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House Price Crash Forum

The Housing (antiques) Road Show

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The problem with the core language of property-speak is that the notion of the "market" seems solely concerned with pricing and not, as it should be, concerned with provision. The house market is a bit like the antique market, since apart from new houses (which form the vast minority of transactions) all people are doing is passing the available stock to and fro, with an expectation that each time they do so, somehow the price will rise.

In any other industry this would be an absurd idea since true profit can only be made by real work which produces goods people actually want and at a price they can afford, and successful economies have a healthy degree of competition which encourages a downward pressure on real-term prices.

The property business completely reverses this idea. Thus when prices stabilise or slightly decrease this is absurdly considered a "collapse in the market" or "a disaster". In fact the opposite is true. In truly healthy and stable economies there is a fair balance between income and capital costs of housing, and the notion of shelter and housing becomes an ordinary and insignificant part of living.

This used to be the case in for example France....until the British started distorting the property market there by buying up quaint old places and "doing them up". Before this, a French house was considered to be a place in which to live, not a vehicle by which one speculated, accumulated and invested.

Like the antique market, the UK property market is predicated on the conventional wisdom that a finite number of valuables can be infinitely bartered and exchanged between the same group of people with the price rising each time. It is no surprise to see therefore that the UK in particular has a parallel obsession with attending antiques fairs, boot sales and county fairs most of which sponsor the endless exchange of tat and dubious objects of so called "value" with again an expectation that each successive round of sales will ad infinitum increase the price.

But real economies are based on the production of goods and services which are competently made, efficiently marketed and sold with a focus on value to the customer. The idea that a property market (new housing excepted) can somehow substitute for real economic growth is absurd. Eventually someone has to pay for all that housing inflation and the accompanying profits made by those who were lucky enough to benefit.

For each person who gains personally from house inflation another person is absorbing the cost. Similar to pyramid selling the whole thing MUST eventually collapse because in the end you run out of people who are able or willing to pay for the accumulated profit of others.

In the case of housing the unwilling and unable are the first time buyers, initially frightened into buying for fear of being left behind, but eventually they are priced out and dig their heals in. When this point is reached, no matter what interest rates are and no matter how cheap and easy loans are, inevitably prices must fall.

In a truly advanced society housing is something that people should not have to fight for to attain, but nor should it be a substitute for work and the production of goods which actually benefit that society. It should be the role of all governments, whatever their political complexion, to curb the excesses where such excess produces a distortion and mismatch between normal economic wealth and unsustainable property inflation.

Of course the Bulls will see this post as a threat to capitalism, or a socialist rant. It is neither. The exploitation of spiralling housing costs has absolutely NOTHING to do with enterprise. At its core, it is a self dillusion that somehow getting rich from housing is a contribution to free enterprise and healthy capitalism. It is precisely the opposite. Real enterprise involves real work.

It is not desirable for house prices to collapse, neither is it desirable for them to spiral out of control. We need a housing policy which provides for all at a reasonable cost and without the need for anxiety on the part of those who are as yet out of the loop. You cannot describe a nation as advance or civilised if a significant proportion of its population has to run through hoops just to get a roof over its head.

To this end the vast majority of estate agents and other property professionals are grossly irresponsible in perpetuating the myth that permanently rising prices are desirable. They do so for entirely selfish reasons.


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The housing market is really two linked markets, one for houses and one for land. These two assets are treated quite differently; one house price may be dominated by its building cost, since it is built on freely available land, whereas another (eg in central London) may have its price dominated by the land value (for example my £500K terraced house has a £145K rebuild cost).

Houses can be improved or new ones built. Land values can be changed (new towns, fashionable areas, flooding etc).

These processes are linked, but not identical. You can build a brand new house and then watch its value drop due to local flooding. Or you can buy a old house and watch its value rise as the area becomes fashionable.

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The land is the asset VP & the house is the liability. To keep the liability running in line with the rest of the market, it needs to be maintained & upgraded when necessary.

The exclusive right to use the land in perpetuity is what helps it be valuable. Without that, it would just be a liability (see leasehold flats for an example).

Antiques & any other commodity were produced in the past and will continue to be produced in the future (today's Beckham shirt is tomorrow's antique). There is no limit whatsoever on how much can be produced so therefore bubbles are much more likely in this market.

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Dr Bubb,

Your own "agree" statement answers your "disagree" statement. By "true" profit I suppose I meant exactly what you said in your "agree" paragraph: ie: it may be a tangible and lucky profit for you, but your profit is someone else's loss!

In the production and sale of goods and services, the idea is that everyone profits either from cash made by the seller or the usefullness to the buyer in relation to the price of the goods. On this last point current housing prices fail to pass the test.


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