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Are Housing Costs Really Rising?

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http://www.npi.org.uk/blog/housing-and-homelessness/are-housing-costs-really-rising/

Are housing costs really rising?

Although this analysis is quite superficial, it still tells us something about the “cost of living crisis”. It is not felt uniformly across the board – those paying a mortgage are paying less now than five years ago. The rise in housing costs is felt mainly by renters, particularly private renters, both in terms of rising weekly costs and the increasing impossibility of affording their own home. This is a group that is mainly poor or young, or both.This is, though, only part of the story of rising costs. There is also a rising number of people in the private sector claiming housing benefit. The next blog will look at this more closely – how much of this rising cost is met by the rising housing benefit bill? - See more at: http://www.npi.org.uk/blog/housing-and-homelessness/are-housing-costs-really-rising/#sthash.bcYbvzbR.dpuf

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The rise in housing costs is felt mainly by renters, particularly private renters, both in terms of rising weekly costs and the increasing impossibility of affording their own home. This is a group that is mainly poor or young, or both.

Two sides of that equation to play out. Non-owners being squeezed even further, affecting future buying affordability for starter homes, and thus homes all the way up the market.

Home-owners can own outright or pay down their mortgage debts now, but their homes are only worth what others prepared and able to pay for them.

And there will always be people needing to sell, and eventually perhaps, too few yield hungry 'easy-money / not earning anything in the bank' BTLers stepping in to buy - foreign buyers wobbling - not enough HTB2 take-up, leading to some owners to lower asking prices. Doesn't take too many lower transaction prices bring down all house prices in an area, including for those who own outright who don't even have their homes on the market.

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asecuretenant tweeted this useful chart a few days ago:

Faisal Islam originally tweeted it to and he's retweeted this npi thing.

Exchanged tweets with RK who says its a wage crisis not a housing crisis. Don't like to use wage crisis as this can be 'fixed' by printing money (Blamchflower on Bloomberg?) when what we really want is a bigger share of the pie.

Should we go with Labour crisis?

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It is a crisis if you are trying to scrape by in London maybe, but I believe that HB cuts are affecting London BTL quite badly, but speaking about that wouldn`t suit certain VI agendas?

My rent in central Edinburgh is down from 450 p.m to 400 pm in the last six months (It was 350 in around `98/`99) and this sort of thing is for sale not far away - http://www.espc.com/properties/details.aspx?pid=329252 but even if it was 20k I wouldn`t buy a flat now at any price. Bear in mind this is central Edinburgh, 15 mins from Princes St., the squeeze is on and when London pops things will get very amusing as the media try to spin it.

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Two sides of that equation to play out. Non-owners being squeezed even further, affecting future buying affordability for starter homes, and thus homes all the way up the market.

Home-owners can own outright or pay down their mortgage debts now, but their homes are only worth what others prepared and able to pay for them.

And there will always be people needing to sell, and eventually perhaps, too few yield hungry 'easy-money / not earning anything in the bank' BTLers stepping in to buy - foreign buyers wobbling - not enough HTB2 take-up, leading to some owners to lower asking prices. Doesn't take too many lower transaction prices bring down all house prices in an area, including for those who own outright who don't even have their homes on the market.

It just goes to show that the government sponsored house price inflation just transfers wealth from the young/poor to those who happen to hold the deeds to a property.

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Exchanged tweets with RK who says its a wage crisis not a housing crisis. Don't like to use wage crisis as this can be 'fixed' by printing money (Blamchflower on Bloomberg?) when what we really want is a bigger share of the pie.

Ahh RK and his quest for wage inflation for the young to solve the problem of very high house prices, to help allow younger people to pay what they're worth.

The problem isn't 'house prices' at all.

It's 30 years of falling wages, coupled to China joining the WTO in 2001.

Solution is to raise wages - which is what'll happen next. If it doesn't there will be civil wars as in mid-east.

Can't understand his theories, as he seems to be readying for more HPI, when that house sold for way more than we thought it would. Then again, isn't he drawing his pension these days?

Hate to say I told you so 4 years ago...............

This is before nominal wages start to increase significantly, banks relax lending criteria and competition starts hotting up in the credit markets.

