The Emperor’s New Hpc

[Guest Alright Jack]

The Emperor’s New HPC

Okay. Here it is.

There wasn’t, isn’t, nor will there be in the foreseeable future a house price crash in the United Kingdom of Great Britain and Northern Ireland.

The underlying economics just do not stack up to this.

You can analyse this thing to death in many different and interesting ways but the simple reality is that a large short-supply in housing stock began to emerge around 1995. And thus began a price run-up to the point of corresponding demand destruction.

At this point prices hold. And so it’s business as usual for those who can afford it. Life’s tough.

Simply; house prices, like any other stock, find their level according to supply and demand.

There is huge demand for housing in the UK – you know this - and plenty of fat pay checks, so the idea of prices falling simply doesn’t make sense given the level of shortfall of stock.

Why such cyclic behaviour of house prices in recent history, prices were stable before this?

Post war UK has been turbulent to say the least! Major demographic, economic and political changes took place adding lots of disturbance. Just look at the volatility in IR and inflation from the seventies. The effects of a population decimated by war left the opportunity for a higher than traditional level of owner occupation – this was never going to last! And the baby boomers did for that.

These ripple effects have dampened and against the stable backdrop we enjoy today, the idea of house prices falling beyond a little here and there - as we have witnessed over the last year - borderlines the ridiculous.

Some people got there, some made a bit of cash and then went back to renting (very well done!)

You have two choices really. You can just accept the situation for what it is and move on already or you can carry on dreaming of 65k detached properties and pump prices of seventy pence a litre.

I wish you all the best.

[zzg113]

Your username is very apt.

[Red Baron]

AND we know who he is.

[Giraffe Cat]

I read that with a big smile on my face as I thought it was going to be a comedy/parody post.

The punchline never came :'(

[Red Baron]

nor will there be in the foreseeable future a house price crash

Really?

Try this for starters; just two of the houses in my area that I have tracked:

Asking price £315 Achieved price £267K 15.2% drop

Asking price £285K Achieved price £240K 15.8% drop

Source: Rightmove and Nethouseprices.

[aclwalker]

AND we know who he is.

<{POST_SNAPBACK}>

Who is he?

[Warwickshire Lad]

simple reality is that a large short-supply in housing stock began to emerge around 1995.

<{POST_SNAPBACK}>

Can you cite a credible source that points to a large short-supply problem in the housing market that started in 1995.

Many thanks, WL.

[Limpet]

quote=Alright Jack,Aug 15 2005, 08:46 PM]

The Emperor’s New HPC

Spot The Loony!!!

[Guest Alright Jack]

Can you cite a credible source that points to a large short-supply problem in the housing market that started in 1995.

Many thanks, WL.

<{POST_SNAPBACK}>

The Barker review.

http://news.bbc.co.uk/1/hi/business/3518866.stm

[Rapid Descent]

Hmm housing in short supply from 95

What happened before '95?

Oooh, yes, a house price crash.

Funny, I remember housing being in "short supply" in the late 80's as well, with lots of people jumping on the bandwagon in the last minute so as not to get left behind.

Can anyone remember how that panned out? I forget.

I'm only hazarding a guess here, but I suspect "Alright Jack" is not playing with a full deck.

[Guest Charlie The Tramp]

the simple reality is that a large short-supply in housing stock began to emerge around 1995.

I`m puzzled, if there is a shortage of housing stock, why within two square miles of my home I can count around fifty new builds houses and flats completed the past six months and unsold.

[Guest Alright Jack]

You can download the Barker report from hm-treasury.

http://www.hm-treasury.gov.uk/consultation...ndex.cfm#report

[Rapid Descent]

Just picked this up from delite1's Rics preview thread:

FT Rics Preview Article

Despite an improvement in buyer interest and an interest rate cut in August, the relatively high stock of property for sale will prevent any significant upward pressure on prices emerging

Must be that supply shortage then

[MrB]

Funny, I remember housing being in "short supply" in the late 80's as well, with lots of people jumping on the bandwagon in the last minute so as not to get left behind.

<{POST_SNAPBACK}>

It's a well known fact that 5 million people got abducted by aliens in June 1989, hence the reduction in demand.

I think Alright Jack needs a troll sized ******** probe.

[Guest Alright Jack]

I`m puzzled, if there is a shortage of housing stock, why within two square miles of my home I can count around fifty new builds houses and flats completed the past six months and unsold. 

