Massive majority for the Tories, Goodbye housing crash for now

MaxiRobriguez

I don't disagree with any of that, the reason I think it will happen the way I suggested is because the majority of wealth is held by the boomers (I read somewhere like 77% of all generations) and a lot of that will be in the family home. It doesn't matter that not all boomers will leave the house to inherit because some will downsize etc, the concept is a lot of them will and because wealth is not proportionate between the different generations, even a minority of younger people inheriting houses they don't want (as they're already settled with their own family elsewhere) will see a lot of similarly valued properties cropping up at once, and that will result in a slow decline of prices as supply outstrips demand.

Just my thoughts anyway.

lisyloo

Do you have figures?
We know net migration is about 1/3rd million per year.
If the deaths (those with property) are to affect demand for housing it has to outstrip increases in population minus amount being built.

I’d want to see some figures on deaths before taking a view.

lisyloo

I did a little research

2018 ONS figures

Deaths 542k
Births 657k
Net immigration 258k

Meaning 373k increase in population in 2018 alone

Long term you may be correct but I wouldn’t recommend any young couple to bank on this trend reversing in the short term. Female fertility in particular in limited, so better to just get started than speculate if you want a family like the majority.

There are 5 numbers that matter here, births, deaths, eu immigration, non eu immigration and emigration.
You are taking a trend in one figure (deaths) and extrapolating from that and I don’t think that is a sensible way to form a view as it doesn’t account for changes in any of the other 4 figures.

Personally I wouldn’t plan a residential purchase on those kind of longer term trends.

GDB2222

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/850825/Housing_Supply_England_2018-19.pdf

"Annual housing supply in England amounted to 241,340
net additional dwellings in 2018-19"

So, as long as there is enough space in the average dwelling for at least 1.5 people, there's space for the 373k population increase.

Since, nearly all dwellings can take at least two people, we are more than keeping pace with demand.

Furthermore, I gather that net immigration is tailing off ...

GDB2222

Just anecdotally, in this area of N. London, there are plenty of unsold new build flats on the market.

lisyloo

GDB2222 wrote: »

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/850825/Housing_Supply_England_2018-19.pdf

"Annual housing supply in England amounted to 241,340
net additional dwellings in 2018-19"

So, as long as there is enough space in the average dwelling for at least 1.5 people, there's space for the 373k population increase.

Since, nearly all dwellings can take at least two people, we are more than keeping pace with demand.

Furthermore, I gather that net immigration is tailing off ...

Thanks for the figures.
Some housing is empty, that includes holiday homes and those bought by foreign investors.
I don’t know the average capacity, would be interesting.

Eu immigration has fallen, non eu migration has increased, so broadly stable.
https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/internationalmigration/bulletins/migrationstatisticsquarterlyreport/november2019

That could change post brexit as could a lot of other things.

If house building has kept up with demand how come some people think we have a “housing crisis”.
I think this is partly because of investors and partly because some people have more than one property.

lisyloo

GDB2222 wrote: »

Just anecdotally, in this area of N. London, there are plenty of unsold new build flats on the market.

London has been falling for a while and the rest of the country has seen rising prices albeit very low figures, so London is not really indicative of anything national.

GDB2222

lisyloo wrote: »

London has been falling for a while and the rest of the country has seen rising prices albeit very low figures, so London is not really indicative of anything national.

In the past, we have seen the trend start in London, then ripple outwards. I'm not sure why that should be, nor whether it will happen again.

In answer to your other question, I accept that there is a chronic shortage of houses. I'm just saying that that does not seem to be getting any worse. It may even be getting slightly better!

Crashy_Time

MaxiRobriguez wrote: »

Houses prices across many parts of the country are out of sync with earnings and there's a very real prospect of a majority of millenials being unable to get on the ladder, or being unable to make the step up past the starter home. With 'facts' like these, the 'obvious' result is that at some point prices will start to revert to the mean.

However, people of the UK are of a rare ilk in that their show-off preference is very much the home, and more people in the UK think of investing as BTL than stock markets, bonds or anything else, which means there's perhaps a greater number of buyers, and a greater demand in those buyers, than perhaps there would be in other countries.

The reality is that until millennials start inheriting houses, house prices are likely to remain elevated simply because that's the way it is in the UK, even if it's a bit barmy. We'll see what happens in 20 years or so when the baby boomers are gone and the 40-50 year old millenials inherit a house they probably don't want. That's going to cause a lot of selling pressure on family homes and might mean the market corrects somewhat to a point whereby the initial cost of entry remains high but the gaps in the rungs of the ladder are much shallower than currently.

Unfortunately many of them are now rammed into over-priced new build rabbit hutches and know they have been mugged on the price and build quality, the "show-off" factor just isn`t there like it used to be around property IMO, there is more just a growing awareness that high prices benefited bankers more than ordinary people I think. Your idea that "That is just the way it is in the UK" only works with record low interest rates, any uptick in rates (weakening pound around Brexit dramas etc.) means game over for bubble property prices.

Crashy_Time

GDB2222 wrote: »

In the past, we have seen the trend start in London, then ripple outwards. I'm not sure why that should be, nor whether it will happen again.

In answer to your other question, I accept that there is a chronic shortage of houses. I'm just saying that that does not seem to be getting any worse. It may even be getting slightly better!

Sky report today on homelessness and housing costs/availability even had to admit that there were plenty of unsold properties in the new and strongly opposed developments in the village they reported from, making the case for more building "even more debatable". The housing shortage is a myth, it always has been, the problem is price pushed up by years of cheap debt and banks unable to take the fallout if the market does crash leading to central banks suppressing interest rates too much for far too long in the hope that people will just keep borrowing, spending, and paying their mortgage.