Osbourne: Rising House Prices for next 10 Years

HAMISH_MCTAVISH

House price boom to last for a DECADE:

George Osborne says demand for homes will continue to outstrip supply for years

Chancellor insists planning reforms will deliver more homes over time

But in 10 years politicians will still be debating soaring house prices

Insists his Help to Buy scheme is not fuelling a new housing bubble

Prices in London are up 11.6% in a year and 4.5% in the South East

He went on: ‘I imagine if we were to assemble again in 10 years' time we would still be talking about the challenge of making sure that our housing supply keeps up with demand.’

He pointed out that house prices had fallen ‘quite considerably’ during the recession, and were still significantly below their peak.

The Bank of England had also been given powers to cool the market if the Help to Buy scheme appeared to be fuelling a new price bubble, he added.

But the Chancellor conceded that the underlying mismatch between demand for homes and the supply is far from being addressed.

‘I think the planning reforms are clearly working. You see planning applications up, planning approvals up, and the percentage of planning approvals up,’ he said.

‘It is having I think a positive effect on creating new homes and those homes are being built in appropriate places.

‘Across the board, we are pulling a lot of levers. But this is a historic problem.’

http://www.dailymail.co.uk/news/article-2551691/House-price-boom-DECADE-George-Osborne-says-demand-homes-continue-outstrip-supply-years.html#ixzz2sOKReDwS

Graham_Devon

Prices so high no one will be able to buy your house off you.

Result.

cells

Graham_Devon wrote: »

Prices so high no one will be able to buy your house off you.

Result.

Rents so high, interest so cheap, there is no end of BTLers who will buy it off you

Over the next 20 years there could be a NET 5 million homes baught by BTLers to take private rented homes towards 10 million.

Privately rented could jump to 32% with Social at 16% and owner ocupied falling to 52%

Sometime between now and then (probably closer to then, than now) the political pressure will build so high that the council planners will be strung up the NIMBYs told to F.off and the country will start building at 400-500k units a year but not before a huge transfer of wealth to the 1% of families that own multiple homes

Graham_Devon

cells wrote: »

Rents so high, interest so cheap, there is no end of BTLers who will buy it off you

Over the next 20 years there could be a NET 5 million homes baught by BTLers to take private rented homes towards 10 million.

Privately rented could jump to 32% with Social at 16% and owner ocupied falling to 52%

Sometime between now and then (probably closer to then, than now) the political pressure will build so high that the council planners will be strung up the NIMBYs told to F.off and the country will start building at 400-500k units a year but not before a huge transfer of wealth to the 1% of families that own multiple homes

But who will rent it off them?

If prices are say 50% higher than now, rents will, too, be much higher.

There comes a point whereby the possible rent won't cover the mortgage. What then? Unless were suggesting rents will likely be higher per year than the average wage. This won't be the case across the entire country, but where I am, the average rent is already just shy of 50% of the average wage. Add on tenancy costs and you are over 50%.

If, say, prices doubled over the next year, how would people be able to afford the rents that the price of houses demanded? Remember, they will need to pay council tax, all bills etc too. We can't just assume 2 people will have to work full time, as people do have kids to care for, pick up from school etc.

Loughton_Monkey

Graham_Devon wrote: »

......There comes a point whereby the possible rent won't cover the mortgage. What then? Unless were suggesting rents will likely be higher per year than the average wage. This won't be the case across the entire country, but where I am, the average rent is already just shy of 50% of the average wage. Add on tenancy costs and you are over 50%.......

Strange that you admit to people paying 50% of income in rent, and yet whenever people buy their first house these days at today's prices (with or without HTB) you are the first to scream "Unaffordable"?

Unless of course you are referring to the professional benefit-seekers where indeed their rent could be 50% of their 'income'. However, 100% of their income probably comes from us tax payers.

Jason74

cells wrote: »

Rents so high, interest so cheap, there is no end of BTLers who will buy it off you

Over the next 20 years there could be a NET 5 million homes baught by BTLers to take private rented homes towards 10 million.

Privately rented could jump to 32% with Social at 16% and owner ocupied falling to 52%

Sometime between now and then (probably closer to then, than now) the political pressure will build so high that the council planners will be strung up the NIMBYs told to F.off and the country will start building at 400-500k units a year but not before a huge transfer of wealth to the 1% of families that own multiple homes

Out of interest, where do those figures come from. They seem to match what I have been seeing myself over the past few years, and if true, are very very worying. Indeed, the gradual shift towards more private renting and less of other tenures is one of the most damaging social shifts going on in the UK at present (particularly given the way private renting works in the UK. It would be less of an issue with a more "tenant friendly" structure). I just haven't. seen figures that set it out as clearly as that.

cells

Graham_Devon wrote: »

But who will rent it off them?

If prices are say 50% higher than now, rents will, too, be much higher.

There comes a point whereby the possible rent won't cover the mortgage. What then? Unless were suggesting rents will likely be higher per year than the average wage. This won't be the case across the entire country, but where I am, the average rent is already just shy of 50% of the average wage. Add on tenancy costs and you are over 50%.

If, say, prices doubled over the next year, how would people be able to afford the rents that the price of houses demanded? Remember, they will need to pay council tax, all bills etc too. We can't just assume 2 people will have to work full time, as people do have kids to care for, pick up from school etc.

Interest rates are so low that mortgage interest is far below rents

Even in London, on the lower end rents are about 2-3x the mortgage on a BTL

So if prices double over say the next 5 years, rents will likely be up 25%, the mortgage will still be cheaper than the rent (assuming mortgage rates are similar)

An OO can get a mortgage rate as low as near 1.5% on a 2 year deal

cells

Jason74 wrote: »

Out of interest, where do those figures come from. They seem to match what I have been seeing myself over the past few years, and if true, are very very worying. Indeed, the gradual shift towards more private renting and less of other tenures is one of the most damaging social shifts going on in the UK at present (particularly given the way private renting works in the UK. It would be less of an issue with a more "tenant friendly" structure). I just haven't. seen figures that set it out as clearly as that.

Available on the ONS site

They list the number of homes OO/PR/Social

Going into the future is just a projection of the recent past, that may or may not come to pass. But what is clear is that PR have increase from about 10% of the housing stock to about 18-20% today (and growing)

Carl31

So, what will this increase in BTL owned properties, plus the fact people are now living longer (life expectancy now over 100 in some areas) do for OAPs in 10 years time +

If benefits are a problem now, then surely this is only going to get worse?

Graham_Devon

cells wrote: »

Interest rates are so low that mortgage interest is far below rents

Even in London, on the lower end rents are about 2-3x the mortgage on a BTL

So if prices double over say the next 5 years, rents will likely be up 25%, the mortgage will still be cheaper than the rent (assuming mortgage rates are similar)

An OO can get a mortgage rate as low as near 1.5% on a 2 year deal

At the moment. But were discussing 10 years ahead here as per the article.

Typhoon2000

I think the BTLers would have paid off their mortgages in 10yr time.
Any way a third of all homes are being bought without mortgages. We have to accept that that not everyone who aspires to own their own homes is going to be able to in the future, and comparing with the good old days is not realistic. Plenty of more people are going to be renting, so plenty more BTL sales are going to have to happen.