Uk Property Prices - Why So High.

[Meat Puppet]

Also not many countries in the Euro zone have higher taxes and more social housing provision.

If you where in China, Morocco, Algeria, Tunisia (just the ones I know) you would think prices of UK homes where reasonable levels of income of course they are in even larger bubbles.

There is definitely something about having your own currency/closed currency that helps retain a bubble ... maybe wrong but it seems to ensure your ability as a government to keep levels of monetary liquidity artificially high.

There is also a strange psychology that spreads through the population. In Thailand a citizen can buy land anywhere and put up a house of their choice on it, yet every decade (or less) prices for mass manufactured concrete boxes on planned estates reach exorbitant levels. What little constitutes the middle class there then submits themselves to mortgage slavery when they could build a nice traditional Thai home themselves for about 10% the cost.

I guess its the greater sucker syndrome that fuels bubbles everywhere.

[Tired of Waiting]

It is simply the same mania which swept through Holland a few hundred years ago, where tulip bulbs became such a desired commodity that people would trade ten years' wages for a single tulip bulb.

Exactly the same as tulip bulbs, houses are only worth as much because everybody agrees they are.

Actually they had a better argument for the tulips than we had for houses: tulips reproduce themselves.

[Harry Monk]

Actually they had a better argument for the tulips than we had for houses: tulips reproduce themselves.

That is what developers thought BTL flats were going to do.

[Tired of Waiting]

That is what developers thought BTL flats were going to do.

You have a point there.

[Tired of Waiting]

Germany had a house price boom in the 1980s - they've been in a slow 'bust' phase ever since. If you compared housing costs in Germany and the UK in, say, 1995 you'd find that UK housing was much cheaper at that time. It's just at a different phase of the cycle now and heading down perhaps permanently due to demographic change (Germany's population is static and about to start declining). France has an awful lot more land than the UK and a different culture when it comes to housing - people are happy to live in apartments and don't require a home with a garden like most people in the UK do. So building new houses in France requires less land on average. Also, as you point out, we have mighty restrictive planning laws that are there to 'protect' the 65% majority of home owners who already have a house to live in. During the boom the UK was building no more than 200,000 properties a year. The Irish repubilc, with 1/15th of the population of the UK, was building 60,000 a year. Now Ireland has had a proper house price crash because there is genuine oversupply - in the UK it hasn't happened because supply is still tight despite the mortgage famine. So basically you're right - the problem is the cost of land. When a house that costs 60K to build sells for 200K, you're paying 140K for the land. Utter madness.

Good post.

Best part: "we have mighty restrictive planning laws that are there to 'protect' the 65% majority of home owners who already have a house to live in."

Selfishness, to the point of cruelty (denying young families their own homes) has caused the biggest economic crisis in the country's peace-time history. The fvcking b@stard NIMBYs. (See my sig.)

[Tired of Waiting]

No thats not true, depends on location.

France and germany are both much larger than the UK, and a cheep farm house is much more likely to be a long long way from anywhere..

Germany has 20 million more people. Their population density is very similar to ours (and almost double France's). Yet, houses cost much less in Germany, even in cities.

Besides, the vast majority of people in developed countries live in and around cities. The size of the more distant countryside (like in France) has very little impact on these houses' prices. What influences prices the most in the short term is finance, and in the long-term, structurally, planning laws.

Our structural crisis is a consequence of the selfishness of our NIMBYs, and complicity of our governments (local and central, and both main parties) and mainstream media. Bunch of short-sighted fecking b@stards, all of them. (See my sig. below.)

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Edited October 30, 2010 by Tired of Waiting

[profitofdoom]

Germany had a house price boom in the 1980s - they've been in a slow 'bust' phase ever since. If you compared housing costs in Germany and the UK in, say, 1995 you'd find that UK housing was much cheaper at that time. It's just at a different phase of the cycle now and heading down perhaps permanently due to demographic change (Germany's population is static and about to start declining). France has an awful lot more land than the UK and a different culture when it comes to housing - people are happy to live in apartments and don't require a home with a garden like most people in the UK do. So building new houses in France requires less land on average. Also, as you point out, we have mighty restrictive planning laws that are there to 'protect' the 65% majority of home owners who already have a house to live in. During the boom the UK was building no more than 200,000 properties a year. The Irish repubilc, with 1/15th of the population of the UK, was building 60,000 a year. Now Ireland has had a proper house price crash because there is genuine oversupply - in the UK it hasn't happened because supply is still tight despite the mortgage famine. So basically you're right - the problem is the cost of land. When a house that costs 60K to build sells for 200K, you're paying 140K for the land. Utter madness.

