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If A Shortage Of Land Explains High House Prices ......


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So .....

There is a finite amount of land in the UK that artificially supports house prices beyond normal affordability levels according to the bulls.

How do we reconcile this argument with the fact that the estimated value of land that will be sold near the Olympic facilties is now 60% below its estimated value at the peak.

Does this not support the notion that open market land values have dropped massively which should pressure closed market house prices to follow?

The Government Olympic Executive’s annual review declared the project on-time and still under the £9.3 billion budget, but revealed that projected receipts from the sale of land near Olympic Park have been reduced from £250 million to just £100 million as a result of the crash.

http://www.telegraph.co.uk/sport/othersports/olympics/london2012/7199786/London-2012-Collapse-in-land-prices-costs-organisers-150m.html

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The Bulls answer:

Perhaps there are few buyers of large parcels land, therefore it's value drops more, despite the UK is a tiny, tiny ovecrowded island.

Large parcels of land are more illiquid than a small plot, where finance is easier to arrange for.

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The Bulls answer:

Perhaps there are few buyers of large parcels land, therefore it's value drops more, despite the UK is a tiny, tiny ovecrowded island.

Large parcels of land are more illiquid than a small plot, where finance is easier to arrange for.

For the Ponzi scheme to continue, don't the owners of large pieces of land need to keep buying it up, carving it up into smaller pieces and selling it on at a massive profit?

If the beginning of the food chain loses faith in the Ponzi scheme, the end of the food chain has to follow suit eventually.

I have always believed that it is up to the major participants to maintain the illusion of liquidity and growth in failing markets to perpetuate the myth. Once they stop doing this, the end is near.

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Guest The Relaxation Suite

So .....

There is a finite amount of land in the UK that artificially supports house prices beyond normal affordability levels according to the bulls.

How do we reconcile this argument with the fact that the estimated value of land that will be sold near the Olympic facilties is now 60% below its estimated value at the peak.

Does this not support the notion that open market land values have dropped massively which should pressure closed market house prices to follow?

http://www.telegraph.co.uk/sport/othersports/olympics/london2012/7199786/London-2012-Collapse-in-land-prices-costs-organisers-150m.html

Their argument is absolute rubbish. Australia has enough land to house millions of people and they are in a terrific bubble. Also Spain has much more land than the UK and only 45 million people, and they too are in a bubble. Meanwhile, tiny Newfoundland and Nova Scotia in Canada are very small places with extremely affordable housing.

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Guest The Relaxation Suite

Yes, but they are both severely economically distressed as well, I've lived in both St Johns and Halifax.

Property is cheap as chips almost everywhere that you wouldn't want to live.

True, but even in the good times property there was very affordable. The fact is that the demand argument is a nasty little trope trotted out by those who don't want people to know that the prices are high because they are being kept high deliberately in the interests of 0.001% of the population. Britain's size has nothing to do with it. If small, busy booming places meant massive house prices then New York State would have very high housing, or Massachusetts. It might behigh relative to SD or somewhere but not compared to UK.

Edited by D-503
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The uk might be small and overcrowded compared to other countries , but it is not that small or overcrowded that we do not have enough land to house everyone adequatly without building over the whole of the green belt or other countryside.

The land with planning permission is kept in small supply to keep the price up . This has had a devastating effect on our econemey and peoples standards of living .

When the governement talk about building as much housing as is needed the nimbies shout out loud and the governement use their shouting as an excuse to not to build enough housing for everyone to have a decent home at a reasonable price.

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So .....

There is a finite amount of land in the UK that artificially supports house prices beyond normal affordability levels according to the bulls.

There is still plenty of land to build on, many people attack the tight planning laws for restricting supply to the point we have a shortage. I travel around he country on trains and cars and always keep an eye out for new housing (built in the last 20 years) and it makes a significant proportion of many towns an villages. I grew up a village that has added 20% to the housing stock in the last 10 years, I believe that this is fairly common. It was the first private development in several hundred years (shows the size of the bubble)

I have always believed we do not have a shortage but we do not have a huge glut of properties that is experienced in the major crash countries. This has helped us in the early stage of the crash but bubble land prices will return to mean.

My family own land on the out skirts of a town that has been assigned for development in the town plan and just waiting for a buyer to take the scheme to development so happy to be proven wrong on this.

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yeah, i dunno, i expect that a lack of new building has played a part in all that's happened but this factor pales into such insignifance beside the number one variable [laxity of lending] and other important ones such as interest rates that it's barely worth discussing.

e.g. scotland's population is famously still lower than it was in the 1960s but it was at the forefront of the housing bubble, seeing higher house price inflation than east anglia, the single area with the highest number of immigrants coming in.

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So .....

There is a finite amount of land in the UK that artificially supports house prices beyond normal affordability levels according to the bulls.

Well, there is a definitely a finite amount of land in the uk, but the problem isn't an objective shortage of land (as inferred by many of the bull's arguments) The problem is caused by the fact that once the land is owned, there is nowhere for the next person to get access to land but to one of the installed landowners

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e.g. scotland's population is famously still lower than it was in the 1960s but it was at the forefront of the housing bubble, seeing higher house price inflation than east anglia, the single area with the highest number of immigrants coming in.

Check out Ayrshire at large. The pricing is out of control in what is essential a giant junkie benefit estate. Yes there are a few nice spots, but in general the whole shire is an economic catastrophe.

A shining star of the speculative housing bubble, on its long, painful way back down to reality.

Although, it is a lovely scenic part of the UK, except for the locals.

