Supply and demand how to measure the property market?

The-Joker

If lots of migrants keep coming to the UK does this count as increased demand? It all depends if they can raise the asking prices of the houses tey want to buy.

It has been said that in refugee camps there is huge demand for housing but very limited supply, this should make prices go up in the refugees camps?

But its obvious that it doesnt matter how many people want to buy a property, all that matter is how many can afford it.

So when it comes to supply and demand the demand aspect is all those have the ability to pay these stupidly high prices. Which means demand is very very low right now, until prices correct back down.

Crashy_Time

My spies on the ground tell me that Battersea London will be a strong bellwether of the supply and demand/sentiment ratio going into reverse......

System

I hope you feel better now.

lisyloo

If lots of migrants keep coming to the UK does this count as increased demand? It all depends if they can raise the asking prices of the houses tey want to buy.

I think you know the answer.
If they are renting (even 10 or 20 of them together) it will increase demand for rental property albeit with very efficient usage.

It has been said that in refugee camps there is huge demand for housing

That isn't real demand. I'd like a ferrari but I can't afford one so it's not real demand.

So when it comes to supply and demand the demand aspect is all those have the ability to pay these stupidly high prices.

No, because people need somewhere to live (unless they are going to live on the streets, mates floor, with mum and dad).
If they are renting then they are part of the demand chain as a BTL landlord or public body will need to house them.

GreatApe

Cheaper homes does not necessary lead to cheaper housing the reason is people just opt to live less dense and have more housing

The UK has about 28 million homes while France has about 33 million homes for roughly the same population. That means they have an additional 5 million homes to pay gas/broadband/electric/tax/upkeep/TV. You are looking at £30 billion pounds per year in additional running costs for the additional homes.

The same is true for renting, in places like Germany rents are a lot cheaper than the UK (or rather a lot cheaper than the SE England). But the germans just rent less densely. So while in the UK a couple of friends might rent a flat for £1000+£300 bills split between them = £650pm each their german cousins are more likely to rent a property all for themselves. So while the rent might be half and the bills £200pm their overall costs are £700pm so roughly the same

What this suggests is the typical person seem to save a budget for housing they are willing to spend, lets say 25% of income and they rent the best property they can find for that budget as opposed to renting what they need or trying to rent a smaller/cheaper property to save money.

The same is definitely true for housing.
People tend to buy the biggest/best they can afford they dont think let me buy the smallest worst home to save some money.

GreatApe

The last bit needs expanding. If people buy the biggest/best home they can afford which is true for most buyers then that means house prices cant really crash much

Think of it this way, if I have a budget of £500,000 and that only buys a crap 3 bed terrace and there are lots of others with a £500,000 budget which there are. If house prices crash 30% I dont think wow great I can now buy the same house for £350,000....what I and everyone else does is keep looking for £500,000 homes. So now I can afford a 4 bedroom nice house after the crash. But so can every one else who had a £500,000 budget

since the housing stock itself doesn't change in a crash, ie when house prices crash 3 bedroom homes dont magically get an extension overnight and become 4 bedroom homes, that means all the people who had £500,000 before the crash are still competing against each other post a crash. It just doesn't work it doesnt add up

The result seems to be that house prices move with the economy. Economic crash = I have less than £500,000 to buy a house now as maybe I lost £100,000 in the stock market crash. Or I have less now maybe because I lost my job and got a new one paying £20k less. etc That way things work people who had £500k budgets now have £400k budgets and house prices can fall and things add up

Without an economic crash/recession house prices wont fall.

The only way out of this 'trap' is if the country focuses its new builds on large properties. This is what France and Germany seems to be doing. Average new build is 120-130 sqm almost double the size of the average UK new build.

Seabee42

I have to laugh, housing benefits seriously messes with this. If we have more immigrants and they are housed by the state then there is more demand for rented accommodation meaning landlords can charge more for rent. If they can rent for more it also means they can pay more for a property to also rent.

NineDeuce

If you believe the scare stories regarding immigration, then logically, you should believe that there are hundreds of thousands of extra people living on the street each year...

Cobblers of course.

Then also according to the anti-immigration crew, one of the good things that is meant to happen out of Brexit is that house prices will go down. How does this work then? Immigration will continue to rise, Brexit or no Brexit, because most immigration comes from outside the EU. You cant point to the crashing economy under the logic that immigration has pushed up prices if immigration continues.

Funnily, something just doesnt stack up, although if you tell this to an ardent Brexiteer, they will just be more determined to believe their own lies.

If you have sense, you will know that the real barrier to entry on the housing market is the high deposit demands from banks on mortgages. People cannot just afford to pay sky high rents as well as save a deposit, which is ironically why renting prices is sky high and why BTL is as attractive as it is...

The-Joker

The fact is that in a refugee camp there are far more people wanting home than propertie available.

Prices should go up, if this was the way to measure supply and demand.

The-Joker

The-Joker wrote: »

If lots of migrants keep coming to the UK does this count as increased demand? It all depends if they can raise the asking prices of the houses tey want to buy.

It has been said that in refugee camps there is huge demand for housing but very limited supply, this should make prices go up in the refugees camps?

But its obvious that it doesnt matter how many people want to buy a property, all that matter is how many can afford it.

So when it comes to supply and demand the demand aspect is all those have the ability to pay these stupidly high prices. Which means demand is very very low right now, until prices correct back down.

Yep, all that matters is how many can afford the price of a certain property. This is how to measure demand.

Malthusian

The-Joker wrote: »

The fact is that in a refugee camp there are far more people wanting home than propertie available.

It's been nine months since this thread started, have you worked out what your point is yet? The value of a refugee camp tent is nil because everyone who wants to live in it has no money. It doesn't matter if there are a thousand people in the camp with no money or a million people with no money. There is no demand from people with money because anyone with money will get the hell out of the refugee camp at the earliest opportunity.

This is of no relevance to the market for housing in the UK, where all those demanding the housing have money. Including migrants.