Media Is Now Predicting A Massive 40% Property Price Crash

parking_question_chap

seven-day-weekend wrote: »

I would like house prices to come down so that more young people could afford them. Whether they will or not I have no idea.

Its not really that simple.

Housing prices need reason to come down, such as higher unemployment. In such a scenario many young people would still not to be able to afford to buy, because they are most susceptible to being out of work.

HAMISH_MCTAVISH

parking_question_chap wrote: »

Its not really that simple.

Indeed.

Lets say prices temporarily fell due to external factors such as high unemployment, recession, etc, and all of a sudden the several million young people in HMO's, living with parents, etc, could afford to buy.

There aren't several million houses available for them to buy - so prices would simply shoot back up again - and most would still not have bought.

Housing prices need reason to come down, such as higher unemployment. In such a scenario many young people would still not to be able to afford to buy, because they are most susceptible to being out of work.

Yep.

A brutal recession and soaring unemployment would lower prices - temporarily - but fewer people could buy in such an environment than can today.

Reducing the number of mortgages being issued would also lower prices, as by definition fewer people could buy so demand falls, but again that still leaves us with fewer people being able to buy which is the opposite of an actual solution to the problem.

The only solution to a housing shortage is to build more houses.

It really is that simple.

economic

HAMISH_MCTAVISH wrote: »

Indeed.

Lets say prices temporarily fell due to external factors such as high unemployment, recession, etc, and all of a sudden the several million young people in HMO's, living with parents, etc, could afford to buy.

There aren't several million houses available for them to buy - so prices would simply shoot back up again - and most would still not have bought.



Yep.

A brutal recession and soaring unemployment would lower prices - temporarily - but fewer people could buy in such an environment than can today.

Reducing the number of mortgages being issued would also lower prices, as by definition fewer people could buy so demand falls, but again that still leaves us with fewer people being able to buy which is the opposite of an actual solution to the problem.

The only solution to a housing shortage is to build more houses.

It really is that simple.

any decision needs to be economical. just saying the solution is building more houses is silly. the people building the houses need to make a return and currently its difficult to do so.

economic

if young people really want to buy and cant afford it - they will simply have to work harder/smarter and save more. theres no other way around it.

Koldweather1

HAMISH_MCTAVISH wrote: »

Indeed.

Lets say prices temporarily fell due to external factors such as high unemployment, recession, etc, and all of a sudden the several million young people in HMO's, living with parents, etc, could afford to buy.

There aren't several million houses available for them to buy - so prices would simply shoot back up again - and most would still not have bought.

The only solution to a housing shortage is to build more houses.

It really is that simple.

Yep and its fair to say that if a recession was to hit, the young would be hit the hardest. We certainly have been hit the hardest since 2008's crash that is for sure. The young are more likely to have those retail/less stable jobs that in theory maybe able to buy with a 40% reduction, but in all likelyhood would either have much reduced hours or no job at all and thus relatively they are no better off overall...

The only mechanism, that could cause a crash is a sharp increase in IR. Otherwise you'll get something akin to 2010-2012 which is a slow drain in prices and eventual stablisation. People with mortgages can hold fire in a relatively low IR setting, but might be forced into action with much higher IRs.

And frankly, the govt/central bankers are simply not going to raise those IR nearly enough to get the whole thing into the state required to crash...and at this point, a crash in house prices WILL lead to a crash in the overall economy, the two are just too intrinsically linked now days.

westernpromise

HAMISH_MCTAVISH wrote: »

The only solution to a housing shortage is to build more houses.

What housing shortage?

HAMISH_MCTAVISH

westernpromise wrote: »

What housing shortage?

:wall:
:wall:
:wall:

HAMISH_MCTAVISH

economic wrote: »

any decision needs to be economical. .

We've done it before - we can do it again.

In 1951 politicians – from the Conservative party, no less – set out a plan to build 300,000 units a year, at a time of much greater austerity, and when the national debt was 200% of GDP compared with 89% now.

a history of British house prices tells you how they remained flat through much of the 1950s and early 1960s, precisely when supply was at its most vigorous – around 400,000 units a year at its peak. We knocked out just 140,000 last year.

https://www.theguardian.com/business/2016/nov/20/britains-housing-crisis-must-be-tackled-now

economic

HAMISH_MCTAVISH wrote: »

:wall:
:wall:
:wall:

What housing shortage? Everyone is housed.

HAMISH_MCTAVISH

economic wrote: »

What housing shortage? Everyone is housed.

I see you're confusing a shortage of bedrooms (which we don't yet have) with a shortage of housing of the types people need and in the places people need them, which we most certainly have...

From the latest government white paper on this topic...

The housing shortage isn’t a looming crisis, a distant threat that will become a problem if we fail to act. We’re already living in it. Our population could stop growing and net migration could fall to zero, but people would still be living in overcrowded, unaffordable accommodation.

If we fail to build more homes, it will get ever harder for ordinary working people to afford a roof over their head, and the damage to the wider economy will get worse.

This isn’t a new problem. Its roots stretch back decades, with house building well below what was needed under successive governments. And it’s not a problem we can afford to ignore any longer.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/590463/Fixing_our_broken_housing_market_-_accessible_version.pdf

And from elsewhere....

The UK is in the midst of a housing shortage that numerous credible experts now describe as ‘chronic’ and ‘acute’. While it’s widely recognised that we need 250,000 new homes each year to meet population growth and household formation, house-building hasn’t reached that level since the late 1970s.

‘We haven’t been building nearly enough since the 1960s, and the total shortfall over the last 20 years has been huge — around 2.3 million homes,’ says Professor Paul Cheshire of the London School of Economics, an eminent housing expert who has advised successive governments. ‘A growing supply gap over the last few years has seen prices become more and more unaffordable and if we do nothing, it’ll get even worse.’

https://www.spectator.co.uk/2016/11/britains-lack-of-house-building-has-come-home-to-roost/