Interest Rates Are About To Rise - Homeowners Being Softened Up.

[Parkwell]

We are not building houses because there isn`t a shortage of houses, it is quite simple.

Disagree. The population has been steadily rising and that demand has been largely met by building flats, and very small houses. Also by chopping up the existing housing stock. I've seen numerous average sized terraces and semis bought, split into small flats and either flipped or rented out. People are squeezing themselves into smaller homes and paying more for the privilege, also more people are living with parents for longer.

What we need is to build a lot more good quality family sized houses. That's what self build would likely provide from people who are better off. And add downward pressure to house prices in general. We might even see some formerly broken up houses made into a single household when demand reduces enough (I can dream).

[dances with sheeple]

Well our population has increased 2 or 3 million over recent years.....have we built enough housing to accommodate this increase?......we may have built some units and split other units into smaller units.....also there are far more people living alone, more family break-ups.......do the maths.

Ok, so now it`s millions? Where are the millions who need a house now living, it is certainly not on the streets? The PTB know that a massive building programme will result in run of the mill city flats etc selling for 20k, they don`t want this because their city mates won`t make money, and they don`t want Joe Average getting free of the Hamster wheel that easily, too much time to plot against them if that happens. There is going to be a HPC anyway, but there certainly won`t be hundreds of thousands of new houses being built in the UK any time soon IMO.

[tomandlu]

We are not building houses because there isn`t a shortage of houses, it is quite simple. The government would be out of power overnight if the numbers of people we are led to believe need houses built for them really existed.

?

Shortage of supply + high prices = people making do with less space and/or less upmarket locations

[dances with sheeple]

Disagree. The population has been steadily rising and that demand has been largely met by building flats, and very small houses. Also by chopping up the existing housing stock. I've seen numerous average sized terraces and semis bought, split into small flats and either flipped or rented out. People are squeezing themselves into smaller homes and paying more for the privilege, also more people are living with parents for longer.

What we need is to build a lot more good quality family sized houses. That's what self build would likely provide from people who are better off. And add downward pressure to house prices in general. We might even see some formerly broken up houses made into a single household when demand reduces enough (I can dream).

You are coming from the London perspective, although I`m sure there are plenty of empty properties in London that people just want to hang on to....for the moment. In Edinburgh there were plenty of flats and split houses built, sometimes in the gardens of larger houses, where the developer went bust and the properties didn`t sell. When rates rise, London pops and the news is screaming CRASH every night, it will be amazing how much housing stock suddenly materialises IMO.

[dances with sheeple]

?

Shortage of supply + high prices = people making do with less space and/or less upmarket locations

Shortage of supply is not the same as shortage of houses. Shortage of supply is linked to credit availability and interest rate trends, which can change over time.

[Wurzel Of Highbridge]

Ok, so now it`s millions? Where are the millions who need a house now living, it is certainly not on the streets? The PTB know that a massive building programme will result in run of the mill city flats etc selling for 20k, they don`t want this because their city mates won`t make money, and they don`t want Joe Average getting free of the Hamster wheel that easily, too much time to plot against them if that happens. There is going to be a HPC anyway, but there certainly won`t be hundreds of thousands of new houses being built in the UK any time soon IMO.

Ireland encountered a general housing shortage in the late 80's early 90's.

Don't forget the rules can be re-written overnight, they have been before with ZIRP, QE and Mark to Make Belief.

There is no reason to believe that the current supply restriction will stay in place even past the end of this year.

Back in the 50's and 60's 200,000 council houses and 70,000+ private houses were built every year - most of these are now in a terrible deteriorating state and require replacing.

[@contradevian]

Ireland encountered a general housing shortage in the late 80's early 90's.

Don't forget the rules can be re-written overnight, they have been before with ZIRP, QE and Mark to Make Belief.

There is no reason to believe that the current supply restriction will stay in place even past the end of this year.

Back in the 50's and 60's 200,000 council houses and 70,000+ private houses were built every year - most of these are now in a terrible deteriorating state and require replacing.

