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cica

What Does Uk Household Size Tell Us?

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Afternoon,

Fact: UK household size has been dropping clearly and steadily for decades, right? I've seen this in multiple sources. Feel free to correct me.

uk-household-size.gif

To me a falling household size sounds to me like people are successful in finding more and more housing rather than it meaning there is a growing unmet demand. It's like the demand is being met.

Prices don't seem to have tracked falling household size to me.

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There is no UK housing shortage, it's just a myth that is difficult to debunk in the middle of a property bubble.

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There is no UK housing shortage, it's just a myth that is difficult to debunk in the middle of a property bubble.

Exactly. The graphs show a fall in big households and a rise in small ones, yet where are all the legions who can't find a place to live living? Can't see them on the streets or in tents in the fields, perhaps they all live near Winkie?

If they don't live near Winkie then I propose the legions of the unhoused don't exist, hence their housing needs must be catered for, hence their is no shortage of housing even with people living in less crowded households. Therefore the lack of supply = high prices argument is completely spurious, as there is no lack of supply.

Edited by General Congreve

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Exactly. The graphs show a fall in big households and a rise in small ones, yet where are all the legions who can't find a place to live living? Can't see them on the streets or in tents in the fields, perhaps they all live near Winkie?

If they don't live near Winkie then I propose the legions of the unhoused don't exist, hence their housing needs must be catered for, hence their is no shortage of housing even with people living in less crowded households. Therefore the lack of supply = high prices argument is completely spurious, as there is no lack of supply.

...What I mean is there are fewer people living in most housing but only because they have smaller families or families of one generation per household....the hidden living I am talking about is the over crowding of mainly adults in small bedsits and flats, sub let in big towns and cities....some are home migrant workers some are overseas migrant workers. ;)

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...What I mean is there are fewer people living in most housing but only because they have smaller families or families of one generation per household....the hidden living I am talking about is the over crowding of mainly adults in small bedsits and flats, sub let in big towns and cities....some are home migrant workers some are overseas migrant workers. ;)

Migrant workers have always done that cos they are from poorer countries and it helps them save the dough to move upwards later in life, but they are the exception, not the rule.

Fact is all my friends, most of them renting, have a place to live in and typically it's big enough for their requirements, it's just they can't afford to buy a place of their own because the banks have been creating money and splashing it around, thereby creating HPI that hasn't been matched by increases in wages.

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I'm assuming that chart makes more sense if the right hand axis is number of people/millions

Otherwise I struggle to understand the 0.5 people living in 5 member households.

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I'm assuming that chart makes more sense if the right hand axis is number of people/millions

Otherwise I struggle to understand the 0.5 people living in 5 member households.

I think the right is for the bars and the left for the lines.

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There is no UK housing shortage, it's just a myth that is difficult to debunk in the middle of a property bubble.

There are regional, localised shortages. In parts of the south there is a very serious shortage. I think these localised shortages relate quite directly with the intensity of local MIMBYism. They haven't allowed enough, or hardly any, new building here for decades. Hence, a serious shortage here. Small cr@ppy old 2 bed terraces around here cost almost £200k.

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I think the right is for the bars and the left for the lines.

+ 1

It looks like we had some 3.1 people per household in 1961, and now we have around 2.3.

That is due to smaller family units.

And that change in the average family size was the main cause of increased need for residential properties.

Say 60 million people: They would need less than 19.35 million properties in 1961; But the same 60 million would need 26.08 million properties now. (Plus the population is now 62 million.)

Though IIRC we have only 22 million residential dwellings in Britain today

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There are regional, localised shortages. In parts of the south there is a very serious shortage. I think these localised shortages relate quite directly with the intensity of local MIMBYism. They haven't allowed enough, or hardly any, new building here for decades. Hence, a serious shortage here. Small cr@ppy old 2 bed terraces around here cost almost £200k.

Are the prices there tracking population/household size with greater correlation than the asset price bubble?

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Are the prices there tracking population/household size with greater correlation than the asset price bubble?

Sorry, I am not sure I understood your question.

But in general: I am in Sussex, a very rural county, with very low population density. And prices/sq.m here are much higher than in the north, even comparing with large cities there, thanks to strong and old, historical NIMBYism here. Our housing shortage is old. Prices went up even higher with the national bubble, of course. And didn't fall much since 2007. We are almost at peak levels.

