Economy House Price Vs Oil Peek

[Odin]

I've been reading with much interest about house pricing, comodity prices and natural resource scemarios.

Housing construction relies on the price of oil. If the price of oil is now set to continue to rise does that not put the housing market in a position help prop the price up. I (think I) understand the time frame for house price vs general domestic borrowing boom (being an immediate problem) and the oil price rise is a slow longer term thing that will hit us all (once oil inflation occures and worked through the economic system).

If a economic downtown keeps occuring what does history say about the rate of oil consumption, does its growth in anyway track that downtime (to slow growth in consumption) so an econominc downturn now will in effect fend off (for a handful of years) the real oil peak crisis ? or even the downturn never recovers to today levels because if a recession lasts 10 years by that time the oil peak problem will hit us all.

Will China just eat up whats left over as they continue to boom while the west stagnates due to its own debt circle ? How much of China economy relies on the west, is it a lot more self suficient ?

What if I were to argue that house prices will fall in the short term (3 years) but come back to their current levels a lot sooner than expected because the cost of materials and construction becomes much higher due to material costs escalating (china, oil peak).

I've mixed a lot of things in here and maybe I talk about chalk and cheese. Please set me straight.

Your Thoughts ?

[Unexpected]

What if I were to argue that house prices will fall in the short term (3 years) but come back to their current levels a lot sooner than expected because the cost of materials and construction becomes much higher due to material costs escalating (china, oil peak).

No I just dont see logic in your point Odin. The cost of a house is hardly at all linked to the cost of materials to build it. I agree that house prices will fall in the short term but I also believe they will fall in the long term too.

High oil prices will just make houses cheaper due to the fact that people will have to spend more of their money on oil based products (mostly petrol) and therefore will have less money to spend on housing.

The rise in Oil price will cause almost all products to be more expensive but housing will not be one of them.

[Odin]

No I just dont see logic in your point Odin. The cost of a house is hardly at all linked to the cost of materials to build it.

Currently yes I agree. And you think this will hold true within the mortgage lifetime of a house purchased today (read as the next 25 years).

How much oil do you think it takes to build a house and process all its raw materials and transport the labour needed to do it ? How much do you think it will cost to supply those oil consuming products to build a new house in say only 12 years time.

As we agree on one thing, todays house prices are hardly linked to the cost of materials, that means to me there is a huge amount of possible movement in that factor in a future market.

[Kam]

Currently yes I agree.  And you think this will hold true within the mortgage lifetime of a house purchased today (read as the next 25 years).

How much oil do you think it takes to build a house and process all its raw materials and transport the labour needed to do it ?  How much do you think it will cost to supply those oil consuming products to build a new house in say only 12 years time.

As we agree on one thing, todays house prices are hardly linked to the cost of materials, that means to me there is a huge amount of possible movement in that factor in a future market.

<{POST_SNAPBACK}>

We'd probably see a switch to Timber and SIPs houses, with more focus on energy saving,

[Unexpected]

We'd probably see a switch to Timber and SIPs houses, with more focus on energy saving,

<{POST_SNAPBACK}>

When was the first barrel of oil produced? Look at the amazing buildings put up long before oil was ever used. Building products will always be available locally so transport will not be a consideration.

Better worry about how you will be able to afford to go on holiday rather than the additional cost of building materials.

[Odin]

When was the first barrel of oil produced? Look at the amazing buildings put up long before oil was ever used. Building products will always be available locally so transport will not be a consideration.

Better worry about how you will be able to afford to go on holiday rather than the additional cost of building materials.

<{POST_SNAPBACK}>

Without getting too much into the detail of this, yes I agree buildings were put up before mainstream use of oil was adopted as an energy source in their construction. As I dont know any specific date for that lets call this period the last 120 years, however looking around you now how many buildings are there that are older than 120 years ? I can point out plenty that are over 60 years old that look set to last for another 60 still.

There maybe a few thatched cottages and limestone grit buildings scatted in pockets around the country, I'm just not convinced we can switch to a modern version of those and it have zero effect in the price of your existing house and maintain the current levels of new construction.

I would also argue that a switch in construction methods doesn't happen through foresight, it will be led by economic reasons to do so, and for economic reasons to occur there must already be another economic change that motivates that shift. So your switch in construction techniques argument

already supports my case that in the future there will be construction issues to overcome. Presumably that would send house prices higher.

