Do migrants push up house prices?

Generali

Bored now CLAPTON.

Enjoy playing with the price fairy.

CLAPTON

Generali wrote: »

Bored now CLAPTON.

Enjoy playing with the price fairy.

fairy enough

I shall continue to believe that the large renting population affects the price of property in London and you can continue to believe that those three million people have no impact.

dktreesea

CLAPTON wrote: »

OK so you are refusing to discuss whether 3 million renters in London affect house prices : I'll let you off on the nonsense
as I will charitably assume you were drinking and now feel a bit embarrassed.

There is a decent amount about how prices are set for 'luxury' or unique goods to be found in the economic literature of even by using one's brains cells.

The 'supply and demand set prices' is true in a limited set of circumstances : usually requiring multiple buyers and multiple sellers is a relatively free market. The classic economic text book often use grain or some undifferentiated products to illustrate the principles how prices converge on a small price range.

High value goods are priced, not according to the competition but rather by where the supplier wants to target their sales and by consideration of how they can maximise their (semi) monopoly position.
They have the luxury of limiting supply but charging a higher price for scarcity value.
Apple prices their computers at a premium as it was a 'unique' product, similarly with their phones/tablets etc

Ticket for cup finals and pop concerts and similar products where supply and demand do not directly determine price.

All this is not to say the the supply and demand and price don't have some interplay.

I know this is a bit complicated but you will be able to find economics tuition blogs on the internet or maybe buy an economics book.

google is your friend.

That's not a bad description of the housing market, i.e. rare, luxury items, in relatively short supply, so demand greater than supply in an ever increasing population situation.


The reason I say your comment is close though is because of government interference, i.e. using the housing benefit as a minimum level of rents, often far in excess of what it would cost interest wise to buy a similar property.


The government seeks to maintain its position of NOT investing in social housing.

HornetSaver

Ugh... I've avoided this debate to try to avoid acknowledging that I more or less agree with CLAPTON. But needs must.

A Ferrari analogy would be relevant to this discussion if tens of thousands of people had no option but to drive around in modern Ferraris, despite not having a hope in hell of ever owning one outright. They don't, thus it isn't.

If anything the appropriate analogy is quite the opposite - millions of cheap cars are floating around in the UK because millions of people require transportation but cannot afford the models they would ideally want. To compare this situation with housing would be to say that people who want to live in a family home but cannot afford even a smaller one should instead think seriously about a tent, or a well sheltered bridge. They can't - they have to live in something whether they own it or not, and whether the financial requirements of putting a roof over their heads are sensible or not.

I'd also question the source of the assertion that the South East and Northern Home Counties (I include them as housing wise they have far more in common with the South East than they do with the majority of Essex, the east Midlands or East Anglia) have seen house prices stagnate or fall in real terms since 2004.

I will give cells some credit here though. His point about the traditionally cheap regions underlines the fact that there is something of an equilibrium in much of the country. The question is, is this equilibrium a good or a bad thing, and would Brexit change it for the better or the worse? A debate that is probably worth a thread of its own.

My two cents: I completely agree that Brexit will reduce the amount of house construction in cheaper areas, and it's an undeniable fact that construction contributes significantly to GDP. But if prices in those regions are "unsustainably low" or "dirt cheap" (direct quotes from cells' viewpoint on those housing markets in the past), why would this be of consequence? If we don't need houses in particular areas, it's difficult to shift the solidly built and low-priced ones already there, and population growth is going to flatline, why the clamour to build more houses in these areas?

It would be a great time for the goverment to get some relatively cheap infrastructural work going whilst the sector starts to wind down to a more sustainable level. In the longer term there would always remain demand for a certain level of construction in the northern regions, some of the work would move southwards and eastwards, and some of the workers would move into the new jobs we are apparently going to create whether or not we retain free movement of labour.

Crashy_Time

http://blogs.spectator.co.uk/2016/05/if-brexit-solves-the-housing-crisis-bring-it-on/

Generali

HornetSaver wrote: »

Ugh... I've avoided this debate to try to avoid acknowledging that I more or less agree with CLAPTON. But needs must.

A Ferrari analogy would be relevant to this discussion if tens of thousands of people had no option but to drive around in modern Ferraris, despite not having a hope in hell of ever owning one outright. They don't, thus it isn't.

If anything the appropriate analogy is quite the opposite - millions of cheap cars are floating around in the UK because millions of people require transportation but cannot afford the models they would ideally want. To compare this situation with housing would be to say that people who want to live in a family home but cannot afford even a smaller one should instead think seriously about a tent, or a well sheltered bridge. They can't - they have to live in something whether they own it or not, and whether the financial requirements of putting a roof over their heads are sensible or not.

I'd also question the source of the assertion that the South East and Northern Home Counties (I include them as housing wise they have far more in common with the South East than they do with the majority of Essex, the east Midlands or East Anglia) have seen house prices stagnate or fall in real terms since 2004.

