Jump to content
House Price Crash Forum
Maynardgravy

Demand - Not Supply - Is The Problem

Recommended Posts

There is no single problem, successive governments have badly mismanaged the essential foundation of society that is housing.

It will have to be sorted out, probably when a lot of votes depend on it, we are at a key moment now.

Share this post


Link to post
Share on other sites

He got his first house in London via his right-to-buy council house. He then promptly borrowed against the automatic equity in that to purchase 10 buy-to-let properties in Durham on amazing-sounding yields. He’ll be buying more when the value of those has risen enough for him to borrow more against them — although not in London, where he quite rightly considers the yields to be far too low for comfort.

ARRRRRRGGGGGGHHHHH!

Share this post


Link to post
Share on other sites

Google trick not working :(

Needs to not be behind a paywall. Did get some coverage on R4 this morning.

Edit: hang on... click away the survey and it's there.

Edited by Alonso Quijano

Share this post


Link to post
Share on other sites

I the same article the author claims young people can't afford houses & the problem is excess demand.

Can't have it both ways.

Share this post


Link to post
Share on other sites

I the same article the author claims young people can't afford houses & the problem is excess demand.

Can't have it both ways.

Yes you really can.

Young people can't afford to own their own houses, because of the demand from landlords to own other people's houses.

Moreover demand, in this context, means the total value of mortgages vomited out of the banks.

Excess demand is just jargon for too much mortgage debt being issued. Mortgages are too high and too many mortgages are being issued to hoarders and speculators.

It certainly isnt a lack of supply because we know, by counting, that the supply is higher than ever.

Edited by BuyToLeech

Share this post


Link to post
Share on other sites

Yes you really can.

Young people can't afford to own their own houses, because of the demand from landlords to own other people's houses.

Moreover demand, in this context, means the total value of mortgages vomited out of the banks.

Excess demand is just jargon for too much mortgage debt being issued. Mortgages are too high and too many mortgages are being issued to hoarders and speculators.

It certainly isnt a lack of supply because we know, by counting, that the supply is higher than ever.

+1

Share this post


Link to post
Share on other sites

No problem whatsoever with supply around my way ,BTL are bailing out ,but guess what there's very few that can afford to buy ,you can spot the over leveraged a mile off 20%+ disparities between houses on the same street ,but i`m glad to say prices are falling ,the ones that can afford to lower the price are the only ones that are selling ,the game of catch the falling knife looks to have started ,,,,,,,it can only get better

Edited by long time lurking

Share this post


Link to post
Share on other sites

No problem whatsoever with supply around my way ,BTL are bailing out ,but guess what there's very few that can afford to buy ,you can spot the over leveraged a mile off 20%+ disparities between houses on the same street ,but i`m glad to say prices are falling ,the ones that can afford to lower the price are the only ones that are selling ,the game of catch the falling knife looks to have started ,,,,,,,it can only get better

Yes, I think a lot of posters (correctly to some degree) think that prices won't drop too far because of lack of forced sales through zirp. But for me the floor has always been the de facto position of , to quote a prominent poster, 'just rent it out innit' if they couldn't get what it was 'worth' (I know two acquaintances who did this for that very reason). But now times are a changin'. Letting is not going to be the safety net it has been.

Share this post


Link to post
Share on other sites

From the interesting FT article


The number of households in the UK has risen by 7 per cent since 2005, but ONS numbers suggest that the number of people living in each of those households hasn’t: our current average of 2.4 people is the same as the European average and the same as it was in 2003. If there was a genuine shortage of homes the three-generation homes and boomerang kids we hear so much about in the media would be showing up in these numbers. They aren’t.

One suspects that these days in the UK the average ratio varies a lot from place to place and in some areas one suspects that the average ratio has gone up a lot and would be much higher than 2.4 - and people in overcrowded areas don't necessarily want to move to less crowded ares just to suit the average ratios (and vice versa of course). It would be interesting if the extreme values for the UK ratios compared to european ratios were supplied for comparison.

For example from the 2011 census (are its figures accurate?) Newham's ratio was 3.01 an increase from 2.70 in 2001 and most likely significantly higher again in 2016 - but don't hold your breath for such information for the whole of the UK and europe to be made easily available by officialdom.

Then some people think the the UK's official population figures and the population growth figures (especially the population growth figures in recent years - say since around 2003) are inaccurate and low.

The number of UK houses/homes used for the ratios is probably reasonably accurate as those will be based on registers which seem to be kept reasonably upto date.

That's not to disagree with the article's general conclusions.

Edited by billybong

Share this post


Link to post
Share on other sites

An excellent article and really gets the point across about the demand and supply issues. Demand is not just a reflection of the number of people who want something (how most people see 'demand') but rather access to funding, in the shape of ultra low interest rates and Help to Buy.

