"Housing Market Slumps"

zagubov

GreatApe wrote: »

I recall reading somewhere that the UK was apparently the EU capital of refurbihment and extensions. I cant seem to find it on gogole. It seemed to make sense we had some of the lowest new builds per capita so the population were extending/improving more per capita

It is probably a part of our productivity problem.

Wouldn't surprise me at all, certainly here in London and the South-East. It's a sad indictment of our so-called housing market that we buy inadequately sized starter homes that we then have to extend to make them liveable, when much of the rest of Europe builds houses or flats that are big enough to live in from the very start, and to be comfortable in.

This catastrophic need to get on the housing ladder as early as possible down here means there's a market for inadequate run-down housing that people in the rest of the UK would turn up their noses, and quite rightly.

And the idea that we're all wealthy because we can sell our houses for inflated prices is really a sign that our housing is overpriced for what you get. It's a bit like the idea that in the 1980s the Japanese Imperial Palace was worth more than all the real estate in California.

fatbeetle

BikingBud wrote: »

No i just find it bizarre that everybody was over the moon when they boasted about the "great" increases in their house prices. Yet we are now complaining that they are unaffordable.

Perhaps you're confusing or mixing up two distinct groups of people there.

ukcarper

BikingBud wrote: »

Is the value or worth of a house the same thing? Different people in different circumstances will set them differently. When buying a house you are likely to have to pay more than you value it at and very much more than you would value it for insurance replacement purposes.

When selling a house you would like to think it is worth more than the buyer would like to spend, the fact that fear has allowed the sellers to continue to exploit the situation has exacerbated the size of the National debt.

IT doesn't matter what you value it at its what the person who buys it values it at. Sellers can value a house at what they like but if no one is prepared to pay that it won't sell. Sellers are exploiting nothing most sellers buy another property so in fact buyer and sellers are the same people.

House insurance is the rebuild cost not the value of the house.

ukcarper

Windofchange wrote: »

I think this one runs far deeper than supply and demand. Ok, you can argue that for London in that people want to be in London for a variety of reasons, but why are people able to create the demand? As I have said on a previous thread, there is not a shortage of housing in London. I could if I had the money go out tomorrow and have my choice of thousands of empty flats up and down the Thames. There is a shortage of affordable housing in London.

What is it that facilitates the demand? If you stripped away schemes such as help to buy, started penalising buy to letters (happening already) and put interest rates up then people wouldn't be able to borrow the sums of money they need to buy in London. I think this is what we are starting to see as areas of the country outside of London are starting to outstrip the capital for month on month growth. People are giving up or getting out whilst they are ahead. I know of people in their 20's who have 'brought' 550k flats in the capital with the help of BOMAD and the government. This is skewing demand as it is external factors facilitating the bubble, and it is most definitely a bubble. Why have BOMAD got a spare million? Because their house has gone up 2000% since they brought it.

It is being done for a reason. The bank of England and by extension the government know they are trapped. The minute interest rates start climbing the whole pack of cards will come tumbling down. It is a case of kicking the can far enough up the street that it doesn't happen on their watch and some other schmuck can take the fall. They had the chance to let it all correct in 2007 but chose to intervene, and we are now in my opinion in even more of a mess because of it.

So yes, you can say supply and demand, but what is it driving the demand? It is emergency interest rates for the best part of a decade and easy cheap credit which allows everyone from your cleaner to Tony Blair to build a property empire. Unsecured debt is going through the roof alongside all this. We truly are !!!!ed.

Yes if you had the money you could go out and buy a house, but that is because the limited supply is rationed by price.

As you say many things can effect demand and help to buy might have had some effect but I doubt it's that significant.

I don't think the amount you can borrow has increased since the crash so how are these people borrowing more.

I do think prices are to high but looking for conspiracies will not help. If there is one house for sale the house will go to the person prepared to pay the most, if there are 2 houses for sale and one buyer the owner prepared to accept the lowest price will sell. The problem is the lack of building over the last 20 years and that most of the demand is centered on London and South East.

