Is overcrowding to blame for high house prices?

System

IveSeenTheLight wrote: »

I never get the real terms argument.
Nobody buys at real prices

Ah, what if you agree to buy a house and then it takes 10 years for the paperwork to go through? That could work

wotsthat

Isn't the Isle of Wight the usually used to demonstrate that there's lots of land.

i.e. we could fit 285 Empire State Buildings on the Isle of Wight therefore there is no housing shortgage in the UK.

C_Mababejive

I cannot understand why no one is interested in land reform in this country. Are we so powerless and apathetic that we accept the status quo and are forever chained as serfs and peasants..modern day slaves..not much advanced than those who used to be chained and traded?

IveSeenTheLight

Joeskeppi wrote: »

Ah, what if you agree to buy a house and then it takes 10 years for the paperwork to go through? That could work

It could.
I do know of a property that has been offered and accepted over 6 months ago but the paperwork has not been finalised due to finding an anomolie from previous sales.

The buyer is patient for the time being, but doubt many would wait 10 years to complete.

jamesmorgan

IveSeenTheLight wrote: »

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.

There are broadly 2 types of person interested in house prices.

a) The home owner - the key issue for them is affordabilty (ie what percentage of their net income is consumed by mortgage costs). For these people the rise in 'real' house prices is key. If housing cost go up by 5% but their salary goes up by 10% then housing is more affordable. If housing costs go up by 5% but their salary stays flat then they are less affordable.

b) The investor - typically buys housing as an asset and will sell if they believe that greater returns can be made from other asset classes. For simplicity these people will often just look at absolute returns, but in reality they are using these to draw comparisons with other asset classes.

Re hyper inflation, there is no formal definition but it is typically assumed that inflation is running in excess of 50%/month. This means over a year, prices are 100 times higher than at the beginning of the year. So if house prices fall by 75% in real terms then they only rise by 25 times during the year. During periods of hyper-inflation, money has little value so you definitely want to be in assets (possibly housing, but more likely gold).

homelessskilledworker

HAMISH_MCTAVISH wrote: »

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.

You are indeed right Hamish,:)


I am indeed grateful that you took this very very very seriously and took time out to find the true facts.

I have now indeed on receiving your correct information been forced to concede

THE BEAR ARGUMENT IS NOW WRONG

I repeat

THE BEAR ARGUMENT IS NOW WRONG

As I type dozens of Uber bulls flood to thank Hamish for putting one of MSE notorious bears in his place, and at last prove once and for all that this Guy was wrong in everything he ever said, mainly his views on the housing market.


Or


It could have just been a silly little factoid that I heard that was BS and a little bit of fun, thanks for the info though, still interesting.
Here is another one, the whole population of the earth can stand on the Isle of man, I would check the facts myself but I have some sort of life to lead:)

CLAPTON

not every long ago one could fit the entire population of the world on the Isle Of Wight and each person could have about a square foot each

however the global population is now too large but if we stacked then 3 or 4 levels high then we could do this again.

I have heard rumours that the people of the Isle of Wight don't like the idea: UKIP are definitively against, Dave's thinking about it but will change his mind several times this week, Lib Dems are obviously for and Ed agrees in principle but is waiting to see what Dave says so he can oppose.

IveSeenTheLight

jamesmorgan wrote: »

There are broadly 2 types of person interested in house prices.

Hope you don't mind, I'd like to break this down a bit more

jamesmorgan wrote: »

a) The home owner - the key issue for them is affordabilty (ie what percentage of their net income is consumed by mortgage costs). For these people the rise in 'real' house prices is key. If housing cost go up by 5% but their salary goes up by 10% then housing is more affordable. If housing costs go up by 5% but their salary stays flat then they are less affordable.

This is not strictly real terms. It's house costs v's wage inflation.
I do agree affordability is key, however it's not a simple as a straoght comparison.