Given that house prices are detached from their fundamental value, a crash will inevitably follow.

Edited by Ah-so

Share this post


Link to post
Share on other sites

Am excellent article and really gets the point across about the demand and supply issues. Demand is not just a reflection of the number of people who want something (how most people see 'demand') but access to funding, in the shape of ultra low interest rates and Help to Buy.

Given that house prices are detached from their fundamental value, a crash will inevitably follow.

+1

...access to funding, in the shape of ultra low interest rates and Help to Buy....

...and unconstrained BTL mortgages. Edited by BuyToLeech

Share this post


Link to post
Share on other sites

I always feel not enough is made of the speed at which supply of credit and supply of property can adjust. Given the ability of bank credit to slosh around the world at the drop of a hat, the supply of mortgage credit against a given housing asset (e.g. London property) can increase massively damn near instantaneously. Once the asset price is moving, investors chasing yield and looking for somewhere to stash loot can chase it up. Physical supply can only respond at a comparatively glacial pace.

Even if there is a modest shortage of property in some markets (relative to 'demographic' demand) the price mechanism is not working so well because the market has become a speculators' market; a move in prices reflects animal spirits and not a carefully calibrated read out of the mismatch between supply of housing and 'demographic' demand for housing. Hence, for my money, there is very little information in house prices other than what house buyers as investors think is going to happen next to house prices.

Hence arguably whilst some of the BTL tw@ts think rampant HPI in London and the South speaks unambiguously to a supply-demand mismatch, the possibility exists that a significant driver of prices is simply their willingness to invest on the basis of an imagined mismatch. The mismatch does not need to actually exist in order to call forth the HPI.

Edited by Ghost Bird

Share this post


Link to post
Share on other sites

If it isn't a paywall it's an adblock notice. Would really appreciate if people can find free websites to post, I'm not forking out to read the news.

Share this post


Link to post
Share on other sites

So according to the article Uber drivers rate their passengers and it'll all go on a database.

For sure taxi drivers have always formed opinions about their passengers in their own mind if only on a superficial basis especially on the level of any tip (like passengers have opinions on the drivers) - but an official registered opinion. More control freakery again. Sort of like a company appraisal of an employee and for sure you won't get a copy.

No you can stick that - so I'm out and I won't be using the company.

Edited by billybong

Share this post


Link to post
Share on other sites

From the interesting FT article

One suspects that these days in the UK the average ratio varies a lot from place to place and in some areas one suspects that the average ratio has gone up a lot and would be much higher than 2.4 - and people in overcrowded areas don't necessarily want to move to less crowded ares just to suit the average ratios (and vice versa of course). It would be interesting if the extreme values for the UK ratios compared to european ratios were supplied for comparison.

For example from the 2011 census (are its figures accurate?) Newham's ratio was 3.01 an increase from 2.70 in 2001 and most likely significantly higher again in 2016 - but don't hold your breath for such information for the whole of the UK and europe to be made easily available by officialdom.

Then some people think the the UK's official population figures and the population growth figures (especially the population growth figures in recent years - say since around 2003) are inaccurate and low.

The number of UK houses/homes used for the ratios is probably reasonably accurate as those will be based on registers which seem to be kept reasonably upto date.

That's not to disagree with the article's general conclusions.

I find it unlikely that there is significant error in population numbers, although it is possible.

Doesn't matter.

The accuracy of those numbers is almost irrelevant given the scale of the debt gushing forth into the housing market, and given the huge increase in Landlording.

The numbers would have to be off the charts wrong before the physical shortage of housing even came close to the virtual shortage caused by landlords.

The same is true of any local shortages. I don't doubt that there are some areas in need of additional housing, but the impact of that will be dwarfed by the impact of landlords, foreign investors and limitless mortgage lending.

Share this post


Link to post
Share on other sites

I find it unlikely that there is significant error in population numbers, although it is possible.

Doesn't matter.

The accuracy of those numbers is almost irrelevant given the scale of the debt gushing forth into the housing market, and given the huge increase in Landlording.

The numbers would have to be off the charts wrong before the physical shortage of housing even came close to the virtual shortage caused by landlords.

The same is true of any local shortages. I don't doubt that there are some areas in need of additional housing, but the impact of that will be dwarfed by the impact of landlords, foreign investors and limitless mortgage lending.

The overriding role of credit is why I said

"That's not to disagree with the article's general conclusions."

As a separate issue the FT article underplayed the the possible number of people living in each household (in some UK areas) when referring to population growth/household occupancy and in comparing the UK with europe. The article suggested no more overcrowding than in europe but it only referred to the average and didn't consider areas with extreme ratios.

