House Price Crash 4

Sput2001

Sorry that's wrong.

The pundits in 96 were all telling us that house prices would never again boom because Brits had learnt the painful lessons of rampant speculation.

Errrr.... if you looked hard enough, there were people (they may have been in a minority) who were forecasting another crash, same as they are now. Believe me, I'd just bought with a 95% mortgage and was acutely aware of this.

meanmachine_2

You're telling me that, in 96, when average house prices were around 2.5x earnings, that experts were telling you they would crash?

Why would they do that?

Don't compare that terrible piece of advice to today when prices are, on average, EIGHT times average earnings.

That's not to say they won't go Irish for a few years and balloon to 12 x salary, but that doesn't make them fair value today.

Sput2001

You're telling me that, in 96, when average house prices were around 2.5x earnings, that experts were telling you they would crash?

Some people were, yes. I'd stop short of referring to them as experts, mind. QED.

Why would they do that?

Dunno. Cos they're paranoid pondlife who write for the Mail/Express, possibly?

Don't compare that terrible piece of advice to today when prices are, on average, EIGHT times average earnings.

Who's to say that's not terrible advice, too?

nomadicwesti

Seems to me that people are talking up a crash
Lets look at the market forces.
Demand exceeds supply. House building is at a historical low while the population of the UK is growing fast as a result of new EU migration. There is also the sociological phenomenon of the single household. These two factors combined with low house building will result in demand far outstripping suppky.

Interest rates are historically low. It is unlikely in teh current climate that they will rise significantly (4-5% increase) in the medium term... The lack of political influence on these and strick criteria of the committee will see to this

Affordability is still, for the average buyer still in teh realms of sense (Outside of SE England) Average prices in Scotland are still under the 4 times annual salary mark. The last crash occurred when the average was 6 times average salary. Therefore theough prices seem historically very high theya re still within the affordability range for most areas of teh UK or at least north of Watford.

Unemployment is also at historical lows and job creation is at a historical high. though there has been a minoir increase in teh unemployment figures these are from a sitauion of virtually full employment and the input of migrants is fuelling the booming economy.

For these reasons I beleive the writing is not on teh wall as some other posters have stated. There may be a slow down but a crash is unlikely and any bubble is merely a creation of the doomsayers.

roswell

Im surprised that no one is mentioning the current state of the dollar and the impact this could have not only on house prices.

Alan_M_2

nomadicwesti wrote:

Demand exceeds supply. House building is at a historical low while the population of the UK is growing fast as a result of new EU migration. There is also the sociological phenomenon of the single household. These two factors combined with low house building will result in demand far outstripping suppky.

On what facts have you based these two statements?

There is a glut of property on the market where I live that isn't selling, properties far exceed buyers and there has never been so much development since the relaxation of the planning laws.

I live in Surrey just outside the M25 in a green belt area notoriously difficult to obtain planning, and I've never seen so much construction.

I also own and run a business directly related to the construction industry and I can't cope with the demand, due to the enourmous amount of new builds.

nomadicwesti

Here you go...

"But the 2005 figure bucked a very low trend in house building since 1997 - and separately, how "significant" is this increase?

In 2004, the Barker Review of Housing Supply recommended an extra 70,000 homes a year to bring inflation down to 1.8 per cent and an extra 120,000 homes a year to bring it in line with the EU average of 1.1 per cent. The fact that between 2004 and 2005 the house building total only rose by a fraction of that - 6,000 - shows the scale of the challenge the government faces.

Another way of looking at Cooper's claim is to contrast the house building rates with the rise in new households. Is the gap getting wider or narrower?

The latest government figures, released this year, project household numbers in England will increase by 209,000 every year on average for the next two decades. The gap between this and the 2005 house building figure - the most recent available - is 49,702.

This gap is marginally narrower than in 2002. In that year, the gap between projected new households and new homes was 52,218. But both compare poorly to the gap in the last year of the Conservative government - in 1996, the number of new homes lagged behind projected new households by only 12,765.

The government is aiming for a house building figure of 200,000 a year by 2016, but this would still leave a gap.

There is agreement across the housing sector that the lag between supply and demand remains dramatic.

John Slaughter, director of external affairs at private sector trade body, the Home Builders Federation, said: "There still remains a shortfall of 50,000 homes per year, a problem which if not addressed will only exacerbate the current affordability crisis.""


The figues prove that last year was the lowesdt ever figure for new house building since the war..

