Thursday, Nov 22, 2007
House prices only ever go up!
This Is Money: Boom but no bust for housing
Stephen Nickell is chair of the National Housing and Planning Advice Unit, a quango which advises the government on property prices. He is a former member of the BoE Monetary Policy Committee, which sets interest rates.
He says: "I wouldn't be all gloom and doom about the housing market. Any hint of a slowdown and there are people who will come forward - there are queues of people waitingto get a share of the action. The housing market has this fundamental support."
It all boils down to the basic law of supply and demand. Houses are too scarce, so prices will carry on rising, he explains.
"It is not a bubble phenomenon, but based on fundamentals."
Posted by little professor @ 08:50 AM (1479 views) Add Comment
25 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. little professor said...
Sorry for the long summary :(
I can't believe this idiot is in such a high-powered job. Is this a reflection of the standard of economists on the MPC? If so, we should all be very, very worried.
2. Utterlee said...
Hmm, people won't be coming forward if the banks won't lend them the money...
3. Steve said...
Is it posible that there are some differences between what he think and what he says ?
4. Ihopeitgoeswithabang said...
He is a member of a quango.
I stopped reading after I read that bit.
The fundamentals he is blissfully neglecting is the affordability of housing not just for those wanting a house, but those already paying for it.
It's not just a matter of people getting on the ladder like it was 3/5 years ago.
5. Davros said...
This is a gross over-simplification.
Ulitmately this is a supply and demand issue, but you can't just ignore the influence of investors completely!? This must be politically driven, either that or the bloke is an idiot.
Regardless, it won't change the way the market it heading.
6. tyrellcorporation said...
"It is not a bubble phenomenon, but based on fundamentals."
House prices are riding high on the back of cheap credit - this is one of the biggest bubbles in history. What an *rse!
7. dohousescrashinthewoods said...
He is so going to resign by the end of next year.
8. sold out said...
" the former Bank of England policy maker is reminiscing about a wild road trip across the Middle East with future Pink Floyd bass player Roger Waters in 1963."
Did Stephen ingest too much acid in the sixties?
Sounds like he comes from the Sid Barrett school of economics.
9. Icarus said...
There's that word 'fundamentals' again. So 'fundamentals' are going to shore up house prices are they? If 'fundamentals' drive house prices can someone explain what it was that these fundamentals did to cause 20% p.a price rises over the last few years?
10. ontheotherhand said...
"get a share of the action". What is he talking about here, a place to live or a poker game?
11. Soundman said...
I think he's confusing demand with desire. Yes there may be a lack of supply and there probably are queues of people who DESIRE a home but there is no DEMAND as long as property is overpriced and cannot be mortgaged.
Surely one can only demand something if they can actually pay for it. I demand a new Ferrari..... not going to get me very far is it?
12. European-bear said...
'And as people get wealthier, they just want more housing. They buy second homes, they buy homes for their children at university. There will just be more and more of that as people get richer.'
If this has any truth, then rather than keep manufacturing concrete in a polluted world, homes need to be rationed to one per family and this can be done by penal tax rates on second and holiday homes. But the real reason is, as he says, supply and demand. The demand came (or rather was) easy credit form the banks...i.e. a huge money supply. Give enough supply of money and people spend it. For example the demand is not taking up the half million or so empty properties and rents are not rising. In Ireland 15% of houses are empty...its just a speculative bubble. If you halve UK house prices they would still look quite expensive to many places!
13. the reaper said...
'there are queues of people waitingto get a share of the action'......who can't get a mortgage anymore
14. bidin'matime said...
Don't argue with the guy - if he's advising the government, we want him to tell them that prices will keep going up - so that they keep IRs high, keep building more houses and generally do what they can to reverse the situation. If they realise that there is a crash around the corner, they will lower rates...
15. techieman said...
These people are bound to say this sh*t whether they believe it or (as i suspect) not. Either they are stupid or economical with the truth - either way i feel sorry for Joe public that actually takes notice of them!
16. Darren said...
I agree with "bidin'matime", isn't this guy working in our favour. We need more intellectual idiots like him at this very sensetive stage in the process of a slow moving HPC.
17. george monsoon said...
I work with his kind,
they can bulshit for England and take as fact, any information the are given from thier minions.
I would guess that during a "meeting" (one of a hundred in a week) he has been syrup fed these soundbytes from those in his employ, who's interest is to look at the world through rose tinted spectacles and keep him happy.
what a total pr!ck..
18. voiceofreason said...
Pal of mine is trying to flog his BTL in the very popular with BTL-ers "Inner Avenue" area of Southampton.
SO14 0BH, half mile, < £225K. About 10 streets of victorian terraced houses very close to popular pubs & universities.
So I thought I would take a look.
Would you believe that there are 19 houses in this set of a few streets on the market all of a sudden, just on Rightmove.
So much for a shortage. That is a flood of supply. They do make the flats nearby look pricey too.
My seller friend has recognised that he has missed the peak of the market.
19. cyril said...
I'm glad everyone else shares my distain for the NHPAU. This was one of Kate Barker's creations (another former MPC member).
20. wdbeast said...
I do not accept that someone of his intellect, education and experience can actually believe this; I really do not think he does.
So why is he saying it?
Maybe he wants a crash for altruistic reasons?
21. Bearfacts said...
Wasnt it the NHPAU who recently brought out a 'report' stating that prices would rise by 40% by 2010 or some such horsesh*t ? Strangely enough it came out the day after the IMF said UK housing was 40% overvalued. This is a government sponsored quango - I expect their real mission ( given by Brown) is to ramp the housing market whenever some bearish news comes along and lets be honest its been coming along in bucketloads of late.
22. techieman said...
Hey VofReason - are you from Swindon only a guy valling himself VofR (from Swindon) was on R5 Live last night commenting on England. Was that you?
23. seanb303 said...
about 2 month's ago the bbc read out comment's on nothern rock
one of them was from voiceofreason basically saying the great depression is coming
it was great that made my day
24. bearshare1616 said...
'And as people get wealthier, they just want more housing. They buy second homes'.
I was driving around the New Forest the other day and was amazed at the amount of cottages for sale. They are the type that are empty all week and occupied by city folk at the weekend. If Stephen Nickell is correct why are so many people selling their weekend second-home retreats. I believe they are jumping ship before their investments start to haemorrhage cash.
25. voiceofreason said...
bearshare, exactly !!
Buy because they go up turns to sell because they are going down.
QED.
Tight supply suddenly becomes flood of supply. I wish the MUPPETS in govt would understand this observation of fact and reality.
The voices of Reason are many .. and increasing .. he says sounding like a schizophrenic confused76.
No, it wasn't me, I am not a Depression monger, slowdown / mild recession is my view. But I still think house prices will reduce by approx 20%.
Which is a lot, because don't forget 100% increase = 50% decrease....