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Bubble Pricker

HPC On American Radio

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I recently did an interview for American Public Media's Marketplace Programme.

I have posted the programme in the HPC in the Media Section.

Enjoy!

Brilliant!

For those unaware of the show, it airs at prime drive time every weekday on a large number of influential National Public Radio stations. I listen regularly on my drive home. At the moment, they seem to have something bearish about house prices just about every day...

frugalista

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Yeah, it's quite a good piece of work by Stephen Beard. We have also learnt our PR lesson here at HPC. Although I have only about 20secs or so of airtime in the piece, I think the point comes across. It's a sad fact that with the media one needs to have sound bites, and "the UK housing market is biggest pyramid scheme in history" has become my favourite one.

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Yeah, it's quite a good piece of work by Stephen Beard. We have also learnt our PR lesson here at HPC. Although I have only about 20secs or so of airtime in the piece, I think the point comes across. It's a sad fact that with the media one needs to have sound bites, and "the UK housing market is biggest pyramid scheme in history" has become my favourite one.

Just a few days ago Marketplace had a great piece by an economist academic. Unfortunately, I can't remember her name. But her argument was really compelling, it was basically all based on demographics.

The main thrust was that there are just not enough younger people to buy all the family homes left by the baby boomers (defined as being born betwen 1946 and 1964). The oldest baby boomers (who incidently form the largest group) are thinking about retirement and many of them are not particularly attached to that suburban lifestyle they have been living for the past 20-30 years. The speaker had interviewed many baby boomers and they all plan to move to cities or the coast for their retirements. So they are starting to sell up already. The ones selling now will realize their gains, but in a few years, there will be a massive glut of typical American homes and the price will have declined significantly.

I know that UK demographics are similar. I guess that the equivalent house is the 3-bed 1930s semi in the suburbs. Over the next 5 years, I wonder how many of these will be up for sale by boomers trying to finance their retirement?

frugalista

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Guest Charlie The Tramp

I know that UK demographics are similar. I guess that the equivalent house is the 3-bed 1930s semi in the suburbs. Over the next 5 years, I wonder how many of these will be up for sale by boomers trying to finance their retirement?

frugalista

Well according to this research the children or beneficiaries will get the lot.

We are not all that bad us BBs. ;)

Gadfly Financial Mail

Good news for grasping youngsters who fear their parents are about to cash in the family home and fritter away the inheritance.

It seems the old folk`s caveman genes will be urging them to hang on to the house until they die.

A new paper from academic Steffen Huck at University College London probes what has until now been one of the greatest mysteries in economics-the `endowment effect`This describes why people`s attachment to possessions tends greatly to exceed their market value. The Royal Economic Society, which is publishing the paper by Huck and collaborators Georg Kirchsteiger and Jorg Oechssler, says: `People wonder why few elderly homeowners take out equity release plans to boost their income, or capitals on the booming housing market by selling their homes and moving to a more convenient flat.`

Huck and Co have cracked it, apparently. It all goes back to our days in the hunter-gatherer environment. A hunter who wanteda balanced diet would have to swap meat for berries, for example, but would have an inflated sense of value of what he owned-meat.

The consequences: if you like something, then you will think it is worth a lot and you will want a lot in return.

That`s why, the paper says, `emotional attachment to some of our possessions might actually be hard-wired in our brains`.

Just what forward planning sons and daughters wanted to hear.

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The main thrust was that there are just not enough younger people to buy all the family homes left by the baby boomers (defined as being born betwen 1946 and 1964). The oldest baby boomers (who incidently form the largest group) are thinking about retirement and many of them are not particularly attached to that suburban lifestyle they have been living for the past 20-30 years. The speaker had interviewed many baby boomers and they all plan to move to cities or the coast for their retirements. So they are starting to sell up already. The ones selling now will realize their gains, but in a few years, there will be a massive glut of typical American homes and the price will have declined significantly.

Yep, this is what I have been saying for a long time. The long term future of the market for family homes is doomed due to the demographics. This has already started to happen in Germany, where family houses in rural areas can be bought very cheaply, but prices in urban areas are holding up well. I recently read an extremely well researched report on the German property market, which predicts that this trend will continue and that some properties in certain non-urban areas will become worthless over the next 20 years, whilst property prices and and rents in city centres will rise.

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Well done bp, truly global.

I do worry about the consequences of a crash, but I still think its in the long term good of society.

I think that you can relax a little now, because early on the message need to get an airing, now the snowball is rolling down the slope, it will gather its own momentum.

It still fells sureal out there though, in the world, where you still hear people talking about investing in property, I hear 3 or 4 people talking about it everyday at work. I have to keep my mouth shut and its hard! Like having a bee in your mouth! So in a way David Smith was right about it being sticky downwards, its taken two years to go from >20% to nothing, but it won't stop retreating at 0% growth.

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Yep, this is what I have been saying for a long time. The long term future of the market for family homes is doomed due to the demographics. This has already started to happen in Germany, where family houses in rural areas can be bought very cheaply, but prices in urban areas are holding up well. I recently read an extremely well researched report on the German property market, which predicts that this trend will continue and that some properties in certain non-urban areas will become worthless over the next 20 years, whilst property prices and and rents in city centres will rise.

im not actually sure that is the case in the uk - i understand a lot of "middle-class" families are trying to escape to the country to avoid the chaos of the cities, a trend which has actually increased house prices at a faster rate outside the cities than inside.

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im not actually sure that is the case in the uk - i understand a lot of "middle-class" families are trying to escape to the country to avoid the chaos of the cities, a trend which has actually increased house prices at a faster rate outside the cities than inside.

Sure, but once the single child of those middle class families has grown up and the parents are in a rest home or have died, and the same scenario has played itself out in hundreds of thousands of other rural family homes, then who will buy them?

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  • 301 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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