British house prices are 31% too high

WestonDave

The issue isn't identifying the problem, its coming up with a solution when the bank balance sheets rely on the current values of property, and can't sustain the levels of lending that would be needed to finance building enough new property to drive prices down. It can be solved but only slowly.

andy.m_2

Percy1983 wrote: »

You should be in politics with the kind of spin you try.

Next week black is white.

More that next week, Black is not White which is correct.

IveSeenTheLight

Graham_Devon wrote: »

S British house prices are 31% too high

Hmmmm, in a comparison with rents

Surely however this is not a viable stable relationship.

As properties change from owner occupiers to rented properties, it shifts the balance of the supply and as a consequence has an impact on it's markets.

Could this be articulating that there is a shortage of properties (and mortgages) for owner occupiers, whilst there have been sufficient growth in the rental market to curtail the growth of rents?

I'm sure there are far better comparitors, namely average property price to average home buyer household income.

Graham_Devon

IveSeenTheLight wrote: »

I'm sure there are far better comparitors, namely average property price to average home buyer household income.

Well, you'd like that statistic better, as if you take the average home buyer income, you are only looking at those who can afford to be a buyer.

Makes thing look much rosier!

robmatic

IveSeenTheLight wrote: »

Hmmmm, in a comparison with rents

Surely however this is not a viable stable relationship.

As properties change from owner occupiers to rented properties, it shifts the balance of the supply and as a consequence has an impact on it's markets.

Could this be articulating that there is a shortage of properties (and mortgages) for owner occupiers, whilst there have been sufficient growth in the rental market to curtail the growth of rents?

I'm sure there are far better comparitors, namely average property price to average home buyer household income.

Rents vs. house prices is for me the most rational way of judging fair value.

If there was a shortage of properties for owner-occupiers and a surplus of rental properties, then landlords should sell and obtain that capital that is obtaining a poor yield.

The easy way of telling that the property market was overheating in the Noughties was by observing that rents were increasing in line with inflation and property prices were increasing at a much higher rate.

IveSeenTheLight

Graham_Devon wrote: »

Well, you'd like that statistic better, as if you take the average home buyer income, you are only looking at those who can afford to be a buyer.

Makes thing look much rosier!

Graham, Old ground with you yet again.

Not everyone can afford to buy. Why should their income affect homebuyers?

If you want property to be affordable for all, you need sufficient supply to accommodate that.

I trust you'll be canvasing for increased building and ease of mortgage availability to support this.

IveSeenTheLight

robmatic wrote: »

The easy way of telling that the property market was overheating in the Noughties was by observing that rents were increasing in line with inflation and property prices were increasing at a much higher rate.

If rents were rising with inflation and property prices were increasing at a higher rate, then surely this indicates a shortage of supply.

robmatic wrote: »

If there was a shortage of properties for owner-occupiers and a surplus of rental properties, then landlords should sell and obtain that capital that is obtaining a poor yield.

When did you see a surplus of rental properties and a shortage of Owner Occupier properties?

Rental Yield has been providing a decent enough return

wotsthat

I really can't see the point of dividing one number by another and only looking at the result in the context of the long term average.

The Economist came up with similar figures to the OECD but provide interactive graphs which allows the bigger picture to be viewed..

http://www.economist.com/blogs/dailychart/2011/11/global-house-prices

- it's 10 years since house prices were so low when priced in rent
- it's 10 years since house prices were so low when priced in average wages
- it's 10 years since house prices were so low in real terms

As the price/ average earnings & price/ rent ratios have spent the best part of 40 years either sharply increasing or sharply decreasing the long term average is pretty meaningless in assessing whether prices are too low or too high.

Not a single person said to me in the nineties when I bought that it was a good decision because prices were too cheap - everyone I knew thought they were too expensive then too.

Graham_Devon

IveSeenTheLight wrote: »

Graham, Old ground with you yet again.

Not everyone can afford to buy. Why should their income affect homebuyers?

Old ground? Not really.

Just highlighting your rather silly way to define the affordability of something.

Basically what you are saying is it's affordable if you can afford it.

Which is brilliant and all that for your rose tints ....but is hardly a measure of affordability.

Percy1983

Graham_Devon wrote: »

Old ground? Not really.

Just highlighting your rather silly way to define the affordability of something.

Basically what you are saying is it's affordable if you can afford it.

Which is brilliant and all that for your rose tints ....but is hardly a measure of affordability.

Proving all those who bought houses can afford houses doesn't prove much does it.