Asking prices up 3% in a month according to June rightmove report ...

cells

Generali wrote: »

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.

sounds like madness

is it a case that the limited number plates mean the taxi drivers there make lots of money or just that they are so confident in a resale at the price they paid or higher that they don't see it as a risk

Generali

cells wrote: »

sounds like madness

is it a case that the limited number plates mean the taxi drivers there make lots of money or just that they are so confident in a resale at the price they paid or higher that they don't see it as a risk

It's a classic example of rent seeking.

People (sometimes companies sometimes individuals) buy the taxi plates as an investment. IIRC the system was set up in the 1930s and some taxi plates have been in families for generations.

The number of tax plates is limited by the state (NSW in this case) and before Uber got here, they sold for upwards of $400,000. Uber has dented the market for the plates.

The plates are issued periodically in tranches when the NSW Government deems it judicious to do so.

There is a similar market in NSW for a licence for a 'pokie machine' (our equivalent of a fruit machine). It's harder to gauge the price of a pokie licence as normally they come associated with a pub licence.

Before the Olympics in 2000, Sydney pub owners were buying up community, rural pubs just to strip them of their pokie licences before shutting them down. I think the licences are now geographically limited making any comparison harder still so a licence from a pub on the Central Coast could only be used in a Central Coast venue.

mwpt

HAMISH_MCTAVISH wrote: »

The imbalance between supply and demand is the primary factor in house prices.

That is certainly true. If we could build unlimited houses or invent teleportation then prices would be a fraction of what they are.

What is eluding me is why you would say it is the only factor. Do you assert that if mortgage rates had never dropped and were still at 6% prices would still be the same as they are currently?

Generali

mwpt wrote: »

That is certainly true. If we could build unlimited houses or invent teleportation then prices would be a fraction of what they are.

What is eluding me is why you would say it is the only factor. Do you assert that if mortgage rates had never dropped and were still at 6% prices would still be the same as they are currently?

Isn't finance just a function of demand? If the Government was to ban mortgages tomorrow it's likely house prices would fall as people wouldn't be able to raise the funds to bid up prices.

What people are prepared for a house must be limited by the funds available.

Graham_Devon

Generali wrote: »

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.

I'd argue here that the policy has more effect here than anything else.

They isn't really an issue per se with supply, theres loads of it around Cuba, rather theres an issue with policy for that country.

Policy has created the supply shortage. Much the same as with houses in this country.

Hence why I say it's not all about supply and demand and nothing more. Policy has an effect too, as do many things.

I can see the argument Hamish is making. He's wrapping everything up into supply and demand. He's not particularly wrong. It's like taking every type of food from all around the world, every type of cooking etc and saying "energy is all there is". Correct, but extremeley argumentative.

Graham_Devon

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.

You are right when you look soley at the last couple of decades.

But go further back than that. Go back to a time when credit wasn't as available and you'll find that house building was much higher.

Infact, the last couple of decades which you show us are uniquely also the same couple of decades when credit became much looser. Yet we built far less houses than we ever had done in the past.



You know the saying, you can do anything with statistics.....

We can clearly see that supply over the last 60 years has not been solely credit driven.

Policy was the biggest factor in supply (as with the Cuban cars scenario). Credit was a tiny factor, until the timeframe you have decided to outline.

HAMISH_MCTAVISH

mwpt wrote: »

That is certainly true. If we could build unlimited houses or invent teleportation then prices would be a fraction of what they are.

Exactly.

What is eluding me is why you would say it is the only factor.

Because it is.

The availability and price of credit are just components of effective demand.

Do you assert that if mortgage rates had never dropped and were still at 6% prices would still be the same as they are currently?

That's a different argument, whether effective demand would be as high or even higher as it is today had the price of credit not fallen, but I'll be a bit controversial here and say I think demand would have remained high and prices would not have fallen, and indeed may well have risen.

Under MMR banks are already stress testing the affordability of payments up to mortgage rates of around 7%.

In order to assume a world where base rates had not fallen, then you also need to assume a world where there had not been a global financial crisis, and therefore also a world without the significant negative impact to the UK economy and UK mortgage lending of the GFC.

And in that world mortgage rates of 6%, lower than the 7% they are being stress tested to today for affordability, should not be a problem.

HAMISH_MCTAVISH

graham_devon wrote: »

i can see the argument hamish is making. He's wrapping everything up into supply and demand. He's not particularly wrong. .

For once I can't argue with that.

wotsthat

Graham_Devon wrote: »

But go further back than that. Go back to a time when credit wasn't as available and you'll find that house building was much higher.

The credit was there but looks like it was being borrowed by the state/ taxpayer rather than home owners.

mwpt

HAMISH_MCTAVISH wrote: »

Exactly.
In order to assume a world where base rates had not fallen, then you also need to assume a world where there had not been a global financial crisis, and therefore also a world without the significant negative impact to the UK economy and UK mortgage lending of the GFC.

And in that world mortgage rates of 6%, lower than the 7% they are being stress tested to today for affordability, should not be a problem.

No, that is a straw man. In a hypothetical argument we don't have to assume any such thing. We are purely examining what the cost of credit doe to prices all other things being equal (because I'm challenging your assertion that supply/demand is the only factor).

We could build our model with the assumption that houses are built at a rate of X which matches population increase such that demand doesn't continue grow in excess of supply. Interest rates are 10%. In our model, we keep all other factors the same but overnight we lower interest rates to 1%. Prices will soar.