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Debate House Prices
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Age of home ownership coming to an end...
Comments
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I agree. The query I have is how much the second income can be when you have a couple of kids under foot?
I understand.
My wife and I stretched ourselve with dual income and worked extremely hard to reduce the mortgage substantially.
now that we have kids, the wife no longer works and we can afford our home on one income.
I understand some area may be extremely high, but certainly there are options if you choose to go down that route.
There certainly seems to be a lot of people that want to be able to have everything now and not be prepared to make sacrafices in order to achieve it.:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
the_flying_pig wrote: »Dual incomes is a red herring IMO. ........................
Shared ownership, well, you could query whether that's a response to high prices or simply a cause of high prices. A bit like 100-year mortgages in Japan.
I don't think that dual incomes is a red herring. It's a reflection of how today's society operates. Same with the increase in divorces, immigration etc all lead to more people requiring property either to buy or to rent.
Certainly I can agree with the shared ownership issue, it seems to be growing.
On saying that, I do recall from univeristy experiences that very often there was multiple occupancies even back in the 90's
Going back even further than that, there seemed to be a number of people that let a room's out to a lodger. e.g the rising damp series
Isn't this also shared occupancy only that there was one owner and the rest of the occupiers were renters:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
IveSeenTheLight wrote: »I don't think that dual incomes is a red herring. It's a reflection of how today's society operates...
no, but you get my point, right, 1992 to 2001's 'societies' operated in a way that was not really different at all in terms of how common dual incomes were, and property was far more affordable?
social/demographic trends are very different in different countries [e.g. the USA's baby boom peaked a decade or even two decades earlier than the one in the UK] but the US, Irish, UK, etc pwoperdee booms all kicked off within a year or two of each other [and of the dotcom bubble bursting]. what could it possibly be that happened in all of these countries at more or less exactly the same time?FACT.0 -
the_flying_pig wrote: »IMO [coloured, no doubt, by my personal prejudices] 3.25, give or take 0.25, is an interesting figure since, uniquely for the very short-run halifax dataset, this seems to be a level that can be sustained as some kind of equilibrium for a decent amount of time [namely the decade between 1992 and 2001
Well at least you admit that is coloured by your personal bias.
You state the decade long trough (in real terms) after the last crash is where the market finds "equilibrium". Fair enough, if you measure such a thing only by the duration of a single price point at the bottom of a depressed market......
Presumably you also feel that trough in the market brought on by sustained housebuilding throughout the last crash, and the consequent glut in supply afterwards holding down prices for a decade, is also "fair value".
Which if you ignore the fact that it was historically cheap, and not just cheap by UK standards, but also far below a basket of similar western economies housing prices at the time due to the uniquely troubles circumstances of the UK, would be an understandable mistake.
But the fact remains the ultra-cheap decade of the 90's was an anomaly, likely never to be repeated in our lifetime.
The builders have clearly learned their lesson from last time around, and new building fell off a cliff during this crash. Prices recovered strongly this time, as the policy response from government and the BoE has successfully avoided making the same mistakes again as were made in the 1990's.
In short, the circumstances that created a decade long trough in the 1990's do not exist today, and are not likely to return.
Comparing today's prices to those of the 1990's is therefore a pointless distraction.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
the_flying_pig wrote: »what could it possibly be that happened in all of these countries at more or less exactly the same time?
The most likely answer to that is the ease of credit.
Bankers wanted more propfit so were willing to lend more money.
They factored that the risk was countered by increasing prices.
Dual income scenario, divorce, immigration etc all driving demand higher, thus pushing prices even more.
It's not that risky to lend £100k if in a few years time the asett is worth £120k.
Affordability changed from looking at multiple incomes to looking at disposable income.
let's face it, two couples earning £50k between them could have vastly different debts and outgoings.
You can complain or moan that the rate of HPI was too great or unsustainable, however the fact is that for many people, they are locked into that and would not accept lower.
For many others, they may not be locked into it but would be unwilling to sell for lower than similar properties (especially if they don;t have to).
The best really for all (owners and would be buyers) is a period of stagnation or real inflation linked rises.:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
One of the points of the lending was that the bankers did not have to bother too much about the risk, as they sold the mortgages on. The ratings agencies were obliging and rated this debt far too highly. Bonuses for all!No reliance should be placed on the above! Absolutely none, do you hear?0
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Hamish, do you have a linky to that graph's source please?No reliance should be placed on the above! Absolutely none, do you hear?0
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the_flying_pig wrote: »what could it possibly be that happened in all of these countries at more or less exactly the same time?
Credit expansion, clearly.
Which enabled the effective fulfilment of underlying demand in some countries, and created credit fuelled bubbles in others.
But to determine which is which, we really need to look at the performance of the different housing markets once the credit tap was turned off.
The USA, Spain, UK, and Ireland all saw an expansion of credit.
They all saw the credit markets feeze up, and credit availability drop by up to 70% in a short time frame.
They all saw interest rates drop to near zero, and all had government stimulus and liquidity support.
Yet the performance of house prices was very different.....
Three of those markets crashed hard and have not made any significant recovery.
One of those markets crashed, but then recovered rapidly.
What could it possibly be, that would trigger such a different result?
I don't suppose this has anything to do with it......
Empty homes as a percentage of total housing stock.
Ireland 17%
Spain 16%
USA 11%
UK 3.2%
“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »Empty homes as a percentage of total housing stock.
Ireland 17%
Spain 16%
USA 11%
UK 3.2%
We do have many thousands of houses though that are empty for the majority of the year.
They are not empty by definition. But they are empty most of the time.
Called second homes / holiday homes.
There is a whole key service industry down here looking after them.0 -
Hamish, do you have a linky to that graph's source please?
Sure....
http://www.businessspectator.com.au/bs.nsf/Article/Demographia-Dogma-$pd20090129-NQTPP?OpenDocument&src=sph“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0
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