I will give cells some credit here though. His point about the traditionally cheap regions underlines the fact that there is something of an equilibrium in much of the country. The question is, is this equilibrium a good or a bad thing, and would Brexit change it for the better or the worse? A debate that is probably worth a thread of its own.

My two cents: I completely agree that Brexit will reduce the amount of house construction in cheaper areas, and it's an undeniable fact that construction contributes significantly to GDP. But if prices in those regions are "unsustainably low" or "dirt cheap" (direct quotes from cells' viewpoint on those housing markets in the past), why would this be of consequence? If we don't need houses in particular areas, it's difficult to shift the solidly built and low-priced ones already there, and population growth is going to flatline, why the clamour to build more houses in these areas?

It would be a great time for the goverment to get some relatively cheap infrastructural work going whilst the sector starts to wind down to a more sustainable level. In the longer term there would always remain demand for a certain level of construction in the northern regions, some of the work would move southwards and eastwards, and some of the workers would move into the new jobs we are apparently going to create whether or not we retain free movement of labour.

My final word on Ferraris. I am not using them as an analogy for anything, I merely stated (correctly) that the price of Ferraris is set by supply and demand. Supply is kept low by Ferrari as they are in a quasi-monopolist position and so other people can't come along and increase supply. Demand is also low because people can't afford Ferraris at the current price and demand is defined as being people willing and able to buy at the market price (when discussing demand at the equilibrium price).

The above is a very simple statement of Marshallian supply and demand theory and if anyone wants to disagree with it in any sort of sensible way you have to show why Marshall is wrong. Hicksian demand just underlines what I am saying so really someone would need to demonstrate that economic theory has been wrong on supply and demand for a century and come up with an entirely new theory. There is probably a Nobel Prize for the poster that can.

HornetSaver

Generali wrote: »

My final word on Ferraris. I am not using them as an analogy for anything, I merely stated (correctly) that the price of Ferraris is set by supply and demand. Supply is kept low by Ferrari as they are in a quasi-monopolist position and so other people can't come along and increase supply. Demand is also low because people can't afford Ferraris at the current price and demand is defined as being people willing and able to buy at the market price (when discussing demand at the equilibrium price).

The above is a very simple statement of Marshallian supply and demand theory and if anyone wants to disagree with it in any sort of sensible way you have to show why Marshall is wrong. Hicksian demand just underlines what I am saying so really someone would need to demonstrate that economic theory has been wrong on supply and demand for a century and come up with an entirely new theory. There is probably a Nobel Prize for the poster that can.

We're moving a million miles away from the question of migrants pushing up prices in London and not pushing them up in Stoke-on-Trent here, but in the interests of putting this one to bed I don't see how you could describe the nature of the competition they face from McLaren, Lamborghini etc as putting them in a quasi-monopolistic position (in the same way that say, Google could be said to have a quasi-monopoly over search, or Facebook over what is traditionally viewed as social networking, despite determined competition, because of critical mass and the manner in which they are embedded into other areas of the internet). Ferrari are more an example of highly successful brand differentiation - there are manufacturers offering comparable and highly regarded products above and below Ferrari's price points, but none considered as iconic in red.

Generali

HornetSaver wrote: »

We're moving a million miles away from the question of migrants pushing up prices in London and not pushing them up in Stoke-on-Trent here, but in the interests of putting this one to bed I don't see how you could describe the nature of the competition they face from McLaren, Lamborghini etc as putting them in a quasi-monopolistic position (in the same way that say, Google could be said to have a quasi-monopoly over search, or Facebook over what is traditionally viewed as social networking, despite determined competition, because of critical mass and the manner in which they are embedded into other areas of the internet). Ferrari are more an example of highly successful brand differentiation - there are manufacturers offering comparable and highly regarded products above and below Ferrari's price points, but none considered as iconic in red.

If Ferrari was a price taker they wouldn't have cut supply in 2013:

http://www.reuters.com/article/ferrari-production-idUSL6N0DP36R20130508

Ferrari isn't a monopoly but it has many features of one. Supply of and demand for Ferraris is low.

CLAPTON

Generali wrote: »

My final word on Ferraris. I am not using them as an analogy for anything, I merely stated (correctly) that the price of Ferraris is set by supply and demand. Supply is kept low by Ferrari as they are in a quasi-monopolist position and so other people can't come along and increase supply. Demand is also low because people can't afford Ferraris at the current price and demand is defined as being people willing and able to buy at the market price (when discussing demand at the equilibrium price).

The above is a very simple statement of Marshallian supply and demand theory and if anyone wants to disagree with it in any sort of sensible way you have to show why Marshall is wrong. Hicksian demand just underlines what I am saying so really someone would need to demonstrate that economic theory has been wrong on supply and demand for a century and come up with an entirely new theory. There is probably a Nobel Prize for the poster that can.

the ferrari is an excellent example of price determining demand and hence supply and not one of supply and demand (acting blind) determining price.

chucknorris

I don't think it would look quite right towing a caravan (which we intend to get) with a ferrari, so we will probably stick to getting an S Max next year.