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More Houses Allegedly Make Houses More Expensive

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http://www.cityam.com/217357/uk-house-prices-building-new-properties-doesnt-drive-down-prices-study-shows

Building new properties doesn't drive down house prices, according to a study by the London School of Economics.

By looking at the price impacts of a series of Barrat Homes developments in suburbs and villages over the past five years, the researchers found no evidence of a price depreciation.
In fact, in some cases the opposite was true – the report, seen by the FT, says: “Developments of the size and scale studied, even in areas where originally objections were significant, can lead to more rapid rises in local house prices.”
Eight developments were looked at in total, each containing 300 new homes. All were based in the Midlands and South of England.
The results are contrary to the opinion held by many economists that more houses are needed to keep future house prices in check. The consensus is that between 200,000 and 300,000 new homes are needed each year, but in 2013-2014 the UK fell short of this with 141,000.

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2,400 houses across 8 developments in a constrained geography

I would question the significance of the investigation

Moreover, if Barratt funded it (given that only its developments are cited), then the report's conclusions risk being perceived as tainted (by cynics like me)

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One problem with new houses is that they can be quite expensive to build with all the regulations, energy efficiency etc.

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2,400 houses across 8 developments in a constrained geography. I would question the significance of the investigation

Moreover, if Barratt funded it (given that only its developments are cited), then the report's conclusions risk being perceived as tainted (by cynics like me)

I linked to the FT article earlier: http://www.housepricecrash.co.uk/forum/index.php?/topic/204938-tiniest-violin-ever/page-6#entry1102732037

FT: 'Housebuilding does not drive down prices, research says' http://www.ft.com/cm...144feabdc0.html

"...runs counter to the widely held belief that the best way to make housing more affordable is to increase supply."

Small sample LSE pilot study commissioned by Barrat and the NHBC. Reporting obviously skewed to outline how wonderful it is that homeowners shouldn't worry about the impact of developer newbuilds on their asset prices. Can't find the source yet, but article refers to the 2004 Barker report which reached similar conclusions on (always well known) inelasticities - [housing supply] "...not particularly responsive to changes in house prices." And vice versa.

In what direction would a cynic interpret the conclusions, because hardly anyone understands the (correct) fact that more private supply has almost zero effect on prices anyway.

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Ever smaller houses on ever smaller plots at more and more expensive prices...make the top of the housing pyramid more expensive.

This has been proven empirically over the last 10 years,

Cluster homes and people buying with friends have re-appeared in the last few years, not seen since before the 90's collapse.

Guess what's coming next folks....

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Ever smaller houses on ever smaller plots at more and more expensive prices...make the top of the housing pyramid more expensive.

This has been proven empirically over the last 10 years,

Cluster homes and people buying with friends have re-appeared in the last few years, not seen since before the 90's collapse.

Guess what's coming next folks....

There are many signs that UK property (generally yes, but specifically in and around London) is a bubble

Bubbles can stay bubbles for a long time, especially when the government keeps supplying pumps and gas tanks

That the bubble could burst should be no surprise to anyone

Trying to time it and trying to predict how big the pop might be will be more difficult

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There are many signs that UK property (generally yes, but specifically in and around London) is a bubble

No S**t sherlock.

I eamiled the BoE 2 years ago telling them what was happening and asking them when they would raised interest rates. Just before it got out of hand.

their reply.....It cant be a bubble because of the low sales volumes.

I fully expected to be fobbed off but I wanted it on record so the newspapers can apportion blame when the time comes. Their reasoning/excuses were pitiful and transparent.

The top men at the BoE and George Osborne specifically are culpable for all that happens from here on in.

The difference between 2007 and now is that in 2007 the bubble and the bankers fraud came as a surprise to most, I cant even say the MPs would have been culpable at that time. However , this time everyone knows it's a bubble, people are opening discussing how ridiculous it is now, the media are starting to side with the theory that prices are too high and need to come down. This new phase of the bubble has been engineer by the government and it's sub prime lending front men ( aka the banks ).

Is it all being stage managed....I dont know but in terms of wages in the UK, housing for local people is a massive bubble still unless you live in the North East/West or Belfast even then I suspect UN-affordability is high.

Edited by TheCountOfNowhere

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I don't think it is being stage managed

But I think the last government made up its mind to do anything and everything it could to prevent a fall in house prices before the 2015 election.

I haven's seen anything so far that makes me think this government isn't going to do anything and everything it can to prevent a fall in house prices before the 2020 election.

Whilst the ability to artificially support a bubble market must reduce with each intervention, we don't yet know how what (if any) other interventions they have up their sleeves.

Unless something is done in this Budget or this Autumn statement that indicates a change in direction, I think we should settle in for another 5 years of government intervention to try to prevent a HPC. In the absence of rising prices, I think it will settle for the oft mentioned soft landing. Can it do it?

I think market forces will prevail, but I don't underestimate just how hard the government will fight to keep them at bay!

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Rising house prices are caused mainly by the availability of credit not by a shortage of supply so increasing the supply doesn't have any effect in this "market".

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I don't think it is being stage managed

But I think the last government made up its mind to do anything and everything it could to prevent a fall in house prices before the 2015 election.

I haven's seen anything so far that makes me think this government isn't going to do anything and everything it can to prevent a fall in house prices before the 2020 election.

Whilst the ability to artificially support a bubble market must reduce with each intervention, we don't yet know how what (if any) other interventions they have up their sleeves.

Unless something is done in this Budget or this Autumn statement that indicates a change in direction, I think we should settle in for another 5 years of government intervention to try to prevent a HPC. In the absence of rising prices, I think it will settle for the oft mentioned soft landing. Can it do it?

I think market forces will prevail, but I don't underestimate just how hard the government will fight to keep them at bay!

The intervention has already been withdrawn in the form of FLS for non BTL buyers and MMR.

The effects of that removal have clearly caused the london sales volume collapse.

All we are currently left with is the BTL FLS scheme and odious HTB 20% bank guarantee, which I dont think is having much of an uptake now.

No one will mourn the demise of the BTLers when the london bubble collapses.

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Would the Govt schemes like help to buy, new buy etc push up properties prices when any new development is built? This wouldn't just be Barrett but could be any developer.

I've been looking in Milton Keynes recently and after what appears to have been a housing market crash since 2008 and then stagnation I've seen what appeared to be a total change just before the election with properties going SSTC quickly. I don't know of course, how many of these will fall through but none I have been following have so far.

This seems to have died down a little now but the asking prices are still very, very high compared to a year ago.

Milton Keynes has seen several new build developments in the last couple of years. I can see the ASKING prices for the older properties around these new developments rising to match the newbuilds.

Edited by Flopsy

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Yes. Very generally that is about the long and short of it.

If the government gives someone some of the money they need to buy a house (or makes it easier for them to get the credit needed to buy a house), then house prices will go up.

It isn't sustainable. But, as we are seeing, it can persist for quite some time

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One problem with new houses is that they can be quite expensive to build with all the regulations, energy efficiency etc.

3 bed terrace/semi on a large scale new build plot is around 30k for the basic build i.e. excluding new utility routings, new roads etc.

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3 bed terrace/semi on a large scale new build plot is around 30k for the basic build i.e. excluding new utility routings, new roads etc.

If they build 3000 square foot houses and sold them for the current price of 2nd hand 1500 sq ft houses what effetc would that have on prices ?

It's the rabbit hutch effect, using government support for force people into smaller and smaller spaces charging them more and more and using that to bolster tax takes and poush up the asset prices for themselves and their rich friends.

it's ingenious corrupt.

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