The discgrace that is the UK Property Market
Discussion
ClaphamGT3 said:
But the point is, this isn't a 2000 to 2013 phenomenon, this is a 1973 to 2013 phenomenon and, if you look over the entire period, interest rates, availability of credit and price/income ratios have not been principal, long-term determinants in the upward trend in house prices. For example, the massive contraction in available mortgage credit from 2008 to 2011 did little other than suppress growth, it certainly didn't cause a significant downward adjustment. Similarly, a significant hike in interest rates in 1990-92 only very temporarily caused a downward adjustment.
So the question is, will the current price trend continue, with more renter occupiers renting from BTL owners, will prices re-adjust to some notional price/income ratio that is judged "sustainable, or will it be somewhere in between?
I was just using 2000-13 as a example.So the question is, will the current price trend continue, with more renter occupiers renting from BTL owners, will prices re-adjust to some notional price/income ratio that is judged "sustainable, or will it be somewhere in between?
Know one really knows unless you have a crystal ball what will happen
I posted this in the other housing thread;
The talk last week of the US gov possibly slowing down Q/E an removal of government stimulus in the economy caused the stock market to fall ,just the talk of it why ? All this q/e and gov stimulus has cause an asset bubble because of zirp and a lot of assets prices have been inflated because of the stimulus.So if the stock market falls on slightly speculation that the USA may slow down stimulus , what the hell will happen when they remove it?(not just stock market but other asset bubbles like housing)
There was an interesting article last month in the Sunday Times about how central banks used all these all these polices (to stop economy free-falling)zirp, q/e etc during the credit crisis to stimulate the economy which has created asset bubbles , yet there was no clarity or policies when these schemes would be removed (and what damage they would cause,) In otherwords no exit strategy We have never been through an economic situation like this one , and that the uncertainty of when central banks will unwind these schemes will lead to a popping of the asset bubble.
Basically we are in uncharted territories , governments have used q/e ,0.5 i/r etc to prop up the economy and create an asset bubble what will the removal of these polices d to the stock market and house prices etc? (that have been inflated through these schemes)
BJG1 said:
You're right, nobody has a right, but isn't it kind of the point of a democratic society that we attempt to build a country that is as optimal to live in as possible? Shouldn't we look at the housing market as an area where we should be making it as beneficial for society overall as possible? Is it not fair to say that lower priced housing would help more people than it would disadvantage? That tackling exorbitant rents, particularly in the south and London, would be for the good of the many rather than the few?
And how precisely will this socialist utopia be funded?And even assuming it was fundable, what problem would you be solving?
There is no crisis in accommodation where people "need help" to coin your rather patronizing phrase to afford a roof over their heads. There is a more multi-layered property market in the UK now than at any time in our history, where people have an amazing ability to match their spending power to accommodation of a minimum decent standard. If you look at the charity Shelter's data on homelessness and low quality housing, you'll see that this has been falling since 1997
ClaphamGT3 said:
Here's a clue, it's called a "market". I don't see a case for Govt intervention in the housing market at all.
No government intervention eh? I agree. That means no planning restrictions too - which i think would have a pretty significant downward impact on prices. But maybe you do see a case for government intervention if it props up prices...Oh and no quantitative easing, no "funding for lending", no government deficits...where would prices be without those government interventions?
Edited by TheMonster on Monday 19th August 20:34
John87 said:
BoRED S2upid said:
rossub said:
John87 said:
I don't think you can speak for the whole of the UK property market based on your example. For example, the 69k in the OP would easily buy a 3 bed house in Scotland. Obviously wages are lower but not by enough to justify the difference.
f
k me, what part of Scotland is that?! £69k in the Aberdeen or Edinburgh areas would barely buy that studio flat. One bedroom flats are north of £100k.
My Brother in law can't sell a 1 bed flat for £45k the first time buyers just aren't there.
2 bed flat for the price of a second hand car
5 bed detached woth garage £86.5k
Plenty more to choose from although not necessarily in the nicest of areas
ClaphamGT3 said:
RealSquirrels said:
ClaphamGT3 said:
RealSquirrels said:
the very rapid increase in house prices (vs wages) started in the 1990s, not the 1970s.
I'm sorry, but that's just not true. Any metric within the property development industry and within economic history, will take the early 1970s as the point at which the exponential growth in residential property values in relation to incomes began. Even as long ago as the late 80's when I was studying the economics of property development, this was recognized as a near-enough irreversible long term trendas you say, house prices are a result of a market. But there are plenty of markets that we control to make sure hat they do not become unbalanced or distorted, e.g. we prevent the formation of monopolies. Why should the same not be the case with housing (which is probably one the country's/individuals greatest needs).
Edited by RealSquirrels on Sunday 18th August 15:27
TheMonster said:
ClaphamGT3 said:
Here's a clue, it's called a "market". I don't see a case for Govt intervention in the housing market at all.
No government intervention eh? I agree. That means no planning restrictions too - which i think would have a pretty significant downward impact on prices. But maybe you do see a case for government intervention if it props up prices...Oh and no quantitative easing, no "funding for lending", no government deficits...where would prices be without those government interventions?
