Is overcrowding to blame for high house prices?

ukcarper

Graham_Devon wrote: »

It was the 70's. Doesn't really matter when you got one....the facts are the facts!


Hardly surprising a boom in both credit and HPI stood hand in hand.

Access introduced in 1972 halfway through boom

I search some more and it was 1971 that the rules changed but bank mortgage were not freely available in the early 70s and it was difficult to get a mortgage.

In 1979 8 years after change building societies still had 96% of mortgage market while banks had 3%.

jamesmorgan

Are house prices high?

The key metric is what percentage of net household income is required to pay the mortgage. At the end of 2011, 1st time buyers and home movers needed 27% of net income to pay the mortgage (assuming 70% mortgage). This compares to 37% average over the past 27 years.

Regardless of whether the UK is overcrowded or not, there are few new houses being built in the places that people want to live. This means that typically people will bid against each other to buy the properties available and will continue to bid up to the point where roughly a third of their net income is spent on the mortgage. If households are spending more than a third then houses are over-priced.

The only way that this metric is likely to change if there was a sudden glut of house-building (in the right places). This could lead to more houses being available than people looking for houses. In this scenario, builders would need to reduce prices until they could secure a buyer.

In the absence of this, house prices will only fall if mortgage costs rise or net incomes fall. Clearly both of these are possible, but it could be argued that they have already been priced in with the current low metric of 27% of net income.

joe_blotts

Very interesting thanks. if interest rates return to more normal levels of say 4% base rate what percentage then would go towards house repayments?

homelessskilledworker

Just to put things in perspective, because I do know how Hamish like to keep things in perspective:)
If all the humans on the planet were moulded into one giant person of the same size and volume it would be roughly the size of the empire state building, and roughly the same weight.
In other words it is like having an ant live in a four bedroomed house, and on it's own.

I think just releasing a little more land to house the people is going to make very little difference to the green belt.

wotsthat

homelessskilledworker wrote: »

Just to put things in perspective, because I do know how Hamish like to keep things in perspective:)

Bloody hell - what is it with you lot - you're obssessed!

homelessskilledworker wrote: »

If all the humans on the planet were moulded into one giant person of the same size and volume it would be roughly the size of the empire state building, and roughly the same weight.
In other words it is like having an ant live in a four bedroomed house, and on it's own.

Is that putting things into perspective or a plot from the Twilight Zone?

HAMISH_MCTAVISH

FTBFun wrote: »

Obviously the author is so proud of his views that he/she doesn't put their name on the article.

It's Cliff D'Arcy, resident bear at lovemoney.

A poor article, all in all.

I agree.

Badly researched, badly written, and immensely biased.

Nothing more than rehashing the same old discredited hpc arguments.

homelessskilledworker

wotsthat wrote: »

Bloody hell - what is it with you lot - you're obssessed!



Is that putting things into perspective or a plot from the Twilight Zone?

Says the man who is logged on to this site every single day of the week and every week of the year:rotfl:

It's just a little fun mate, try and get over yourself

Graham_Devon

HAMISH_MCTAVISH wrote: »

It's Cliff D'Arcy, resident bear at lovemoney.




I agree.

Badly researched, badly written, and immensely biased.

Nothing more than rehashing the same old discredited hpc arguments.

Why is it badly researched? Can you tell me the errors in the facts provided?

C_Mababejive

The two main causes of the currently high housng market are

a)ramping in the 90's which has built in a slab of negative equity as yet to be realsied
b)The theft of much of the land from the people by the few

See my sig

Thrugelmir

ukcarper wrote: »

very little if any BTLs etc.

Residential property investment was the preserve of the capital rich.

There wasn't the funding around to support the BTL market as we know it today.

BTL was an invention of the B&B using securitised debt to fund the expansion. We all know how successful a venture it turned out to be.

There's no sign of another big player stepping into the market to replace the void left by B&B.