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cardiffone

Should House Prices Really Go Only With Inflation?

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Should house prices have really only gone up inline with inflation over the last 20-30 years?

Seems a lot of people think that way.

I dont agree entirely, the standard of housing stock in the UK has improved enormously over the past 20 years.

Many of the "overpriced" areas in my home town include large areas of victorian and edwardian housing.

Around 20-30 years ago many of these houses where occupied by retired people who had lived their most of their lives in these houses, many were in a poor state of repair.

They where often damp, had no central heating, rotten windows, poor or unfashionable decoration and unkept gardens, stone work was often peeling or blackened with pollution, roofs and gutters where coming to the end of their working lives.

In these areas today the majority of these houses have been renovated by younger owners, with more cash, they are simply not the same houses.

In recent times there has been a massive drive in home improvement, DIY has become far more common place and housing standards have risen.

Yes there are still bad areas, and yes the prices of un-modernised house are often driven up by being in the same street as "done up" properties.

The point I'm making is that the houses on sale today in most of the more "desirable" areas are not the same as the houses on sale 20 years ago, they are in general of a higher standard.

So I think it is a mistake to believe that housing prices should only have risen inline with inflation.

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That's partially the general increase in quality of living with time, and partially genereal ongoing maintainance, or catching up on the lack of it. If it's the former then there's no reason not to go up with inflation (it's one of the reasons that there is inflation), if it's the latter then it should simply be moving back to a long-term inflationary trend from a period below it caused by being too cheap to do repairs.

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I dont agree entirely, the standard of housing stock in the UK has improved enormously over the past 20 years.

The point I'm making is that the houses on sale today in most of the more "desirable" areas are not the same as the houses on sale 20 years ago, they are in general of a higher standard.

Are you having a laugh? I'd say in the majority of cases, the opposite is true. :unsure:

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Are you having a laugh? I'd say in the majority of cases, the opposite is true. :unsure:

You simply are not right on that count. Living standards have been increasing over time not decreasing.

And this is certainly the case in many areas of victorian and edwardian housing, which along with georgian housing make up the most expensive housing stock in most UK cities.

There are still pockets of neglect, but this is not like the 70's and 80's in which i grew up.

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That's partially the general increase in quality of living with time, and partially genereal ongoing maintainance, or catching up on the lack of it. If it's the former then there's no reason not to go up with inflation (it's one of the reasons that there is inflation), if it's the latter then it should simply be moving back to a long-term inflationary trend from a period below it caused by being too cheap to do repairs.

True, but remember when many of these older houses where built there where no electrics, no central heating, no double glazing ( though much of the UK's double glazing is pig ugly ), often small kitchens, and terrible bathrooms and out side toilets.

So it not just a case of maintenance, but significant improvement in many cases.

Edited by cardiffone

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You simply are not right on that count. Living standards have been increasing over time not decreasing.

And this is certainly the case in many areas of victorian and edwardian housing, which along with georgian housing make up the most expensive housing stock in most UK cities.

There are still pockets of neglect, but this is not like the 70's and 80's in which i grew up.

Thats down to energy supplies, not inflation or money.

prices MUST keep with inflation.deflation or you end up with bubbles...as they have.

Prices are determined at present by credit availability. nothing to do with ability to pay.

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I think you need to draw a distinction between the improvement of existing stock and new builds, which are rubbish in comparison to council houses from the 50's IMO.

I would agree with you on that, I'm mainly referring to victorian, edwardian and georgian houses. These are the most common housing types in the most expensive areas of most cities in the UK, and the areas that have risen in price the most over the last 20 years.

I would say they have dragged up the prices of the other areas of lower quality housing as people have been priced out.

I cant believe people actually buy the lego houses of todays suburbs...

Edited by cardiffone

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I would agree with you on that, I'm mainly referring to victorian, edwardian and georgian houses. These are the most common housing types in the most expensive areas of most cities in the UK, and the areas that have risen in price the most over the last 20 years.

I would say they have dragged up the prices of the other areas of lower quality housing as people have been priced out.

I cant believe people actually buy the lego houses of todays suburbs...

ah - a fan of the magnolia and laminate. Twigs in a pot?

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Lets imagine for one minute we accept that hosing stock is better. Couldnt you argue that most things have got better over time? So should the maximum rate of inflation for houses be on a similar par to all other goods?

Cars have indisputably improved over time. Would be interesting to track the price of an entry level family saloon over 15 - 30 years and the corresponding increase in house price. The increase in quality of cars is there for all to see. Improvement in housing stock is far more debatable.

Edited by Caveat Mortgagor

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Lets imagine for one minute we accept that hosing stock is better. Couldnt you argue that most things have got better over time? So should the maximum rate of inflation for houses be on a similar par to all other goods?

Cars have indisputably improved over time. Would be interesting to track the price of an entry level family saloon over 15 - 30 years and the corresponding increase in house price. The increase in quality of cars is there for all to see. Improvement in housing stock is far more debatable.

But car price changes depend on changes in the cost of production of cars.

The cost of building a car is not directly related to the cost involved in upgrading a house.

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But car price changes depend on changes in the cost of production of cars.

The cost of building a car is not directly related to the cost involved in upgrading a house.

Maybe ive helped you to start answering your original question.

Please clarify though, upgrading or maintaining? And (regardless of the cost of doing so) do all upgrades add value?

Edited by Caveat Mortgagor

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I think the improvement in housing stock has little to do with the increase in values. Ultimately it’s the willingness/ability and availability of finance of the buyers that dictate prices. There are so many other factors involved in price increases, but I would think that improved housing stock is not one of the main drivers, (UK housing is still quite poor by Western Standards, yet the values are much higher, say than Europe or North America) Prices have went up slightly more than inflation, mainly because of the credit bubble, and you see prices now deflating since 2007 in real terms, so eventually it will fall back in line with inflation. But remember thats wage inflation.

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Should house prices have really only gone up inline with inflation over the last 20-30 years?

Seems a lot of people think that way.

I dont agree entirely, the standard of housing stock in the UK has improved enormously over the past 20 years.

Many of the "overpriced" areas in my home town include large areas of victorian and edwardian housing.

Around 20-30 years ago many of these houses where occupied by retired people who had lived their most of their lives in these houses, many were in a poor state of repair.

They where often damp, had no central heating, rotten windows, poor or unfashionable decoration and unkept gardens, stone work was often peeling or blackened with pollution, roofs and gutters where coming to the end of their working lives.

In these areas today the majority of these houses have been renovated by younger owners, with more cash, they are simply not the same houses.

In recent times there has been a massive drive in home improvement, DIY has become far more common place and housing standards have risen.

Yes there are still bad areas, and yes the prices of un-modernised house are often driven up by being in the same street as "done up" properties.

The point I'm making is that the houses on sale today in most of the more "desirable" areas are not the same as the houses on sale 20 years ago, they are in general of a higher standard.

So I think it is a mistake to believe that housing prices should only have risen inline with inflation.

House prices can only rise with increase in wages, as now in a lot of cases people are having to take pay cuts, pay freezes and other income cuts and there are more to come. Nothing more that affordability.

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  • 140 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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