Yes but back in the 1940's there were loads of fit fighting men returning from battle. Returning to bombed out shitholes would probably have resulted in a long overdue pitchforking for our ruling elites (about 1000 years overdue IMO). Also at that time UK wasn't a Boomer retirement park where every view was sacred, in order to protect ones equity. Indeed there was a lot of optimism at the time about the future, reflected in the architecture and culture. Now we've kind of lost that optimism and boldness I think. Now if we build a railway it costs more than a bloody manned shot at the moon.

Edited February 8, 2014 by aSecureTenant

[(Blizzard)]

?

Shortage of supply + high prices = people making do with less space and/or less upmarket locations

Exactly. Household size unexpectedly rose in the last decade having fallen for several previous decades, and the size of homes shrank.

That isn't really the issue though. The point is that housing is unobtainable and building more homes will help.

Not the right solution, but not the worst, and a solution entirely consistent with Tory rhetoric.

If they don't increase building by entrepreneurs through deregulation of planning then it proves that they are still the landlord party, and everything they've stood for since 1979 is revealed as a massive lie.

Even Osbrown can see that, and even he thinks it is a problem.

Edited February 8, 2014 by (Blizzard)

[LDR]

We are not building houses because there isn`t a shortage of houses, it is quite simple. The government would be out of power overnight if the numbers of people we are led to believe need houses built for them really existed.

The housing shortage doesn't mean a ton of homeless people, it means ever more people getting crammed into the limited housing we have available - it's why we see even very well paid young professionals being obliged to rent rooms in HMOs or shared houses rather than renting or buying a place of their own, "family" houses being subdivided into flats so they can house two or three families separately, and so on.

[gf3]

We are not building houses because there isn`t a shortage of houses, it is quite simple. The government would be out of power overnight if the numbers of people we are led to believe need houses built for them really existed.

If there isn't a shortage of houses why are rents so high?

If there was an over supply of houses landlord would have to keep cutting their prices as tenants found cheaper and cheaper deals.

[Frank Hovis]

If there isn't a shortage of houses why are rents so high?

If there was an over supply of houses landlord would have to keep cutting their prices as tenants found cheaper and cheaper deals.

There is a housing shortage, however building is expanding at a pace to the point where waiting times are getting longer and longer for things like bricks and tiles. I am hearing this directly and there are also stories about labour shortfalls although that must be elsewhere in the country as I'm not seeing it.

Labour shortages as construction continues to grow

Published on 10 January 2014 15:08

The Royal Institute of Chartered Surveyors (RICS) has reported an impressively high rate of growth in the construction industry over the last three months. However, with this comes signs of a shortage of both skills and materials. This is holding back the industry’s growth, and could become an even bigger problem in the long run.

According to data acquired by the RICS, the construction workloads balance reached +38 in the fourth quarter of 2013. This means 38 per cent more companies reported an increase in activity than reported a decrease for the period.

This is the fastest rate of growth that has ever been recorded by the RICS, since the institute began measuring in 1994 nearly 20 years ago. The RICS also expects workloads to rise by 5.2 per cent, which would be the biggest margin recorded since 1998.

Alan Muse, RICS director of built environment, said: “With the economy having turned a corner in recent months, it would seem that the construction industry has followed suit and activity is up right across the country. More homes are being built, infrastructure is being upgraded and each part of the UK is benefiting from this more positive picture.”

http://www.jewson.co.uk/about-us/industry-news/labour-shortages-as-construction-continues-to-grow/

[Wurzel Of Highbridge]

The Royal Institute of Chartered Surveyors (RICS) has reported an impressively high rate of growth in the construction industry over the last three months. However, with this comes signs of a shortage of both skills and materials.

There can be no skills shortage as there are hundreds of thousands of unemployed Irish, Polish builders still lingering from the boom. The building jobs haven't been filled from the (shrinking) UK population for decades.

Materials are another thing - it would take up to a year to put adequate production facilities across Europe into ger + most of the stuff like insulation (kingspan), wires, piping, roofing slates is made abroad - and bricks are made in the UK the biggest supplier has 10 factories in the UK, so I would think that their supply elasticity is very good.

