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House Price Crash Forum


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Everything posted by FallingAwake

  1. Why? It only just works for the USA, even though they had a civil war, but for the most part the differing States have a common language and culture. What makes you think a federal Europe would work? I mean, we barely held the UK together this past month or so!
  2. Instead of faceless he bEUROcrats thousands of miles away issuing directives on what you can and cannot do. At least locally it's reasonably possible to change something if we care enough, as demonstrated by the recent by-elections. Good luck changing Brussels.
  3. Don't forget that net immigration is only part of the story. The UK grew by about 400,000 in the last year or so (link), so not only do we need to house new immigrants, but also the natural increase in the population. Also interesting is that the increase is much more pronounced in England: "The estimated population increased in England by 0.7% to 53.9 million, in Scotland by 0.27% to 5.3 million, in Wales by 0.27% to 3.1 million, and in Northern Ireland by 0.33% to 1.8 million." No wonder our Scottish friends are baffled by this constant banging on about immigration! Either we English are breeding like rabbits, or... England is the main focus of immigration. (Or perhaps both.)
  4. Wow. I imagine if that happened, campervanman would suffer a nervous breakdown.
  5. Yes, because prior to 1997 we lived in an authoritarian hellhole.
  6. Except for those not yet on the "property ponzi". If they become a majority, the political cycle changes. NIMBYs and those whose "property is their pension" become less powerful. Ultimately, democracy is a kind of mob rule. It just depends on the biggest mob at the time.
  7. Demolishing the NIMBYs own homes because they have "concreted over the countryside" already? Priceless.
  8. Umm... I think you missed the bit where I said "credit played the major part". I also said, "I believe immigration is a significant contributing factor to why house prices keep increasing." Like sugar is a significant ingredient in a cake, but certainly not the only ingredient, or even the key ingredient. So those MPs are not taking the same approach to me at all.
  9. But it's kind of a Catch 22. They may have been sitting empty because nobody could afford them. Thus, there is a physical shortage of genuinely affordable homes, at least in the areas people want to live the most. Immigration, in my opinion, exacerbates the problem, even though it's not the prime HPI culprit. That said, interest rates returning to "normal" would really shake the tree and perhaps give us a true picture of whether we have too much or too little real physical supply for the population... but I'm not sure we'll be seeing that normality for quite a while yet... at least, not voluntarily. We need an armada of black swans.
  10. Well, if that's the case, I wouldn't even call them "affordable homes"... more like "debt traps". If that Greenwich lady is "happy" to own 25% of a flat for 77K, then, to go all Venger for a moment... quite frankly, she gets what she deserves when it starts to crash. She should be fuming... or better yet, have refused to buy. Then again, that's assuming she's a real person and not some grinning model being paid to smile for the ad agency; or an estate agent.
  11. I agree, expectations and also BTL mortgage costs do play a part in rent. But landlords have to compete, and can't just raise rents at will. I might "expect" a 10% increase in my rent, but sooner or later I'm going to notice if 3 blocks down, the rent is £200 cheaper! However, if there is, say, lots of immigration in a particular area (i.e. London) and therefore lots of demand for rented accommodation, this gives the landlord a lot more leverage. So your Poundbury example is an example of supply and demand... "half a mile into the town centre, though, and you'll find rents have stagnated or reduced"... that's because of lower demand in that area. My argument is, high immigration raises demand for rental accommodation more than would be the case without it, thus allowing landlords to raise prices and/or reduce dwelling sizes via chopping up properties etc... in the areas of high immigration. i.e. where before the landlord might have rented out a 4 bedroom house for £500 p/month to a family, they can now rent it out to 4 immigrants at £300 p/month per room, taking the BTL's revenue from £500 to £1200 p/month! This increases BTL revenue, which in turn feeds into higher house prices as these BTL'ers now have more buying power. Meanwhile, that is 1 less 4-bedroom house available for a local family, unless they're willing to pay more than the BTL'er. In fact, they might even find it harder to find ANY property to rent for £500 p/m, since landlords know their potential is £1200p/m... thus forcing rental prices upwards for everybody else, too. In short, I think immigration indirectly feeds into house prices, via increasing the revenue of BTL'ers who in turn feed house prices. Yes, it's mitigated somewhat by new house builds, but since the average immigrant isn't initially going to be buying that shiny new £240k Barratt home, he or she is inevitably going to find him/herself stuffed into an already crowded city, fueling somebody's growing BTL empire, and competing with a new wave of immigrants every year.
