Unmoderated

I think you might be right. Earnings, I think, will continue to grow at a reasonable rate for a few years yet and then the public sector will have to, inevitably, catch up with the private sector where all the better increases have been this side of the pandemic. Getting that ratio of HP to income back to a 3X or 4X would be wonderous for affordability and all the while the IO BTL spivs will be getting torched. It's beautiful.

Really depends on how much 'help' government gives. BTL is the epic risk here. Run down properties that haven't been well maintained - just the minimum - for years will struggle to sell at what even a bank might value them. That's where the forced sellers will be. The top end also looks very fragile. Lots of IO and/or high multiple mortgages were only available to people on large salaries. I'm seeing a lot of big and impressive houses around me come up and sit on the market (£2M+ bracket in Berkshire). 30% would be the most extreme end. As you point out (rightly imho) what matters is real prices. They're down a lot already. It is even possible that nominal falls are curtailed to sub double figures if wages continue to rise.

Eh? Wind yer neck in Blobsy I think if you've read some of my posts you'll see I've changed my tune on inflation. I'm aligned with Scottbeard as of a few weeks ago. Core inflation did surprise on the upside and I think we're going to get another 0.5% this year. I would really like for house prices to drop 30% nominally. I can actually see it happening now but these things are fast up and slow down. My view is the most totally f***ed group are the interest only BTLs. I have heard stories within my network already of people with places that are not washing their face. Only a matter of time until they're fire selling to get what they can back or end up defaulting and being repo'd. Couldn't happen to a nicer bunch. Anyway, that's the forced sellers required to start the storm. Markets price as margins so that will be that. FTBers and MEWers will be in -ve equity. The HPC of 2023-25 is nailed on but you've not won until you've won. To that you need to buy a house at the bottom. Some on here have big savings and are ready to go. Good for them! I wasted many years reading this site and making my own decisions on a crash that never materialised. Now it's here I am thankful I'm in a relatively strong financial position. Contrary to your assumptions I'm not an EA (but I was for a brief period many years ago and it gave a very useful insight into the market). I'm a chartered accountant these days. No job is safe but I've been in role for coming up 10 years. They could make me redundant but that would be expensive and I've got a lot of savings right now since I was hoping to renovate the house. Not going to happen now though. Roll on the crash. It'll be even better in real terms. P.S. When I come off my fixed rate in 3.5 years it would be rather nice if inflation is under control and interest rates back to 1%. Just for January 2027.

I would say that this is mostly correct. Most landlords, especially new ones, are sensitive to maximising their revenues and profits. New ones more so since they paid higher prices and have less equity, typically. However, there are many instances where the rent being charged is/was lower than the market rate simply because landlords managed it themselves and were old, or on the fiddle and wanted to keep a trustworthy tenant paying in cash and forwarding the wife's mail back to him (the latter so they could pretend it wasn't rented etc). All kinds of little details and circumstances that meant landlords could afford and had an incentive, to charge less than the market would bear. Now, if your BTL mortgage costs are going up you'll want to be covering that and so rental prices will all get jacked up. There is still that ceiling which I think is your point really - that mortgage rates do not change the market rental value directly - but they will in many cases create upward pressure on existing rentals that were a 'good deal'. I think a second point is that renting and buying are good substitutes since nobody want to move in with parents or friends or be homeless (long term anyway). If the price of a substitute increases then there's some feedback into comparable products etc. Not trying to be argumentative and I do see what you're getting at. I'm probably just over thinking everything as usual!

Good report! This clown hasn't a clue. I am wondering if you're right and they're up to their eyes in it and wants to believe that the myth of supply shortage will put a floor under prices. I say this with a very big mortgage but I can't wait for prices to plummet. I think we're going to see at least 20% off from peak. No question now.

You're logic is sound economically speaking. In bond markets things work as you describe (but the other way around). You might purchase a bond paying 6% for £100. If interest rates fall then the bond will increase at face value since people will pay more for a 6% rate until the point that the yield to maturity or redemption is whatever the rate is at the time. The sensitivity of change in value to change in interest rate is referred to as the 'modified duration'. Housing is different to bonds of course. Rental yields (comparing as an investment vehicle) is variable while most bonds are fixed in coupon payments and par value. People get emotionally attached to places and do not always need to sell. They can wait it out, over pay etc. The other point to note is that while interest rates were very low there was some thought put into how much they might rise by when people took these loans. People should be able to afford higher interest rates. People at the margins wont but by and large the majority of people can still pay their mortgages at 5%. Despite the super low rates these past couple of years I think my first mortgage rate was around 2.5%. Granted that's low by historical standards but it's not a million miles from today.