<{POST_SNAPBACK}>

Part of the problem is the development of unsatisfactory quality of much of the current stock and of new builds. The government recognises this fact.

http://www.hm-treasury.gov.uk/media/296/69...olicy190705.pdf

This does not increase the stock of proper housing that is in real demand.

Those pokey flats and new builds will sell eventually at lower prices...Falling completion prices define a crash, not falling asking prices. Anyone is allowed to try it on

[DoubleBubbleTrouble]

Part of the problem is the development of unsatisfactory quality of much of the current stock and of new builds. The government recognises this fact.

http://www.hm-treasury.gov.uk/media/296/69...olicy190705.pdf

This does not increase the stock of proper housing that is in real demand.

Those pokey flats and new builds will sell eventually at lower prices...Falling completion prices define a crash, not falling asking prices. Anyone is allowed to try it on 

<{POST_SNAPBACK}>

Err if there's a shortage of supply why are there 50% more unsold properties on Estate Agents books?

Perhaps people are just too lazy to buy them?

[Portent]

Part of the problem is the development of unsatisfactory quality of much of the current stock and of new builds. The government recognises this fact.

http://www.hm-treasury.gov.uk/media/296/69...olicy190705.pdf

This does not increase the stock of proper housing that is in real demand.

Those pokey flats and new builds will sell eventually at lower prices...Falling completion prices define a crash, not falling asking prices. Anyone is allowed to try it on 

<{POST_SNAPBACK}>

Last year in NW London you'd have been laughed at to offer anything below asking price. Now it seems to be the done thing to go in low and work up to a middle ground. So if asking prices are falling then completion prices must be falling even faster.

Also, regardless of the quality of these new properties, if there was indeed a dire shortage then they would be snapped up. They are not being.

[Guest Charlie The Tramp]

Those pokey flats and new builds will sell eventually at lower prices...Falling completion prices define a crash, not falling asking prices. Anyone is allowed to try it on

Well I thought the houses were well built and only asking 380k for a 4 bed, I thought they were a bargain. It was only the 300k mortgage that stopped me buying one.

[Guest Alright Jack]

It's a well known fact that 5 million people got abducted by aliens in June 1989, hence the reduction in demand.

I think Alright Jack needs a troll sized ******** probe.

<{POST_SNAPBACK}>

Yes, 80's was most definately a bubble and did mimic stock market activity in some ways. The important thing is that it peaked and then nose-dived. Very clear cut.

It has been over a year since the undisputed peak of 2004. Nothing much has changed price wise.

The market has found it's level.

Yes, yes, I know. Stock markets don't plateau. This is not the stock market.

[OnlyMe]

We all know the quality and supply type of housing is poor but if the Barker report spent a little more time analyzing the quality of credit controls it would have been nearer the truth of the UK's property problems. The scale of them will become apparent at some point when the bad debts continue to roll in.

[Guest Alright Jack]

Just picked this up from delite1's Rics preview thread:

FT Rics Preview Article

Despite an improvement in buyer interest and an interest rate cut in August, the relatively high stock of property for sale will prevent any significant upward pressure on prices emerging

Must be that supply shortage then

<{POST_SNAPBACK}>

So there is little further upward pressure on prices. That fact is established and accepted - peak 2004.

Of course there is supply at the market level - Suppose you are after some fries from MacDonalds. There will be loads and loads of them. But you won't get them for 30p despite the apparent glut.

If you want the fries, put your hand in your pocket mate.

[Guest Alright Jack]

Well I thought the houses were well built and only asking 380k for a 4 bed,  I thought they were a bargain.  It was only the 300k mortgage that stopped me buying one. 

<{POST_SNAPBACK}>

You seem to be saying that you think the houses that you are looking at are worth the asking prices (or thereabouts). It would be the amount of debt you would have to take on in order to buy that bothers you.

Is this correct?

Despite having a good deposit, your uneasiness about the loan amount means

those properties are probably not right for you in this case.

It depends on what your income is. You shouldn't really borrow more than about 3.5 your income (4 at the very very most!)

[Guest Charlie The Tramp]

Suppose you are after some fries from MacDonalds. There will be loads and loads of them. But you won't get them for 30p despite the apparent glut.

If you want the fries, put your hand in your pocket mate.

I find when they have a glut I get an extra large portion.

[BandWagon]

Sorry, but your argument is riddled with holes.

The Emperor’s New HPC

Okay. Here it is.