  12. Well, that's a step in the right direction, although I wish they'd specify precisely what they mean by "affordable", i.e. are they going to be in the... say, 3.5 x single income range? Or is it the Boris Johnson, 10 x investment banker income range? As for the BTL landlord, do they need to factor that in if their potential loss from the building of 165,000 homes can be replaced by the rent from another 600,000+ new immigrants over the next 3 years, not to mention the natural population growth? I guess that my point is, in order for those new homes to put a downward pressure on house prices, all other things being equal, there needs to be more new homes being built than actual demand from people or BTL'ers who might end up buying these and renting them out.
  13. Absolutely, yes. But then, ultimately, why are any of us on this site in the first place? Isn't it because we want house prices to crash so that, at some point, we can buy a house? The difference is simply that, we here recognize that houses (particularly in the South) currently don't represent VALUE for money. A house that sold for £60k in 1999 hasn't suddenly sprouted 3 extra bedrooms, a pool and a small forest at the back in order to become worth £200k. It simply sat there, as a pile of bricks, gaining magical equity. That extra £140k is not really value for money. Anyway, my point was, If house prices get too far out of reach of an entire generation, it invites political trouble... or rather, a major political opportunity... and thus the pendulum inevitably swings back. So even the political cycle implies that eventually there will be value for money again, even if (sigh) it takes a generation. I am reminded of the "markets" and "solvency" quote.
  14. As an addition to my last post... Since rent is more affected by supply / demand / income than property prices, I think it would be interesting to know... what could a typical Londoner get in the rental market for, say, £800 a month today vs the equivalent amount of money 30 years ago? I know "dances with sheeple" will probably point out that in Edinburgh, rent has barely moved since the Act of Union ... but what about in London? If you can barely get a room in some parts of London for £800 a month, while 30 years ago you could rent a family home in that same area, then I'd suggest either building hasn't kept up, or immigration has had a major effect on rents, or both.
  15. Thanks for sharing that. Looking at the figures, it raises a couple of interesting issues: (1) I notice that in the 1970's, we were building houses at a rate of about 300,000 a year, while immigration was a few tens of thousands at best. That building rate slowed down in the 80's and 90's to perhaps about 200,000 a year, but again, immigration was quite low until 1997. From 2008 onwards, building seems to have dropped to about 120-140,000 a year, but we still have much higher immigration than before 1997. So obviously the credit crunch / financial crisis had a big impact, but we're definitely still not building as many houses as before, while immigration is still "high" compared with the last 100 years. (2) You said: "Local authority building has been ticking up each and every year since 2008 and has grown 700% since then". Yes, from a recent low of 340(!) in 1998-99, to 3,130 in 2010-11. That's still not very many, and you're assuming the growth rate will compound. (It's obviously not going to, as your "housing 1/2 of Europe" idea shows.) This is compared with a rate of 175,550 in 1969-70, or even 67,450 in 1979-80 and the beginning of the Fatcher era. So I accept the point that new home building mitigates some of the effects of immigration, but there has been a vast change from, say, the 1960's to today, which affects the private property market.... - hardly any new local authority building (I think ~3,000 still qualifies as "hardly any") means housing benefit is going in the pocket of private landlords. Immigrants not working are recipients of housing benefit, thus subsidising landlords; and more working immigrants also compete for non-immigrants for housing, thus helping landlords to either increase rent or reduce the size of the dwelling (i.e. chopping up houses). - overall, we're bulding far fewer homes than in the 60's (which had much lower immigration), and while I don't have the stats, I'd think more people are living on their own today than in the 60's. Hmm... I'm not sure what my point is. I think it's that, immigration's biggest effect (in terms of housing) is on the rental market in the South of England. It props up BTL landlords in particular, since most immigrants are not just coming here and buying up £500k homes in Chelsea! And in turn, BTL landlords are creating an upward pressure on house prices, while reducing the supply of family homes as they chop up properties into 1-bed flatlets.
