Some Christmas cheer from the Guardian

Jason74

harpoboy wrote: »

What a difference a year makes.

Lovely to see that 2014 is likely to be an even better year than 2013 for house price rises

Just out of interest, why is this a good thing ?. Surely a rise in the costs of the essentials of life is bad news. After all, I assume you don't celebrate when the cost of energy or food goes up ?

harpoboy

Jason74 wrote: »

Just out of interest, why is this a good thing ?. Surely a rise in the costs of the essentials of life is bad news. After all, I assume you don't celebrate when the cost of energy or food goes up ?

Got a couple of BTLs on the boil.

Hope to sell one in late 2015 to pay the mortgage on the family home, thanks entirely to HPI and the generosity of my tenants paying my mortgage

HAMISH_MCTAVISH

Jason74 wrote: »

Just out of interest, why is this a good thing ?. Surely a rise in the costs of the essentials of life is bad news. After all, I assume you don't celebrate when the cost of energy or food goes up ?

Houses and land are assets, just like shares, fine art, classic cars, precious metals, etc.

Energy and food are consumable goods.

It is usually a good thing when assets rise in price, and usually a bad thing when consumable goods rise in price.

Graham_Devon

HAMISH_MCTAVISH wrote: »

Houses and land are assets, just like shares, fine art, classic cars, precious metals, etc.

Yes, because we all need to provide fine art, shares, classic cars and precious metals for ourselves and our family in order to live.

Indeed, I'm having to rent my fine art as I'm priced out of owning it and I'm finding it almost impossible to function as a normal memeber of society without it.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Yes, because we all need to provide fine art, shares, classic cars and precious metals for ourselves and our family in order to live.

Indeed, I'm having to rent my fine art as I'm priced out of owning it and I'm finding it almost impossible to function as a normal memeber of society without it.

The number of people that need something has no bearing on whether or not it's a consumable good or an asset.

Graham_Devon

HAMISH_MCTAVISH wrote: »

The number of people that need something has no bearing on whether or not it's a consumable good or an asset.

A consumable good is one that is bought to be either consumed or used.

That, my friend, is what a house is.

An investment in housing is defined as Property or another possession acquired for future financial return or benefit.

That, my friend, is not what a house is for most people. It's a place to live, with often no financial return in the end when they are finished with it. Don't confuse buying a home with investing in secondary homes and BTLs.

Try as you might, you might get commended by those with the same viewpoint as you, but the majority would suggest a house is bought to live in. Therefore, cannot be, in any way seriously, compared to fine arts.

Jason74

HAMISH_MCTAVISH wrote: »

Houses and land are assets, just like shares, fine art, classic cars, precious metals, etc.

Energy and food are consumable goods.

It is usually a good thing when assets rise in price, and usually a bad thing when consumable goods rise in price.

In terms of how things are seen in the UK, you are undoubtedly right. I would however argue that the fact that houses are seen primarily as assets, rather than for their utility value (IE, as somewhere for their owner to live), is something that makes the problem of high housing costs significantly worse than it would otherwise be. Personally I do see a house as "goods"(albeit non consumable) and therefore consider a rise in its price a bad thing. We would imho be much better off as a society / economy if such an approach became the norm in the UK, and was reflected in the tax system.

Chances of that happening any time soon . . . .sadly pretty close to zero

HAMISH_MCTAVISH

Graham_Devon wrote: »

A consumable good is one that is bought to be either consumed or used.

That, my friend, is what a house is.

First class muddling there Graham, but here's the formal definition of an asset.

An asset is a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity.

A house absolutely fits the criteria of asset.

It is vastly more cost effective to own than to rent over a lifetime, so economic benefits are realised by the owners of houses whether they live in them or not.

Even if HPI was zero, it would still be significantly cheaper to own than to rent over the long term, and those savings are an economic benefit.

A house or land is an asset, not a consumable good.

HAMISH_MCTAVISH

Jason74 wrote: »

In terms of how things are seen in the UK, you are undoubtedly right. I would however argue that the fact that houses are seen primarily as assets, rather than for their utility value (IE, as somewhere for their owner to live), is something that makes the problem of high housing costs significantly worse than it would otherwise be. Personally I do see a house as "goods"(albeit non consumable) and therefore consider a rise in its price a bad thing. We would imho be much better off as a society / economy if such an approach became the norm in the UK, and was reflected in the tax system.

Chances of that happening any time soon . . . .sadly pretty close to zero

How people see something isn't what defines whether or not it's an asset or a consumable good though.

Rental yield, whether imputed or realised, is a significant economic benefit to the owner of a house.

Whether they bought the house to live in, or to rent out, doesn't change the fact that the economic benefit exists.

Therefore a house is an asset.

And would be even if house prices were cheaper or HPI was zero.

wotsthat

Graham_Devon wrote: »

An investment in housing is defined as Property or another possession acquired for future financial return or benefit.

That, my friend, is not what a house is for most people. It's a place to live, with often no financial return in the end when they are finished with it. Don't confuse buying a home with investing in secondary homes and BTLs.

Just because 'most' people think something doesn't make it so. I think most people would be offended at the rather simplistic outlook you credit them with.

Buying a house, and living in it, is absolutely one of the best investments that can be made towards future financial benefit.