What causes HPI ?

DervProf

Linton wrote: »

On the other hand I do believe that market forces are capable doing the job on their own.

They are, but are they ?

nembot

The last ten years of HPI was caused by an unnatural and possibly fortunate random errata in Sarah Beeny's DNA sequence, which lead to oversize bosoms which subsequently created an addiction by CEO's of major lenders after the slowmo video of her removing the rear ajoining wall to add additional light and ambience with a sledgehammer.

The CEO's wanted more and more of these slowly shaking female bits, thus filtering down the ranks came the cry lend, lend and f'kin lend!!!


So there we have it, it's all Sarah's fault - but I'd marry her tomorrow.


No offence to the better half of the species intended, it's clearly easy credit and the promise that prices go up forever (there is no cycle) and pure greed by lenders.

Sorry Hamish, but that's the truth and any suggestion otherwise is just pure carp.

nem

DervProf

Linton wrote: »

But for the average FTBer, no. I would think most are looking for a house to live in and seeing a mortgage as better than rent.

Not influenced in any way by "Buy now, or miss the boat" headlines ?

Not influenced by "average property will be £300K by 2010" ( I think that was in the Daily Mail back in 2006) ?


If I were a vendor of a FTBer type property, I`d love those headlines, and I`d stick to my asking price, or maybe increase it.

If I were a potential FTBer, I might be more willing to stretch my finances that little bit further, after reading those headlines.


If those headlines (and ones like them) weren`t printed, the price paid might well be a little lower.


As it turned out, those headlines were proved totally wrong, but I wonder what effect they had back then ?

ManAtHome

phil_b wrote: »

What about previous house price booms, was there media hype then?

There was massive TV, radio, and papers rampling mid to late 80s with the usual projections of what the average house price would be in x years (as usual taking the last 6 months and drawing a straight line forward for x years...).

DervProf

ManAtHome wrote: »

There was massive TV, radio, and papers rampling mid to late 80s with the usual projections of what the average house price would be in x years (as usual taking the last 6 months and drawing a straight line forward for x years...).

Interesting.

Obviously it was market forces that pushed prices up, nothing to do with ramping. Oh no, no way.

ManAtHome

Ably assisted by Lawson, probably the second worst Chancellor we've had...

Linton

DervProf wrote: »

Interesting.

Obviously it was market forces that pushed prices up, nothing to do with ramping. Oh no, no way.

So you are claiming that for 30 years the operation of a free market involving millions of transactions and billions of £££ has been secretly controlled by a conspiracy of TV reality shows and Sun headlines but no-one except for a few insightful bears has noticed?

Sounds a bit like the Illuminati or reptile people to me.

Even more astounding is that even with this manipulation FTBers have continued to be able to afford new houses. So the net effect of the alleged manipulation cannot be very different to what would have happened anyway.

Isnt it time for Occams Razor to come into effect?

Damaged

It is a global issue, from Northern America, to New Zealand, Australia and Asia.
To say that it is just from cheap credit does not really dive into the reason as to why there was cheap credit to start with. I believe it is the emerging economies which have driven up house prices. The BRIC's nations are amassing wealth like no tomorrow. As a result of this, new money is being pumped into our economy, house prices are being bought by foreigner's and rich locals. Wage inflation has meant people can afford more. Cheap interest rates were required so that people could buy.

It is a cycle, inflation will make houses go up in price, they always will in the long term, but what we have are newly wealthy people spending and pushing demand higher and higher. Whether there is actually new money in the system is debatable, I would argue the poor are getting poorer in some cases.
Yes we see on TV all the shows, showing houses and prices going up. We also have the internet which has opened us all to new information we would in the past have never bothered or cared to look at, and any results are live as they happen.

Immigration across the world is changing, the rich are moving from less desirable places to places such as the UK. Places like the UK, AUS and NZ have had an influx of South Africa fleeing regime change. I am not say these people are wealthy, but they do have money and are keen to settle asap.

Then there is also compliance, our social system cares more for people than it ever did. This costs money, and ultimately we have to pay for it. Look at the developers, they have to give property to the council now due to the affordable housing scheme. It is a catch 22 on that, and you'll never stop it with our stopping the social aid that is given when someone lives in these affordable housing.

So in summary, what has done it;

1. Emerging Economies
2. The cost of government spending on social projects, such as housing, medical and general welfare.

TV has just recorded and showed what happened.

ManAtHome

Linton wrote: »

So you are claiming that for 30 years the operation of a free market involving millions of transactions and billions of £££ has been secretly controlled by a conspiracy of TV reality shows and Sun headlines but no-one except for a few insightful bears has noticed?

So why do you think we have booms and busts? Maybe millions of people just wake up one morning and decide (quite independently) it's a good/bad time to buy/sell some particular asset...

nembot

Damaged wrote: »

It is a global issue, from Northern America, to New Zealand, Australia and Asia.
To say that it is just from cheap credit does not really dive into the reason as to why there was cheap credit to start with. I believe it is the emerging economies which have driven up house prices. The BRIC's nations are amassing wealth like no tomorrow. As a result of this, new money is being pumped into our economy, house prices are being bought by foreigner's and rich locals. Wage inflation has meant people can afford more. Cheap interest rates were required so that people could buy.

It is a cycle, inflation will make houses go up in price, they always will in the long term, but what we have are newly wealthy people spending and pushing demand higher and higher. Whether there is actually new money in the system is debatable, I would argue the poor are getting poorer in some cases.
Yes we see on TV all the shows, showing houses and prices going up. We also have the internet which has opened us all to new information we would in the past have never bothered or cared to look at, and any results are live as they happen.

Immigration across the world is changing, the rich are moving from less desirable places to places such as the UK. Places like the UK, AUS and NZ have had an influx of South Africa fleeing regime change. I am not say these people are wealthy, but they do have money and are keen to settle asap.

Then there is also compliance, our social system cares more for people than it ever did. This costs money, and ultimately we have to pay for it. Look at the developers, they have to give property to the council now due to the affordable housing scheme. It is a catch 22 on that, and you'll never stop it with our stopping the social aid that is given when someone lives in these affordable housing.

So in summary, what has done it;

1. Emerging Economies
2. The cost of government spending on social projects, such as housing, medical and general welfare.

TV has just recorded and showed what happened.

Wrong, it was easy credit and greed that lead to an unprecedented rise in prices and the other factors you mention are negligible in comparison. The same factors are applicable to every Country, in which the same thing occurred.

Without the above, it'd be impossible to be in the current situation and we'd have houses prices in line or maybe a little over inflation, rather than inflated to such a degree as we have today.