Cool graph from the BBC

tomstickland

About a year ago I came to my own conclusion that house prices wouldn't budge whilst it was easy to borrow money. Since joining MSE I've refined this idea. It's a game of risk being played out by the lenders against each other and they'll keep going until they finally lose nerve. I don't blame them; the real problem is ignorant borrowers.

You know how it goes - "they wouldn't lend us enough even though we know we can afford it, so we've now found a broker who's found someone who can lend us what we want".

Alan_M_2

I think you can read too much into what's driving the price rises, economy, immigration, interest rates, the appearance of affluence, when all it boils down to is the ability to borrow what you need.

The lenders drive the market.

Whenever I borrow money of any kind, vehicle leases, business finance, stock finance, letters of credit etc...The figure I'm interested in is what I pay back in total for the transaction, I can then assess if I'm making enough money to warrant the borrowing.

Whenever I did this with a mortgage it always used to make my eyes water.....

jamesd

Where are the extra 1-2 million single person households expected in the next 5 years going to live? That's a significant increase in demand at the bottom end of the market that needs to be offset with property supply somehow.

Not so much demand increase expected for houses, so that area looks more vulnerable.

greencat_2

jamesd wrote:

Where are the extra 1-2 million single person households expected in the next 5 years going to live? That's a significant increase in demand at the bottom end of the market that needs to be offset with property supply somehow.

Not so much demand increase expected for houses, so that area looks more vulnerable.

They'll probably do what a lot of single people on average income in London do already. Rent a room in a shared house. Or if you are a New Zealander/Australian/Eastern European/Asian staying here a short while - you'll be sharing the room with at least 2 others.

I know plenty of people living in 3 bed terraces who are sharing with 10 others. And one guy sharing with 3 others in a studio flat!

It's because of this I feel immigration is a red herring regarding housing demand and pricing. Sure it is high - but the people involved don't want to pay large amounts for their housing (and if Britain starts looking too expensive they'll go elsewhere).

jamesd

Certainly some will - some will have no choice. But that's still constrained demand and many of them presumably desiring not to be forced to share. Others will presumably live in tiny studio flat conversions. That still seems to leave quite a bit of additional demand to satisfy, placing incresing pricing pressure on the market unless there are new buildings or conversions to satisfy it.