That underplay should be pointed out as apart from anything else it is relevant to possible overcrowding and housing shortage - overcrowding and shortages do matter (although compared to credit levels they don't influence house prices that much) and is why I said

One suspects that these days in the UK the average ratio varies a lot from place to place and in some areas one suspects that the average ratio has gone up a lot and would be much higher than 2.4 - and people in overcrowded areas don't necessarily want to move to less crowded areas just to suit the average ratios (and vice versa of course). It would be interesting if the extreme values for the UK ratios compared to european ratios were supplied for comparison.

For example from the 2011 census (are its figures accurate?) Newham's ratio was 3.01 an increase from 2.70 in 2001 and most likely significantly higher again in 2016 - but don't hold your breath for such information for the whole of the UK and europe to be made easily available by officialdom.

On the issue of the accuracy of the population numbers there's some evidence to point to possible underestimation - for example with much higher than expected NI registrations indicating hidden numbers and also retailers' consumption figures suggesting a bigger population than officially admitted along with doubts on the accuracy of census returns etc etc (especially when one considers how the government's intentions and motives seem so suspect and how it has continually misled on the immigration numbers and seems to underplay all sorts of figures relating to population numbers). If true that also matters as it has an effect on the statistics relating to overcrowding and general congestion etc.

Landlords/BtLers certainly influence house prices by their role as a conduit in supplying credit to the housing market and cash rich overseas buyers also influence house prices - but neither group alter the number of properties available for occupation unless they leave them empty.

Edited by billybong

Share this post


Link to post
Share on other sites

That was reported on 10 April 2014. One would still need some convincing that even those figures are accurate just observing the awful increase in general congestion of people and vehicles in the town and city streets over the years (British people are expected to believe that since year 2000 the British population has gone up by about 10%, an extra 1 in 10 :lol: what a laugh) - and has the ONS adjusted the official ONS figure for total population in 2016 to account for the factors leading to the admitted 350,000 underestimate just upto 2011.

Edited by billybong

Share this post


Link to post
Share on other sites

That was reported on 10 April 2014. One would still need some convincing that even those figures are accurate just observing the awful increase in general congestion of people and vehicles in the town and city streets over the years (British people are expected to believe that since year 2000 the British population has gone up by about 10%, an extra 1 in 10 :lol: what a laugh) - and has the ONS adjusted the official ONS figure for total population in 2016 to account for the factors leading to the admitted 350,000 underestimate just upto 2011.

An error of half a percent. Oh noes.

It's like claiming to be 6' tall when you're only 5'11 2/3.

Doesn't change the argument one bit.

The fact it was significant to them, shows the expected precision.

Edited by BuyToLeech

Share this post


Link to post
Share on other sites

An error of half a percent. Oh noes.

It's like claiming to be 6' tall when you're only 5'11 2/3.

Doesn't change the argument one bit.

The fact it was significant to them, shows the expected precision.

Indeed 350,000 is a small amount of the official total population in percentage terms (about 0.5%) but 350,000 is still a hefty amount in housing need terms and possible source of overcrowding in some areas.

A 350,000 error in the official total net migration figure is about 16% (say an original net migration total of about 2.2 million before the error was spotted - 2001 to 2011) - a significant error even in percentage terms. 350,000 = on average nearly 2 years worth of net migration in those days.

The error is about 6% of the official total population increase (2001 upto 2011) - which is also a significant error. A 6% error in extra population in that time frame is too inexact and lax and makes satisfactory planning for housing needs and avoiding shortages/overcrowding more difficult.

The ONS admission was just one official confirmation of population/immigration underestimation so far. Admitted by the ONS one of the official compilers and there are reasons to point to other possible significant underestimates - they had to admit that one as it was from the official census of 2011.

Accepted that the level of credit is the main reason for crazy house prices.

Edited by billybong

Share this post


Link to post
Share on other sites

Indeed 350,000 is a small amount of the official total population in percentage terms (about 0.5%) but 350,000 is still a hefty amount in housing need terms and possible source of overcrowding in some areas.

A 350,000 error in the official total net migration figure is about 16% (say an original net migration total of about 2.2 million before the error was spotted - 2001 to 2011) - a significant error even in percentage terms. 350,000 = on average nearly 2 years worth of net migration in those days.

The error is about 6% of the official total population increase (2001 upto 2011) - which is also a significant error. A 6% error in extra population in that time frame is too inexact and lax and makes satisfactory planning for housing needs and avoiding shortages/overcrowding more difficult.

The ONS admission was just one official confirmation of population/immigration underestimation so far. Admitted by the ONS one of the official compilers and there are reasons to point to other possible significant underestimates - they had to admit that one as it was from the official census of 2011.

Accepted that the level of credit is the main reason for crazy house prices.