"You might want to quibble about whether it was the lowest number of new homes since 1945 or 1947, but the figures all tell the same story - the rate hit a historic post-war low for a prolonged period under this government. "

That pretty much points to a dramatic shortage in new builds as I said in my post

http://www.uklandinvestments.com/articles/building-new-homes-uk.php

One-Person Households

Dr Jo Williams, of the UCL Bartlett School of Planning, said: “Current trends show that one-person households are growing more rapidly than other types of household. Previously, the typical one-person householder was the widow, often on a tight budget and thrifty. The rise in younger, wealthier one-person households is having an increasingly serious impact on the environment. But we have identified possible opportunities which arise out of the group’s expansion and diversification.

“For example, the rise in one-person households is expected to account for 72% of annual household growth between 2003 and 2026 according to government statistics*. This means that, as part of the planned housing programme for England and Wales, there is a real opportunity to house this group in ecological new builds that are prestigious, well-designed, state-of-the-art and environmentally sound.

Population Increase

The population of the UK reached an estimated 60.5 million in mid-2006 and is growing by more than 320,000 a year. Our numbers have increased sixfold since 1800 and by a fifth since 1950, and the environmental impacts of this growth are already clear in the relentless development pressures on our finite supply of land and natural resources. Officially projected to rise by about 0.4% a year to reach 71 million by 2074 - an increase of more than 10 million, population growth in the UK has reached near-record levels

Much of the predicted increase in England's population will come from immigration. Figures released last month by the ONS showed that the population of the whole of the United Kingdom passed 60 million for the first time in 2005. Two thirds of the 375,000-strong increase in people living in the UK last year was attributed to international migration, while a third was a result of "natural change" - more births and fewer deaths.

Regards,
Bryan

Alan_M_2

roswell wrote:

Im surprised that no one is mentioning the current state of the dollar and the impact this could have not only on house prices.

Currencies effect us in a different way, the first an most obvious way they hit us is GDP, specifically Exporting, even more specifically manufacturing businesses that export.

Our products, or for the that matter any product produced in Europe is now extremely expensive to ship to the USA becasue ofthe exchange rate.

This effects manufacturing profitability, therefore jobs, therefore salaires, but the effects of this take a little while to kick in as it filters through the system.

The current state of the US economy and their current slide in house prices, along with the Crash in Austrailia and the crash that occured a few years back in Japan have no direct result on our housing market, How can they?
But they do drive sentiment, people will see what's happeing and wonder when it will happen here etc....but that's about it.

Alan_M_2

nomadicwesti wrote:

Here you go...

"But the 2005 figure bucked a very low trend in house building since 1997 - and separately, how "significant" is this increase?

In 2004, the Barker Review of Housing Supply recommended an extra 70,000 homes a year to bring inflation down to 1.8 per cent and an extra 120,000 homes a year to bring it in line with the EU average of 1.1 per cent. The fact that between 2004 and 2005 the house building total only rose by a fraction of that - 6,000 - shows the scale of the challenge the government faces.

Another way of looking at Cooper's claim is to contrast the house building rates with the rise in new households. Is the gap getting wider or narrower?

The latest government figures, released this year, project household numbers in England will increase by 209,000 every year on average for the next two decades. The gap between this and the 2005 house building figure - the most recent available - is 49,702.

This gap is marginally narrower than in 2002. In that year, the gap between projected new households and new homes was 52,218. But both compare poorly to the gap in the last year of the Conservative government - in 1996, the number of new homes lagged behind projected new households by only 12,765.

The government is aiming for a house building figure of 200,000 a year by 2016, but this would still leave a gap.

There is agreement across the housing sector that the lag between supply and demand remains dramatic.

John Slaughter, director of external affairs at private sector trade body, the Home Builders Federation, said: "There still remains a shortfall of 50,000 homes per year, a problem which if not addressed will only exacerbate the current affordability crisis.""

That pretty much points to a dramatic shortage in new builds as I said in my post

Regards,
Bryan

Exactly, and your figures are two years out of date, there has been a dramatic increase in construction since the ODPM stated that local authorities had to relax planning laws.

None of the statisitcs of the new explosion in construction are included in the above statment.

There has never been so much construction as there is now since the rebuilding after the War and there are an enourmous number of properties sitting empty in and around surrey, particualrly new builds and in a lot of cases Key worker newbuilds.

meanmachine_2

Also Scotland's population has actually been declining - it's an incredibly sparsely populated country and yet prices there have gone mad.

So, um, explain that to me using fundamentals please. I'm all ears.

Really.

Please do blame that on immigrants, the lack of land, blah blah.

And then tell me how Japan - the most crowded island in the world has seen its property market collapse.

Again, please do tell me how that makes sense.

But of course a "bubble" is all in the minds of nutters.