House prices divide the nation between old and young, haves and have-nots

worldtraveller

An interesting survey by Markit for Knight Frank where it appears that:

Most of those aged over 45 said they expect house prices to fall during the next year.

Most of those under 45 predicted house prices will rise during the next year.

Telegraph

The older generation know better?

CLAPTON

does that mean there is a glut of house on the market as old people rush to offload before the price fall and a rush of young buyers keen to buy before prices rises?

maybe not

MacMickster

Probably just a case of good old British pessimism all round.

Those with property are worried that it will fall in value. Those who want one, but don't have one yet, are worried that prices will always rise out of their reach.

ruggedtoast

House prices and their resolute refusal to plunge as relentlessly predicted by housepricecrash.com among others, have become a major source of division between the generations.
No wonder, you may say, with most homeowners sitting on tax-free capital gains but many other people excluded from home ownership. High house prices and the mortgage famine have forced rising numbers to rent well into their thirties or remain in their parents’ home.

It really does seem that "the boomer shall inherit the earth".

ukcarper

ruggedtoast wrote: »

It really does seem that "the boomer shall inherit the earth".

Can you explain how you come to that conclusion from the above survey

Loughton_Monkey

worldtraveller wrote: »

....The older generation know better?

Only one way to prove that. Let's wait a year and see who was right!

Most likely, prices will be pretty much the same, but Nationwide will say +1%, and Halifax -1%. So then the answer will be:

fiiiiiiiiiiggggggggghhhhhhhtttttttt

GeorgeHowell

So much talk about house prices and so little discussion of the realities.

Domestic property -- certainly if you exclude new builds -- is almost a perfect market, in terms of information and the inability of any individual buyer or seller, or organised group of them, to distort the market.

Therefore prices are determined by supply and demand and little else. The only prices that count are the ones at which property actually changes hands, advertised price and perceptions of what an individual property may be worth are irrelevant.

The periodic surge in property prices over decades has been driven by demand. We have seen buyers effectively outbid each other. The demand is fed by scarcity -- too many people chasing too few properties -- and by the perceived desirability of owning property rather then renting it. In that respect demand driven property revaluation has become a self-fulfilling prophesy.

The baby boomer generation has certainly gained from increasing property prices -- on paper at least. But they did not engineer it, it happened through market forces. And unless the Uk falls out of love with property ownership it will continue to happen, albeit with fits and starts, because the demand is only tempered by the level of disposable income, and the affordability of mortgages.

shortchanged_2

GeorgeHowell wrote: »

So much talk about house prices and so little discussion of the realities.

Domestic property -- certainly if you exclude new builds -- is almost a perfect market, in terms of information and the inability of any individual buyer or seller, or organised group of them, to distort the market.

Therefore prices are determined by supply and demand and little else. The only prices that count are the ones at which property actually changes hands, advertised price and perceptions of what an individual property may be worth are irrelevant.

The periodic surge in property prices over decades has been driven by demand. We have seen buyers effectively outbid each other. The demand is fed by scarcity -- too many people chasing too few properties -- and by the perceived desirability of owning property rather then renting it. In that respect demand driven property revaluation has become a self-fulfilling prophesy.

The baby boomer generation has certainly gained from increasing property prices -- on paper at least. But they did not engineer it, it happened through market forces. And unless the Uk falls out of love with property ownership it will continue to happen, albeit with fits and starts, because the demand is only tempered by the level of disposable income, and the affordability of mortgages.

You forgot to add that the boom in prices was fueled by much, much easier access to credit in the form of liar loans, 5+ times income mortgages, a huge increase in the market of IO mortgages.

So ask yourself. Now this credit line has been cut off, what is happening?

A stagnant, falling market, with a low level of transactions only propped up by lender forbearance and low interest rates.

OK supply and demand does of course have an effect on prices but you also have to look at the drivers of supply and demand and a shortage of housing cannot continue to push prices upwards if people simply don't have access to the credit they need to buy.

GeorgeHowell

shortchanged wrote: »

You forgot to add that the boom in prices was fueled by much, much easier access to credit in the form of liar loans, 5+ times income mortgages, a huge increase in the market of IO mortgages.

So ask yourself. Now this credit line has been cut off, what is happening?

A stagnant, falling market, with a low level of transactions only propped up by lender forbearance and low interest rates.

OK supply and demand does of course have an effect on prices but you also have to look at the drivers of supply and demand and a shortage of housing cannot continue to push prices upwards if people simply don't have access to the credit they need to buy.

I did say that demand is affected by disposable income and affordability of mortgages. Although the mortgage free-for-all was brought to an abrupt end we have since seen relatively low mortgage interest rates which act as a partial offset.

In a recession psychology plays a big part and sheeple tend to avoid spending, including on housing, because they think that is what everyone else is doing. The stagnant market is not bad for everyone. Other things being equal the first time buyers struggling to get on the ladder are helped by a temperance of ever-rising house prices.

abaxas

GeorgeHowell wrote: »

So much talk about house prices and so little discussion of the realities.

Domestic property -- certainly if you exclude new builds -- is almost a perfect market, in terms of information and the inability of any individual buyer or seller, or organised group of them, to distort the market.

Therefore prices are determined by supply and demand and little else. The only prices that count are the ones at which property actually changes hands, advertised price and perceptions of what an individual property may be worth are irrelevant.

The periodic surge in property prices over decades has been driven by demand. We have seen buyers effectively outbid each other. The demand is fed by scarcity -- too many people chasing too few properties -- and by the perceived desirability of owning property rather then renting it. In that respect demand driven property revaluation has become a self-fulfilling prophesy.

The baby boomer generation has certainly gained from increasing property prices -- on paper at least. But they did not engineer it, it happened through market forces. And unless the Uk falls out of love with property ownership it will continue to happen, albeit with fits and starts, because the demand is only tempered by the level of disposable income, and the affordability of mortgages.

The issue is that supply is controlled not by market forces, but by availability of planning permission.

The market is, by definition, distorted by protectionism.

GeorgeHowell

abaxas wrote: »

The issue is that supply is controlled not by market forces, but by availability of planning permission.

The market is, by definition, distorted by protectionism.

That does restrict availability of new builds. But the big builders would love to be able to build more so I don't think it's part of a conspiracy to raise prices. The issue how much does society want to see of urban sprawl, and concretisation of the countryside ?