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"No House Price Bubble in UK" - says top economist....
HAMISH_MCTAVISH
Posts: 28,592 Forumite
https://www.telegraph.co.uk%2Ffinance%2Fpersonalfinance%2Fhouseprices%2F10312983%2FNo-house-price-bubble-in-UK-says-top-economist.htmlProfessor John Kay is the latest credible voice to enter the debate on whether Britain's housing market is becoming overheated.
He takes the view that there is not yet evidence of a bubble, thus siding with Bank of England Governor Mark Carney, among others.
An expert on investor behaviour and markets, Professor Kay last year presented a major report to the Government looking at the way companies fail their shareholders by being too focused on short-term outcomes.
Asked in an interview at the weekend about the housing market, he was critical of government policies such as Help to Buy – see the links below for more on that subject – but said:
"Talk of another property bubble is wrong.
My concept of a bubble is when people are buying things not for their intrinsic value but because they believe they will shortly be able to sell them at a higher price.
"That was true in parts of the US property market and it was true in Spain.
I don't think it was ever really true in the UK."
Strange.
I'm sure it was just yesterday that Graham was claiming some other definition for a bubble....
Anyway, as per the definition above, there was no bubble in UK house prices even back in 2007.
Just a genuine shortage of supply when compared to population growth and household formation.
“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”
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Comments
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Not sure I agree with the view if people are not buying to make a profit and sell then it's not a bubble..
Surely if people are buying something that is overpriced and rising due partly (but to quite a large extent) to Government intervening to ensure prices rise, then what occurs when the Government removes their assistance? I think that could then be seen as a bubble??0 -
Not sure I agree with the view if people are not buying to make a profit and sell then it's not a bubble..
There are basically two things that can cause house prices to rise rapidly.
1. A genuine shortage, where underlying demand for housing due to population growth and household formation far exceeds supply.
That's what we had in the UK. And it's not a bubble.
Or...
2. A speculative mania, where there is no genuine shortage but many/most people are buying and selling houses purely for investment gains.
That's a bubble. And it's not what we had in the UK.
Not all steep rises in price are a bubble.
If they're underpinned by genuine shortages of supply, then by definition, the market is acting rationally and efficiently, and it's not a bubble.Surely if people are buying something that is overpriced and rising
If the prices are high primarily because of a shortage of housing, then it's not "overpriced".“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
"Talk of another property bubble is wrong.
My concept of a bubble is when people are buying things not for their intrinsic value but because they believe they will shortly be able to sell them at a higher price.
"That was true in parts of the US property market and it was true in Spain.
I don't think it was ever really true in the UK."
Shows how clueless he is. This is exactly what was going on in the UK in the previous decade.
How does he explain the huge increase in property developers in the previous decade. The UK housing market certainly became a speculators market.0 -
shortchanged wrote: »Shows how clueless he is. This is exactly what was going on in the UK in the previous decade.
How does he explain the huge increase in property developers in the previous decade. The UK housing market certainly became a speculators market.
Eh?
Even the HPC bears have finally accepted the shortage of housing is real.
Took them long enough, and it's a bit of a grudging acceptance, but the place is now full of people lobbying for more houses to be built.
How did we end up with the last few uber-bears in denial over here?“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
shortchanged wrote: »"Talk of another property bubble is wrong.
My concept of a bubble is when people are buying things not for their intrinsic value but because they believe they will shortly be able to sell them at a higher price.
"That was true in parts of the US property market and it was true in Spain.
I don't think it was ever really true in the UK."
Shows how clueless he is. This is exactly what was going on in the UK in the previous decade.
How does he explain the huge increase in property developers in the previous decade. The UK housing market certainly became a speculators market.
what 'huge' increase in property developers was that then?
did it show in a 'huge' increase in the number of properties built?
the vast majority of UK properties are either owner occupied or are tenanted and not lying idle waiting for the price to go up0 -
HAMISH_MCTAVISH wrote: »Eh?
Even the HPC bears have finally accepted the shortage of housing is real.
If there was a genuine shortage, rents would have risen a lot. Even in London, they've barely moved in nominal terms.0 -
HAMISH_MCTAVISH wrote: »Eh?
Even the HPC bears have finally accepted the shortage of housing is real.
Took them long enough, and it's a bit of a grudging acceptance, but the place is now full of people lobbying for more houses to be built.
How did we end up with the last few uber-bears in denial over here?
Fair enough McT, we certainly are not building or have not built enough houses which is keeping prices up now.
But surely you can't deny that the actions of the previous decade was not fuelled some what by speculation on property prices.
After all weren't we always told 'property prices only ever go up.'
It is commonplace now for property to be regarded as an investment. That alone means it will be a speculative market.0 -
what 'huge' increase in property developers was that then?
did it show in a 'huge' increase in the number of properties built?
the vast majority of UK properties are either owner occupied or are tenanted and not lying idle waiting for the price to go up
I'm referring to rise in the amateur property developer, you know the Sarah Beeny worshippers etc. Small scale but a bandwagon that many jumped on.0 -
If there was a genuine shortage, rents would have risen a lot. Even in London, they've barely moved in nominal terms.
Eh?
Rents soared to all time record highs in the last few years.
In a recession, with rising unemployment, falling real incomes, and the worst financial crisis in a century.
Rents (and of course they can't be fuelled by mortgage lending) rose to record highs.
How is that remotely conceivable if there isn't a shortage of housing?“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
If there is such a massive shortage of homes where are all the homeless people?Have my first business premises (+4th business) 01/11/2017
Quit day job to run 3 businesses 08/02/2017
Started third business 25/06/2016
Son born 13/09/2015
Started a second business 03/08/2013
Officially the owner of my own business since 13/01/20120
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