Why exactly are houses so expensive?

moneyinmypocket

There is money out there - fair enough I don't have it but doesn't mean the next doesn't

Carl31

CLAPTON wrote: »

my understanding is that for every house bought there is a seller.

so for everyone paying silly prices there is some-one receiveing silly income

the total amount of money floating around in the economy is therefore the same

the problem with our economy is an excess of savings.

If everyone was earning silly income to match the silly prices we would have no problem.

I mentioned that a correction needs to happen. A correction doesnt mean prices have to bottom out, if wages were to rise then that would also provide a soloution. But, considering the fact we are in the longest recession in decades, the likelyhood of that happening is pretty remote, so what else will give.

There was a report on the news the other day that there is, apparently, 750k empty properties in the uk. So its not even a problem of lack of properties

I dont know how true that report is, but i imagine its someway indicative

the_flying_pig

moneyinmypocket wrote: »

There is money out there - fair enough I don't have it but doesn't mean the next doesn't

(1) maybe you should change your username then?;
(2) speaking of which, your posts are starting to read a lot like Sibley's.

DervProf

CLAPTON wrote: »

the problem with our economy is an excess of savings.

Yes, what we need is for those with savings to invest most of it in bricks and mortar, or at least go on a couple of luxury holidays and buy a 60" TV.

And what have they got to lose ? In the event they are ill, out of work or retire, they get extra state benefits because they have less savings.

CLAPTON

Graham_Devon wrote: »

LOL.

This place gets better.

do you not believe that when you go to your building society and 'deposit' 1,000 into your savings account that a debt of exactly the same amount is created in the BS a/c?

do you not believe that when some-one borrows 1,000 from a bank, that a credit of exactly that amount of 1,000 is created?


do you not believe that the sum of all saving and all debts is zero?

do you not believe that an debt problem must exactly equal a savings problem.

if debt is evil then so must be savings

so we suffer from an deficiency of demand due to an excessive amount of savings; which is exactly the same thing as saying there is too much debt.

the interesting issue is why there is too much savings but that wouldn't make much of an interesting headline and would require people to know a little economics

moneyinmypocket

the_flying_pig wrote: »

(1) maybe you should change your username then?;
(2) speaking of which, your posts are starting to read a lot like Sibley's.

There is money out there just because one person doesn't have it doesn't mean the next doesn't

CLAPTON

DervProf wrote: »

Yes, what we need is for those with savings to invest most of it in bricks and mortar, or at least go on a couple of luxury holidays and buy a 60" TV.

And what have they got to lose ? In the event they are ill, out of work or retire, they get extra state benefits because they have less savings.

well while sarcasm does have a place, personally I would prefer that the money was invested in productive infrastructure projects although over time we need to address the underlying causes.

StevieJ

Graham_Devon wrote: »

In the same time that houses have increased 8,000% in value, eggs have increased 2,000%, bread 1,983%, milk 1,125%.

I ,make it that prices have increased by 157% (63k to 162k) between 1989 and 2012 so most of that rise must have landed in the laps of the late 80's boomers, I wonder if they squealed as much when it was their turn to buy?

Graham_Devon

CLAPTON wrote: »

do you not believe that when you go to your building society and 'deposit' 1,000 into your savings account that a debt of exactly the same amount is created in the BS a/c?

do you not believe that when some-one borrows 1,000 from a bank, that a credit of exactly that amount of 1,000 is created?


do you not believe that the sum of all saving and all debts is zero?

do you not believe that an debt problem must exactly equal a savings problem.

if debt is evil then so must be savings

so we suffer from an deficiency of demand due to an excessive amount of savings; which is exactly the same thing as saying there is too much debt.

the interesting issue is why there is too much savings but that wouldn't make much of an interesting headline and would require people to know a little economics

and better, and better....

Gracchus_Babeuf

House prices need to remain high because of the 'feelgood factor' that voters have when this happens. It gives people the illusion of being rich even when they have it all tied up in unspendable property. Therefore, governments and the BoE do all they can to ensure that house prices do not fall - and when they do only temporarily and by small amounts. It has more to do with politics than economics.