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Financial Times:live Discusion On Hp An Ir

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http://news.ft.com/cms/s/24bd2d9a-0372-11d...000e2511c8.html

Douglas McWilliams, chief executive of the Centre for Economics and Business Research, answers your questions on interest rates and house prices in a live debate today (Thursday August 4 ) from 1pm BST

An example question and reply;

Q: Do you think that by lowering interest rates, and enticing more first time buyers into an overpriced market, the bubble in house prices will be further inflated, raising the possibility of a hard landing in the future?

Peter J Dunbar

Douglas McWilliams: No. Until the supply of housing is increased to cope with demand, I’m afraid that the high price of housing in the UK is largely not a bubble but the reflection of a supply demand imbalance.

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Why do economists answer sensible questions with stupid 'punch-line' answers?

This is clearly not the case as there are huge amount of houses up for sale around the country which are not selling.

It does totally undermine the creditbility this man!

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"Until the supply of housing is increased to cope with demand, I’m afraid that the high price of housing in the UK is largely not a bubble but the reflection of a supply demand imbalance."

I've just been reading the list of Q&As and that's the comment that I found did most to discredit his answers. You would expect more analytical rigour and less simplistic VI claptrap from a supposedly expert economist.

Edited by PhilT

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What a load of horse $hit! More housing has been thrown up in the last 5 years than adult population increase!

Sorry but that is not true unless you ignore immigraton of course!

Net migration into the UK has averaged 157,000 a year over the last 6 years.

The UK’s population is projected to rise by 6.1 million from 2003 to 2031 – 5.2 million (84%) of this rise is due to immigration. That’s equivalent to a city the size of Portsmouth every year, or 5 cities the size of Birmingham over the 28 year period, needing to be built because of immigration.

59,000 new homes will be required in England each year for the next 17 years for immigrants alone.

http://www.migrationwatchuk.org/

Edited by 737

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Net migration into the UK has averaged 157,000 a year over the last 6 years.

Utterly irrelevant when many of those immigrants are working illegally and living six to a room. If there was such a lack of supply, there wouldn't be dozens of empty flats on my road and my parents would be renting out their spare rooms to dozens of immigrants. They're not.

The reality is that British people are selling up and emigrating, freeing up housing, while lots of foreign workers are coming here to live as cheaply as possible and make a nice little nest-egg to take home with them. They ain't coming here to pay 300k for a two-bedroom shoebox.

Edited by MarkG

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And he seems to be relying alot on the UK "as a nation of property-obssessed

borrowers"

To be fair, what else are they going to do? The only hope they have left is that people keep borrowing more and more money to keep the fantasy going.

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Sorry but that is not true unless you ignore immigraton of course!

Net migration into the UK has averaged 157,000 a year over the last 6 years.

The UK’s population is projected to rise by 6.1 million from 2003 to 2031 – 5.2 million (84%) of this rise is due to immigration. That’s equivalent to a city the size of Portsmouth every year, or 5 cities the size of Birmingham over the 28 year period, needing to be built because of immigration.

59,000 new homes will be required in England each year for the next 17 years for immigrants alone.

http://www.migrationwatchuk.org/

So, are you saying that house prices have increased partly due to increased demands resulting from immigration?

frugalista

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Q: Do you think that by lowering interest rates, and enticing more first time buyers into an overpriced market, the bubble in house prices will be further inflated, raising the possibility of a hard landing in the future?

Peter J Dunbar

Douglas McWilliams: No. Until the supply of housing is increased to cope with demand, I’m afraid that the high price of housing in the UK is largely not a bubble but the reflection of a supply demand imbalance.