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There is no shortage of land. You could buy the agricultural land for a house, with a nice garden for £1000. The problem is the over-restrictive planning laws. The planners do not even do what they are supposed to do. Witness all the houses being built on flood plains. Every NIMBY has the same thought going around his mind; "if they build more houses around here, then demand for mine will fall, then I will have to sell for less". The result is they do not want any houses built, ever, near them.

If Britain is so crowded, then why are they allowing the uncontrolled immigration? Since every immigrant requires a house, why are numbers not tied to new house building?

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yeah, i dunno, i expect that a lack of new building has played a part in all that's happened but this factor pales into such insignifance beside the number one variable [laxity of lending] and other important ones such as interest rates that it's barely worth discussing.

e.g. scotland's population is famously still lower than it was in the 1960s but it was at the forefront of the housing bubble, seeing higher house price inflation than east anglia, the single area with the highest number of immigrants coming in.

Scotland's issue is driven by their secret auction process - sealed bids. If the price was publicised as in a normal auction then peopel wouldn't overbid all the time.

Ultimately everyone in the UK is going to want to live in Greater London or Edinburgh so prices will tend to infinity there and zero everywhere else :)

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Check out Ayrshire at large. The pricing is out of control in what is essential a giant junkie benefit estate. Yes there are a few nice spots, but in general the whole shire is an economic catastrophe.

A shining star of the speculative housing bubble, on its long, painful way back down to reality.

Although, it is a lovely scenic part of the UK, except for the locals.

I didn't know that Ayrshire was that bad. My mother grew up there in the middle of nowhere on the moors.

Somebody on this site once described Scotland as one massive council estate. :(

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Certainly in rural areas the planning system is very restrictive. In our village (desirable, but not that great for services) we have a planning envelope. Within the planning envelope landowners have a chance of getting a planning application approved, subect to the fairly onerous local conditions. Outside the planning envelope the land is "Green Belt" and considered rural - no applications have any chance of succeeding at the moment. The planning envelope does not extend beyond the existing houses in any direction.

The result is that gardens, orchards and small bits of land within the envelope have all been built on over the last 10 years. There is now no easily accessible available land. One villager recently applied for 3 "retirement" bungalows to be built on his disused overgrown orchard behind his garden. Such was the fury of his NIMBY neighbours that he has decided to sell and move away!

Our village is now seemingly stuck - not enough life for a shop, decent bus services, school, viable pub, post office. And an unwillingness to allow any more houses.

The average size of house has also increased over the last few years. At least 20% of the existing stock has been extended, there are now very few 3 bed houses.

We do have a tiny amount of LA 3 bed houses with good sized gardens and a small development of "starter homes" for FTBs. Unfortunately the LA houses are filled with long term tenants going nowhere soon, and the last "starter home" was sold to an elderly couple who managed to sneak round the section 106 by claiming to be FTBs as they had no property to sell. (STR's!).

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It's the price of land that rises and falls.

The building cost is not subject to this variation and in fact from an accountance perspective it depreciates consistently once it is built.

thats right, the Poles with their low wages had no influence on building costs.

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The uk might be small and overcrowded compared to other countries , but it is not that small or overcrowded that we do not have enough land to house everyone adequatly without building over the whole of the green belt or other countryside.

...

A factoid: most of the population is in England; Scotland has a population density similar to Tunisia or Syria... yet prices still went mad!

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I know people bang on about location . People sometimes say it three times. I think that where the land to be released is is crucial. I think demand for a limited resourse is crucial.

To illustrate this I just checked out a list of the 100 most wealthy people in the world the last on the list had a mere $5billion

If you were to “invent” a pill that gave eternal youth (well say 250 years) but could only make 100 I think they would end up in the hands of the 100 weathiest people.

ie. I think anyone offering $4 billion would be out bid.

I thinks its similar with property the few thousand properties in exclusive parts of London are set by the most wealth few thousand people .

I think the price of the several houndred thousand houses within half a mile of a tube are set be the withiest several hundread thousand people.

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If you were to able to build over the whole of Hyde Park the price of the land would be astronomic. The price would be set based on city of London Standards , wealthy foreign buyers, premiership footballers etc

In London if you look at the price of a property about half a mile from a tube as against 1 mile form a tube. There will be a significant difference in price. The price will be set by people on more modest salaries , inherited money etc.

My brother who is a vicar has just bought the home (April 2009 ) he will live in when he retires . He is working in Stoke on Trent and the property cost him £92k. A Three bedroom property with a garage. Hard for a Londoner to believe.

The price is set by people like my brother who does not earn a lot of money.

If you could somehow release another 25 acres of land in central London . The price of property here here would fall.

If you were to release another 2500 acres in stoke its not going to make an aweful lot of differences.

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Ultimately everyone in the UK is going to want to live in Greater London or Edinburgh so prices will tend to infinity there and zero everywhere else :)

So why have these places had reasonable house prices previously then ? Did people all evacuate from London and Edinburgh in the mid 90's ? Must have missed that myself...

10 years ago house prices in Edinburgh were very reasonable. It was also a nicer place back then IMO than it is today. On top of that - today the City is awash with huge areas of brownfield land, with planning permission for 20,000+ houses/flats, sitting doing nothing. With builders ready and desperate to work, sitting doing nothing.

Anyone who tells you high house prices in Edinburgh are down to anything other than a ridiculous bubble - is either a lying EA or simply does not have a clue.

Yet still they fall, even here in this haven of delusion and denial.

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  • 439 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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