Between 1986 and 2004 I sat,as an elected District Councillor on a Planning Committee.In those years we saw density of estates rise inexorably as the big developers tried to squeeze more and more profit out of smaller pieces of land.It ended with detached 4 bed houses on a plot where,from the back garden,you could see the roofs of 13 other properties.

At the same time as this was going on Senior planning officers who were determining policy were working actively to reduce building outside existing developments.In every case that I knew of those officers lived out of town in "nice" little villages with their pretty houses and patches of land.Obviously I got to know some of them quite well over eighteen years.Their children went to village schools and had a very nice life away from the urban sprawl.

Now it occurred to me that it wasn't right that these people were in charge of policy making.It's true that Councillors had the ultimate say but as soon as someone new was elected they were quickly pounced upon and encouraged to "go native" by the planners. So it's actually worse than just NIMBY ism.The Nimbys are the ones guiding the legislation because they are the planners.IMHO no development should be allowed at above 8 per acre and planning laws should be loosened to allow villages to expand by at least 50% in numbers.There should also be a statutory maximum price set for land,maybe £400,000 per acre.

[Tired of Waiting]

Between 1986 and 2004 I sat,as an elected District Councillor on a Planning Committee.In those years we saw density of estates rise inexorably as the big developers tried to squeeze more and more profit out of smaller pieces of land.It ended with detached 4 bed houses on a plot where,from the back garden,you could see the roofs of 13 other properties.

At the same time as this was going on Senior planning officers who were determining policy were working actively to reduce building outside existing developments.In every case that I knew of those officers lived out of town in "nice" little villages with their pretty houses and patches of land.Obviously I got to know some of them quite well over eighteen years.Their children went to village schools and had a very nice life away from the urban sprawl.

Now it occurred to me that it wasn't right that these people were in charge of policy making.It's true that Councillors had the ultimate say but as soon as someone new was elected they were quickly pounced upon and encouraged to "go native" by the planners. So it's actually worse than just NIMBY ism.The Nimbys are the ones guiding the legislation because they are the planners.IMHO no development should be allowed at above 8 per acre and planning laws should be loosened to allow villages to expand by at least 50% in numbers.There should also be a statutory maximum price set for land,maybe £400,000 per acre.

Thanks for that profitofdoom. I've learnt another aspect of it.

ToW

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Edited October 30, 2010 by Tired of Waiting

[SHERWICK]

People in Britain, as a nation, generally speaking, are greedy, selfish, mentally inept, devoid of scruples and family values, and to top it off, we are manic gamblers.

This differentiates us from most of Europe.

Yes, but we have cricket.

[Democorruptcy]

There should also be a statutory maximum price set for land,maybe £400,000 per acre.

Are you sure it should be that high?

[Executive Sadman]

Are you sure it should be that high?

I reckon most landowners would love to sell at a fraction of that price. Some relatives of mine had a housing association development near then, the landowners were gagging to sell a couple of acres for £86k iirc. It was greenfield land and far more than they'd get without planning.

[profitofdoom]

Are you sure it should be that high?

I was working with that figure on the basis of a maximum.Obviously in a nice village in the Home Counties a single quarter acre plot for £100,000 would be a bargain.I would guess that currently it might make three times that.

[Meat Puppet]

I was working with that figure on the basis of a maximum.Obviously in a nice village in the Home Counties a single quarter acre plot for £100,000 would be a bargain.I would guess that currently it might make three times that.

The stats that the CLG publish say in the southeast a hectare of land with planning permission goes for £2.3 million so just under a million for an acre.

Apparently a hectare cost over £4 million in 2007.

[profitofdoom]

The stats that the CLG publish say in the southeast a hectare of land with planning permission goes for £2.3 million so just under a million for an acre.

Apparently a hectare cost over £4 million in 2007.

So my guesstimate for a quarter acre plot was virtually spot on?

[Meat Puppet]

So my guesstimate for a quarter acre plot was virtually spot on?