Windofchange

I see the argument that it is supply and demand, and I could concede that of course that has to ultimately underpin transactions. I just think it is too simplistic given what housing in the SE at least has become. It's an end product of a London centric economy. All the high paying jobs, all the finance industry, all the wealth bar pockets scattered around the country has come to London. This is true on an international scale too where investors and dirty money has piled in to find a safe haven. It has resulted in a property market that just doesn't work for the middle income masses - the teachers, nurses, doctors etc. It has been actively encouraged too - look to the likes of singapore, hong kong etc and the countless property fairs.

I don't know if conspiracy is the right word, but I think surely you have to agree that there has been a concerted effort to keep things bubbling along in the SE? Take help to buy for instance. Why did the government increase this to 40% from 20% in London if they didn't realise there was a problem and that they needed to act to further 'assist' young buyers? This is an example of what I am talking about. Instead of letting demand fall due to somewhere being unaffordable, the powers that be have chosen to further inflate the problem. They just will not let the market set a price.

Put it this way, can the majority of middle income earners in London afford a starter home (500k, 1 bed flat)? I would put it to you the answer is no. Therefore there has to be if not a conspiracy at the very least an admission of tampering.

Do you believe London and parts of the SE are in bubble territory or is this a healthy market?

westernpromise

Why would a middle income earner buy a starter home?

The average home owner has 45% equity in their property. A middle income earner buying a 500k house would be doing so with a 275k mortgage, and if it's a house, that's two middle incomes to pay for it with, not one. I blame those pesky women.

500k starter homes go to people on 50k graduate starting salaries.

ukcarper

Windofchange wrote: »

I see the argument that it is supply and demand, and I could concede that of course that has to ultimately underpin transactions. I just think it is too simplistic given what housing in the SE at least has become. It's an end product of a London centric economy. All the high paying jobs, all the finance industry, all the wealth bar pockets scattered around the country has come to London. This is true on an international scale too where investors and dirty money has piled in to find a safe haven. It has resulted in a property market that just doesn't work for the middle income masses - the teachers, nurses, doctors etc. It has been actively encouraged too - look to the likes of singapore, hong kong etc and the countless property fairs.

I don't know if conspiracy is the right word, but I think surely you have to agree that there has been a concerted effort to keep things bubbling along in the SE? Take help to buy for instance. Why did the government increase this to 40% from 20% in London if they didn't realise there was a problem and that they needed to act to further 'assist' young buyers? This is an example of what I am talking about. Instead of letting demand fall due to somewhere being unaffordable, the powers that be have chosen to further inflate the problem. They just will not let the market set a price.

Put it this way, can the majority of middle income earners in London afford a starter home (500k, 1 bed flat)? I would put it to you the answer is no. Therefore there has to be if not a conspiracy at the very least an admission of tampering.

Do you believe London and parts of the SE are in bubble territory or is this a healthy market?

I don't think there is an effort to make prices bubble along as you put it. I believe that measures put in place to help prevent an recession have contributed to prices not falling. I don't think HTB has had a big effect in London. The take up of HTB in London is much lower in London compared to the rest of the country 1 in 10 in London copared to 1 in 3 in the rest of country.

Also I don't think London is in a bubble, London property has become to expensive for a lot of people living there, but unless demand falls dramatically I don't see that changing.

Filo25

Windofchange wrote: »

I see the argument that it is supply and demand, and I could concede that of course that has to ultimately underpin transactions. I just think it is too simplistic given what housing in the SE at least has become. It's an end product of a London centric economy. All the high paying jobs, all the finance industry, all the wealth bar pockets scattered around the country has come to London. This is true on an international scale too where investors and dirty money has piled in to find a safe haven. It has resulted in a property market that just doesn't work for the middle income masses - the teachers, nurses, doctors etc. It has been actively encouraged too - look to the likes of singapore, hong kong etc and the countless property fairs.

