a house for £2,000 and sold it later for £10,000.
It was then sold again for somthing like £40k and again at £155k.

Do you believe that house should always have been sold at £2,000?

Inflation happens to all things.
How much is a loaf of bread or a pint of milk nowadays compared to historically?
Are car prices dearer or cheaper than in the past?

Both of these questions are things that I'm personally interested in (on the first question see, e.g. http://www.housingexcellence.co.uk/features/how-much-loaf-bread) but not relevant to the very simple statement I made earlier, namely that house price inflation creates exactly the same number of losers as it does winners. This is an inescapable fact, not a matter of opinion.

Arguments about whether or not the creation of these winners & losers through very rapid house price inflation is desirable, or 'fair', or even sustainable, or whateverm are very much matters of opinion, and as such not something to be confused with the factual statement above.

I don't have any better ideas than anyone else about the future direction of house prices. Like most people near enough the best I can do (informed, to some degree, by observing trends in things like the price to income ratio, interest rates, & homebuilding rates) is extrapolate recent trends in prices. According to the Halifax index seasonally adjusted prices in the first four months of the year were almost completely flat [a very tiny fall]. On this basis I guess I'm in the stagnation camp. If prices were to start falling again I'd probably return to the ranks of the bears.

IveSeenTheLight

mr_fishbulb wrote: »

There weren't constant TV programs telling you how you could buy a 3-door car, stick another 2 doors on and then sell it at a nice profit

HeHe, when it comes to selling my car, do you think a lick of magnolia will increase the selling price

Seriously though, who lives in a car?

The demand for property has dramatically increased over the years through divorce, more single people, women financially independent, less families living together (i.e. children moving out before marrying), greed / foresight (people buying 4 bed detached without any children).

Fulfill the demand and prices would not have escalated as they did.
If you don't fulfill the demand, all it means is that more and more people a competing for the same properties, driving up the price so that only those with the highest desire and affordability, purchase.

IveSeenTheLight

the_flying_pig wrote: »

the very simple statement I made earlier, namely that house price inflation creates exactly the same number of losers as it does winners. This is an inescapable fact, not a matter of opinion.

I totally agree with what you are saying.
I'm merely extending to state that the individual "losers" end up "winners"

I would question your terminology of "losers" as those that secure their own home and all the benefits that go with it.

I've certainly not felt like a "loser" whenever I have bought property.

the_flying_pig

IveSeenTheLight wrote: »

HeHe, when it comes to selling my car, do you think a lick of magnolia will increase the selling price

Seriously though, who lives in a car?

The demand for property has dramatically increased over the years through divorce, more single people, women financially independent, less families living together (i.e. children moving out before marrying), greed / foresight (people buying 4 bed detached without any children).

Fulfill the demand and prices would not have escalated as they did.
If you don't fulfill the demand, all it means is that more and more people a competing for the same properties, driving up the price so that only those with the highest desire and affordability, purchase.

low homebuilding played its part but we all know that the global phenomenon of hugely relaxed lending criteria also played its part. that is, unless you believe that almost this exact same 'supply and demand' dynamic that you describe was in place in pretty much every country, including those such as ireland that experienced massive housebuilding booms

http://www.economist.com/business-finance/displaystory.cfm?story_id=14438245

IveSeenTheLight

the_flying_pig wrote: »

low homebuilding played its part but we all know that the global phenomenon of hugely relaxed lending criteria also played its part. that is, unless you believe that almost this exact same 'supply and demand' dynamic that you describe was in place in pretty much every country, including those such as ireland that experienced massive housebuilding booms

http://www.economist.com/business-finance/displaystory.cfm?story_id=14438245

I fully agree the ease of credit helped increase house prices, however in theory, if there are more available properties, then there is less competition and less drive for house prices to increase.

I know many people who have experience 10 or more people all bidding on the same property. This simply results in people extending themselves as far as their affordability will allow in the hop to secure.

If there were more properties available and less competition, people would be able to offer more realistic values that would no result in the HPI drive that we have seen.

Sellers would also be more willing to accept reasonable offers instead of looking to push the price up, fearing that their "buyer" could go elsewhere.

the_flying_pig

IveSeenTheLight wrote: »

I totally agree with what you are saying.
I'm merely extending to state that the individual "losers" end up "winners"

I would question your terminology of "losers" as those that secure their own home and all the benefits that go with it.

I've certainly not felt like a "loser" whenever I have bought property.

OK, maybe the terminology is misleading.

But you know what I mean. In my pretend example the chap who bought the house in 1980 for £25k found its price had increased by 600% by 2010. But if he'd been able to pay the 1940 price when he bought [around £500], rather than £25k, he'd have enjoyed a 34900% profit. And, of course, the person who he bought it from would have been considerably worse off. So, although the chap benefited from the 1980 to 2010 inflation [at the expense of the person who bought from him later] he was somewhat worse off as a result of the pre-1980 inflation.

Rather than winners and losers what I mean more precisely is probably something like "every extra pound in the pocket of a would-be be downsizer or seller-upper that results from house price inflation is always counterbalanced by an extra pound out of the pocket of, or an extra pound of debt incurred by, a would-be upsizer or FTB".