In reply to the favourite of all VI lies;

According to National Statistics Office, Population Estimates, Mid 2003

"The UK has a growing population. It grew by 232,100 people in the year to mid-2003.......The UK has an ageing population. This is the result of declines both in fertility rates and in the mortality rate. This has led to a declining proportion of the population aged under 16 and an increasing proportion aged 65 and over. "

From the red above, if we take last year in isolation, the UK built 125,000 homes for 232,100 people:

Implied occupancy = 232,100 / 125,000

_______________ = 1.86 persons / household

According again to the government Social Trends Survey (see Chapter2, Households and Families, table 2.1) household occupancy Great Britain Percentages for the past forty year sor so have been thus:

Occupancy________1971___ 1981___1991_____2001_____2003

One person__________18______22______27_______29________29

Two people__________32______32______34_______35________35

Three people________ 19______17______16_______16________15

Four people_________ 17______18______ 16______ 14________14

Five people__________8_______7_______ 5_______ 5_________5

Six or more people____ 6_______4_______ 2_______ 2_________2

Average _________ 2.9_____2.7_____2.5______2.4______ 2.4 persons / household

So taking last year in isolation, in the UK:

Houses built as % of those needed = 2.4 / 1.86  * 100 = 129%

Put another way, we built 29% more houses than were needed.

Couple this with the 718,720 empty homes across the country (Empty Homes agency) an dthe very real prospect that owners of such homes will be forced into compulsory letting by the government (House of Commons Hansard debates, 11 May 2004 ) and one wonders just how pressing the supply issue really is! Remember the stress is always on shortage of affordable homes. For FTBers, affordability can be solved just as easily by a house price crash as by building more homes.

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So, are you saying that house prices have increased partly due to increased demands resulting from immigration?

frugalista

No, after reading the posters on this BB I realise I was mistaken, apparently the 157,000 net immigrants into the UK per annum are all living in one room at the bottom of someones garden and therefore have no effect on the housing market at all.

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The 'demand outstripping supply argument' always annoys me. I'm sure in parts of the South-East this is true, but it's a well know fact that house prices have risen rapidly at rates well above inflation in all areas of the UK. These obviously include those where there is no great influx of people. Since when has Blaenau Ffestiniog (to name one of many) been the hotbed of immigrant activity:

http://www.upmystreet.com/property/prices/...Ffestiniog.html

People speculating using easily gained credit is the obvious answer so why not state it?

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apparently the 157,000 net immigrants into the UK per annum are all living in one room at the bottom of someones garden and therefore have no effect on the housing market at all.

Again, if there's such a desperate demand for housing, why are there so many empty flats around the country? Why do my parents have three empty bedrooms in their house that they could rent out?

'157,000 net immigrants' tells you absolutely nothing unless you know what kind of living arrangements those immigrants are using and how they compare to the hundreds of thousands of people _leaving_ the country every year.

Statistics are worthless without analysis. In fact, as a general rule, statistics are just worthless.

Edited by MarkG

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Sorry but that is not true unless you ignore immigraton of course!

Net migration into the UK has averaged 157,000 a year over the last 6 years.

The UK’s population is projected to rise by 6.1 million from 2003 to 2031 – 5.2 million (84%) of this rise is due to immigration. That’s equivalent to a city the size of Portsmouth every year, or 5 cities the size of Birmingham over the 28 year period, needing to be built because of immigration.

59,000 new homes will be required in England each year for the next 17 years for immigrants alone.

http://www.migrationwatchuk.org/

The problem is that nobody wants building in their backyard, only 2% of the UK is urban/built on, there's masses of land in this country that we just don't need anymore for farming.

I don't understand why the majority of the population should be forced to live in tiny, expensive housing so that a tiny few can look out over green fields. I'm not suggesting we build everywhere but we could release far more green land than we do to relieve the cost of building and the pressures of fitting more and more people into smaller spaces.

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Again, if there's such a desperate demand for housing, why are there so many empty flats around the country? Why do my parents have three empty bedrooms in their house that they could rent out?

'157,000 net immigrants' tells you absolutely nothing unless you know what kind of living arrangements those immigrants are using and how they compare to the hundreds of thousands of people _leaving_ the country every year.

Statistics are worthless without analysis. In fact, as a general rule, statistics are just worthless.