Currently, many mortgage owners in this example would have positive "real term value" as their mortgage costs have dramatically decreased in the last 3 - 4 years.
Affordability is at a long term low when measured as mortgage interest as a percentage of net income.
Meanwhile there is wage inflation.

I don't see how this in anyway is related to "house price real value"

As a homeowner, I am maximising on the lower housing costs to invest the difference in outgoings.
Should the rates dramatically increase, it will not affect my affordability, but reduce my further investment opportunities.

jamesmorgan wrote: »

b) The investor - typically buys housing as an asset and will sell if they believe that greater returns can be made from other asset classes. For simplicity these people will often just look at absolute returns, but in reality they are using these to draw comparisons with other asset classes.

I'm an investor in property.
My calculations at the time of purchase are very much on Rental Yield achieved and whilst HPI will be a bonus when I choose to sell the property, I'm very much focussed on the Rental Yield and maximising the profitability on that return.

I have tried alternative investment methods and had my fingers severly burned inthe process, we also see many reports of people who have invested and not seen the returns they had expected (think of many pension investments over many years to find the return is now what they had envisaged)

Therefore I think there are many property investors who are looking longer term, possibly lower monthly return but greater investment security, with the likelyhood of HPI on the property especially if invested in over a longer period.

I have shown examples in here where property far exceeds placing the deposit in a high interest account, without including HPI over a 25 year timeframe.

jamesmorgan wrote: »

(possibly housing, but more likely gold).

Are you a gold bug?
It's personal preferance, but for me property is more tangeable than gold.
Society needs property as shelter, greater than they have a need for gold.

Incidently, I've said I'm a homeowner and a property investor.
Does that mean I and many others are a third choice of people and if so what are your assumptions as to our preferrences?

C_Mababejive

CLAPTON wrote: »

not every long ago one could fit the entire population of the world on the Isle Of Wight and each person could have about a square foot each

however the global population is now too large but if we stacked then 3 or 4 levels high then we could do this again.

I have heard rumours that the people of the Isle of Wight don't like the idea: UKIP are definitively against, Dave's thinking about it but will change his mind several times this week, Lib Dems are obviously for and Ed agrees in principle but is waiting to see what Dave says so he can oppose.

The days of holocaust will come when men will kill eachother in massive numbers for the scarce space,food and water available on the planet. Its already happening now but on a smaller scale.

jamesmorgan

IveSeenTheLight wrote: »

This is not strictly real terms. It's house costs v's wage inflation.
I do agree affordability is key, however it's not a simple as a straoght comparison.

I agree most people use the term 'real terms' to compare with RPI (or CPI). In practice it is attempt to measure affordability of an item and as such is usually better measured against wage inflation.

As a homeowner, I am maximising on the lower housing costs to invest the difference in outgoings.
Should the rates dramatically increase, it will not affect my affordability, but reduce my further investment opportunities.

I still think this means that house prices are currently more affordable. It becomes a personal choice what you do with the excess money - either to buy more of the affordable item (ie bigger house) or to use the saved money to spend on other things.

I'm an investor in property.
My calculations at the time of purchase are very much on Rental Yield achieved and whilst HPI will be a bonus when I choose to sell the property, I'm very much focussed on the Rental Yield and maximising the profitability on that return.

Personally I invest in shares so understand that total return is a combination of yield and capital growth. Ultimately it doesn't matter where the growth comes from, but do understand that rental yield is more easy to predict and build a business case around.

Are you a gold bug?
It's personal preferance, but for me property is more tangeable than gold.
Society needs property as shelter, greater than they have a need for gold.

No, not a gold bug at all.:) Like you I would be nervous investing in something that has little intrinsic value. However, in times of extreme stress, gold values do seem to hold up better than other asset classes (I still wouldn't touch it!)

Incidently, I've said I'm a homeowner and a property investor.
Does that mean I and many others are a third choice of people and if so what are your assumptions as to our preferrences?

My guess that they would be some combination of the two depending on your relative investment in each.