Saturday, Apr 18, 2009
Advice from an expert gold seller
This is Money: Gordon Brown on house prices
This is a bit old and I'm surprised it wasn't posted on the blog earlier but it's good for a quick giggle. Gordon Brown says that "Supply has not kept up with demand for housing. Over time, as the housing market starts to recover, the sense that we need to build homes would grow. That must make you more optimistic about the housing market in the years to come."
Posted by quiet guy @ 12:32 PM (1464 views) Add Comment
17 Comments
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1. dj2000 said...
It amazes me that people still think that if something goes up it must stay up and never go down and if it is to go down then it must come up and be better. In the long run with inflation and house prices you could expect a moderate increase in prices over time but what has happened over the past 20 years is more than just inflation.
I heard that it costs about £64k for a moderate house to be built by one of these devlopers including the land which they can then sell for £180k, fair enough the only thing is that the true value is more around the cost + 20% so 76k is a more realistic price which leave them with over 100k profit over valued!
2. matt_the_hat said...
"Supply has not kept up with demand for housing. Over time, as the housing market starts to recover, the sense that we need to build homes would grow. That must make you more optimistic about the housing market in the years to come."
This is great to hear a socialist prime minister pleased that asset prices will go up because there are not enough places for ordinary people to live. What a time we live in, people living with their parents well into their thirties whilst 1,000,000 homes are empty. Dickens didn't write about stuff like this!
3. dbc reed said...
@dj2000
You would not get the land AND the bricks and mortar for 64k.This is the mistake Prescott made when he got developers to design his 60k houses,some of which were produced in Milton Keynes and sold for over 150k.(The local Labour MP could never account for the difference).
Brown was right to say that the problem in USA and Spain was building too many houses ( In the UK building too many flats in ciity centres?).There is probably a lot of pent-up demand for houses in the UK.... but at affordable prices!
Keep an eye on land values.The market in land is in an interesting predicament.
4. japanese uncle said...
He really is an expert gold seller alright just from a different (opposite, I mean) perspective.
5. Tenyearstogetmymoneyback said...
dbc reed said "You would not get the land AND the bricks and mortar for 64k".
Do you know what the costs are then ? I am genuinely interested.
As I have pointed out before, in about 1995 you could buy a new Crest 2 bedroom house in New Milton Hampshire
for about £52000.
Alternatively you could have had my 15 year old three bed for £52000 for the same money but no one was interested
:- Duncan
6. stillthinking said...
At the end of the bubble, we have a lot of debt and a shortage of family homes.
Spain and the US don't, so there were some benefits to the population. One of the most unpleasant aspects of Britain is being forced to prop up the lifestyles of the land owners to your own detriment, and also society if you accept as contributory to the birth rate.
7. Mr Plumbase said...
Lies and damn lies, even now the myth of a housing shortage is still being peddled, pricing is the problem if I had a few million quid laying around I could buy a dozen tomorrow. Beach hut for £70k, anyone? No I thought not.
8. mark wadsworth said...
dj2000, your balancing figure of £100,000 is the cost/value of the plot itself - it's the 'land' value.
Which is not really 'land' value at all, it is partly location value and mainly 'bubble' value, which in turn is created by artificial scarcity, light taxation of land profits, artificially low interest rates and this insane devotion to the property market.
9. Maihem said...
land for agriculture is much much cheaper than land with planning permission. The planning permission is the expensive bit.
10. Jake said...
They still don't get it!
House prices rising at more than the rate of inflation or average earnings are BAD - NOT GOOD.
11. timmy t said...
"Supply has not kept up with demand for housing..." problem is that the demand came from people who wanted to let it out rather than get off their backside and work for a living. Supply now exceeds demand because we don't actually have an infinite population as this nob seems to think.
"That must make you more optimistic about the housing market in the years to come." why can't people understand that expensive houses are a bad thing. It means people can't afford them. He is like the king of BTLers - he thinks if people have loads of equity they will spend spend spend and the economy will soar. It really isn't that difficult to grasp.
12. Frank Bell said...
post 5, stillthinking
Have I misread your post about the US not having a lot od Debt? China has bailed them out for years. I fully agree with you on no shortage of family homes. I was in the US on a Road Trip for 5 months last year. Arizona had buiilders offering "buy one, get one free" and in a really nice subdivision with full Golf Course in Las Vegas, One street had 22 houses of which 15 were bank owned or short sales. No wonder the values are still dropping there. $150,000 for a lovely detached home on that subdivision. Shame about the US taxes though.
13. Stevo said...
out of the mouths of babies, my mother does not know a thing about property or investing, and when I put the demand for housing scenario past her even a year ago, she said if there is this big housing shortage why? are the papers and agents full of them? I told her they realy mean affordable houses, then she said well there are not many kids being born and all the likes of me are going to die soon, and a lot of these imigrants come here to make money not spend it? and I thought my mum was a bit dumb.
14. dbc reed said...
@tenyearstogetmymoneyback
Until recently you could access the ABI (Association of British Insurers) website for house rebuild insurance and find out the costs of assembling the bricks and mortar for your type of house in your area.Deducting this from the going price leaves you with the land price ( in rough terms as MW explains).
Nowadays you have to register to use this site: I dunno why.But it can't be that much of a problem.
Most people are shocked by how relatively little their house is worth,in comparison with the price of the house AND the land underneath it.
The conclusion that a lot of people come to is that land prices are too high and that the political parties are bent ( yeah) on keeping them that way.Next moment,you are sunk in the netherworld of land taxers who are smart,cool people but furious.
15. Tenyearstogetmymoneyback said...
Thanks for the reply dbc reed
A couple of of interesting points.
The Crest houses I keep saying about were actually on a Greenfield site (next to the housing estate where I lived).
As part of the deal Crest did have to replace about half a mile of narrow country lane with a proper road. Thinking
about it I reckon they are the last houses I can think off built on this type of site (as opposed to a Brown field one)
In reply to the various comments about whether there is a housing shortage, the thing that winds me up
is when they demolish perfectly good buildings to build flats. Someone I know lived in a large Edwardian house which had
been converted into four flats. About 2 years ago developers bought out all the owners, demolished it and built a new block of ten.
flats I drove past it last week and there were at least six For Sale and To Let signs outside so you could argue that there has been
no real gain at all.
:- Duncan
16. Dantheman said...
I still think that the reason the Media, and the BTLers, NAEA, CML, The government, All the vested interest groups, are screaming that house prices have bottomed out, or have as gone as low as they will go.
Is because the Housing Market cannot survive without FTBers, and therefore, we are in control. And they want us to get our wallets out quick sharpish.
That may be oversimplifying it, but it does not make it any less true.
I aint buying until they go back down from £240k to 1999/2000 prices of £70k.
I can hang on renting a lot longer than Estate Agents can stay in business, with no sales volume.
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