Yeah for a guestimate that is about as good as it gets.

[erranta]

House prices are so high in the UK because the people that bought them as a home and to live in suddenly saw them making more money a year than what they could earn a year...the banks saw an opportunity to make money so obliged in lending whatever was required to meet the craving to 'get rich quick'......the banks were very happy to lend because they were earning 7% to 9% interest good returns, they held the title/deeds so their money was secure, everything was all hunky dory until the money ran out.

That's a wonderfully naive way of thinking (the banks want you to think that) - but you're kidding yourself!

The Synchronised, Globalised Financials planned a decade+ ahead for the synchronised Global housing rip-off just like they took Billions off ordinary punters that Thatcher et al encouraged (the little people) to buy shares with their meagre savings and got wiped out by the manufactured City .com/moc(k) bust!

Seeing how the B.O.E. and Govt can force base interest rates to stay @ 0% makes me realise just how much they were manipulating us in the past (in the City) to take Billions of Pounds out of ordinary punters pockets to fill banks with overcharged interest - for decades!

Edited October 30, 2010 by erranta

[winkie]

Between 1986 and 2004 I sat,as an elected District Councillor on a Planning Committee.In those years we saw density of estates rise inexorably as the big developers tried to squeeze more and more profit out of smaller pieces of land.It ended with detached 4 bed houses on a plot where,from the back garden,you could see the roofs of 13 other properties.

At the same time as this was going on Senior planning officers who were determining policy were working actively to reduce building outside existing developments.In every case that I knew of those officers lived out of town in "nice" little villages with their pretty houses and patches of land.Obviously I got to know some of them quite well over eighteen years.Their children went to village schools and had a very nice life away from the urban sprawl.

Now it occurred to me that it wasn't right that these people were in charge of policy making.It's true that Councillors had the ultimate say but as soon as someone new was elected they were quickly pounced upon and encouraged to "go native" by the planners. So it's actually worse than just NIMBY ism.The Nimbys are the ones guiding the legislation because they are the planners.IMHO no development should be allowed at above 8 per acre and planning laws should be loosened to allow villages to expand by at least 50% in numbers.There should also be a statutory maximum price set for land,maybe £400,000 per acre.

Tell me about it...a two block flat got permission to add another floor on it in an already high density area, with insufficient parking....and two gardens had houses built on them...land sold and owner moved to a room with a view so the remaining households left to look at the new view of the new brick walls.

[redwine]

We have lived in France for the past 15 years, and can agree that you can buy much more for much less here. We think that the principal reason for property prices being so much lower is that the French banks would not lend as recklessly as did the British banks, particularly during the stupidity of 1995 to 2007.

So, "Why are UK property prices so high?" is simply down to the greed of the lenders and the naivity of many of the borrowers, the latter now not being able to sell their properties at the currently over inflated prices, without incurring punitive losses. Once higher interest rates finally kick in, then UK property prices will inevitably fall, though probably still not to the level in France.

Incidentally, most of the new properties being built in our area of France are bungalows, are detached and have, in the main, reasonably sized gardens because, as someone has mentioned, land is more plentiful/affordable here..

Really French banks got into serious trouble due to reckless lending

When interest rates go up in France the property market will collapse

Land is cheaper in france in the middle of no where areas where the Brits live but be-careful taxes are going up

Which French Dept do you live in the 24 or another dead-end French dept

[Democorruptcy]

I was working with that figure on the basis of a maximum.Obviously in a nice village in the Home Counties a single quarter acre plot for £100,000 would be a bargain.I would guess that currently it might make three times that.

I noticed you said maximum but it seemed a lot to me - until recently I was looking at prices in Scotland which are nowhere near that sort of money.

I see that subsequent posts have agreed with your figure - but it still seems scary.

[Realistbear]

Recently I have been looking at property in France and Germany.The upcoming 20% VAT is likely to hit my business badly and my profits are down as it is.So I thought I might bail out.

Typical prices in bothy France and Germany are around 150-180 Euros for a farmhouse and one or two acres.For the price that I sold mine for in July - around 400,000 Euros you are looking at a serious piece of commercial property in either country.

I got to wondering why? it seems that if you were to take the construction cost of the property abroad and add say 10% that is about where things stand.So it seems to me that 50-60% of the extra cost must be the land itself.To strengthen my theory a property abroad with a few hectares doesn't command much more money.