The calculation of housing density uses the total population, not the change, and we that's why I use this measure. The relevant error is half of one percent.

That isn't really the point though. The population estimate could be off by millions and we still wouldn't be seeing a housing shortage. We'd still show housing densities as good as they've ever been.

The data is absolutely clear, it's not remotely a close call, and even if you doubt the accuracy you don't need high accuracy to draw this conclusion.

As it happens, you do get basically the same conclusion if you look at housing completions vs annual changes in population (I've posted those numbers before), but that's not the best way to do the calculation.

If we were discussing immigration more generally I'd make a similar point. The mass immigration of the last decade or two is unprecedented. The errors aren't important because the conclusion is already stark.

We shouldn't worry that immigration has been underestimated, we should worry that it is as high as they claim.

The fact that the levels of immigration shown in the figures don't tally with people's direct experience of immigration, says more about people's intuition regarding large numbers, and orders of magnitude, than it does about the numbers themselves.

Edited by BuyToLeech

Share this post


Link to post
Share on other sites

The calculation of housing density uses the total population, not the change, and we that's why I use this measure. The relevant error is half of one percent.

That isn't really the point though. The population estimate could be off by millions and we still wouldn't be seeing a housing shortage. We'd still show housing densities as good as they've ever been.

The data is absolutely clear, it's not remotely a close call, and even if you doubt the accuracy you don't need high accuracy to draw this conclusion.

As it happens, you do get basically the same conclusion if you look at housing completions vs annual changes in population (I've posted those numbers before), but that's not the best way to do the calculation.

If we were discussing immigration more generally I'd make a similar point. The mass immigration of the last decade or two is unprecedented. The errors aren't important because the conclusion is already stark.

We shouldn't worry that immigration has been underestimated, we should worry that it is as high as they claim.

The fact that the levels of immigration shown in the figures don't tally with people's direct experience of immigration, says more about people's intuition regarding large numbers, and orders of magnitude, than it does about the numbers themselves.

Which goes back to my original point that the FT article only referred to average figures for household occupancy and made no reference to the extreme values in certain localities in comparing for instance the UK with europe. I gave Newham as being one example of a significantly higher occupancy ratio compared to the average according to the official data. How does that compare with extreme values in european countries.

I think all 3 percentage errors (0.5%, 6% and 16%) are relevant depending on context - and that's only the officially admitted error by the ONS.

That isn't really the point though. The population estimate could be off by millions and we still wouldn't be seeing a housing shortage. We'd still show housing densities as good as they've ever been.

It depends how many millions the figures are off and where they are. Assuming the figures for the numbers of homes are accurate (no reason to particularly doubt their accuracy) then extra uncounted millions would mean some uncounted extra crowding maybe even overcrowding in some areas. We wouldn't be seeing a housing shortage because they would just be shoving more people into the same number of homes and on current trends those local areas in time would tend to spread out - the occupancy ratios would also be inaccurate/underestimated. Also bearing in mind how tiny UK homes are on average - relative to the rest of the world.

The UK won't ever have a shortage if the UK tolerates increasing occupancy ratios in some areas. Areas that will tend to spread over time.

The data is absolutely clear, it's not remotely a close call, and even if you doubt the accuracy you don't need high accuracy to draw this conclusion.

You have data to prove that?

As it happens, you do get basically the same conclusion if you look at housing completions vs annual changes in population (I've posted those numbers before), but that's not the best way to do the calculation.

What about the areas with extreme occupancy ratios - rather than national averages.

If we were discussing immigration more generally I'd make a similar point. The mass immigration of the last decade or two is unprecedented. The errors aren't important because the conclusion is already stark.

We shouldn't worry that immigration has been underestimated, we should worry that it is as high as they claim.

I agree we should be very concerned that the figures are as high as they claim. The situation is unprecedented, stark and full of risk.

I would still rather use figures known to be accurate through a reliable method of counting. Known to be accurate so that we can have confidence when for example comparing the UK figures with the european figures as the FT was doing.

The fact that the levels of immigration shown in the figures don't tally with people's direct experience of immigration, says more about people's intuition regarding large numbers, and orders of magnitude, than it does about the numbers themselves.

It's pretty easy for one to compare the personal experience of awful congestion now with the congestion of say 2000. The massive difference in congestion when the total population is only officially supposed to have only increased by about 10% is enough in itself to justify questioning the accuracy of official figures for population increase within that time frame. 1 in 10 (or 10%) is easy to imagine, it doesn't require intuition - and the general increase in congestion experienced suggests that the 10% figure is miles out.

Accepted that the level of credit is the main reason for crazy house prices.

Edited by billybong

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • Next General Election   91 members have voted

    1. 1. When do you predict the next general election will be held?


      • 2019
      • 2020
      • 2021
      • 2022

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.