Radio 4: Bricks and Bubbles

HAMISH_MCTAVISH

In_For_A_Penny wrote: »

borrowing huge sums of money.

over-stretching oneself for the sake of a mortgage

But people are not doing this now...

The average FTB borrows less than 3.5 times income.

The average second stepper borrows less than 3 times income.

Quite clearly people are not over stretching themselves, on average.

Thrugelmir

In_For_A_Penny wrote: »

Do you not think market sentiment has a role to play? At the moment the general consensus seems to be that HPI will continue making people more at ease with borrowing huge sums of money.

Chasing fool's gold. More money than sense.........

In_For_A_Penny_2

Thrugelmir wrote: »

Chasing fool's gold. More money than sense.........

I tend to agree though still I'm not sure where this is going.

Anecdotes aren’t particularly useful on here but I distinctly remember coming out of college in 2005 and friends going crazy to get their hands on property – you “had to get on the ladder” in case you “missed the boat” and could never buy.

Groups of friends all chipped together to buy overpriced houses in poor areas simply out of panic. Then of course prices crashed by 50% and they are still stuck 10 years later with a house they don’t live in, don’t want and can’t sell. Ok so that was N.Ireland and it was greed/panic (same thing really) and speculative buying for many.

Of course people will say “it can’t happen here” and indeed, the inflationary pressures may be different in Britain but I suspect many people are buying houses now for all the wrong reasons and the conditions now feel very similar to N.Ireland 10 years ago. The rest of the UK hasn’t experienced a crash on that level but as a result have been very insulated from the real pain a crash can cause.

The fact people are bidding for houses on bits of paper at the front door on the way out of an open viewing with dozens of other people, for me, presents all the same warning signs.

lukeh23

In_For_A_Penny wrote: »

The fact people are bidding for houses on bits of paper at the front door on the way out of an open viewing with dozens of other people, for me, presents all the same warning signs.

In the south-west no less, just goes to show the insanity is not just consigned to London.

Thrugelmir

In_For_A_Penny wrote: »

I tend to agree though still I'm not sure where this is going.

Ultimately a correction. At the end of the day property prices will track the real economy.

HAMISH_MCTAVISH

In_For_A_Penny wrote: »

Ok so that was N.Ireland and it was greed/panic (same thing really) and speculative buying for many.

Of course people will say “it can’t happen here” .

It could easily happen here.

Feel free to revisit that theory when/if prices double in a little over a year as they did in NI.

lukeh23

Part 2:

http://www.bbc.co.uk/programmes/b04d0j0v

HAMISH_MCTAVISH

Good show, explains clearly the problem....

"Between 1936 and 1984 London's population was declining rapidly, the problem was depopulation and what you were going to do with all the empty buildings and space."

Since the mid 80's a reversal in the population and a promotion to the premier league of global cities has changed things....

In 1981 the London population was 6.6 million.

It's 8.4 million today.....

What did you expect would happen to London prices when you raise London population by nearly 2 million people and build nowhere near enough houses?

sennypijama

HAMISH_MCTAVISH wrote: »

Yes....

A bit of a misleading graph, since it doesn't take into account household size.

I doubt an immigrant arriving with his wife and three children will need 5 houses.

CLAPTON

sennypijama wrote: »

A bit of a misleading graph, since it doesn't take into account household size.

I doubt an immigrant arriving with his wife and three children will need 5 houses.

indeed so


but in general, with the higher the population growth would you expect house building growth to increase or decrease?