Don't flatter yourself. I think it's pretty clear you're totally wrong and have to stoop to invent things to try and claw back any credibility. You are blocked and reported

Perhaps you're a little too simple? "What is the evidence that debunks the "not enough supply" theory for why house prices are so high??" Saying the same thing repeatedly and offering zero evidence other than "Google it" (you utter joke of a debater) doesn't mean it's true. The OP is asking for evidence that debunks the theory and you sit there dribbling out unsupported nonsense.

Doesn't he just! Perhaps we should stop feeding the cantankerous little troll.

Totally off topic and increasingly inane. Where did I suggest people shouldn't get housing? Seems like you're trying to goad me into some reaction which is lame. Stick to the topic.

You clearly don't understand this at all do you? It's hard to accept you've been misled. I do understand . You're well off topic. To remind you, the OP, @tbeckbeck, wants to know how to debunk the theory that it's supply and demand causing high house price. You're not doing anything of the sort lol. It's clear you do care. You keep repeating the same nonsense without any compelling argument. You're parroting the garbage dribbled out by property programs for decades. Building societies, Bank of England, London School of Economics etc all say that it's not a supply issue but a credit issue. Apparently though, you know best. Better than all the rest. You mentioned council houses - you don't qualify if you're loaded and you're not on the list if you can house yourself so that's what I'm talking about. I'm responding to your points. You spitting out so much nonsense that even you can't keep pace. What, in my response, suggests I look down my nose at those less fortunate? That's quite a pathetic ad-hom and untrue. I actively support those with housing issues. Actively support with my own time and money. Why do you think prices fell in some regions? Was it because they built more houses to fix the "shortage"? Then you flip to the demand side, rather than the supply side. How much further would those houses have fallen in price had it not been for ZIRP, QE, IO mortgages etc etc? Learn how to construct an argument and stop wasting everyone's time.

@Insane Even the Bank of England admit it's their policies that have caused this rather than supply and demand lol https://positivemoney.org/2019/09/bank-of-england-confirms-positive-money-analysis-of-house-prices/

I would not take you as the authority on anything. What has water being wet got to do with your point? You stated a shortage and gave zero examples or logic or justification. I can google anything, why don't you formulate a reasoned response? I'm not saying everyone is adequately housed. Not everyone is adequately fed but it doesn't mean there's a food shortage. Try and keep your line of reasoning logical. Allocation problems do not mean there's a shortage of housing. The "big laugh" is that household formation has lagged building by 500K over the last decade. For your example to hold water household formation would need to at least keep pace with the rate of house building. London councils have waiting lists why? Because those people can't afford property because it's too expensive. You take the seriously simple, basic, line of thought it's because of a shortage while missing the stacks of empty apartments in London. Now you're proposing that you build houses for a specific group of people who can't afford things themselves. Building at someone else's costs to give a house to someone that can't afford it on the open market woudl house those people yes. That's not to say there's a shortage nor is it an example. I think you're just refusing to see the point that, as in Japan, Sweden, UK, USA, everywhere you look, it is credit that overwhelming is responsible for driving house prices. The example of Japan is simply to show you that regardless of supply in the short term prices can go to the moon without a shortage. It seems you accept this? Or you dont? The number of empty houses in the UK continues to rise: https://www.leedsbuildingsociety.co.uk/_resources/pdfs/press-pdfs/press-releases/empty-homes-week.pdf But there's a shortage .... apparently.

LOL, The OP is asking about ways to debunk the housing shortage argument. I'm just demonstrating that a large part of this is down to the availability of cheap and easy credit. As to a shortage it's still not agreed as defined. Are there enough houses to go around? Has building kept pace with household formation? https://blogs.lse.ac.uk/politicsandpolicy/tackling-the-uk-housing-crisis/ The reports of a housing shortage are simply (no offence) the basic person's argument for house prices only going up. "They aren't making any more land" etc. There's not a shortage of houses. There might be an allocation problem which building will not necessarily solve. https://www.telegraph.co.uk/news/2022/06/30/no-housing-shortage-britain/ https://www.economicshelp.org/blog/183129/economics/is-there-really-a-housing-shortage-in-the-uk/ Look at Japan. Property prices there went crazy in the 1980s. At one point I think Japan was worth 33% of the global real estate market!! Was there a sudden population boom or a sudden loss of housing?

