MSE News: Rents are back on the rise

HAMISH_MCTAVISH

gingeralan wrote: »

There are lots of empty places with to let signs outside in pretty much every city I have been to recently, so I am not accepting that a an argument.

Interesting.

That statement shows an incredible lack of understanding about how the economics of supply and demand work in the real world.

You may as well say....

There's lots of gold for sale in every jewelry shop I've been past lately, yet gold prices have risen by hundreds of % in the last decade, so I am not accepting that as an argument.

Or...

There's lots of petrol for sale in all the garages I drive past, yet petrol prices have risen by an "inflation busting" 20% in the last year, so I am not accepting that as an argument.

Etc....

In the real world of course, you don't need to run out of something before you realise there's more demand than there is supply and adjust prices accordingly to limit demand until it matches supply.

The simple fact is that we build around 100,000 houses a year, and add around 250,000 new households a year. In the last 3 years alone the shortfall is nearly half a million houses.

The market has responded to this in exactly the way it should...

Rent prices have risen until those at the bottom of the income distribution are forced to share with others. The market is rationing product in a limited supply through price. Just as it does with petrol or gold.

There are more people in this country who want a house than there are houses for them to have.

Changing the price does not change that fact, it would just mean you'd have to find some other way to ration housing, such as through waiting lists or lottery draws.

I have noticed you seem obsessed with this idea of lack of supply both in rental and sale markets. I think you are ill informed and perhaps over exposed to this investment vehicle and this is why you feel the need to consistently bang the drum claiming all this nonsense.

I bang this drum because sadly there are a lot of people out there, like you, who seem to have no clue that we are approaching the biggest housing crisis in our history.

The UK population is growing at the rate of nearly half a million people a year.

We need to build 2.5 million houses in the next 10 years just to keep up with current levels of population growth. More like 3.5 million houses if we want to clear the current shortage as well.

As it stands today we're on track to build no more than a third of those numbers.

gingeralan

HAMISH_MCTAVISH wrote: »

Interesting.

That statement shows an incredible lack of understanding about how the economics of supply and demand work in the real world.

You may as well say....

There's lots of gold for sale in every jewelry shop I've been past lately, yet gold prices have risen by hundreds of % in the last decade, so I am not accepting that as an argument.

Or...

There's lots of petrol for sale in all the garages I drive past, yet petrol prices have risen by an "inflation busting" 20% in the last year, so I am not accepting that as an argument.

Etc....

In the real world of course, you don't need to run out of something before you realise there's more demand than there is supply and adjust prices accordingly to limit demand until it matches supply.

The simple fact is that we build around 100,000 houses a year, and add around 250,000 new households a year. In the last 3 years alone the shortfall is nearly half a million houses.

The market has responded to this in exactly the way it should...

Rent prices have risen until those at the bottom of the income distribution are forced to share with others. The market is rationing product in a limited supply through price. Just as it does with petrol or gold.

There are more people in this country who want a house than there are houses for them to have.

Changing the price does not change that fact, it would just mean you'd have to find some other way to ration housing, such as through waiting lists or lottery draws.



I bang this drum because sadly there are a lot of people out there, like you, who seem to have no clue that we are approaching the biggest housing crisis in our history.

The UK population is growing at the rate of nearly half a million people a year.

We need to build 2.5 million houses in the next 10 years just to keep up with current levels of population growth. More like 3.5 million houses if we want to clear the current shortage as well.

As it stands today we're on track to build no more than a third of those numbers.

You cannot compare petrol to housing availability. We can who'll should we wish right now go and see the level of stock and keep track. This is not possible with petrol as it remains inaccessible to us until we dispense it into our vehicles.

HAMISH_MCTAVISH

gingeralan wrote: »

You cannot compare petrol to housing availability. We can who'll should we wish right now go and see the level of stock and keep track. This is not possible with petrol as it remains inaccessible to us until we dispense it into our vehicles.

And seeing some "For Rent" signs outside houses does not mean we don't have a shortage of them.

The facts are that the average rental void period is now down to 14 days, even though rent prices have risen to new record highs.

