Is overcrowding to blame for high house prices?

ukcarper

Thrugelmir wrote: »

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.

I think that might have been a contributing factor for the 70s boom there were hardly any properties available to rent and the only choice you had was to hope for a council house or buy. Although a lot of property was being privately rented at the time in most cases when the existing tenant leaf the property was sold.

HAMISH_MCTAVISH

Graham_Devon wrote: »

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

Sure.

But if I do, you'll just disappear from the thread and pop up elsewhere spouting the same nonsense.

So instead I'll just point you to any one of the hundreds of threads already posted displaying the facts about the housing shortage, overcrowding in the UK, household formation rates, etc.

IveSeenTheLight

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.

Interesting statement, however unfortunately, having been in the Empire State Building, I cannot imagine that every person in the planet could mould into the same size and weight of the Empire State Building.

Do you have a link to the research that concluded this statement?

jamesmorgan

joe_blotts wrote: »

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

First point to recognise is that mortgage are only very loosely connected with base rates. The current SVR mortgage is around 4%. Probably around the same for 5 year fixed. Over the past 30 years these rates have tended to be in the range 5-8% so we are definitely cheap by historic standards. If mortgage rates were to increase to the mid-point of the historic range (ie 6.5%), then mortgage costs as a percentage of net salary would rise to 43%. This is about 18% higher than the long-term average of 37%. All other things being equal we would expect to see a similar 18% fall in house prices.

However, mortgage rates wouldn't rise to 6.5% overnight. If this rise took 3 years, net salaries may also have risen by around 8%. So whilst there may be an 18% fall in real terms, in absolute terms this may only equate to a fall of around 10%.

Of course, you can't take this as a worst case scenario. Those of us with long memories will remember in the 1980's when mortgage rates peaked at over 20%. If this happened again (for a prolonged period) then house prices could fall by 75% or more.

IveSeenTheLight

jamesmorgan wrote: »

Of course, you can't take this as a worst case scenario. Those of us with long memories will remember in the 1980's when mortgage rates peaked at over 20%. If this happened again (for a prolonged period) then house prices could fall by 75% or more.

In this scenario, I would envisage that the housing market would completely stop long before 75% reduction in house prices occured.

Sure there would still be some sort of market catering for reposessions, but as standard, I doubt that would be sufficient for 75% drops.

homelessskilledworker

IveSeenTheLight wrote: »

Interesting statement, however unfortunately, having been in the Empire State Building, I cannot imagine that every person in the planet could mould into the same size and weight of the Empire State Building.

Do you have a link to the research that concluded this statement?

Hiya Iveseenthelight..


I thought the same:)


And without wanting to upset Wotsthat with having a little bit of fun(he should be along within the next hour for his usual daily stint on MSE).
The total weight of all the humans on the planet is roughly 300,000 tons, but I thought that the empire being made of steel and concrete would be denser and therefore you would think that a person would have to be taller:), but remember the building is hollow.

The weight it is quite accurate, your own maths can roughly work that one out, the height and volume is up for debate, but it is not that far out.

jamesmorgan

IveSeenTheLight wrote: »

In this scenario, I would envisage that the housing market would completely stop long before 75% reduction in house prices occured.

Sure there would still be some sort of market catering for reposessions, but as standard, I doubt that would be sufficient for 75% drops.

Yes, of course you are right. A prolonged situation of 20% mortgage rates would indicate that the economy is under extreme stress and in those situations normal metrics go out of the window. The most likely cause would be hyper-inflation. In that scenario we could see a 75% drop in real terms, but in absolute terms house prices could actually be increasing rapidly.

Let's hope we don't get to see what actually happens in that scenario!

HAMISH_MCTAVISH

homelessskilledworker wrote: »

The total weight of all the humans on the planet is roughly 300,000 tons.

As with most of your posts, you are wrong. Not just a little bit wrong, but really, really wrong.

The total weight of all humans on the planet is around 316 million tons.

http://www.foxnews.com/health/2012/06/18/weight-world-researchers-weigh-human-population/

The weight of the empire state building is 365,000 tons.

The volume of a ton of water is .9 cubic metres (or 1 cubic metre for a tonne). And a human is mostly made of water.

So the volume of 316 million tons of human will be somewhere close to 285 million cubic metres.

Whereas the volume of the Empire State building is slightly over one million cubic metres.

So if you liquified all the humans on earth, you'd need around 285 empire state building sized containers to pour them all in to.

IveSeenTheLight

jamesmorgan wrote: »

In that scenario we could see a 75% drop in real terms, but in absolute terms house prices could actually be increasing rapidly.

I never get the real terms argument.
Nobody buys at real prices, they buy at a nominally agreed price at the time.

Real term value is only of value when considering historical investments.

I also am struggling to contemplate a rapidly increasing nominal value, but achieving a 75% drop in real terms.
Surely that means that the cost of most other things is increasing at a faster rate than the house price which is "rapidly increasing".

In that situation, arguably it's better to be an assett owner, as despite the value compared to other products widening, the nominal value of the assetts is still "rapidly increasing" whilst the mortgage debt remains similar or indeed decreases.

IveSeenTheLight

HAMISH_MCTAVISH wrote: »

you'd need around 285 empire state building

It's certainly easier to envisage the worlds population fitting into 285 ESB's as opposed to 1.