IIRC the refugee boat refused help repeatedly to ensure it didn't get turned around.

Not all second homes are tenanted, far from it. BTL is BTL but one in ten people own at least two properties. Air BnB, Holiday Lets etc all place more pressure on existing housing stock. Are they going to build houses if prices fall? It seems like the volume builders are already slowing down. I'm sure the perception of a shortage of housing is justified for many spanking everything onto a house and a mortgage and the housing market is a local market so there are local shortages but people are moveable, houses are not. In response to the OP I'm not sure there is a national shortage of housing (there's an allocation issue and this has been debated on other threads) and if you restricted lending to 3X one earner you'd have house prices back to affordable levels in short order. The monster increase in house prices over the last 25 years has come about from the credit markets imho. Was there a sudden drop in population in 1990 and in 2008 or a massive increase in supply? House prices fell in those times which coincided with a huge increase in the cost of borrowing (1990) and with a sudden contraction in the credit markets (2008). Then they launched help to buy in 2013 and made borrowing easy again and the rest is history.

We have millions who are over housed and millions more who own more than one house. So is it a shortage or an allocation issue? In other words, if we just build more what is to stop them being hoarded and not allocated? Perhaps social housing might work? Just thinking aloud.

It seems like you're suggesting a conspiracy. The people setting central bank rates are not doing as they please. They're running it based on models.... The market has, for the last 15 years, enjoyed central banks buying back debt. That's not quite the same as setting interest rates so you're now drifting into QE. Right now market expectations are for lower inflation and rates in the future. The fun this is that if you disagree you can bet against it. Let us know how you get on

Spot on! If transaction costs were lower and especially SDLT people would e less inclined to move twice. So many stretch to get something that will be great for them in 10 years time but not ideal for now. Ironically, around six years ago, I bought a bungalow as a project but that's now on hold given the cost of borrowing. I might have bought the house I die in!

Totally disagree. There are people who are underhoused and there are people who are over housed. I'm not saying it's fair to kick a widow out of her family home. It's also not fair to make someone raising a family in a two bedroom flat pay taxes to pay said widow's late hubby's final salary pension, winter fuel allowance and triple locked state pension plus goodness known's what else. I'm no proposing anyone lives in a tiny house am I? I proposing people live in appropriate houses. Widow could be perfectly happy in a two bed bungalow or ground floor flat. The growing family could not yet this the where we find ourselves.

My example of homeless was simply that if we have not been building enough houses for decades while the population has increased 25% then we would, in theory, have millions homeless? This is the point. How would someone define a shortage in the first place? The UK has enough houses and enough bedrooms for everyone. There are holiday lets, holiday homes, over housed etc that mean there's an allocation issue (this is discussed a length in another thread on this forum). There's also an issue of location. Housing markets are local. We might have a million empty houses in Scotland but that doesn't solve the housing issues in central London.

Here's some phrases from last time: Extend and pretend Delay and pray

The banking class (who? lol!) don't decide interest rates. The market and the MPC decide. Nobody is getting bailed out, this is not a financial crisis. The system does not require it. We have disinflation already and it's quick, look at the annual figure last month and this month. I admit, one month doesn't make a recovery and I also think inflation will not hit 2% for a while but what matters is the MPC's view on inflation 18 months ahead. If they think it will be lower in, say 3 years time than the target we can expect lower rates. The yield curve is predicting lower rates in the medium term. I don't think saying inflation has peaked and interest rates will fall equates to mortgage rates back at 1.69% anytime soon but it does mean the worst is, probably, passed.

Have we ever lived in a period when there were zero homeless? I have friends who live in vans believe it or not. One sold his beautiful house because he split with his ex. He could have kept it but decided he didn't fancy getting a full time job and enjoyed partying too much. Far more privileged upbringing than I. I'm not saying it's easy, nor that everyone has access to the house they want/need. But the question is what does a shortage of supply look like? If it's as dire as people are trying to say then homelessness wouldn't just be up a little would it?

Haha, thanks I love classic comedy. Hadn't heard of this one.