Edited by Tired of Waiting

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Afternoon,

Fact: UK household size has been dropping clearly and steadily for decades, right? I've seen this in multiple sources. Feel free to correct me.

uk-household-size.gif

To me a falling household size sounds to me like people are successful in finding more and more housing rather than it meaning there is a growing unmet demand. It's like the demand is being met.

Prices don't seem to have tracked falling household size to me.

What if there's a mismatch between properties and the people living in them, or where those properties are?

Say for example lots of single pensioners hanging on to large family houses, leaving lots of families to scrap over small flats? In that case you'd have adequate numbers of homes at the aggregate level, but still real shortages when it comes to specific types of properties.

Alternatively there could plenty of properties in say Accrington, but no jobs. And lots of jobs in say London, but not enough properties? Once again you'd have no problems at the total country level, but real problems within individual towns.

Just sayin'....

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What if there's a mismatch between properties and the people living in them, or where those properties are?

Say for example lots of single pensioners hanging on to large family houses, leaving lots of families to scrap over small flats? In that case you'd have adequate numbers of homes at the aggregate level, but still real shortages when it comes to specific types of properties.

Alternatively there could plenty of properties in say Accrington, but no jobs. And lots of jobs in say London, but not enough properties? Once again you'd have no problems at the total country level, but real problems within individual towns.

Just sayin'....

I actually think that is a very valid point but I don't see it as a main driver of near tripling house prices. Thanks.

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Sorry, I am not sure I understood your question.

But in general: I am in Sussex, a very rural county, with very low population density. And prices/sq.m here are much higher than in the north, even comparing with large cities there, thanks to strong and old, historical NIMBYism here. Our housing shortage is old. Prices went up even higher with the national bubble, of course. And didn't fall much since 2007. We are almost at peak levels.

Fair enough, sounds like there could be a localised shortage which is partially driving prices. As long as we are agreed what is really driving the mega boom.

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There are regional, localised shortages. In parts of the south there is a very serious shortage. I think these localised shortages relate quite directly with the intensity of local MIMBYism. They haven't allowed enough, or hardly any, new building here for decades. Hence, a serious shortage here. Small cr@ppy old 2 bed terraces around here cost almost £200k.

Same where I live.

However, my neighbour bought his 2 bed for 70k in 1997. It sold in 2007 for 240k and has just sold again to a cash buyer for around 250k.

Has the UK population increased 4-fold in the intervening years? No. Has bank lending gone on an insane rampage that now threatens the entire financial system in the intervening years. Yes.

There's your answer.

Edited by General Congreve

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Same where I live.

However, my neighbour bought his 2 bed for 70k in 1997. It sold in 2007 for 240k and has just sold again to a cash buyer for around 250k.

Has the UK population increased 4-fold in the intervening years? No. Has bank lending gone on an insane rampage that now threatens the entire financial system in the intervening years. Yes.

There's your answer.

As far as I can see this is the fact.

UK has increased in population and building has been modest but household size has been dropping for decades without any perceptible flinch in terms of price correlation.

Prices do not correlation with population anywhere near as much as they correlated with ease of credit.

Welsh population grew only 1.9% from 2001 to 2005 yet tracked England's house prices with pretty much perfect correlation.

Edited by cica

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Same where I live.

However, my neighbour bought his 2 bed for 70k in 1997. It sold in 2007 for 240k and has just sold again to a cash buyer for around 250k.

Has the UK population increased 4-fold in the intervening years? No. Has bank lending gone on an insane rampage that now threatens the entire financial system in the intervening years. Yes.

There's your answer.

The cause of this HPI was too much credit boosting demand, and supply not being allowed to react, as it was blocked by planning = house price bubble.

You need both to have a long running HPI.

Of course finances acts much faster than construction, as it take years to build a few million homes. On the other hand the positive effects of a greater supply on prices (downwards) is much longer lasting, almost permanent. Besides, if you have a building boom, like in the USA, Ireland and Spain, prices will eventually come down much faster and stronger. And will stay there, low, for longer, 'cause once homes are built, the positive effect pushing prices down is much longer lasting.

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The cause of this HPI was too much credit boosting demand, and supply not being allowed to react, as it was blocked by planning = house price bubble.

You need both to have a long running HPI.

Of course finances acts much faster than construction, as it take years to build a few million homes. On the other hand the positive effects of a greater supply on prices (downwards) is much longer lasting, almost permanent. Besides, if you have a building boom, like in the USA, Ireland and Spain, prices will eventually come down much faster and stronger. And will stay there, low, for longer, 'cause once homes are built, the positive effect pushing prices down is much longer lasting.

