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House Prices A Matter Of Confidence And Belief

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Supply and demand, something is only worth as much as someone is willing to pay for it, you need access to finance any large purchase. All these factors will keep the price of anything seemingly "above avg" or high compared to times when these factors didnt exist. I thought house prices were a bit crazy back in 2002 but then I had little knowledge about anything only the price of places back in 1993 when the olds tried to sell and the late 1990's. If I look at the present I see the following facts

A) Increased demand for housing, the family unit is declining, marriage is delcining, idependence even of couples who like their own space means the avg house has less and less people, requiring more and more people. ON the other side of the coin larger houses with baby boomers might actually fill up as more people sell up or move back into parents houses, or large debt forces house sharing.

B) MOST IMPORTANT people are willing to pay it seems the prices available. The VI, call it propoganda or management of public sentiment have managed the situation very well in their PR, influence on lazy journalistic thinking and telling the public what they want to hear to justify their decisions to pay these prices. The government and BOE have also played a part, maybe its been in the best interests of the economy to keep this confidence going and spending going, but ultimately one has to suspect that long term independence and objectivity have been called into question. Anyway thats beside the point, relentless tales of money made, HPI "dead money renting" all have kept the reality of standard economic analysis and historical trends out of the debate. All this will take a long run of bad stories or a major set of shocks such as front page repsoessions outrageous loans, collapses of high profile property gurus to work the other way.

C) Access to finance is still readily available, I really dont see much reduction in the credit markets yet, feck knows how it all works ultimately and whose actually paying, and what the concept of money truely is but it has made it easier to leverage and get on the ladder. ALso there is a big glut of people who have been put off back in 2002,2003, 2004 who have large deposits and desperate to get on the ladder (rabbid like after all the spiel coming out of the VI's) who will finally relent and see stable prices jump on. Mortgage lending is.

Also one has to ask if there are bubbles in property, equity, the beginnings of one in gold due to money supply blah blah, with the threats of a collapse of currency, hyperinflation etc is an asset that enables you to actually live in and could be protection against inflation (as shown over long term trends)such a bad bet?

I personally cant afford to buy a house, and not sure Id want to, it would reduce my mobility in regards to changing jobs the option of working abroad (im still youngish!) as an investment it may be different this time and maybe there will be a very slow correction in which case Ill be best off saving up and going straight onto the 2nd rung. As I see it at the moment though the above 3 points illustrate that any downturn in the market might take longer than thought, and if HPC does occur I think so many other things might collapse it might all be academic, you cant buy a house at the trough if you have no job!

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  • 312 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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