  16. I'd agree, except that the UK population are indoctrinated to believe that they must get "on the property ladder". Personally, I think a more realistic scenario is this: Renting will increase, until the majority actually become renters. When that happens, renters will have more political influence than homeowners. Thus, it will once again become politically expedient to offer genuinely affordable houses - whether it becomes "council houses", "self-buld plots" or whatever. Elections will, in part, be fought and won over genuinely affordable housing. (I emphasize the word "genuinely", in contrast to so-called affordable housing like Boris Johnson was peddling recently). Rather than your scenario, I think we're going to move to a long-term scenario where it will eventually become politically viable to actually offer CHEAP houses to younger people. Your scenario requires that a whole generation will "rent indefinitely" and just accept their lot. Maybe they will for a time, but that generation will grow in political power, and will eventually be able to swing elections. Then we'll see what "indefinite" means in political terms. Economic models and cycles are only of real value if we include political cycles as well. A whole generation priced out of buying a home is a cycle in itself, one that I don't think should be underestimated, although it will take time to play out. Personally, I'm hoping it won't take anywhere near as long!
  17. (1) You're assuming all immigrants are "skint". If that's the case, how do they survive? They either work (thus taking up a job), or live off benefits. (2) Some rent. Thus reducing the supply of rental accommodation to non-immigrants. (3) Some live off government benefits. Regardless of what they do, those millions of immigrants are living somewhere, aren't they? Thus they are affecting the supply of houses in some way, even if they're not buying them.
  18. Funny how that kind of price manipulation in most other industries would be considered fraud, but in oil, it's called "policy".
  19. The real question is, where are the people at the bottom of the Property Ponzi Scheme supposed to find this extra 30% to buy a house... or rather, rent their home from a bank for 30 years? With interest rates at rock bottom levels already, it's going to mean a 30% bigger monthly mortgage payment, or else some other exotic scheme to make it more "affordable" for them. I think this farce might continue until the bottom of the Ponzi pyramid collapses; which might only happen when the government stops coming up with "schemes" to "help" them onto the Ponzi ladder.
  20. 'Cos the model says so. And models are always right, apart from the times they're not. That's over 5% a year, which extrapolated over 30 years is a 332% increase. No doubt wages will have gone up by that amount as well, I'm sure, and first time buyers will be getting assistance from the Bank Of Kidney and Liver Extractions.
  21. Here's what's amazing. If the energy companies said they were going to hike prices by 30% over the next 5 years (which they'll probably do, given their track record), Labour would respond by threatening to cap electricity prices, and the Tories would threaten new regulations (that don't really do very much). But 30% house price inflation? Oh, we'll bung the youngsters a 20% loan and a 20% discount. Quite frankly, if we lived in saner, fairer times, this report would be a wake-up call to politicians that there is a huge problem with our housing "market". Instead, no doubt politicians will see it as a signal to stuff themselves with larger property portfolios. Shameful.
  22. Are they assuming that interest rates will remain at the 300-year emergency low rate of 0.5%?
  23. Well I agree. It's just that no party seems to be willing to allow it.... plus Lib, Lab and Con are quite happy to continue with their "people stuffing", meaning UKIP are (in my opinion) the least worst in that regard.
  24. OK, so this is your rebuttal I presume. Now, your statement is perhaps true as it stands (although it makes a massive assumption that golf course owners will sell out to anything that offers higher returns) ... but why focus on golf courses, which is what Vince Cable apparently did? Why not do the same to the parks and forests as well? They no doubt have more economic value as homes. If we value land purely in terms of "what brings the most economic value", then sure, we should allow homes and nuclear power plants (which probably bring even more economic value than homes, per sq foot) to be built anywhere and everywhere. In fact, come to think of it, why not demolish all the homes to make room for nuclear power plants? OK, I suppose your point is, removing the planning restrictions will allow people to decide how they want to use that land, whether for a golf course or for a housing estate or a nuclear power plant. If THAT is Vince Cable's point, then fair enough. But then, it's not really about "golf courses". The argument is, remove planning restrictions and let people build what and where they want. By the way, I'm not pro-NIMBY, I'm anti-NIMBY. I think the typical nimby is selfish, in that they're ok for their own house to "concrete over the countryside", but won't let any newcomer enjoy the same benefits. However, I'd ask why pick on the golf courses, when we have plenty of land to build on in this country? (And to clarify, I've never played a round of golf in my life, so I wouldn't actually miss them.)
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