Credit, population and the Housing Stock

[thebananapimp]

I would like people to post all the factors they believe have affected house prices in the past, and will in the future, and attribute a sort of proportion to each factor. 

I'd like you to do it with just two headings too, 

Demand and Supply

Let me start (based on what I have learned on HPC and I hope that people will add to this until we all sort of agree, and perhaps learn some new ways of thinking about this issue.

And I know this isn't a linear relationship, nor is this ever that simple, but just assume it's present day and that the relationship is super simple for ease of discussion.

 

Supply of houses for sale

Too few new houses coming onto the market - 75%

Difficulty of finding large plots for development in desirable areas - 10%

Oligopoly of house builders with high barrier to entry, due to costs and regulations - 10%

Vacant properties staying unused and general occupancy rate issues - 5%

 

Demand of houses to buy

Ease of available credit - 40%

Help to Buy - 5%

Growing population - 40%

Buy to let 15%

 

 

I'd love to hear what other people think, as I'm sure I'm forgetting some things, and I'd like to try and graph a relationship between all the factors.

 

If you disagree, please state the change in % you think is needed.

 

TBP

 

 

 

 

[maverick73]

5 hours ago, thebananapimp said:

Ease of available credit - 40%

Once easy credit, becomes not so easy... then it all stacks up...

Inflation is one component, the other is oil... hence is the US begins a mass infrastructure cycle.. then they will chew oil driving prices up, hence global inflation... net result is global rate rises ?

[hurricane]

Cheap credit is the key. Not just available...

[Arpeggio]

Demand > Technology - Looms didn't have wages so to speak and don't buy things or houses. Same for AI and Robots of future.

Like that, I see there's nothing to do with the real economy in your list as a factor, sad but true.

[thebananapimp]

50 minutes ago, hurricane said:

Cheap credit is the key. Not just available...

Yep, fair point, I could have worded that better. How large a factor would you say that is? 

[hurricane]

For me cheap credit is the main factor causing prices to rise/keeping them high.

Ask yourself would happen to prices if the base rate was 4% or even 2%...

[thebananapimp]

19 minutes ago, hurricane said:

For me cheap credit is the main factor causing prices to rise/keeping them high.

Ask yourself would happen to prices if the base rate was 4% or even 2%...

Yeah actually. A much more rapid and volatile effect than one caused by stagnant population growth which would be a slow burner.

Fair, alright so I'd say cheap credit is 60% then and current population growth 20%.

And I've seen a graph shared on here showing affordability of mortgages at the base rate and some people will be in for a nasty surprise should the rate rise!

What about the supply side factors then? What % should change?

[mrtickle]

That's four years out of date. Would like to see an updated version!

 

[henchard]

Here's some stats to help you. The increase in 'one person households' has certainly been a factor in the equation.

 

https://visual.ons.gov.uk/uk-perspectives-2016-housing-and-home-ownership-in-the-uk/

[thebananapimp]

38 minutes ago, henchard said:

Here's some stats to help you. The increase in 'one person households' has certainly been a factor in the equation.

 

https://visual.ons.gov.uk/uk-perspectives-2016-housing-and-home-ownership-in-the-uk/

Thanks!

Copy pasted quick facts from there: 

There were 27 million households in the UK in 2015. Of these, 29% consisted of only one person; in 1981, 20% of the 20.2 million households were single occupancy.

Overall, there has been growing demand and relatively limited supply growth. 

The number of households in the UK, and therefore demand for housing, has increased, partly as a result of increasing population together with decreasing average household size.