Building is picking up, even I can see that. I should think if the rate of building can double from here and maintain for a few years then we will have plenty of tiny houses on the fringes.

To get this even greater demand of building we need some 'fake' demand. During the Irish boom this came in the form of mum and pop investors and almost everone encouraged [by the media] to get into BTL. So logically HTB for landlords would be a logical step to increasing supply.

[dances with sheeple]

The housing shortage doesn't mean a ton of homeless people, it means ever more people getting crammed into the limited housing we have available - it's why we see even very well paid young professionals being obliged to rent rooms in HMOs or shared houses rather than renting or buying a place of their own, "family" houses being subdivided into flats so they can house two or three families separately, and so on.

That is because houses are too EXPENSIVE due to a large number of greedy c*unts monopolising multiple properties and refusing to drop prices to sell, that is different from an actual SHORTAGE of houses. If there was a real physical shortage of houses they would be building, there isn`t so they are not building. If they built the number of houses that some on here think are necessary the banks balance sheets would be blown to Kingdom Come. The mass building program is not going to happen, it will be rates and credit conditions that finish the UK property Ponzi, along with dwindling positive sentiment towards housing as a one way bet.

[dances with sheeple]

If there isn't a shortage of houses why are rents so high?

If there was an over supply of houses landlord would have to keep cutting their prices as tenants found cheaper and cheaper deals.

Have you not read my many many posts on rent in Edinburgh? I have had a 50 p.m rise in 15+ years, now paying 400 p.m 15 mins from Princes St. Landlords here are DESPERATE for good tenants that can pay up every month.

[LDR]

That is because houses are too EXPENSIVE due to a large number of greedy c*unts monopolising multiple properties and refusing to drop prices to sell, that is different from an actual SHORTAGE of houses. If there was a real physical shortage of houses they would be building, there isn`t so they are not building. If they built the number of houses that some on here think are necessary the banks balance sheets would be blown to Kingdom Come. The mass building program is not going to happen, it will be rates and credit conditions that finish the UK property Ponzi, along with dwindling positive sentiment towards housing as a one way bet.

You're putting the cart before the horse - it's the imbalance between supply and demand that's driving prices up. If you think otherwise, why did the US housing market crash by 50%+ and return to historical norms when the British market only dipped by 20% and is now heading back to 2007 levels? Both countries' central banks flooded the markets with cheap credit via quantitative easing and zero interest rate policies, and the US has always provided borrowers with more protection than the UK, so if that was all there was to it, we should've seen the same crash as they did. The difference is that in the US, housebuilding kept pace with population growth, so when the GFC hit there was a massive glut of unsold inventory and prices had room to fall. Here, housebuilding slowed down during the boom years so we didn't have that huge pool of newly built houses and builders who desperately needed to offload them at any price. As a result, the housing market dipped instead of crashing and rapidly bounced back onto its pre-crash trend.

It's about supply and demand; everything else we're seeing in the market, from the ongoing price inflation to the prevalence of BTL to the squeezing of more people into ever smaller "houses" is a direct consequence.

[dances with sheeple]

You're putting the cart before the horse - it's the imbalance between supply and demand that's driving prices up. If you think otherwise, why did the US housing market crash by 50%+ and return to historical norms when the British market only dipped by 20% and is now heading back to 2007 levels? Both countries' central banks flooded the markets with cheap credit via quantitative easing and zero interest rate policies, and the US has always provided borrowers with more protection than the UK, so if that was all there was to it, we should've seen the same crash as they did. The difference is that in the US, housebuilding kept pace with population growth, so when the GFC hit there was a massive glut of unsold inventory and prices had room to fall. Here, housebuilding slowed down during the boom years so we didn't have that huge pool of newly built houses and builders who desperately needed to offload them at any price. As a result, the housing market dipped instead of crashing and rapidly bounced back onto its pre-crash trend.

It's about supply and demand; everything else we're seeing in the market, from the ongoing price inflation to the prevalence of BTL to the squeezing of more people into ever smaller "houses" is a direct consequence.