Edited by TheMonster on Monday 19th August 20:34
Planning, whilst in need of a pretty comprehensive overhaul is one control that I wouldn't agree should be removed. Quite apart from the environmental (in the broad context) issues, a relaxation of planning controls would massively drive up the required tax take as all the infrastructure and social provision currently funded through s106/CIL contributions, and therefore directly funded by those within the development deal map, would have to be met by the taxpayer as a whole
ClaphamGT3 said:
And how precisely will this socialist utopia be funded?
And even assuming it was fundable, what problem would you be solving?
There is no crisis in accommodation where people "need help" to coin your rather patronizing phrase to afford a roof over their heads. There is a more multi-layered property market in the UK now than at any time in our history, where people have an amazing ability to match their spending power to accommodation of a minimum decent standard. If you look at the charity Shelter's data on homelessness and low quality housing, you'll see that this has been falling since 1997
This is why I usually steer clear of threads like this on Pistonheads. Anything which suggests we might be able to make things better for those that aren't powerfully built company directors is dismissed as "socialism". In this case, it's frankly ridiculous to level such diatribe at me.And even assuming it was fundable, what problem would you be solving?
There is no crisis in accommodation where people "need help" to coin your rather patronizing phrase to afford a roof over their heads. There is a more multi-layered property market in the UK now than at any time in our history, where people have an amazing ability to match their spending power to accommodation of a minimum decent standard. If you look at the charity Shelter's data on homelessness and low quality housing, you'll see that this has been falling since 1997
You have taken my point out of context. I have not said people need help to put a roof over their heads, I have said we should aim for a society where owning a house is a realistic and affordable situation for the majority of people. I would like it if this were the case relatively early in people's lives, rather than spending 15 years renting.
As others have shown, house prices relative to salaries have become increasingly more expensive and this isn't a trend I think is healthy for the majority. For most younger professionals, especially in the south, being able to afford to buy is a pipe dream. Take my housemate, a 24 year old earning £29k a year who has to spend nearly half of his net salary on rent. Over half when you include essential bills and council tax. If he did manage to save some money, it'd take decades to get together a deposit for a half-decent flat in zone 2 of London, or somewhere that isn't a s
t hole in zone 3.I don't think that's a situation we want to be in. It benefits the middle and upper classes who have parents who can help with a deposit (like myself) and prevents those from more humble backgrounds from being able to own their houses.
I'm not a particular fan of Government intervention to stimulate markets, so it'd be nice if we started off by allowing a significant number of new homes be built.
http://www.rightmove.co.uk/commercial-property-for...
£60K gets you a 7 Bedroomed Hotel in Blackpool
http://www.rightmove.co.uk/property-for-sale/prope...
or a 5 bed house in Merseyside.
£60K gets you a 7 Bedroomed Hotel in Blackpool
http://www.rightmove.co.uk/property-for-sale/prope...
or a 5 bed house in Merseyside.
12v3pot said:
ClaphamGT3 said:
Planning, whilst in need of a pretty comprehensive overhaul is one control that I wouldn't agree should be removed.
Surprise, surprise. I wish you'd be honest about your motives, though. 
But, if you think that the tax paying public as a whole should fund the enabling infrastructure for property developments, how does that support your initial argument?
NoelWatson said:
ClaphamGT3 said:
RealSquirrels said:
ClaphamGT3 said:
RealSquirrels said:
the very rapid increase in house prices (vs wages) started in the 1990s, not the 1970s.
I'm sorry, but that's just not true. Any metric within the property development industry and within economic history, will take the early 1970s as the point at which the exponential growth in residential property values in relation to incomes began. Even as long ago as the late 80's when I was studying the economics of property development, this was recognized as a near-enough irreversible long term trendas you say, house prices are a result of a market. But there are plenty of markets that we control to make sure hat they do not become unbalanced or distorted, e.g. we prevent the formation of monopolies. Why should the same not be the case with housing (which is probably one the country's/individuals greatest needs).
Edited by RealSquirrels on Sunday 18th August 15:27
BJG1 said:
ClaphamGT3 said:
And how precisely will this socialist utopia be funded?
And even assuming it was fundable, what problem would you be solving?
There is no crisis in accommodation where people "need help" to coin your rather patronizing phrase to afford a roof over their heads. There is a more multi-layered property market in the UK now than at any time in our history, where people have an amazing ability to match their spending power to accommodation of a minimum decent standard. If you look at the charity Shelter's data on homelessness and low quality housing, you'll see that this has been falling since 1997
This is why I usually steer clear of threads like this on Pistonheads. Anything which suggests we might be able to make things better for those that aren't powerfully built company directors is dismissed as "socialism". In this case, it's frankly ridiculous to level such diatribe at me.And even assuming it was fundable, what problem would you be solving?