If there was no shortage, then those houses simply wouldn't rent at record high prices and landlords would be forced to drop them. That's how the market works.

The latest DCLG survey reported empty house levels at just 300K, (and bear in mind most of those are derelict and/or just in the wrong places to meet current demand).

Not so long ago a number of posters on here were proclaiming we had no shortage because there were "a million empty houses". Well today it's just 300K, so that's a huge fall in a few years.

There is not a single credible entity out there that doesn't think we have a large and worsening shortage of housing in this country, from charities like Shelter, organisations like the National Housing Federation to Government Departments like DCLG.

All of them agree the situation is bad and getting worse, and all of them agree we are going to be royally stuffed if we don't build close to 300K houses a year. Instead, house building has fallen to the lowest levels since 1923 last year, and it's down again since then.

If you want cheaper rents, then the last thing you should be doing is running around claiming that "there is no shortage" because you happen to have seen a few "for rent" signs. That's just daft.

recapture_is_evil

breadlinebetty wrote: »

Rents ALWAYS rise. They always have. Just check back 10/20 and 30 years ago to see how RENTS ALWAYS RISE! It's a fact of life, and anyone who denies it is an ostrich.

But does the Rent rise quicker than the money devalues over the same period?

HAMISH_MCTAVISH

recapture_is_evil wrote: »

But does the Rent rise quicker than the money devalues over the same period?

It did in the last 12 months.

Rent rising faster than both RPI and CPI inflation.

yellowmonkey

HAMISH_MCTAVISH wrote: »

Supply and demand.

Same as always.....

also known as greed

brit1234

HAMISH_MCTAVISH wrote: »

It did in the last 12 months.

Rent rising faster than both RPI and CPI inflation.

Didn't rents fall for the previous 2 months and likely to be down next month with housing benefit changes.

Also with more people renting out homes/rooms supply is increasing and demand falling.

recapture_is_evil

HAMISH_MCTAVISH wrote: »

It did in the last 12 months.

Rent rising faster than both RPI and CPI inflation.

Well that all kinda depends on where you are looking at in the country.

Looking through the table in the report and picking on the worst case scenario, the annual change for north east is -0.7% as opposed to the headline 4.3 rate. For Jan RPI = 3.9% and CPI = 3.6%, but the VAT changes skewed the figures here a little, look at december with RPI 4.8 & CPI = 4.2 (or heaven forbid Nov, RPI = 5.2, CPI 4.8) and this index as a whole almost smacks of being inline with the other inflation measures. But if you find 0.1% significant based on a mean average of a select few properties I guess you can read whatever you like into it.

The yields are scary on the report, given that they don't include voids or repairs and there is a 10.7% rate of late/non-payment in the rental sector surveyed, BTL looks really quite fragile.

HAMISH_MCTAVISH

brit1234 wrote: »

Didn't rents fall for the previous 2 months

Rents fall every winter.... as you should have learned last year when you were busy spouting erroneous propaganda about rents falling, only to see them rise to record highs all summer.

They should have fallen this month too..... But didn't.

Despite it both being winter and the new housing benefit cuts having started.

and likely to be down next month with housing benefit changes.

Dream on Brit.

You've been saying that every month for over a year now, and you've been wrong every month for over a year now. The benefits changes started a year ago for new claimants, and have had no effect at all.

Also with more people renting out homes/rooms supply is increasing and demand falling.

Yes, that's why rents are only rising at twice the rate of wage inflation.

Good thing too, as without that we'd have a lot of homeless people given population is growing at nearly half a million people a year and we're only building less than a third the houses needed to put them in.

seven-day-weekend

nollag2006 wrote: »

Sadly, this is very true

The only way rents will fall is when banks start lending to FTBs, and allow them to buy the property they have always wanted.

The inevitable consequnece of this, though, is that house prices will rise.

My son got a mortgage as a FTB with low wages, no credit history and on a flat with a 66 year lease.

However the flat was only £65000 and he had £25k deposit from bank of mum and dad.

It seems to me that many young people will be stymied by lack of a huge deposit. Unless they can have anyone to help them, then it seems that renting is the only option, especially in areas where two-bedroom flats cost more than £65k.