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Why You Can't Afford A Home In The Uk

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Spot on. The first article I've seen that gets it right without beating around the bush.

The cycle works as follows: if the growth of mortgage lending outpaces the supply of new homes, this will inevitably cause a rise in house prices.
As house prices rise, households are forced to take out larger mortgage loans to get on the housing ladder, boosting banks’ profits and capital.
This enables them to issue more loans, which further pushes up prices until such a point that house prices are many times people’s incomes.

Sorry to keep posting this graph everywhere, but people (even on here) don't seem to realise the simplicity of the housing problem.

UK-House-Prices-1997-2014.png

Edited by Eddie_George

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Spot on. The first article I've seen that gets it right without beating around the bush.

Sorry to keep posting this graph everywhere, but people (even on here) don't seem to realise the simplicity of the housing problem.

UK-House-Prices-1997-2014.png

ABSOLUTELY.

AND THEY'RE CALLED

PREDATORY LIAR LOANS.

[see below in my signature].

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:if the growth of mortgage lending outpaces the supply of new homes, this will inevitably cause a rise in house prices.

Then the question is what causes the continual growth of mortgage lending when incomes are relatively static.

The answer is fraudulent applications for loans and fraudulent acceptance of the fraudulent applications - aka PREDATORY LIAR LOANS.

Otherwise prices would tend to stabilise at a level reflecting an honest assessment of the lending risk based on honest facts and figures.

Edited by billybong

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Sorry to keep posting this graph everywhere, but people (even on here) don't seem to realise the simplicity of the housing problem.

Great graph! :)

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Then the question is what causes the continual growth of mortgage lending when incomes are relatively static.

The answer is fraudulent applications for loans and fraudulent acceptance of the fraudulent applications - aka PREDATORY LIAR LOANS.

Otherwise prices would tend to stabilise at a level reflecting an honest assessment of the lending risk based on honest facts and figures.

Fraud is part of the issue. Also the removal of self-imposed limits on income multiples or LTV.

Banks do not do honest. Or risk assessment. If house prices keep going up there is no risk to them. Can't pay? Take it away.

The risk is an HPC. That is why the banks and the government will try to stop prices crashing. So far they have done that very well.

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That graph is a superb simple illustration of the root causes and connection between increased mortgage lending and credit availability and the forever increase in house prices.

However I'm betting that majority of the British public wouldn't have a clue how to interpret that graph, what it meant and its implications.

"house prices only go up innit" "supply and demand innit" "increase in population innit"

BF

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Spot on. The first article I've seen that gets it right without beating around the bush.

Sorry to keep posting this graph everywhere, but people (even on here) don't seem to realise the simplicity of the housing problem.

UK-House-Prices-1997-2014.png

The interesting thing about the graph is that it shows supply keeping pace with population. So what's this argument that we need more house because it seems that, at least in total, we are building enough? I think this is correct and the supply problem is confined to a few areas. It's credit and low IRs that have driven this and very little else.

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The interesting thing about the graph is that it shows supply keeping pace with population. So what's this argument that we need more house because it seems that, at least in total, we are building enough? I think this is correct and the supply problem is confined to a few areas. It's credit and low IRs that have driven this and very little else.

Supply has risen ahead of population long-term since about 1946.

It has not kept pace with aspiration:

- At the low end, even students now expect their own bedroom (and sometimes even en-suite).

- In the middle, people expect a place (nowadays with mod-cons) for each domestic unit: single, couple, or family. Noone aspires to sharing.

- At the top end, more rich folks have second homes.

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I'm new to this forum, and just trying to learn as much as possible. So this might be a stupid question. The y axis on the graph I assume is £s (in thousands), but how can you then plot population and housing supply on this same graph or at least without labelling it?

Spot on. The first article I've seen that gets it right without beating around the bush.

Sorry to keep posting this graph everywhere, but people (even on here) don't seem to realise the simplicity of the housing problem.

UK-House-Prices-1997-2014.png

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most people think banks "have" to lend because, otherwise, how would people be able to buy such expensive things?

This applies to cars as well.

Medical insurance is another form of lending, forcing up prices too. And who can afford to go to the vets these days?..No pet insurance, no treatment.

Insurance for these things, which are almost inevitable, is simply a way for the masses to spread the cost..ie, credit.

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Part time education is similar , they introduced loans for part time courses and what happened the cost sky rocketed its all about the finance and what banks will lend driving prices

It amazes me that the headline news will be inflation at 0.3 and yet house prices to buy and rent are in double digit increases !!!

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I'm new to this forum, and just trying to learn as much as possible. So this might be a stupid question. The y axis on the graph I assume is £s (in thousands), but how can you then plot population and housing supply on this same graph or at least without labelling it?

It's an index with 1997 as the base of 100.

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That graph is a superb simple illustration of the root causes and connection between increased mortgage lending and credit availability and the forever increase in house prices.

However I'm betting that majority of the British public wouldn't have a clue how to interpret that graph, what it meant and its implications.

"house prices only go up innit" "supply and demand innit" "increase in population innit"

BF

What would be the simplest way to explain to someone based on the graph that just increasing the supply of houses wouldn't therefore bring prices down?

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What would be the simplest way to explain to someone based on the graph that just increasing the supply of houses wouldn't therefore bring prices down?

It does have an effect.

But the biggest effect is not the supply of houses...its the supply of credit. more houses would possibly mean less demand ( current demand seems to be supported by people not buying homes, but BTL "investments") so the demand part of buying a home can continue to outstrip supply as two buyers, an OO and a BTL do not compete on the same LENDING propositions, and BTL will always be able to outbid the OO because he can obtain credit.

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What would be the simplest way to explain to someone based on the graph that just increasing the supply of houses wouldn't therefore bring prices down?

I know people in a Spanish town, 10 years ago prices there were similar to where I live in London, now they are about 10%. Building lots of flats there seems to have done it. True they have not help to buy etc but as you can buy without a deposit or a steady job I don't think it would be needed.

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Part time education is similar , they introduced loans for part time courses and what happened the cost sky rocketed its all about the finance and what banks will lend driving prices

It amazes me that the headline news will be inflation at 0.3 and yet house prices to buy and rent are in double digit increases !!!

I probably need a tooth removing and i asked about get an implant ..... and the dentist told me its £2000 but there are loans available for this.

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I probably need a tooth removing and i asked about get an implant ..... and the dentist told me its £2000 but there are loans available for this.

It used to cost £200, but then the banks started offering loans for them.

Seriously though, have you considered becoming a health tourist and get a nice holiday into the bargain?

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It used to cost £200, but then the banks started offering loans for them.

Seriously though, have you considered becoming a health tourist and get a nice holiday into the bargain?

I'm currently on holiday in Thailand but its not that much cheaper here these days for such work, think its the patented implant that costs a lot.

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I'm currently on holiday in Thailand but its not that much cheaper here these days for such work, think its the patented implant that costs a lot.

there you go, if people had to PAY for the tooth, then they would avoid the £2000 job. the market would fill the need at the lower price or there would be no sales at all.

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I probably need a tooth removing and i asked about get an implant ..... and the dentist told me its £2000 but there are loans available for this.

You could have a tooth made of solid gold for that much. Easily.

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It's part of the system, but not the sole driver. I fear it's far too simplistic to point the finger and exclaim "it's the banks what dunnit". My gut tells me there's a larger socio-economic mechanism at play, but for the life of me it's too complex for me to understand.

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