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Debate House Prices
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How will the gridock be broken?
shupufski_2
Posts: 96 Forumite
Rather than the usual raspberry-blowing/fingers-in-ears/!!!!-waving nonsense it would be useful to hear how you believe the housing market will actually move on from where it is.
Bulls have a general view that prices will be maintained by low interest rates and by suppliers restricting supply.
The problem with restricting supply is that it doesn’t necessarily tip the supply/demand balance back in favour of the supplier. Supply is only supply if it is purchased - otherwise it is inventory. Obviously, inventory will vary from one area to another but the lower-level of transactions in the last 18 months will take its toll on the whole market. If we assume that values have remained static over the last 18 months and transaction volumes have declined, the input of new money into the housing market must have fallen. This new money is used not only to buy houses but to fund the equity ”owned” by those further up the chain.
The only way that house prices can be maintained or increase is to increase the amount of new money entering the system. And how do the bulls believe that this will be achieved?
Also the record low level of FTB’s is assumed to be as a direct result of changes to banks’ lending policy. But this assumes that all FTB’s currently want to enter the market and are prevented from doing so. There must also be a proportion of FTB’s who do not want to enter at this stage. If that is the case then demand is also being deliberately withheld –we just don’t know to what extent.
Bulls have a general view that prices will be maintained by low interest rates and by suppliers restricting supply.
The problem with restricting supply is that it doesn’t necessarily tip the supply/demand balance back in favour of the supplier. Supply is only supply if it is purchased - otherwise it is inventory. Obviously, inventory will vary from one area to another but the lower-level of transactions in the last 18 months will take its toll on the whole market. If we assume that values have remained static over the last 18 months and transaction volumes have declined, the input of new money into the housing market must have fallen. This new money is used not only to buy houses but to fund the equity ”owned” by those further up the chain.
The only way that house prices can be maintained or increase is to increase the amount of new money entering the system. And how do the bulls believe that this will be achieved?
Also the record low level of FTB’s is assumed to be as a direct result of changes to banks’ lending policy. But this assumes that all FTB’s currently want to enter the market and are prevented from doing so. There must also be a proportion of FTB’s who do not want to enter at this stage. If that is the case then demand is also being deliberately withheld –we just don’t know to what extent.
0
Comments
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Don't know. Don't care.0
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- Stagnating prices.
- High inflation.
- Real term drops.
- A realisation that things aren't anywhere near as bad as people were led to believe by the media.
- Wage inflation.
- Realisation that housing is actually very affordable.
- Rampant house price inflation.
In that order. Expect the end of the cycle in 4 years.0 -
It's not, with 100% certainty, possible to know whether houses will rise of fall in price.
What we know is the demographic trends point to them becoming more unaffordable ... the no. people is rising faster than the no. homes.0 -
Blacklight wrote: »Rampant house price inflation.
in 4 years.
Just around the time the next demographic bulge of potential FTB's reaches the early 30's average age for FTB's to buy.
A demographic bulge bigger than the boomers, in fact.“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 -
Well they could rise, fall, or stay exactly the same.
Most people here predict what they want to happen, rather than what they think will happen.
I predict a 20% fall.Been away for a while.0 -
Running_Horse wrote: »I predict a 20% fall.
That seems about right for most of the Country. Of course here in Aberdeen prices will continue to rise :j0 -
HAMISH_MCTAVISH wrote: »Just around the time the next demographic bulge of potential FTB's reaches the early 30's average age for FTB's to buy.
A demographic bulge bigger than the boomers, in fact.
Let's have some proof of that.0 -
Running_Horse wrote: »Well they could rise, fall, or stay exactly the same.
Most people here predict what they want to happen, rather than what they think will happen.
I predict a 20% fall.
Interesting.
I'd be delighted to see double digit rises.
But I predict "real terms" stagnation, with a few months of small nominal falls, followed by somewhat more months of small nominal rises.
Then all hell will break loose as the demographics turn in 2013 and prices shoot for the moon.“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 -
Let's have some proof of that.
https://forums.moneysavingexpert.com/discussion/2722919
https://forums.moneysavingexpert.com/discussion/2442901
https://forums.moneysavingexpert.com/discussion/2427991
We are currently in a demographic trough of FTB age individuals.
The next boom starts in 2013/14 and peaks a decade later.
http://www.statistics.gov.uk/populationestimates/flash_pyramid/EW-pyramid/pyramid6_30.html“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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