Who'd vote for lower house prices? Not many...

DervProf

wymondham wrote: »

Why do houses gain in value, yet cars dont (generally)? They both get older, both need maintenance etc. Surely the cost of land is not that much of a factor??

It's a function of supply and demand, demand being governed by all sorts of things. Credit availabilty, promotion of property ownership etc.

We are told that HPI is simply down to a shortgage of property. I happen to believe that there's much more to it than that. Look at what happened to property prices in America, Spain etc. Yes, they may have had more supply than us, but they still managed to get HPI. The "excuse" for HPI here is that we have a shortgage of property. I still believe that with proper regulation of lending a decade ago, the property market would be in a better state at the moment, and prices might not be quite so high. We had our feast, and now it's famine.

wotsthat

I wouldn't vote for lower house prices. I think falling prices would be bad for the economy and longer term not really that beneficial for potential buyers. Banks already don't want to lend - how are they going to respond to a policy of reducing house prices?

In the absence of lending lower prices just benefit the affluent.

House price stability though - I'd vote for that.

IveSeenTheLight

wymondham wrote: »

I'd vote for lower house prices. I'd be happy if mine were worth the same as i bought it for in '96, after all its the same house only older?? The rate they go up is crazy - people now need more for a deposit than my whole house cost, how can this be sane?

Why do houses gain in value, yet cars dont (generally)? They both get older, both need maintenance etc. Surely the cost of land is not that much of a factor??

The rate they go up is crazy - in the last 30 odd years, they have increased 2.9% year on year above inflation. (Takes in increases and decreases.

It's hardly crazy, less than 3%, however the sustained increased over those years

Why have they gone up above inflation, to answer your second question, it's all relevant to supply and demand.
Population increases has increased the quantity of desire and with available credit, this increased demand (desire + ability).

Additionally, the population demographics changed such that more people live alone, thus also increasing demand

At the same time, we have not substantially increased available supply to match.

This inbalance cause prices to increase at the rate they did.

Demand is now curbed through tighter and higher lending requirements, although this has pushed more into the rental market, thus increasing rents are being seen.

Once the lending criteria is met or lowered, this in turn will mean that those with the means will likely transfer from the rented / living with parents market to the homeowner market.

IveSeenTheLight

DervProf wrote: »

It's a function of supply and demand, demand being governed by all sorts of things. Credit availabilty, promotion on proerty ownership etc.

We are told that HPI is simply down to a shortgage of property. I happen to believe that there's much more to it than that. Look at what happened to property prices in America, Spain etc. Yes, they may have had more supply than us, but they still managed to get HPI. The "excuse" for HPI here is that we have a shortgage of property. I still believe that with proper regulation of lending a decade ago, the property market would be in a better state at the moment, and prices might not be quite so high. We had our feast, and not it's famine.

People are naturally selective.
Whilst supply in number may be met, ifdemand is there (desire and ability) then they will likely compete with other buyers for the better of the supply that is open to them., whilst less desireable properties may not obtain the same number of competing buyers.

It's not as if every property in every location is exactly the same and supply can be married up with demand equally.

luvpump

Ironically, Labours (the party of the working class :rotfl: ) success during there 14yrs in power was largely based on there restricting the amount of Social housing available & stuffing the country full of migrants, in my borough there were hardly ANY new council houses built & only a few developments from housing associations, Simple supply & demand, consequently house prices went up & up..
House prices is a national obsession, its what were are best at really, selling bricks & mortar to each at ever more ridiculous prices.. And the Tories are continuing with that policy..

Gracchus_Babeuf

Turnbull2000 wrote: »

http://henrypryor.com/blog/2012/10/the-idle-guide-to-making-money/

I'm not sure what your point is. House prices rise due to high disposable income and a high demand/low supply situation. It doesn't follow that house prices will continue to rise at the same pace forever. Moreover, even if the price of your house goes up tenfold in a few years you are not actually 'making' any money as you need to live in it! Any profits are purely notional until you sell, and when you sell you need somewhere else to live. So, unless you are planning to move from central London to a crofter's cottage in Orkney you are unlikely to become rich as a result of all these price rises.

Gracchus_Babeuf

wotsthat wrote: »

I wouldn't vote for lower house prices. I think falling prices would be bad for the economy and longer term not really that beneficial for potential buyers. Banks already don't want to lend - how are they going to respond to a policy of reducing house prices?

In the absence of lending lower prices just benefit the affluent.

House price stability though - I'd vote for that.

Why are falling prices bad for the economy? Maybe bad for the construction industry and estate agents, but why anyone else? It's higher house prices that benefit the rich, not lower prices. The rich have a lot fo their wealth tied up in property and land - just look at the Duke of Westminster. And what do you mean by 'absence of lending'? Mortgages are out there, but you do need a decent deposit, which is no bad thing.

Gracchus_Babeuf

wymondham wrote: »

I'd vote for lower house prices. I'd be happy if mine were worth the same as i bought it for in '96, after all its the same house only older?? The rate they go up is crazy - people now need more for a deposit than my whole house cost, how can this be sane?

Why do houses gain in value, yet cars dont (generally)? They both get older, both need maintenance etc. Surely the cost of land is not that much of a factor??

The reason house prices are so high is due to government measures to ensure this. There is a perception that house prices need to stay high to preserve a 'feelgood' factor etc. Utter rubbish, of course. In reality this only benefits those who have paid off mortgages and are sitting inside a pile of bricks worth hundreds of thousands - i.e. the rich and/or the elderly middle class, both of whom are traditional Tory voters. Those of us with mortgages and want to trade up face paying more and more to move, and first time buyers also face increasing challenges.

ILW

Gracchus_Babeuf wrote: »

The reason house prices are so high is due to government measures to ensure this. There is a perception that house prices need to stay high to preserve a 'feelgood' factor etc. Utter rubbish, of course. In reality this only benefits those who have paid off mortgages and are sitting inside a pile of bricks worth hundreds of thousands - i.e. the rich and/or the elderly middle class, both of whom are traditional Tory voters.

Is that why some of the biggest rises were under the last labour government?

Gracchus_Babeuf

ILW wrote: »

Is that why some of the biggest rises were under the last labour government?

Because Blair was a crypto-conservative at heart, certainly not a socialist. He was always chasing Tory voters in the South, and for many years the strategy paid off.