HPI to outstrip pay rises 'for years to come'

HAMISH_MCTAVISH

UK house price inflation to outstrip pay rises 'for years to come'

OBR says only 'historically unprecedented' housebuilding activity can prevent loan-to-income ratios rising year after year

Soaring house prices are likely to outstrip pay rises for at least the next five years ad possibly for decades to come, the government's official forecaster has warned.

The Office for Budget Responsibility said households will have to pay an increasing proportion of their income on mortgage bills to meet higher property values and only a "historically unprecedented" boom in housebuilding would prevent loan-to-income ratios rising year after year.

The OBR, which developed a new method of predicting future price movements by bringing together a range of property value measures, said:"The model implies that house prices will consistently rise faster than income, barring a strong and historically unprecedented response from housing supply, leading to a steady rise in household debt relative to income."

Many academics and City analysts have predicted property price rises above annual earnings increases following a dramatic rise in the population and only moderate increases in the supply of homes.

The OBR said publishing detailed diagnostic tests of historical data would allow policymakers to understand how changes in interest rates and other factors will influence prices over time.

http://www.theguardian.com/business/2014/jul/10/house-price-inflation-to-outstrip-pay-rises-for-years

Oh well.

Thank heavens nobody around here supports policies like mortgage rationing, that are proven to reduce the amount of house building even from current woefully inadequate levels.

I mean, that would just be, well, completely daft...

lukeh23

So honeowners get richer, everyone else gets poorer, and the govenment continue to rig the market. Is this even news?

wymondham

lukeh23 wrote: »

So honeowners get richer, everyone else gets poorer, and the govenment continue to rig the market. Is this even news?

Not news as much as Government policy!

CLAPTON

lukeh23 wrote: »

So honeowners get richer, everyone else gets poorer, and the govenment continue to rig the market. Is this even news?

in way way do house owners (the majority of the UK families) get richer except for the small number of downsizers?

if what way do the others get poorer?

indeed the government and local authorities (labour, Libdem, Green and Tory) continue to restrict new building and continue to load levies and costs the poor new house buyers)

it's not news as such but there is an increasing concern and awareness of the problem so maybe there will be a change in the rules that prevent more houses being built.

molerat

My kids are getting richer (as far as their inheritance is concerned).

HAMISH_MCTAVISH

Amazingly enough, in another thread on this board today we have the usual suspects both complaining about the high house prices caused by a shortage of housing while simultaneously arguing for policies that would reduce the number of houses being built.

The cognitive dissonance is staggering.

shortchanged_2

molerat wrote: »

My kids are getting richer (as far as their inheritance is concerned).

As long as you don't have to go to a nursing home.

CLAPTON

shortchanged wrote: »

As long as you don't have to go to a nursing home.

in which case, the money is recycled to the young even earlier.

shortchanged_2

CLAPTON wrote: »

in which case, the money is recycled to the young even earlier.

What do you mean? To pay for MP's pay rises?

CLAPTON

shortchanged wrote: »

What do you mean? To pay for MP's pay rises?

I mean to pay the carers in the nursing home although presumably some will go to pay your benefits entitlement.

As a matter of record I think MPs are relatively modestly paid.

shortchanged_2

CLAPTON wrote: »

As a matter of record I think MPs are relatively modestly paid.

So do I to be honest but an 11% pay rise when the majority of public sector workers are barely getting 1% is a bit hypocritical don't you think.

After all who are the ones preaching about the need for pay restraint.