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Uk House Price Inflation To Outstrip Pay Rises 'for Years To Come'

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http://www.theguardian.com/business/2014/jul/10/house-price-inflation-to-outstrip-pay-rises-for-years

Soaring house prices are likely to outstrip pay rises for at least the next five years ad possibly for decades to come, the government's official forecaster has warned.

The Office for Budget Responsibility said households will have to pay an increasing proportion of their income on mortgage bills to meet higher property values and only a "historically unprecedented" boom in housebuilding would prevent loan-to-income ratios rising year after year.

The OBR, which developed a new method of predicting future price movements by bringing together a range of property value measures, said:"The model implies that house prices will consistently rise faster than income, barring a strong and historically unprecedented response from housing supply, leading to a steady rise in household debt relative to income."

The OBR said it wanted to give the government and the Bank of England a clear picture of the path house prices will take over the coming years, though it admitted much of its analysis was subject to judgments by researchers.

Many academics and City analysts have predicted property price rises above annual earnings increases following a dramatic rise in the population and only moderate increases in the supply of homes. The OBR said publishing detailed diagnostic tests of historical data would allow policymakers to understand how changes in interest rates and other factors will influence prices over time.

Fantasy house prices backed up by every larger LTV ratios?

Considering lenders are clamping down how the feck do they think this is going to work?

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Maybe we should have compulsory euthanasia at the age of 80!

That way more people could have a worthwhile retirement from the age of 60.

what percentage of the population will make it to retirement if the retirement age will be 70?

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But thn whould have thought laws restricting the number of homes that can be built would lead to a shortage? The shortage is completely manufactured by the government, if they did not introduce laws restricting building then people like me would buy some land from a farmer and build their own home.

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http://www.theguardian.com/business/2014/jul/10/house-price-inflation-to-outstrip-pay-rises-for-years

Fantasy house prices backed up by every larger LTV ratios?

Considering lenders are clamping down how the feck do they think this is going to work?

Make-believe scientist uses discredited economic methodology to generate unreliable forecasts. The surprising thing is not that Chote's predictions have been comprehensively wrong year after year but that he's still being paid to make them. <_<

Fig%201%20-%20average%20earnings%20proje

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"The model implies that house prices will consistently rise faster than income, barring a strong and historically unprecedented response from housing supply

They could simply QE £100bn and build 1,000,000 new state owned rental properties, solving the housing supply shortage, creating jobs and reducing the pressure on prices/household debt

Or they can continue the last 40 years of head in the sand 'market knows best' nonsense which got us to this point.

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Make-believe scientist uses discredited economic methodology to generate unreliable forecasts. The surprising thing is not that Chote's predictions have been comprehensively wrong year after year but that he's still being paid to make them. <_<

Fig%201%20-%20average%20earnings%20proje

Unfortunately for Chote, Osborne ended up in No 10 and f*cked it all up.

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The OBR said publishing detailed diagnostic tests of historical data would allow policymakers to understand how changes in interest rates and other factors will influence prices over time.

Some troughing to be done there for a few stats bods, plus a bit of misdirection.

Maybe electing people other than self serving, lobby driven liars would help just that little bit more.

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http://www.theguardian.com/business/2014/jul/10/house-price-inflation-to-outstrip-pay-rises-for-years

Fantasy house prices backed up by every larger LTV ratios?

Considering lenders are clamping down how the feck do they think this is going to work?

More and more stock transferred to privately owned property 'empires', so only the very well paid can afford to buy at all. Ever more complicated shared ownership/HTB style schemes. Restricted supply dribbled onto the market.

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Unfortunately for Chote, Osborne ended up in No 10 and f*cked it all up.

Chote was supposed to take Osborne's policies into account when making his forecasts.

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Chote was supposed to take Osborne's policies into account when making his forecasts.

I'm not even sure Osborne took Osborne's policies into account when making his forecasts (or policies). They were clearly rubbish (expansionary fiscal contraction and al' that jazz)

Edited by R K

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Maybe I am thinking to simply but if how can asset prices rise when the income to pay for them is not rising ....

A: People sacrificing other expenditure to pay their rent or mortgage.

B: Overcrowding. 10 people living in a 2 bed terrace.

C: 50-100 year inter generational mortgages.

D: Liar loans etc.

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A: People sacrificing other expenditure to pay their rent or mortgage.

B: Overcrowding. 10 people living in a 2 bed terrace.

C: 50-100 year inter generational mortgages.

D: Liar loans etc.

Last night I cycled round the village on the scarecrow trail. I was struck by how many houses were in desperate need of attention. Vast numbers seem to be BTL. Judging by the old bangers on the drives and pavements the majority of occupants haven't had any money to spare for the last decade. One of the most successful shops in the village is a charity shop. A large part of their income comes from selling on rags. Where is this village? Not up north, its in affluent Cambridgeshire!

One can only conclude that 'A' is the main driver. So many scruffy houses and gardens, no curtains and a big TV to distract them from the misery of their lives.

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What have we got if we have not got forever rising property to pay for/support ever increasing debt tying the economy together.....one property can be sold and sold over and over again, one property can over the life of the property generate oodles of wealth. :unsure:

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They could simply QE £100bn and build 1,000,000 new state owned rental properties, solving the housing supply shortage, creating jobs and reducing the pressure on prices/household debt

Or they can continue the last 40 years of head in the sand 'market knows best' nonsense which got us to this point.

Why can't markets on their own pick it up, without the money never runs out solution of the lefties? Stick it on the Gov's tab again.

What's that... £100,000 per crapshack newbuild home and selected developers ensuring their cut?

Because younger buyers can't afford to buy.. only a trickle do via ponzi schemes such as HTB/SO against massively over-valued land values.

Same as in other markets... OBR nonsense.

January 2014

The difference between the massive run-up in price from 2013 versus say that which occurred in 2005, 2006, and 2007 is that builders are betting on this price rise as an anomaly. For example during the boom days we were seeing privately owned housing start permits hitting a range of 12,000 to 14,000 as measured by the US Department of Commerce. Today it is near the 3,000 range. This is a big difference. If these price increases were organic, as in regular families buying homes based on incomes you would see more builders building out in places like Riverside and San Bernardino. Yet they are not.
Privately owned housing starts have fallen 78 percent since 2005. Are we not adding more people? Didn’t home prices surge by 20 to 30 percent in California in various markets? The problem with the current boom is that it is based on manipulated supply, artificially low rates, and massive demand from investors. Take one or two of these items away and the market slows down. It has and we have proof with the modest rise in interest rates from last summer. Now we are seeing what happens when some investors begin to pullback.

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Maybe I am thinking to simply but if how can asset prices rise when the income to pay for them is not rising ....

Income is so 20th century though- today it's not income but credit that counts. As long as the PTB can contrive ways for the plebs to take on more debt the sky's the limit on house prices.

Help to buy is the template here- just as the great unwashed were hitting the limit on their debt carrying capacity via deposit constraints the party of 'fiscal responsibility' rushed in to solve the 'problem'.

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A: People sacrificing other expenditure to pay their rent or mortgage.

B: Overcrowding. 10 people living in a 2 bed terrace.

C: 50-100 year inter generational mortgages.

D: Liar loans etc.

I'm glad people are thinking along these lines. Because these idea's were being discussed in the late 80's. I can recall several conversations with an friend who had some kind of management role at the Anglia Building Society (might have been the AH&T or Nationwide Anglia by then).

There was of course then an enormous crash.

However back in those days we were allowed crashes.

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