Is property in a bubble?

economic

GreatApe wrote: »

I don't think capital is being horded rather massive amounts of capital is being created.

If we take residential housing its possibly the worlds largest stock of capital.
Something close to 50 million new homes are being built each year

If we set a global average price of $100,000 a property that is $5 trillion being created annually just on housing! The world really is improving very rapidly

The future is going to be great

But is it really being created? Land has a cost and materials to built the home has a cost too. These already existed so was already part of the worlds stock of capital. We are merely just combining the two to create homes. The difference is where the wealth is created.

AG47

Rents and house prices are still falling in real terms.

With interest rates about to go up, the falls are going to accelerate a lot

chucknorris

AG47 wrote: »

Rents and house prices are still falling in real terms.

With interest rates about to go up, the falls are going to accelerate a lot

Has your glass always been half empty?

westernpromise

AG47 wrote: »

Rents and house prices are still falling in real terms.

With interest rates about to go up, the falls are going to accelerate a lot

...spun the short, hopefully.

GreatApe

Outside the south east homes are not unreasonably priced. However even in those locations many politicians media types and even the general public think there is a problem.

I think there is some truth to this but its not price but size and quality.
The stock of homes in the UK are not very good we have homes that are too small for families.

This sounds odd because people think if prices go down then they personally can afford a bigger house so the problem goes away if prices fall. However the fundamental fact is that even if prices fall 99% people are no better housed we still have the same exact number of homes and people before and after a 99% crash. So a house price crash doesn't solve the problem of people wanting larger better quality homes.

So what is the solution?
I think we need to have almost all our new builds go toward the higher end larger homes and flats.
If the government made it so the smallest new build house was 100sqm I think that would begin to address the problem.

We don't need more small homes we have plenty already.

GreatApe

Housing is perhaps the only sector of the economy which has not gotten more productive but has become less productive over the last 5-10 decades. Some of it has to do with regulations but a lot of it has to do with the way homes are built.

You can't really automate it.
Even the people working on 3D House printers etc are wasting their time.
Sure you might save 2000 man hours if the printer builds the home but if you spend 2000 man hours delivering setting up dismantling and moving your house sized 3D printer you saved 2,000 man hours on the home but spent 2,000 man hours on the printer so no gain at all.

The world needs a way to build high quality homes in a highly automated way.
Factory built and delivered modular homes might be one solution.
Another solution is much higher volume on one site.

Its a difficult problem and all the ways to address it will !!!! off a not of people

economic

Perhaps the only thing that will cost in the future is housing? If every other sector is becoming more productive and eventually fully autonomous, then housing is the only sector left where it will have a price to own the product.

buggy_boy

GreatApe wrote: »

Housing is perhaps the only sector of the economy which has not gotten more productive but has become less productive over the last 5-10 decades. Some of it has to do with regulations but a lot of it has to do with the way homes are built.

You can't really automate it.
Even the people working on 3D House printers etc are wasting their time.
Sure you might save 2000 man hours if the printer builds the home but if you spend 2000 man hours delivering setting up dismantling and moving your house sized 3D printer you saved 2,000 man hours on the home but spent 2,000 man hours on the printer so no gain at all.

The world needs a way to build high quality homes in a highly automated way.
Factory built and delivered modular homes might be one solution.
Another solution is much higher volume on one site.

Its a difficult problem and all the ways to address it will !!!! off a not of people

I would contest this, what about all the power tools we now use, nail guns, drills, cement mixers... Things like push fit connectors for pipes and more recently wago connectors in electric... Pre-made roof struts.. Machines for laying roads, diggers etc etc... We are always innovating and improving productivity. You will likely never fully automate house building unless you want to live in a park home, this adds a big problem about how long the property would last..

GreatApe

buggy_boy wrote: »

I would contest this, what about all the power tools we now use, nail guns, drills, cement mixers... Things like push fit connectors for pipes and more recently wago connectors in electric... Pre-made roof struts.. Machines for laying roads, diggers etc etc... We are always innovating and improving productivity. You will likely never fully automate house building unless you want to live in a park home, this adds a big problem about how long the property would last..

Yes there have been small improvements but those have been offset by additional burdens and costs. For instance a modern home needs foundations that are deeper and thicker than most Victorian homes were built with. That adds to labor and material costs.

Likewise a dual brick with insulation wall is going to be more costly and take more labor than a double brick solid wall.

Also bear in mind that the cost of human labor in real terms is a lot higher today than it was fifty years ago. Thus means even if it takes exactly the same number of man days to build a home you are now less productive as each man day costs more.

There must be ways to make things much more productive. Mass production doesn't mean lower quality it can mean much higher quality.

GreatApe

economic wrote: »

Perhaps the only thing that will cost in the future is housing? If every other sector is becoming more productive and eventually fully autonomous, then housing is the only sector left where it will have a price to own the product.

In the short term I do not see any productivity gains in UK house building.

In some countries like China or Turkey where the norm are high rise flats that can become very productive. Just mass produce in modular form in factories and crane on site.

For the UK there is no easy solution to cut down on labor.
Lots of people have invested lots of money in large 3D printers or robotic arms etc to build homes with less human labor. The problem is even if you could make a robotic system which builds the whole thing for you the cost of shipping it and assembling it and disassembling it means you just shifted from labor to build the house to labor to build and move and unbuild the machine. So that doesn't seem to be a way to do it

I think there is a solution and its what the frackers in the USA do. They build rigs which 'walk'
I think that could work if I had £10million I'd give it a go.
You need a large (10 meter by 10 meter by 10 meter) robotics platform.
Robot arms are amazing and computer vision is now getting very good.
I'm sure such a system could build a house highly automated.
The trick is going to be making this machine moveable so you don't have to dissemble it and reassembled it for each property. That way if you have a site with say one hundred homes to be built this robot could do all the labor and also do the work much more rapidly than humans. You could have twenty robotic arms working on a house and completing it in a single day

There are other techniques which could help make housing a lot more productive. For instance roofs should go to textured printed toughened glass. Virtually infinite life and doesn't rust or rot or break and costs are so low that we throw glass away in drink bottles.. Sheets of that stuff would be a lot more productive than a man bailing slates or tiles.

I wonder how easy it would be to raise funds for a venture like this?
It would probably take 5 iterations and £10 million and 3-5 years but a highly automated house building platform isn't beyond the realms of possibility. Its not going to come from the house builders. They don't do software or even robotics.