Actual benefit of rising prices - a bulls view

westernpromise

Crashy_Time wrote: »

Are you enjoying the HPC on your doorstep Hamish, or still pretending that a certain website is always wrong......:rotfl:

Has it got to 130% down yet?

GreatApe

London is not expensive to Londoners

London seems expensive because its prices went up the most over the last 20 years. There are many reasons for thus but it's clear that the prices of 1995 London were unsustainable low. A 120 sqm three floor terrace home in hackney could be had for £100k the same home now is closer to the £1 million mark

People argue that the £1m is ridiculous but I would argue the £100k was ridiculous. £100k even in 1995 money would not have been enough to buy the materials and labor to build said house in 1995. Plenty of flats were sold in hackney during that time for the £20k-£30k mark. You probably could not have bought the materials for that price showing prices were below cost.

GreatApe

London has 11.5% of the private homes but 22% of the GVA. Prices should be double the average of the other regions (which includes the SE).

Actually the prices should be even more than double the average of the other regions as the purchasing power parity figures would be more in favor of London. If you earn three times as much in London than in wales yet the price of water electricity food fuel medicine council-tax TV mobile etc is roughly the same then your income post necessities in London will be a lot more than the 3x net income difference.


Someone earning 12k post tax might be able to buy a lower end house in a cheap part of wales on a 4x gross income basis.

Another person on £30k post tax in the SE would find it a lot easier to buy on 4x gross income because both people might have necessity costs of £10k per year.

The guy in wales only has £2k income post necessities while the guy in the SE has £20k income post necessities.

This is why a simple income to house price ratio doesn't work. Its also why you can't compare 20 years ago to now on a simple income to house price ratio.

Do the comparison of income post taxes and necessities vs house prices and the line will fit better

Windofchange

Ok, so the feeling is that prices are where they should be as set by supply and demand? Fine, if that is the conclusion I have no interest in a heated argument over the future - I don't get the anger on here. I'm not trying to push any agenda, as mentioned so many times, I am a home owner so if anything I should want HPI forever hey?

I have not been convinced that we shouldn't have been doing a hell of a lot more to sort this out. Whether it is as simple as building a million homes, or whether it is shutting down BTL sooner, curbing foreign investment, I don't know. There is surely no denying that a lot of people have benefitted incredibly from the last 20 years and are saddling a new generation of adults with the hangover. Yes cycles have always existed in housing, but this has been a heck of a party and there is going to be a heck of a hangover sometime in the short to middle term in my opinion.

The way it is at the moment it makes no sense for anyone not getting out. If we want the next step of the ladder we are looking at £1.5 million for a mid sized terraced house with small garden. We're stuck where we are then unless we move out of London which the Mrs won't do.

economic

Windofchange wrote: »

Ok, so the feeling is that prices are where they should be as set by supply and demand? Fine, if that is the conclusion I have no interest in a heated argument over the future - I don't get the anger on here. I'm not trying to push any agenda, as mentioned so many times, I am a home owner so if anything I should want HPI forever hey?

I have not been convinced that we shouldn't have been doing a hell of a lot more to sort this out. Whether it is as simple as building a million homes, or whether it is shutting down BTL sooner, curbing foreign investment, I don't know. There is surely no denying that a lot of people have benefitted incredibly from the last 20 years and are saddling a new generation of adults with the hangover. Yes cycles have always existed in housing, but this has been a heck of a party and there is going to be a heck of a hangover sometime in the short to middle term in my opinion.

The way it is at the moment it makes no sense for anyone not getting out. If we want the next step of the ladder we are looking at £1.5 million for a mid sized terraced house with small garden. We're stuck where we are then unless we move out of London which the Mrs won't do.

rather then complaining about house prices, maybe use that time to develop new skills to enable you to earn more so that you can afford that £1.5m terrace house with a small garden?

Duh!!

Jack_Johnson_the_acorn

Windofchange wrote: »

Ok, so the feeling is that prices are where they should be as set by supply and demand? Fine, if that is the conclusion I have no interest in a heated argument over the future - I don't get the anger on here. I'm not trying to push any agenda, as mentioned so many times, I am a home owner so if anything I should want HPI forever hey?

