50% house price crash does not = more affordable homes

PixelPound

westernpromise wrote: »

Of course, since there is limited housebuilding capacity and the state would be absorbing 200,000 houses' worth a year, this would mean 200,000 fewer houses being built privately. As it's the state doing this, probably many of the houses would be built in the wrong place.

So this would soak up at most 3 years of net immigration, and probably less.

Not sure why private houses are in the right place and council houses in the wrong place! Many houses in cities are council authorised as in they do a plan designating areas of land for houses to be built that private companies can view and will submit planning applications on one or more of the spaces. Depending on the size of the development they will include some social housing (controlled by a housing association, usually one the building company has links with) with the rest for sale.

200,000 was plucked out of the air, but really meaning the idea of a socialist government deciding to build lots of homes to solve the housing crisis and generate lots of jobs. It would probably still be private companies building as now but they will effectively bought en-bloc by the council and put out to rent. Any such scheme would probably be funding by large government borrowing, or council borrowing. I'm not promoting that it is a good policy but stating the idea that a large scale house building, lets say 500,000 per year would dampen the market, because whilst some do want to own a home of their own, many just want affordable secure housing. However would even a Corbyn government want to oversee a crash, so any mass house building probably be a lot less - enough to back up their credentials but not enough that would cause too much strain on the treasury or cause a crash.

AG47

50% hoc after no deal brexit would mean more affordable homes, there would also be a 50% crash in rents and the government would save most of the unaffordable housing benefit going out every day

westernpromise

AG47 wrote: »

50% hoc after no deal brexit would mean more affordable homes, there would also be a 50% crash in rents and the government would save most of the unaffordable housing benefit going out every day

Why would there be a crash in rents? If buying just became less desirable. what are all the would-be buyers going to have to do instead?

phillw

AG47 wrote: »

50% hoc after no deal brexit would mean more affordable homes, there would also be a 50% crash in rents and the government would save most of the unaffordable housing benefit going out every day

For house prices to drop by half, they have to become unaffordable. So it would be preceded by a drop in wages by 50%, or an increase in food and fuel costs. It would also have had to affect people who would speculate on the housing market recovering

Anyone with a 50% mortgage will be forced to take their house off the market, which would restrict supply. House building would be abandoned instantly, also restricting supply.

House prices aren't a magic thing that someone decides will just drop.

Rich2808

Price of food, gas, TVs, cars and electricity falls by 50 per cent - means they are mote affordable?

But apparently not houses!

westernpromise

An apple cost a 'farthing' (£0.0025) in 1882. Was it more affordable then than now?

snowqueen555

phillw wrote: »

For house prices to drop by half, they have to become unaffordable.

Not necessarily. People may stop buying due to wider socioeconomic reasons, or instability/uncertainty. I think we are seeing that in some areas. People are waiting or holding onto their money. Same as with other big purchases.

phillw

snowqueen555 wrote: »

Not necessarily. People may stop buying due to wider socioeconomic reasons, or instability/uncertainty. I think we are seeing that in some areas. People are waiting or holding onto their money. Same as with other big purchases.

Right and the market responds by either not selling, which counteracts that or if the price does start to move downward and someone with money see that then they buy in which also keeps the market afloat.

For a 50% drop you would need to seriously destroy wealth. We are of course talking outside London, some areas could easily take a 50% hit (but going from 50 million to 25 million doesn't really matter to me).

Rich2808 wrote: »

Price of food, gas, TVs, cars and electricity falls by 50 per cent - means they are mote affordable?

But apparently not houses!

It should be no surprise that house prices work differently to the price of TV's.

RealElement47

westernpromise wrote: »

Why would there be a crash in rents? If buying just became less desirable. what are all the would-be buyers going to have to do instead?

When property goes down do do rents, they are correlated.

When property crashes, rents fall because LLS are desperate to get out of the markwt

lisyloo

RealElement47 wrote: »

When property crashes, rents fall because LLS are desperate to get out of the markwt

Huh??
Run that one by me again, makes no sense - AG47

Why are you using two user names, so similar.
Do you think anyone is Fooled?