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(...) With the last 10 years of out-of-control immigration putting Britain on target for a population of 70+ million within a few years, that equation is set to worsen. (...)

According to World Bank data in the last 40 years our population grew from 55.632 million in 1970 to 61.399 in 2008. 6 millions in 40 years. Not much.

We had a high net imigration from 2004-07, due to the EU expansion, and Britain being the only major older EU country allowing these immigrants. But now all 15 older countries allow immigration from the 8 new countries.

The 70 million projection was made in 2008, and said that IF the high net immigration from these past few years were to continue for the next 10 years then we would have 70 million.

But NET immigration was already much lower in 2009, and it may be zero in 2010, due to our economic crisis.

Now, the estimates are that in the next 10 years our population will probably remain about constant, and could even decrease, like many EU countries, such as Germany or Italy.

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As a newbie on this forum I'm surprised there are veterans that still believe prices are determined by supply and dmeand of property rather than the supply and demand of credit to buy the property. People value property on what its going to cost them each month.

Going back to the original question, until interest rates move back up towards 5% prices will be kept artificially high, i hope and pray we dont end up like Japan with interest rates at zero in 20 years time still, but it is a worrying possibility.

Me too. But sterling was bound to fall, and consequently inflation was bound to go up (us being so dependent on imports - food, energy, etc), as it is going up now, 3.4%, and interest rates will have to go up.

Unless they fiddle with the index again... (See my sig., below.) :(

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This is due to planning restriction. Drive down the A329M from M4 Reading and there are fields on both sides of the road. Can't build, not allowed although the vineyard managed to get planning position for a house! How many houses could you build on the land between the A329M and Forest Road and they needn't be next to the roads? Answer lots and lots.

+ 1

This bubble was created by a pincer movement: Demand boosted by a loose monetary policy, and supply restricted by planning.

Simple, really.

( What I find very difficult to understand is how such a simple phenomena is understood by so few. )

.

Edited by Tired of Waiting
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( What I find very difficult to understand is how such a simple phenomena is understood by so few. )

because it is not a simple phenomena. Just because you have constructed this simplistic reality for yourself doesn't make it true. Of course what you are saying has a strong element of truth, but it is not the whole story.

consequently I predict you will continue to be frustrated as the behaviour of the real world fails to match your simple model. instead of re-evaluating your model, you'll invent a far fetched paranoid conspiracy theory that explains the discrepancy.

Its called cognitive dissonance, and will eventually damage your health, if it has not already.

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because it is not a simple phenomena. Just because you have constructed this simplistic reality for yourself doesn't make it true. Of course what you are saying has a strong element of truth, but it is not the whole story.

consequently I predict you will continue to be frustrated as the behaviour of the real world fails to match your simple model. instead of re-evaluating your model, you'll invent a far fetched paranoid conspiracy theory that explains the discrepancy.

Its called cognitive dissonance, and will eventually damage your health, if it has not already.

finance isnt a science..it cant be modelled, but it can be used to explain things.

People are not predictable at the fringe.

and house prices are currently rising at the fringe...most people who would have been in the market in the last 15 years are NOT in the market.

Too many of the population actually seek and find work that involves little work...something that you are forced to do to put a crust on the table. They work where social interaction is what they do all day.

This is a drain on productive society...where the low wages are.

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because it is not a simple phenomena. Just because you have constructed this simplistic reality for yourself doesn't make it true. Of course what you are saying has a strong element of truth, but it is not the whole story.

consequently I predict you will continue to be frustrated as the behaviour of the real world fails to match your simple model. instead of re-evaluating your model, you'll invent a far fetched paranoid conspiracy theory that explains the discrepancy.

Its called cognitive dissonance, and will eventually damage your health, if it has not already.

:lol:

So supply and demand is "too simplistic for you"?

What is wrong with my view then?

I wrote: "This bubble was created by a pincer movement: Demand boosted by a loose monetary policy, and supply restricted by planning."

.

Edited by Tired of Waiting
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:lol:

So supply and demand is "too simplistic for you"?

What is wrong with my view then?

I wrote:

you have only included one item - housing. There is supply and demand for other things too, namely savings, borrowings, labour and short term vs long term assets, urban land and farmland, oil, and so on. Then there is demographics.

these are all interlinked, because money can move between asset classes, and store of value preference can easily switch, as can the purchasing and spending decisions of the masses and the financial classes.