I have not been convinced that we shouldn't have been doing a hell of a lot more to sort this out. Whether it is as simple as building a million homes, or whether it is shutting down BTL sooner, curbing foreign investment, I don't know. There is surely no denying that a lot of people have benefitted incredibly from the last 20 years and are saddling a new generation of adults with the hangover. Yes cycles have always existed in housing, but this has been a heck of a party and there is going to be a heck of a hangover sometime in the short to middle term in my opinion.

The way it is at the moment it makes no sense for anyone not getting out. If we want the next step of the ladder we are looking at £1.5 million for a mid sized terraced house with small garden. We're stuck where we are then unless we move out of London which the Mrs won't do.

You really are not understanding anything that's been posted.
Many of us are homeowners, nobody has posted that they want HPI forever.
Maybe it is best that that you go back to HPC and read what you want to read rather than seeing alternative opinions.

HAMISH_MCTAVISH

Windofchange wrote: »

Ok, so the feeling is that prices are where they should be as set by supply and demand?

That's not 'the feeling' - it's a fundamental principle of economics.

Prices are determined by supply and demand. There is nothing else.

I have not been convinced that we shouldn't have been doing a hell of a lot more to sort this out.

Yes of course we should.

Britain hasn't built the number of houses we need in even a single year for the last few decades.

That is little short of a national disgrace.

Whether it is as simple as building a million homes, or whether it is shutting down BTL sooner, curbing foreign investment, I don't know. There is surely no denying that a lot of people have benefitted incredibly from the last 20 years and are saddling a new generation of adults with the hangover. Yes cycles have always existed in housing, but this has been a heck of a party and there is going to be a heck of a hangover sometime in the short to middle term in my opinion.

You can end that list at 'build more houses'.

Because it really is that simple.

And nothing else will work.

The way it is at the moment it makes no sense for anyone not getting out. If we want the next step of the ladder we are looking at £1.5 million for a mid sized terraced house with small garden. We're stuck where we are then unless we move out of London which the Mrs won't do.

And back to the first point....

That's the market working exactly as it's supposed to do - rationing scarce goods through price - you cannot afford to buy a £1.5m house - but clearly enough people can that the price of those houses are £1.5m in the area you want to buy in.

In order for those prices to fall significantly and sustainably for the long term then either there needs to be a really big cut in demand - an asteroid strike, plague, or Zombie outbreak should do the trick, as there would be vastly fewer people able to buy houses - or society needs to just get on and build a lot more houses for people to buy....

System

Windofchange wrote: »

I am a home owner

How? Did you get given it?

Sorry, might seem a bit rude but in the 2 years you've been posting here all you've done is go an extra £300 in debt but somehow gained a property. Something isn't adding up.

westernpromise

Windofchange wrote: »

it is as simple as building a million homes

In what way is building a million homes simple?

a lot of people have benefitted incredibly from the last 20 years and are saddling a new generation of adults with the hangover

You are still getting it exactly backwards. The people who have "benefited" (if they have, which is highly doubtful - owners have one house and live in it no matter what its value) have done so because the new generation has bid their houses up in price. They're the cause, not the victims, of house price inflation, in that small part of the country where there's been any.

If we want the next step of the ladder we are looking at £1.5 million for a mid sized terraced house with small garden.

Then stop looking in central London and start looking in Zone 3.

CLAPTON

Windofchange wrote: »

Ok, so the feeling is that prices are where they should be as set by supply and demand?

prices in a reasonably free market, are indeed set by the interplay of supply and demand.
this is NOT an fundamantal law of nature but simply an observation about how ordinary, decent people decide at what price they are prepared to pay for a product and what they are willing to receive when selling. I would guess that's exactly what you did when you bought and will do when you sell.

However, the rule/law hides the issues of what sets the demand and what sets the supply.

Clearly for property, the number of people wanting to live in the area is an important parameter and of course their ability to raise the necesary finance:
so in London, the number of immigrants is a very important factor in demand and so is the banking regulation that is a factor in supply of mortgages
On the supply side, the planning regulations and taxes have a major impact on the supply of new property.
The role of social housing is also a significant factor in both the supply and demand.

It's interesting that the Major of London has initiated a study of housing provision in London although I don't know when its likely to emerge, but hopefully it will tell us some of the real facts about ownership, about usage, about newbuilds, about hoarding.