My implicit hint throughout this thread was that if the cost of a new construction was to increase significantly that must have some effect on the justifiable market cost of an existing building. An effect that may never have been significant before.

I'm saying this will have no impact on housing in the short term, but may be the cause of the next house price rise after. Even when general economic downturn persists at that time due to oil throttling.

This does not alter the board concensus for the best window to buy property will be after the imminent adjustment that sparks off a general downturn. We're all just waiting for any one of the economic legs to cave in, unmasking the crippling reality that is "burden of debt".

When was the first barel of oil produced? Crude Oil Used And Traded 1000BC So I can only offer the pyramids of egypt as being the most amazing buildings created before the first barel of oil

Open question, When is the last barel of oil predicted to be produced ? Yes a nonsense question as there is always oil, its just not viable to extract for either economic or enegy deficit reasons. I'm hearing somewhere around the 30 years time mark, if this is worst case scenario based on what is actually available against a continuing rate in consumption. If the price goes up then consumption will drop so that 30 years may in reality stretch out to 90 years.

I am expecting that in 25 years (the lifetime of a mortgage taken out today) to average person in the UK will not be able to afford the use of a car powered from oil, but then we must be the worst taxed nation in the world. I wonder when it will be back to building homes with a horse and cart.

We can always go on holiday to the seaside aboard a locomotive.

[Unexpected]

Oil price increases causing house prices to increase

"There maybe a few thatched cottages and limestone grit buildings scatted in pockets around the country, I'm just not convinced we can switch to a modern version of those and it have zero effect in the price of your existing house and maintain the current levels of new construction."

At least the thatched cottages will give you some straws to clutch at

[sp1]

For producers to pass on costs rises is only possible when demand enables this. The current and growing trend is that supply of accomodation (for purchase and rental) is growing all the time and the government seem set to increase this further...So builder wont be able to pass the cost on....houses will become a home for most people again and not a pension or inflation hedge or investment or make 100,000 people millionaires in 5 years pyramid scheme.

Yes the extent to which we drive asian economies is of great interest, I think you'll find most direction by digging out just how much our down turn will dominow onto them, thier prices will drop cos they have over capacity giving the west a cover to go on inflationary money supply ..... but only after thier sentiment has turned and thus thier domestic demand will be curbed as will ours so my current view is the commoditiy bull market will experience an unpriced correction too.

Most media dont connect the fall in housing to a deep western recession.

The media that does the above then mostly fails to link our recession into a global recession.

THe media that does the above ignores the effect on reducing global commodity demand in the way the first lot of the media doesnt acknowledge the housing crash will bring domestic recession....

The last groups seems to call on "this time its different paradgims" to off load thier resources stocks and commodity portfolios to th public. (this is my view).

Do you believe mat simmons (twilight in the dessert) is really the first person to have done what he claims, as if governments and armies are so unprepared...? It is to provide a divertion of attention from the planned economic mis managment.

And to achieve domestic and global agendas.

No one is telling you to buy a CFD on raw market prices for energy or derivatives of the like. Cos that is the thing that will go up ....they are telling you to buy stocks and portfolio assets that the insiders see heading down over a long bear market when it gets rolling.

IF peak oil (and the stustainable ramping in global demand which) makes its timing pertinent now were true. Then I beleive you would get the media denial like we saw in housing all last year to avoid panic and to keep the ball rolling. Its not happening cos its a calculated public infatuation (as is terrorism do you know haow many thousands are in prisions in muslim countries the colonial authorities chose to give the minority freedom of attention to create a diversion. Find out about pearl hrbour and death f kennedy and anthrax postal deaths...its not alot for governments to lett enemiers take small gains for a bigger agenda) to divert attention.

like he ERM of previous recession to provide a part of the scape goat..

this time price of energy became inflationary (not the loose money supply) and we tried to manage things by cutting rates but cos of unforseeen rising energy we had to rank up rates our hands were tied...every one was caught off guard...honest!

Seriously dont you see how the senate hearings into the iraq oil for food was staged propaganda and how the current senate drama over china currency float and trade tarrifs is all part of the propaganda...i'm sure the same was true for the senate meeting he mention in the past.

Edited August 18, 2005 by sp1