Yes it is about supply and demand - of credit, and unfortunately for the rosy HPI scenario you paint volumes did not bounce back to the pre-crash trend. Are you telling me that you CAN`T walk round London, or any city in the UK and find empty unsold property?

[winkie]

You're putting the cart before the horse - it's the imbalance between supply and demand that's driving prices up. If you think otherwise, why did the US housing market crash by 50%+ and return to historical norms when the British market only dipped by 20% and is now heading back to 2007 levels? Both countries' central banks flooded the markets with cheap credit via quantitative easing and zero interest rate policies, and the US has always provided borrowers with more protection than the UK, so if that was all there was to it, we should've seen the same crash as they did. The difference is that in the US, housebuilding kept pace with population growth, so when the GFC hit there was a massive glut of unsold inventory and prices had room to fall. Here, housebuilding slowed down during the boom years so we didn't have that huge pool of newly built houses and builders who desperately needed to offload them at any price. As a result, the housing market dipped instead of crashing and rapidly bounced back onto its pre-crash trend.

It's about supply and demand; everything else we're seeing in the market, from the ongoing price inflation to the prevalence of BTL to the squeezing of more people into ever smaller "houses" is a direct consequence.

Also Spain.....you can't give them away.

[tomandlu]

Yes it is about supply and demand - of credit, and unfortunately for the rosy HPI scenario you paint volumes did not bounce back to the pre-crash trend. Are you telling me that you CAN`T walk round London, or any city in the UK and find empty unsold property?

A little bit of column A, a little bit of column B I suspect. Exact figures on genuinely empty properties are hard to come by, but, yes, I think we can safely assume that there is enough housing stock in the country for everyone to have somewhere to live, and there would be even more if those empty properties were put back on the market. Then the question is what sort of housing and in what area, and does the stock match a reasonable expectation of the sort of housing people should be able to afford, which is a very relative question.

What we can say is that the housing available to new professionals is a lot worse than what was available to older generations, and that we do not have (especially in London) a large stock of unused accommodation in viable areas. As a final observation, general sentiment on house prices as an investment would certainly be a lot more bearish if there was a clear surplus.

[LDR]

Yes it is about supply and demand - of credit, and unfortunately for the rosy HPI scenario you paint volumes did not bounce back to the pre-crash trend. Are you telling me that you CAN`T walk round London, or any city in the UK and find empty unsold property?

Volumes are moving back towards pre-crash levels - they're up 20% year on year according to both HMRC and Lloyds.

Lloyds on transaction volumes ("up by more than a fifth"): http://m.bbc.co.uk/news/uk-26096295

HMRC on transaction volumes ("up 24% year-on-year"): http://www.bbc.co.uk/news/business-25504814

Again, if it's all about credit rather than the gap between supply and demand, why did the US see a huge crash whereas the UK saw only a brief blip? Why did the crash in the US mirror those in Ireland and Spain despite those three countries having very different credit situations but very similar oversupplies of housing due to frenzied building when the GFC hit?

[frederico]

Its about supply, demand and sentiment

ie fear of losing money.

At some point the balance will tip the other way, its getting close now, sentiment can change because of mainstream messages not even reality.

[dances with sheeple]

A little bit of column A, a little bit of column B I suspect. Exact figures on genuinely empty properties are hard to come by, but, yes, I think we can safely assume that there is enough housing stock in the country for everyone to have somewhere to live, and there would be even more if those empty properties were put back on the market. Then the question is what sort of housing and in what area, and does the stock match a reasonable expectation of the sort of housing people should be able to afford, which is a very relative question.

What we can say is that the housing available to new professionals is a lot worse than what was available to older generations, and that we do not have (especially in London) a large stock of unused accommodation in viable areas. As a final observation, general sentiment on house prices as an investment would certainly be a lot more bearish if there was a clear surplus.

All fair points.

[dances with sheeple]

Volumes are moving back towards pre-crash levels - they're up 20% year on year according to both HMRC and Lloyds.