Yes, house building has not kept pace with population growth. But the two are not so out of kilter to justify 4-fold increases in house prices in around a decade. The majority of the rise has come from lax lending, this is fact.

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The cause of this HPI was too much credit boosting demand, and supply not being allowed to react, as it was blocked by planning = house price bubble.

You need both to have a long running HPI.

Of course finances acts much faster than construction, as it take years to build a few million homes. On the other hand the positive effects of a greater supply on prices (downwards) is much longer lasting, almost permanent. Besides, if you have a building boom, like in the USA, Ireland and Spain, prices will eventually come down much faster and stronger. And will stay there, low, for longer, 'cause once homes are built, the positive effect pushing prices down is much longer lasting.

I definitely think it makes a difference, but I still don't think it's the overwhelming factor. (To be clear, I also agree NIMBYism is evil and obviously affects the mean price but not extreme bubble peaks).

Edited by cica

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Yes, house building has not kept pace with population growth. But the two are not so out of kilter to justify 4-fold increases in house prices in around a decade. The majority of the rise has come from lax lending, this is fact.

No, not "population growth". We had a strong increase in the number of residential dwellings needed because the size of average family unit in Britain fell, by... some 10% (?) in the last 10 years, IIRC, making the number of dwellings needed go up by some 10%.

And I agree that too much cheap credit was the most important factor.

About doubling the real prices in just 10 years, some products/goods are more price sensitive than others. For instance, if they are essential, and there are no substitutes, a 10% increase in demand can double the price. In other cases, if there are alternatives, a 10% increase in prices can kill demand. Etc. http://en.wikipedia.org/wiki/Price_elasticity_of_demand

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I definitely think it makes a difference, but I still don't think it's the overwhelming factor. (To be clear, I also agree NIMBYism is evil and obviously affects the mean price but not extreme bubble peaks).

I agree, "extreme bubble peaks", sharp, fast short term, can't be curbed by construction, 'cause it take at least a few years to build enough houses to curb a bubble, even in markets without our planning blockage. These two factors work in very different time-frames. Finance is much faster. Like, interest rates going up or down in a matter of months can change the market completely.

But the most important point I want to get across here is that the supply side is much longer lasting, and very beneficial, because once you build a few million homes more they will stay there, providing a service for may decades, and keeping prices lower than they would be otherwise, for many decades. Future finances wobbles will still happen, of course, but around a lower average.

Edited by Tired of Waiting

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No, not "population growth". We had a strong increase in the number of residential dwellings needed because the size of average family unit in Britain fell, by... some 10% (?) in the last 10 years, IIRC, making the number of dwellings needed go up by some 10%.

And I agree that too much cheap credit was the most important factor.

About doubling the real prices in just 10 years, some products/goods are more price sensitive than others. For instance, if they are essential, and there are no substitutes, a 10% increase in demand can double the price. In other cases, if there are alternatives, a 10% increase in prices can kill demand. Etc. http://en.wikipedia.org/wiki/Price_elasticity_of_demand

Yep, understand price sensitivity, I studied economics. Also agree finally unit size has decreased and that has an effect in addition to population growth. Apologies for my blunt post.

However, as a you agree, credit is the main instigator of house price rises. If it wasn't we wouldn't be seeing ZIRP in an effort to prop prices up. Still, it might help the government's cause if they flooded the towns and cities of the UK with cheap Eastern European prostitutes in order to ferment more family break up and thereby increase demand for dwellings ;)

Edited by General Congreve

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Yep, understand price sensitivity, I studied economics. Also agree finally unit size has decreased and that has an effect in addition to population growth. Apologies for my blunt post. (...)

No worries.

However, as a you agree, credit is the main instigator of house price rises. If it wasn't we wouldn't be seeing ZIRP in an effort to prop prices up. Still, it might help the government's cause if they flooded the towns and cities of the UK with cheap Eastern European prostitutes in order to ferment more family break up and thereby increase demand for dwellings ;)

Talking about foreigners, I saw a chart in the Times... I'll try to post it here, but I'm not sure if their firewall will block it, Testing it:

Edit: Actually, I think this chart deserves its own thread:

http://www.housepricecrash.co.uk/forum/index.php?showtopic=165073&view=findpost&p=3020478

Edited by Tired of Waiting

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  • 312 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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