Kate Barker’s interim report was published on 10 December, key findings are summarized below.

The number of houses being built in the UK is not keeping pace with demand and damaging the wider economy, according to the independent review of the UK housing market.

In 2001, around 175,000 dwellings were built in the UK – the lowest level since the Second World War. And over the past ten years, the number of new dwellings built has been 12.5% lower than in the previous decade.

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The number of houses being built in the UK is not keeping pace with demand and damaging the wider economy, according to the independent review of the UK housing market.

So why are there so many empty flats around the country?

People can keep harping on about high demand and lack of supply as much as they want, but the reality is that large numbers of the executive shoeboxes built in the last few years are _empty_.

Where's the demand? Where's the lack of supply?

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The problem is that nobody wants building in their backyard, only 2% of the UK is urban/built on, there's masses of land in this country that we just don't need anymore for farming.

I don't understand why the majority of the population should be forced to live in tiny, expensive housing so that a tiny few can look out over green fields. I'm not suggesting we build everywhere but we could release far more green land than we do to relieve the cost of building and the pressures of fitting more and more people into smaller spaces.

Spot on post!

I drove down the A1 from Leeming to Wittering (135 miles) the other day and, apart from a few around the edge of Leeds, hardly saw a house (or a farm animal for that matter) - you could have built tens of thousands of extra detached homes with huge gardens and hardly noticed them. Instead in this country we force people to live in the smallest housing sizes in Europe. Why? Because a few aristocrats and PLCs own most of the land and anly release it in dribs and drabs. A land tax is the answer but will never happen as these land owners punch well above their weight (politically).

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The number of houses being built in the UK is not keeping pace with demand and damaging the wider economy, according to the independent review of the UK housing market.

Amazing that 737 ackmowledges munimula's point without acknowledging what munimula wrote here : <{POST_SNAPBACK}>, a post which I am extremely grateful for, having quite lost the will to resubmit similar material myself. Merely rehashing the old chestnuts about housing shortages is clearly no longer sufficient to explain the cost of housing.

Edited by Sledgehead

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http://news.ft.com/cms/s/24bd2d9a-0372-11d...000e2511c8.html

Douglas McWilliams: No. Until the supply of housing is increased to cope with demand, I’m afraid that the high price of housing in the UK is largely not a bubble but the reflection of a supply demand imbalance.

Ah,right! So that's why there are an historic number of UNSOLD houses flooding the market...because they are in short supply. Of course...how stupid of me. And what did the program do to challenge this idiot statement? Nothing.

I despair.

VP

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No, after reading the posters on this BB I realise I was mistaken, apparently the 157,000 net immigrants into the UK per annum are all living in one room at the bottom of someones garden and therefore have no effect on the housing market at all.

I will interpret your reply as sarcasm, and I presume you do indeed believe that immigration is a driving factor of house price inflation.

The mechanism by which this causal link is supposed to work is housing demand. More immigrants, more demand for housing, increased cost of housing, increased house prices. Right?

If this mechanism is in effect why over the last 10 years have rents only increased a smidgen above inflation?

Surely the fact that rents are only gently rising refutes any explanation for house price inflation based on housing demand. Including the immigration argument, which is a demand based argument.

frugalista

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I will interpret your reply as sarcasm, and I presume you do indeed believe that immigration is a driving factor of house price inflation.

The mechanism by which this causal link is supposed to work is housing demand. More immigrants, more demand for housing, increased cost of housing, increased house prices. Right?

If this mechanism is in effect why over the last 10 years have rents only increased a smidgen above inflation?

Surely the fact that rents are only gently rising refutes any explanation for house price inflation based on housing demand. Including the immigration argument, which is a demand based argument.

frugalista

Rents may well be a lagging indicator, figures from Paragon Mortgages show annual rents have risen by an average of 10.4% since last September, from £9,542 to £10,544. The average house price, on the other hand, has gone up just 2.6% over the same period, from £153,727 to £157,791, according to Nationwide.

Edited by 737

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  • 337 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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