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It just goes to show that the government sponsored house price inflation just transfers wealth from the young/poor to those who happen to hold the deeds to a property.

The young/poor don`t have any "wealth" and neither do those holding deeds to a property which they think is worth an imaginary price, because no one is going to buy it off them? This is just a circle jerk between the banks and the government?

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Two sides of that equation to play out. Non-owners being squeezed even further, affecting future buying affordability for starter homes, and thus homes all the way up the market.

Home-owners can own outright or pay down their mortgage debts now, but their homes are only worth what others prepared and able to pay for them.

And there will always be people needing to sell, and eventually perhaps, too few yield hungry 'easy-money / not earning anything in the bank' BTLers stepping in to buy - foreign buyers wobbling - not enough HTB2 take-up, leading to some owners to lower asking prices. Doesn't take too many lower transaction prices bring down all house prices in an area, including for those who own outright who don't even have their homes on the market.

Just takes one in a similar street of houses and that is the new price no matter how hard the other "sellers" try to wish it away.

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Ahh RK and his quest for wage inflation for the young to solve the problem of very high house prices, to help allow younger people to pay what they're worth.

Can't understand his theories, as he seems to be readying for more HPI, when that house sold for way more than we thought it would. Then again, isn't he drawing his pension these days?

What wage growth?

%E2%80%98Real%E2%80%99-Wage-Growth-in-the-UK-Ex.-Bonuses-sept-2013.png

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Ahh RK and his quest for wage inflation for the young to solve the problem of very high house prices, to help allow younger people to pay what they're worth.

Can't understand his theories, as he seems to be readying for more HPI, when that house sold for way more than we thought it would. Then again, isn't he drawing his pension these days?

Can't say he's wrong so far (apart from his higher nominal wage corollary to me).

But I've got a job so if real wages are coming then I can wait. Real wage increases would make the ladder possible again. Till it doesn't, of course.

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Just takes one in a similar street of houses and that is the new price no matter how hard the other "sellers" try to wish it away.

TBH that sounds a mite optimistic.

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It just goes to show that the government sponsored house price inflation just transfers wealth from the young/poor to those who happen to hold the deeds to a property.

Does it? I am a house owner (with a mortgage) and I don't think the HPI since I bought in 2006 has helped me at all.

Low interest rates have but the fact that my house is worth more doesn't benefit me unless I emigrate and the fall in the £ gets rid of that.

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Does it? I am a house owner (with a mortgage) and I don't think the HPI since I bought in 2006 has helped me at all.

Low interest rates have but the fact that my house is worth more doesn't benefit me unless I emigrate and the fall in the £ gets rid of that.

You also need a buyer paying more than 2006 price? You are in London I suppose, price rises not in question (for the immediate future)

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You also need a buyer paying more than 2006 price? You are in London I suppose, price rises not in question (for the immediate future)

Busted chains, up-sizing - too expensive, down-sizing - shortage of available accommodation, stamp-duty going through the roof. It's hard to see exactly who the 'winners' are if even the people sitting on rising equity are being shafted.

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Busted chains, up-sizing - too expensive, down-sizing - shortage of available accommodation, stamp-duty going through the roof. It's hard to see exactly who the 'winners' are if even the people sitting on rising equity are being shafted.

There is only "rising equity" and "shortage of available accommodation" in half decent parts of London as far as I can tell? That is only part of the market. The winners will be those able to pick up distressed sales for cash at big reductions.

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There is only "rising equity" and "shortage of available accommodation" in half decent parts of London as far as I can tell? That is only part of the market. The winners will be those able to pick up distressed sales for cash at big reductions.

Define 'half-decent'... Balham became the new Clapham, now Tooting is becoming the new Balham. Unaffordability is pushing everyone ever outwards.

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Define 'half-decent'... Balham became the new Clapham, now Tooting is becoming the new Balham. Unaffordability is pushing everyone ever outwards.

I was originally going to write "choice" or "good" areas, but knew that this (fair) argument would crop up. What I should have said is "the areas that those with the spending/borrowing power to purchase are prepared to live in". All I can say is that when the tide finally goes out, those that bought into the less desirable areas will probably find themselves unable to sell? Or will HB changes have moved all the "undesirables" elsewhere?

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