I don't know if conspiracy is the right word, but I think surely you have to agree that there has been a concerted effort to keep things bubbling along in the SE? Take help to buy for instance. Why did the government increase this to 40% from 20% in London if they didn't realise there was a problem and that they needed to act to further 'assist' young buyers? This is an example of what I am talking about. Instead of letting demand fall due to somewhere being unaffordable, the powers that be have chosen to further inflate the problem. They just will not let the market set a price.

Put it this way, can the majority of middle income earners in London afford a starter home (500k, 1 bed flat)? I would put it to you the answer is no. Therefore there has to be if not a conspiracy at the very least an admission of tampering.

Do you believe London and parts of the SE are in bubble territory or is this a healthy market?

London is undoubtedly extremely expensive, but just to say that you can certainly buy more than a 1 bed flat for 500k if you space is a priority for you rather than the area you are buying in.

Equally its somewhat misleading to just look at policies which have had a positive impact on prices in London and ignoring those such as the changes to stamp duty which have hit the top end hard, or the changes to BTL treatment.

Windofchange

Yeah, I think we are starting to see these policies being introduced as a bit of a oh dear we'd best do something to stop this getting ridiculous - the two that you mention are recent as opposed to help to buy etc which have been around for years.

As for not being in a bubble, the price increases would very much go against that argument. Property has gone through the stratosphere in terms of price everywhere - not just the prime London parts. The press is even starting to call it a bubble - recent articles in the sun and telegraph to name two.

https://www.thesun.co.uk/living/2939808/forget-the-london-property-bubble-house-prices-are-rising-more-in-liverpool-and-birmingham/

http://www.telegraph.co.uk/property/house-prices/revealed-the-city-with-a-bigger-property-bubble-than-london/

http://www.telegraph.co.uk/business/2016/04/30/is-a-buy-to-let-bubble-the-next-scandal-in-housing/

From my personal experience our 460k flat from 2012 is now 'worth' in the region of 800k based on a sale last month next door. It has nearly doubled in 5 years! That is insane and the very definition of a bubble I would say.

I am starting to sense a bit of a turning point in London. Prime London has actually already started dropping like a brick as the millionaires flee.

The middle class backbone is starting to flee in their 10's of thousands

https://leftfootforward.org/2016/09/london-is-facing-its-biggest-threat-since-the-blitz-too-many-people-are-leaving/

Prices will always lag a few months but the signs are there that this is popping.

ukcarper

Windofchange wrote: »

Yeah, I think we are starting to see these policies being introduced - the two that you mention are recent as opposed to help to buy etc.

As for not being in a bubble, the price increases would very much go against that argument. Property has gone through the stratosphere in terms of price everywhere - not just the prime London parts. The press is even starting to call it a bubble - recent articles in the sun and telegraph to name two.

https://www.thesun.co.uk/living/2939808/forget-the-london-property-bubble-house-prices-are-rising-more-in-liverpool-and-birmingham/

http://www.telegraph.co.uk/property/house-prices/revealed-the-city-with-a-bigger-property-bubble-than-london/

http://www.telegraph.co.uk/business/2016/04/30/is-a-buy-to-let-bubble-the-next-scandal-in-housing/

From my personal experience our 460k flat from 2012 is now 'worth' in the region of 800k based on a sale last month next door. It has nearly doubled in 5 years! That is insane and the very definition of a bubble I would say.

I am starting to sense a bit of a turning point in London. Prime London has actually already started dropping like a brick as the millionaires flee.

People are starting to flee in their 10's of thousands

https://leftfootforward.org/2016/09/london-is-facing-its-biggest-threat-since-the-blitz-too-many-people-are-leaving/

Prices will always lag a few months but the signs are there that this is popping.

People have been saying that for years high prices don't mean a bubble, prices could stall and fall if demand decreases but I don't think prices will fall dramatically unless the economy crashes.