Why are house prices still so high?

GreatApe

Goldman2020 wrote: »

When many people in the UK are on a low wage, working the Gig Economy or earning the basic UK salary (which I believe is in the region of £27,271) why are property prices (especially in London) still as high as they are? I would have thought that because owning a property is out of reach of many people, especially the young, this would have driven property prices down further than they are at present.

Your constructive and well meaning explanations are appreciated.

Your wage figures are wrong, that is the average including part time workers and kids. If you look at full time workers and adults (25+) then you get a figure closer to £40,000 and for a couple that is £80,000

And income is not just earned wages

There is an additional aprox £600 billion annually in income from assets like shares and businesses

There is an additional aprox £200 billion annually in gifted/inherited from the old to the less old

Overall the only cost of housing is upkeep and the cost to build new builds. So in short most people dont pay for housing they inherit it

This is also why ownership for uk born brits is very close to all time highs


There is a more interesting debate about why construction and renovation costs so much and the reason for that is that it is one of the few sectors of the economy where productivity is more or less the same as a hundred years ago we just haven't gotten better at building things. Or rather we have marginally like power tools but those have been offset by regulations eg cavity walls taking longer to build than solid walls etc

GreatApe

PokerPlayer111 wrote: »

The type of people who are attracted to powerful government positions aren't high level problem solvers. Even if government were geniune about solving housing it will be slow progress.

There is not really a problem to be solved, homes cost what they do and always will

There is a problem with productivity levels in construction. But I doubt corbyn or may, labor or tories will discover or invent a way to improve productivity in the construction sector

GreatApe

sevenhills wrote: »

Do Government build houses?

In the past councils have built houses, but these days its 95% capitalism, so its left to the private sector.

The 'government' has never really built houses, the government paid for houses to be built by private companies. Its not like local labor Councillors spent their weekends laying brick

Can the government increase house building by commissioning and paying for new homes to be built by private companies? Yes sure, but they should go on to sell those homes not rent them out

The planning system has obstructed house building for years.


Yes and no.

In the cheaper parts of the country which more or less means scotland wales the north and most the midlands its not planning stamps its the fact that it is uneconomic to build up there. Construction is very low productivity and very high cost in the uk.

In the most expensive parts, ie London its more to do with limited land and the fact that you probably need to buy 300 expensive old flats, knock them down, then rebuild 700 flats in its place. The result is very expensive very slow

GreatApe

HAMISH_MCTAVISH wrote: »

Home ownership in the UK never got much above two thirds of the population, so the lowest earning third of people have, by and large, never been homeowners.

This is not true, you can say that the percentage of homes at any given time which were owner occupied peaked around 70% that is true but what it does not factor in is that private renting is mostly a transitional tenure and so is social to some extent

What this means is that actually a lot more than two thirds of people will be home owners at some point in their life

The situation is actually very good. More or less everyone can buy or will be gifted a social home. The small amount of private rentals we have is for churn. This is evident by the fact that nearly 80% of private renters go on to buy or get social in less than 10 years

It is even better than that too because a lot (something like 500,000) of private renters actually rent for £0 off relatives (ie people buying a home to put mum dad in and not charging them anything). I am not sure they should be included as private renters its not quite the same thing its closer to owner occupation.

Overall the housing picture is very very good the main problem is the lack of understanding of basic math and stats.

GreatApe

Roughly speaking the tenure of the stock is

~18% private renting
~17% social renting
~65% owning

However that should be broken down to short term and long term private renting

~4% Long term private renting
~65% owning
~17% social
~14% short term renting (eg students or people moving around the country or people owning and renting in another town closer to work etc)

What exactly is the problem?
We need short term renting for mobility and students etc and option

Do we need long term renting? Possibly lower is better but its only ~4% of the stock and not all long term renters are badly off I know two long term renters one also owns but rents a flat in zone 1 and the other rents does not own but is a millionaire and could easily buy

All the energy to say the housing market is wrong or needs fixing is for this 4% of long term renters to go to 0%????

There really is no problem. Even of the long term renters many have it good some 500,000 privately rented properties are rented for £0 mostly off relatives housing elderly parents/etc

The housing market is fine, it makes sense it is logical it works it is rational it is sustainable and it is not a bubble. Once you understand that private renting is transitional and that property is purchased by wealth (inherited/gifted money £200 billion a year, £600 billion a year in non wage earnings) as well as income then everything makes sense

Believe me or believe the hpc loons been predicting a crash for two decades now!

PokerPlayer111

Renting sucks though GreatApe, i used to think it was OK but changing my mind after owning.

GreatApe

PokerPlayer111 wrote: »

Renting sucks though GreatApe, i used to think it was OK but changing my mind after owning.

renting sucks if you rent the lowest end stock

just like buying a £7000 new car is not going to be a nice as the £30,000 new car

overall the point is very few people rent privately long term its only about 4% or even lower

PokerPlayer111

GreatApe wrote: »

renting sucks if you rent the lowest end stock

just like buying a £7000 new car is not going to be a nice as the £30,000 new car

overall the point is very few people rent privately long term its only about 4% or even lower

The best thing about owning is control and the worse thing about not owning is lack of control.



More than 4% of people are annoyed by housing market. Whatever % of the country are forced to rent i expect them to cause extra problems for society even if minimum is expressing unhappiness - not saying i agree or dont, not saying i see any other way particularly, or will be doing much to help.

homeless9

You get ripped off for property and then - usually if you are a man with children and you get divorced - that property gets taken away from you...

Why do men marry women, have kids with them, allow them to not work, staying at home enjoying seeing the kids grow up and say their first words, take their first steps, having friends over for tea and biscuits, while the man is grinding away 9am to 6pm a day.........when, on top of their wife having the easier life, their wife has them by the balls, the man is working for them, the woman knows that they are 100% secure - as by letting them be a stay at home mum, you have basically sacrificed your house fully to them..... if you try to leave her, or if she leaves you - you are totally and utterly rekt.

Is it even worth buying property when men who have children are likely to have it taken off them. How common is divorce? 1 in 3 chance at least of getting divorced?

ukcarper

homeless9 wrote: »

You get ripped off for property and then - usually if you are a man with children and you get divorced - that property gets taken away from you...

Why do men marry women, have kids with them, allow them to not work, staying at home enjoying seeing the kids grow up and say their first words, take their first steps, having friends over for tea and biscuits, while the man is grinding away 9am to 6pm a day.........when, on top of their wife having the easier life, their wife has them by the balls, the man is working for them, the woman knows that they are 100% secure - as by letting them be a stay at home mum, you have basically sacrificed your house fully to them..... if you try to leave her, or if she leaves you - you are totally and utterly rekt.

Is it even worth buying property when men who have children are likely to have it taken off them. How common is divorce? 1 in 3 chance at least of getting divorced?

What makes you think that, I've been divorce didn't have my property taken off me it was sold and split 50/50, I know a few people who have had to move out and make contributions to mortgage but they still own 50% of house.