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you have only included one item - housing. There is supply and demand for other things too, namely savings, borrowings, labour and short term vs long term assets, urban land and farmland, oil, and so on. Then there is demographics.

these are all interlinked, because money can move between asset classes, and store of value preference can easily switch, as can the purchasing and spending decisions of the masses and the financial classes.

Only "included" houses?! That was the topic: house prices!

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Only "included" houses?! That was the topic: house prices!

if asked to analyse the future price of oil, you would not just look at the amount of known oil in the ground versus current demand for it and predict a rise or a fall.

You would have to assess new alternative energy sources, changes in extraction technology, changes in automobile design, changes in population and so on.

there is more to house prices than zoning and interest rates. house prices affect interest rates and interest rates affect house prices. This is a complex dynamic system that is not a simple suppyl demand equilibrium.

Can you use your theory to explain why they had a HPC in the US despite QE and bailouts but we have not had one here?

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if asked to analyse the future price of oil, you would not just look at the amount of known oil in the ground versus current demand for it and predict a rise or a fall.

You would have to assess new alternative energy sources, changes in extraction technology, changes in automobile design, changes in population and so on.

there is more to house prices than zoning and interest rates. house prices affect interest rates and interest rates affect house prices. This is a complex dynamic system that is not a simple suppyl demand equilibrium.

Can you use your theory to explain why they had a HPC in the US despite QE and bailouts but we have not had one here?

You always make such a mess of things. You need foundation. I am sorry but I don't have time and patience now to unscramble your 2 previous posts.

And I wrote "boost" demand - that means beyond normal levels.

.

Edited by Tired of Waiting
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:lol:

So supply and demand is "too simplistic for you"?

What is wrong with my view then?

I wrote: "This bubble was created by a pincer movement: Demand boosted by a loose monetary policy, and supply restricted by planning."

.

Restricted supply? :blink:

Can't move for overbuilding round my way.

There was so much of it people like inside track were selling it before it was ever built! There are swathes of empty properties in most of our cities.

What short memories some people have..............Perhaps it was the wrong sort of snow eh?

Still, so long as 263% of economystics are happy in their little world of make believe fantasynomics.

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and for those thinking planning restrictions should be lifted to deal with excess demand, what happens when/if demand falls? Its easy to add new houses to the market but very difficult to remove them when they are no longer needed.

a house has a shelf life of what - 100 years at least?

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if asked to analyse the future price of oil, you would not just look at the amount of known oil in the ground versus current demand for it and predict a rise or a fall.

You would have to assess new alternative energy sources, changes in extraction technology, changes in automobile design, changes in population and so on.

there is more to house prices than zoning and interest rates. house prices affect interest rates and interest rates affect house prices. This is a complex dynamic system that is not a simple suppyl demand equilibrium.

Can you use your theory to explain why they had a HPC in the US despite QE and bailouts but we have not had one here?

Maybe you are overcomplicating this as opposed to TOW simplifying it? You appear to be using the ‘it’s complicated’ argument for the sake of disagreement without considering the simpler facets.

I appreciate that you state there are many factors involved in predicting (or trying to) the movement of house prices but then again there is also the trend of house prices over the last century to look at and also to see the relationship between house prices and incomes. I think you are overcomplicating what is essentially quite simple even for non-economists to get their heads' around in that house prices are STILL in a bubble are still overvalued no matter what you compare them to and the likelihood is that they will still correct at some point soon. It isn’t difficult to extrapolate that something is going to have to give pretty soon.

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It isn’t difficult to extrapolate that something is going to have to give pretty soon.

well that's an easy argument to make and no doubt correct, but in itself is pretty useless unless you can say how soon, and how large the correction is likely to be, and whether the correction is a real or nominal one. Also of significant interest would be whether the change is a permanent move to a new equilibrium or whether it is a correction in an ongoing trend of HPI or even HPD(eflation). To do this you need to consider the factors I mentioned, and it is complex.

All these factors are important for someone thinking of buying now or in the near future, and unless these points are addressed its pretty pointless waffle to say that something is going to give, a statement which imparts no information of any use.

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and for those thinking planning restrictions should be lifted to deal with excess demand, what happens when/if demand falls? Its easy to add new houses to the market but very difficult to remove them when they are no longer needed.

a house has a shelf life of what - 100 years at least?