There is no crisis in accommodation where people "need help" to coin your rather patronizing phrase to afford a roof over their heads. There is a more multi-layered property market in the UK now than at any time in our history, where people have an amazing ability to match their spending power to accommodation of a minimum decent standard. If you look at the charity Shelter's data on homelessness and low quality housing, you'll see that this has been falling since 1997
You have taken my point out of context. I have not said people need help to put a roof over their heads, I have said we should aim for a society where owning a house is a realistic and affordable situation for the majority of people. I would like it if this were the case relatively early in people's lives, rather than spending 15 years renting.
As others have shown, house prices relative to salaries have become increasingly more expensive and this isn't a trend I think is healthy for the majority. For most younger professionals, especially in the south, being able to afford to buy is a pipe dream. Take my housemate, a 24 year old earning £29k a year who has to spend nearly half of his net salary on rent. Over half when you include essential bills and council tax. If he did manage to save some money, it'd take decades to get together a deposit for a half-decent flat in zone 2 of London, or somewhere that isn't a s
t hole in zone 3.I don't think that's a situation we want to be in. It benefits the middle and upper classes who have parents who can help with a deposit (like myself) and prevents those from more humble backgrounds from being able to own their houses.
I'm not a particular fan of Government intervention to stimulate markets, so it'd be nice if we started off by allowing a significant number of new homes be built.
ClaphamGT3 said:
Planning, whilst in need of a pretty comprehensive overhaul is one control that I wouldn't agree should be removed. Quite apart from the environmental (in the broad context) issues, a relaxation of planning controls would massively drive up the required tax take as all the infrastructure and social provision currently funded through s106/CIL contributions, and therefore directly funded by those within the development deal map, would have to be met by the taxpayer as a whole
For "environmental (in the broad context)" read "impact on prices to existing owners".S106 / cil... really... What proportion is that of the annual tax income of the government
ClaphamGT3 said:
I am not sure that even that would do it - remember that interest rates were at those levels in the late seventies/early eighties and again I the early/mid nineties and, roughly speaking, all that happened was that the growth in the differential halted. I guess it would depend on how long rates were at that level, what was happening with other economic determinants such as inflation etc.
You seriously believe that if interest rates went up from 0.5% to 10% that it would not have an impact on prices?Wow.
TheMonster said:
ClaphamGT3 said:
I am not sure that even that would do it - remember that interest rates were at those levels in the late seventies/early eighties and again I the early/mid nineties and, roughly speaking, all that happened was that the growth in the differential halted. I guess it would depend on how long rates were at that level, what was happening with other economic determinants such as inflation etc.
You seriously believe that if interest rates went up from 0.5% to 10% that it would not have an impact on prices?Wow.
ClaphamGT3 said:
The question was about price/earning multiples not prices......
So earnings would fall at a similar rate to prices? Seems unlikely to me but if it did happen there would be meltdown - think of all the existing homeowners whose mortgage payments have just gone up by multiples while their earnings have fallenTheMonster said:
ClaphamGT3 said:
Planning, whilst in need of a pretty comprehensive overhaul is one control that I wouldn't agree should be removed. Quite apart from the environmental (in the broad context) issues, a relaxation of planning controls would massively drive up the required tax take as all the infrastructure and social provision currently funded through s106/CIL contributions, and therefore directly funded by those within the development deal map, would have to be met by the taxpayer as a whole
For "environmental (in the broad context)" read "impact on prices to existing owners".S106 / cil... really... What proportion is that of the annual tax income of the government
Slightly guessing, but its not unreasonable to suggest hat, without planning controls, the public purse would have to find up to £15bn of funds for enabling infrastructure to support development and, because no one would know when and where development was going to take place, capacity planning for health, education, highways and public transport, adult social care, utilities etc, etc would become very much more difficult with the creation of expensive inefficiencies in provision which would have to be Bourne by the consumer or taxpayer
TheMonster said:
ClaphamGT3 said:
I am not sure that even that would do it - remember that interest rates were at those levels in the late seventies/early eighties and again I the early/mid nineties and, roughly speaking, all that happened was that the growth in the differential halted. I guess it would depend on how long rates were at that level, what was happening with other economic determinants such as inflation etc.
You seriously believe that if interest rates went up from 0.5% to 10% that it would not have an impact on prices?Wow.
ClaphamGT3 said:
And how precisely will this socialist utopia be funded?
And even assuming it was fundable, what problem would you be solving?
There is no crisis in accommodation where people "need help" to coin your rather patronizing phrase to afford a roof over their heads. There is a more multi-layered property market in the UK now than at any time in our history, where people have an amazing ability to match their spending power to accommodation of a minimum decent standard. If you look at the charity Shelter's data on homelessness and low quality housing, you'll see that this has been falling since 1997
hmmm.... no crisis?And even assuming it was fundable, what problem would you be solving?
There is no crisis in accommodation where people "need help" to coin your rather patronizing phrase to afford a roof over their heads. There is a more multi-layered property market in the UK now than at any time in our history, where people have an amazing ability to match their spending power to accommodation of a minimum decent standard. If you look at the charity Shelter's data on homelessness and low quality housing, you'll see that this has been falling since 1997
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