Lloyds on transaction volumes ("up by more than a fifth"): http://m.bbc.co.uk/news/uk-26096295

HMRC on transaction volumes ("up 24% year-on-year"): http://www.bbc.co.uk...siness-25504814

Again, if it's all about credit rather than the gap between supply and demand, why did the US see a huge crash whereas the UK saw only a brief blip? Why did the crash in the US mirror those in Ireland and Spain despite those three countries having very different credit situations but very similar oversupplies of housing due to frenzied building when the GFC hit?

Edinburgh FTB flats are easily at 50% crash levels now, and this beastie isn`t even half awake yet. The US is a vast space, and real estate was "snapped up" all over the place probably because it was near a nice view, or a casino, or a new hotel complex which never really took off, but not necessarily near anywhere people could work or commute to work? Spain similar story, smaller scale, except it was "holiday homes" built all over the place, Ireland, well I just think they went f*ucking mental and believed all the Celtic Tiger pish to be honest. And yes they all overbuilt, but my question still stands - Are you saying that you are unable to walk round London or any city and see loads of empty unsold property?

[winkie]

Its about supply, demand and sentiment

ie fear of losing money.

At some point the balance will tip the other way, its getting close now, sentiment can change because of mainstream messages not even reality.

Yes.....often people do not buy out of need, they are buying out of greed.....thinking the price will rise faster than inflation, faster than their pay packet, faster than their pension contributions, buying into a forever rising market.....tell me the demand will still be strong when the last house in the street sells for less than the house before it, and the one before that.

A real home buyer buys for need at a price they can afford....they care not if it falls in price whilst they are living in it, all they do is concentrate on paying for it, to be free and totally debt free....anyway falling house prices matters not when moving because the next home they buy will be cheaper.

[dances with sheeple]

Yes.....often people do not buy out of need, they are buying out of greed.....thinking the price will rise faster than inflation, faster than their pay packet, faster than their pension contributions, buying into a forever rising market.....tell me the demand will still be strong when the last house in the street sells for less than the house before it, and the one before that.

A real home buyer buys for need at a price they can afford....they care not if it falls in price whilst they are living in it, all they do is concentrate on paying for it, to be free and totally debt free....anyway falling house prices matters not when moving because the next home they buy will be cheaper.

Agreed. Excellent post. A look at the Edinburgh thread or FTB level Edinburgh flats on Rightmove will show anyone who cares to look the pickle that many who bought at peak are getting into, Edinburgh isn`t London, but one deluded EA once described it as "A unique market, to which the laws of other markets do not apply" ! Bet he is feeling like a right Anus now?

[zugzwang]

Edinburgh FTB flats are easily at 50% crash levels now, and this beastie isn`t even half awake yet. The US is a vast space, and real estate was "snapped up" all over the place probably because it was near a nice view, or a casino, or a new hotel complex which never really took off, but not necessarily near anywhere people could work or commute to work? Spain similar story, smaller scale, except it was "holiday homes" built all over the place, Ireland, well I just think they went f*ucking mental and believed all the Celtic Tiger pish to be honest. And yes they all overbuilt, but my question still stands - Are you saying that you are unable to walk round London or any city and see loads of empty unsold property?

You're absolutely correct. Even sentiment is a function of credit availability. When credit is cheap everyone wants some because everyone can make the repayment schedule. When credit is expensive people either get discouraged or simply fail to qualify for a loan.

US house prices fell when HELOC (Home Equity Line Of Credit) refinancing was withdrawn from the market or made more expensive as one after another the subprime lenders collapsed. HELOC is similar to MEW over here. During the bubble years homeowners were given five to ten year drawdown periods in which they were obliged to make only interest repayments on their additional drawings, the total rate of the outstanding being adjusted monthly and added to the prime rate of the mortgage.

In Spain and Ireland, the inability of the sovereign to borrow and print in its own currency has meant much higher rates of interest and unemployment therefore much higher rates of delinquency than the UK and much smaller populations of solvent borrowers post-Crash. This, together with Osborne's various market-defying subsidies, FLS and HtB etc., and foreign cash speculators, explains the spike in transactions seen in the UK in the last eighteen months