There wasn’t, isn’t, nor will there be in the foreseeable future a house price crash in the United Kingdom of Great Britain and Northern Ireland.

Perhaps you could explain the 10% price falls of 2 bed flats in Battersea over the last year? I can support this claim with evidence from the Land Registry, and my own personal experience since selling last year. Considering the last crash took 7 years, I think that's quite an amazing start to this one.

The underlying economics just do not stack up to this.

What underlying economics would that be?

£1.1 trillion of consumer debt, people struggling to repay mortgages at 4.75%, an economy that was artificially propped up by cheap money and the biggest housing boom the UK has ever seen?

An economy that is now heading for a nasty increase in unemployment, and the biggest rise in bankruptcy since the 60's?

You can analyse this thing to death in many different and interesting ways but the simple reality is that a large short-supply in housing stock began to emerge around 1995. And thus began a price run-up to the point of corresponding demand destruction.

At this point prices hold. And so it’s business as usual for those who can afford it. Life’s tough.

What housing shortage?

Rents, which illustrate the demand for housing services, have been falling or at least stagnant for the last few years.

The housing shortage Kate Barker refers to is a long term structural problem.

Note how she refers to houses in the UK rising 2.4% a year over 30 years, against 1.5% in Europe.

That's the effect of the shortage.

That's all it is, not the 25% percent rises that suddenly started to appear since 1996. That's just greed and stupidity.

Simply; house prices, like any other stock, find their level according to supply and demand.

There is huge demand for housing in the UK – you know this - and plenty of fat pay checks, so the idea of prices falling simply doesn’t make sense given the level of shortfall of stock.

The shortfall of stock is bullsh!t sprouted by estate agents and mortgage companies.

Please note once again the Barker report refers to 2.4% a year, over the last 30 years. Once again, the housing shortage is a long term structural problem.

The fat cat pays checks?

House prices are now on average 6 times earnings, against a historical average of 3.5. Your fat cat pay checks aren't so fat, in fact they're pretty skinny. Your argument has no basis for comparison.

These ripple effects have dampened and against the stable backdrop we enjoy today, the idea of house prices falling beyond a little here and there - as we have witnessed over the last year - borderlines the ridiculous.

Prices in Hammersmith and Fulham fell almost 20% annualised at the end of last year (Land Registry data). Prices have recovered slightly since, but this is still a hard fall for a very upmarket borough in London.

Soon it going to hit the rest of the country very very hard.

Some people got there, some made a bit of cash and then went back to renting (very well done!)

You have two choices really. You can just accept the situation for what it is and move on already or you can carry on dreaming of 65k detached properties and pump prices of seventy pence a litre.

I wish you all the best.

<{POST_SNAPBACK}>

We have moved on, we've realised that renting is the sensible option, for as long as it takes for reality to return.

This is the biggest housing bubble the world has ever seen.

Do some reading on the history of the UK housing market, and the behaviour of people in crowds. You may also want to do some reading on economics, much has been publicised by many top economists.

Your arguments are typical of someone who has done very little research and simply believes what they read in the media.

Personally, looking at the current state of the market, and the history of the UK housing problem, I will not be surprised to see prices fall 50% in the next 5 years.

This may seem ridiculous in the context of a healthy economy, but people didn't think prices would fall 30% when they bought in 1988.

Welcome to HPC, we're all here to learn.

Edited August 15, 2005 by BandWagon

[theChuz]

So there is little further upward pressure on prices. That fact is established and accepted - peak 2004.

Of course there is supply at the market level - Suppose you are after some fries from MacDonalds. There will be loads and loads of them. But you won't get them for 30p despite the apparent glut.

If you want the fries, put your hand in your pocket mate.

<{POST_SNAPBACK}>

You will get fries cheaper if no one is buying them and you have to sell them before they go off. Its obviously a crap analogy that youve used because of the prices involved and the spred of items to carry the cost.

Throwing away £1000 worth of fries a day when you make £15000 on other food items dosnt matter a great deal.

If you were to only sell fries and you had £0 profit for that day wouldnt you try and sell the fries at half price and still make £500 instead of nothing?

Isnt this why you get reduced food in supermarkets?

Isnt this why we get sales.

Come to think of it .. at the end of a night in our local chipshop you get more chips otherwise they get binned, you get more for your money.

Like ive said countless times, you can only hold your breath for so long, running at a loss can only be done for so long.

Edited August 15, 2005 by theChuz