We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
Debate House Prices
In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non MoneySaving matters are no longer permitted. This includes wider debates about general house prices, the economy and politics. As a result, we have taken the decision to keep this board permanently closed, but it remains viewable for users who may find some useful information in it. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Asking prices up 3% in a month according to June rightmove report ...
Comments
-
Oh yes, well, obviously supply. I did say in the very first point in my post that supply/demand is a factor. I can stress that it's a huge factor if that helps?
The imbalance between supply and demand is the primary factor in house prices.
The cost of credit can play a role at the margins, but in the absence of that supply/demand imbalance to begin with, would play no role at all.I'm not sure why this is controversial? If mortgage rates dropped to 0.5% house prices would increase accordingly.
I'd argue the mechanism in place is more to do with the availability of credit converting need into effective demand - which then only raises prices if a shortage exists. The price of credit will not increase the price of assets absent a shortage of those assets to begin with.
If the price of credit fell to zero but overnight you could wave a magic wand and double the number of houses in Britain, the price of houses would plummet regardless...“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 -
Graham_Devon wrote: »You seem to infer that supply is the only reason that cars become cheaper.
Which is, of course, absolute nonsense.
Like others are stating....it's part of the reason. Not the sole reason. Supply and demand is not all there is.
Car's depriciate naturally as they become older.
No matter of tight supply can turn a £200 scrap metal value knacker of a car needing welding and a new engine etc into a £2k asset.
Actually if you look at the car market in Castro's Cuba that's exactly what happened.
The only cars available for most people were pre-revolutionary models so they held their value.0 -
Graham_Devon wrote: »Car's depriciate naturally as they become older, more untrustworthy, more problematic and need new replacement parts such.
No matter of tight supply can turn a £200 scrap metal value knacker of a car needing welding and a new engine etc into a £2k asset.
And yet, where a shortage of supply does exist with used cars, prices do indeed rise very significantly.
People pay very large amounts of money for many old cars with "tight supply", and in many cases they are indeed a "knacker of a car needing welding and a new engine etc"....
Supply and demand is always, always, always the only factor that sets a market price.
There really is nothing else.
Your problem is that you don't understand the difference between 'need', 'want' and 'effective demand'.
“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 -
HAMISH_MCTAVISH wrote: »Not that I expect a serious answer but perhaps you'd care to enlighten us as to why credit, almost uniquely, drives up the price of used houses while it does not drive up the price of items where there is no shortage of supply?
used cars are not an asset with a yield.
houses, bonds, shares etc are
So if the prevailing interest rate, determined by a whole lot of things, goes down you will have the assets increase in price.
This is normally a good thing as higher asset prices would lead to more of these assets being built but in the UK supply of buildings is not price determined by quota determined and as such higher prices do not lead to more supply.
i have asked you this probably 10x now but you never answer as it flies in the face of your "builders wont build what they cant sell and we need more mortgages to fix that" theory
Q: Why are build rates in the various councils so different?
Why is it somewhere like Telford with very low prices can build, per capita, many many more homes than somewhere like Waltham forest with much higher prices.
Its the same country same mortgage market same building methods and same regulations yet one has sufficient supply while the other doesn't
quotas determine the UK market far more than prices/mortgages.
In a more free building countries you would be right, turkey went from difficult to obtain mortgages to easy-er mortgages and the build rate jumped from the 400k a year mark to the 800k a year mark.0 -
HAMISH_MCTAVISH wrote: »Supply and demand is always, always, always the only factor that sets a market price.
sure but the one thing you are loath to see is that supply in the UK is almost solely determined by quotas than anything else
So when your critics say that easy lending drives prices up you really should say...ok yes it does
there are indeed more free markets where supply is not quota driven but price/mortgage driven but the UK is not one of them0 -
quotas determine the UK market far more than prices/mortgages.
There are only 4 years in the last couple of decades where UK supply has even begun to approach realistic levels in comparison to housing need.
2004, 2005, 2006 and 2007.
It's no coincidence that these were also the years where credit availability was highest.In a more free building countries you would be right, turkey went from difficult to obtain mortgages to easy-er mortgages and the build rate jumped from the 400k a year mark to the 800k a year mark.
Sure, issue more planning permissions if you like, we absolutely need more houses so it can't hurt.
But in the absence of greater availability of mortgages and developer funding, no more houses will get built.“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 -
A bit more on the car thing:
http://www.businessinsider.com/cuba-opens-up-car-sales-to-the-public-for-the-first-time-in-decades-2014-7?IR=TA price list hanging on the green chain-link fence hints at why: $85,000 for a 6-year-old Peugeot compact; $46,000 for a tiny 2008 Citroen C3 hatchback that would cost less than a third of that in Europe. Elsewhere, a larger, new Peugeot 508 lists for $262,000, five times its price in Britain — and more than a millennium worth of paychecks in Cuba, where wages average about $20 a month.0 -
Graham_Devon wrote: »You seem to infer that supply is the only reason that cars become cheaper.
Which is, of course, absolute nonsense.
Like others are stating....it's part of the reason. Not the sole reason. Supply and demand is not all there is.
Car's depriciate naturally as they become older, more untrustworthy, more problematic and need new replacement parts such.
No matter of tight supply can turn a £200 scrap metal value knacker of a car needing welding and a new engine etc into a £2k asset.
As for your houses, supply and demand is not all there is. That's why you have a housing shortage and at the same time, houses which people cannot get rid of - not even for a quid. They need so much money spent on them it's not worth it. This type of scenario are the other factors - the factors you are impying don't exist.
By your theory, those houses people are selling for a quid would be worth far more. Tight supply would see them bought up at ever increasing prices. The total opposite is happening.
Another example. Remove housing benefit from the market tonight. What's going to happen next month when thouse hundreds of thousands cannot pay the rent? Demand is still the same. Supply is still the same. However, prices would plummet.
in Singapore they have a limited quota system for cars and you need to bid for a licence which can cost over $100,000
limited supply has driven the price of a licence from effectively close to $0 to $100,0000 -
in Singapore they have a limited quota system for cars and you need to bid for a licence which can cost over $100,000
limited supply has driven the price of a licence from effectively close to $0 to $100,000
In Sydney you need a special number plate to be a taxi. These have come down in price a bit since Uber got going over here. This guy will probably get about 10% less than his asking price:
http://www.gumtree.com.au/s-ad/sydney-city/business-for-sale/sydney-taxi-plate-unrestricted/1078538355
So over AU$300,000 for a number plate that happens to start with a T. Oh and which allows you to charge for driving people around Sydney.0 -
HAMISH_MCTAVISH wrote: »There are only 4 years in the last couple of decades where UK supply has even begun to approach realistic levels in comparison to housing need.
2004, 2005, 2006 and 2007.
It's no coincidence that these were also the years where credit availability was highest.
Sure, issue more planning permissions if you like, we absolutely need more houses so it can't hurt.
But in the absence of greater availability of mortgages and developer funding, no more houses will get built.
how are some areas of the UK building a lot more than other areas of the UK sometimes by upto 4x more than the average?0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 351.3K Banking & Borrowing
- 253.2K Reduce Debt & Boost Income
- 453.8K Spending & Discounts
- 244.3K Work, Benefits & Business
- 599.5K Mortgages, Homes & Bills
- 177.1K Life & Family
- 257.8K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.2K Discuss & Feedback
- 37.6K Read-Only Boards