Therefore I deduce that is the difficulty of gaining Planning Consent in Britain that is the driver behind all our woes.It needs to be loosened, and drastically so.My local authority is trying to prevent even infill building in villages,thereby driving up the cost of rural property.This is being done from a NIMBY/Hippy perspective but it is madness.

There is one reason for high house prices in the UK: willingness + ability to pay.

[Tired of Waiting]

There is one reason for high house prices in the UK: willingness + ability to pay.

Yes, you have explained the strong demand.

But you forgot to considered the other half of the story: blocked supply - by planning restrictions.

[Meat Puppet]

There is one reason for high house prices in the UK: willingness + ability to pay.

Looks like you know as much about the property market as you do about the stock markets and gold.

[copydude]

There is one reason for high house prices in the UK: willingness + ability to pay.

Actually, the willingness has since unravelled as being beyond most people's ability to pay . . . so you make a very a interesting point.

Houses are inflated worth in English people's opinions, hence their inflated prices. It isn't all down to economics. Just about every other product category is price-sensitive at some point. For some daft reason, houses not included.

As some other posters noted, there have been big price bubbles on the continent too - I remember a couple of south-sea style biggies in Holland when I was there.

Now, by contrast with the UK, Holland does have a large provision of social housing, housing associations and controlled rent sectors. The budget areas are nicely dispersed to avoid ghettoisation and often barely discernible.

So, it really isn't entirely necessary for everyone to pay silly prices for housing . . . but many people just do. Why don't they baulk at it? I seriously dunno.

As it happens, there's a totally undistinguished, very Essex, 2-bed, semi-detached bungalow near my sister's place which has changed hands a few times since 1999. I found the recent history of its HPI is on nethouseprices.com

October 1999 £80,000

March 2003 £152,950

Dec 2005 £190,000

Nov 2009 £195,000

Thoroughly and utterly badly built originally, and unextended or significantly makeovered since, with two tiny bedrooms and pocket handkerchief grounds, it was never 'worth it' at any time during the last decade and still isn't. Yes, why the willingness??

[TeddyBear]

SMI and housing benefit.

Friend of mine, good job, in Paris, redundant a couple of years back. Benefits for a while very generous, not means tested, based on previous salary and contributions. They then drop to a subsistence level. He got a job just in time but would have had no choice but to move out of his rented Paris flat if he hadn't. Here in UK LHA would pay the rent and keep someone who couldn't afford to be there housed.

This is what benefits should be about, keep you in your lifestyle for a period long enough to see if you are going to be back in the same level of work, if you're not, make you make the necessary changes. The way we do it in the UK is moral hazard.

[AndyAndy]

My take on it is with the right conditions, whole nations can be caught in a national stupor.

Germany 1930's. The humiliating loss of the Ist world war, the national kicking bestowed by France in particular on that broken state and the failure of the Weimar republic brought a huge desire among the majority of a population for national pride. So followed a national adolation for a party that found scapegoats for previous failures and that talked the state up despite being the most despotic bunch of nutters that walked the earth. Germany was full of intelligent people in the 1930s and acting rationally I cannot believe the population of Germany would have allowed the national socilaists to take power. But they did; their actions were irrational until it was too late for them and headlong they charged into a national disaster.

UK 2000's. Thatcherism had instilled a nation with a desire for wealth and the conspicuous trappings of wealth in the 1980's. However the recession and the ERM debacle resulted in 7 years of misery for these new capitalists. Then, developing financial products (I remember someone telling me securitisation and ever more complex derivatives would lift us to a new plain and it did all sound quite plausable at the time) founded by these new capitalists and decreasing regulation fuelled the provision of debt for those who wanted assets. Those people and the people who had the assets wanted to believe in increasing house prices to live the promise they saw in the 80's. So a nation found a way to meet its heartfelt desire and contines to charge along for as long as possible.

But its like our 1941. There have been no major defeats although there was a bit of a wobble a year or two ago (like the outbreak of war). But the army's of home investment with their BTL and MEW shock troops are marching towards fiscal reality like german divisions marching towards Moscow.

I don't think people so caught up are Nazis. But I do think nations can be caught in a mass hysteria that causes those so entraced and everyone else a good deal of pain.