132968d1249843825-q-headphone-style-ear-defenders-block-loud-music-sledgehammer.jpg

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well that's an easy argument to make and no doubt correct, but in itself is pretty useless unless you can say how soon, and how large the correction is likely to be, and whether the correction is a real or nominal one. Also of significant interest would be whether the change is a permanent move to a new equilibrium or whether it is a correction in an ongoing trend of HPI or even HPD(eflation). To do this you need to consider the factors I mentioned, and it is complex.

All these factors are important for someone thinking of buying now or in the near future, and unless these points are addressed its pretty pointless waffle to say that something is going to give, a statement which imparts no information of any use.

It’s too difficult to give specifics within the current economic and political climate, there are too many variables depending on what happens next to be more specific than that I'm afraid.

So actually, no, it isn't pointless waffle it is entirely sensible because it describes the current state of things which in turn should possibly warn people off making rash decisions with regards to the housing market. What you are describing is the desire for black and white but what I am describing is currently greyer with a note to say 'watch this space because something is going to give and therefore it is important not to put all your eggs in one basket right at this minute if you can stay liquid'

Far from being pointless waffle it is more useful than most of the black and white arguments going on at the minute.

And FYI, I have little VI either way other than the fact I simply believe that property prices as they stand are at socially destructive levels.

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All these factors are important for someone thinking of buying now or in the near future, and unless these points are addressed its pretty pointless waffle to say that something is going to give, a statement which imparts no information of any use.

Thinking about the medium term ... how many people aged 20 - 25 now (who currently have not bought their first property - so the vast majority of them) will be able to afford an average house in 10 years time?

At some point in the next few years (not talking about crises here, or central London) house price inflation must grind to a halt due to the fact that there will not be enough new entrants to the market. When all the cash buyers have bought, when all the Mum and Dads able and willing to have released their equity (how? by re-mortgaging? who's going to pay the mortgage? by down-sizing? who's going to buy the property at the bottom of the chain? maybe them if they want to buy a flat) - the market must stop. And that's without taking rises in interest rates into account.

At the point when the market stops - there is just no more money laying around to keep feeding it - the gulf between what an average person is able to pay for an average house and the price of that average house will be immense. Maybe as much as 50%. I really struggle to see how someone entering the housing market now - buying a 200k flat with a big mortgage - will ever be able to pay the half million demanded for a decent house.

At some point in the future that half million pound house will have to halve in price - or we'll have to have significant inflation.

What other options are there?

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BTL - a few more tax breaks, MIRAS style relief for BTL and lower capital gains tax levels. And don't say the government will not do it, whatever it takes to keep HPI going. According to my MP BTL was encouraged originally because it was believed that it would lead to lower private rents :D

It would, IF they were new-builts, thus increasing the supply of housing. But most BTL were just properties previously occupied by owners. No new capacity.

Edited by Tired of Waiting
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What other options are there?

I'd say that the equilibrium point, for now, is some way down from where we are now, maybe 10 or 15%.

I'd day that in future, economic growth will be lower and interest rates will accordingly be lower. So that ought to result in a price/earnings ratio some way in excess of the historical 3.5X norm, though when credit availability normalises to the new normal I'd expect overall repayments affordability tp be pretty much in lnie with the long term norm.

As boomers retire, one might expect houses to come down in price but it is not guaranteed all the housing stock will remain viable. We might in some scenarios see detroit style situations played out in the UK where whole cities and towns get abandoned, which keeps supply tighter than might be imagined.

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According to World Bank data in the last 40 years our population grew from 55.632 million in 1970 to 61.399 in 2008. 6 millions in 40 years. Not much.

We had a high net imigration from 2004-07, due to the EU expansion, and Britain being the only major older EU country allowing these immigrants. But now all 15 older countries allow immigration from the 8 new countries.

The 70 million projection was made in 2008, and said that IF the high net immigration from these past few years were to continue for the next 10 years then we would have 70 million.

But NET immigration was already much lower in 2009, and it may be zero in 2010, due to our economic crisis.

Now, the estimates are that in the next 10 years our population will probably remain about constant, and could even decrease, like many EU countries, such as Germany or Italy.

That is an outrageous use of data for a subject that should really only be discussed devoid of facts.

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Exactly but when the new-builds did not happen what did Labour do. Nothing, the MPs just joined in the feeding frenzy.

Yep. The most economically devastating case of collective hysteria I have ever seen.

And from that interview Brown gave in Cardiff (in another thread) it looks like he is still in it: Houses in America are too affordable now - according to Brown, a Labour PM... :huh:

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