UK house prices rise at fastest rate since 2004

[dugsbody]

3 minutes ago, iamnumerate said:

Firstly I think it is migration not immigration.

Also I don't think that they are two only factors. Obviously changes in wages, government props and house supply are also important factors. (HTB had a massive affect in London).

 

At first glance it seems that comparing Cornwall and Lancashire migration has had massive differences in affordability. 

(I worked out that in Preston affordability is not that different than in 1995 now. Far less than the London had risen by 2001).

However, I don't have the time to do a proper study between them, and I would guess that most of the figures are not easily available on the net. So there could be something else.

Probably no academic would ever do it as so most people in the UK seem to think either a) all problems are caused by immigration or b) no problems are caused by immigration and the conclusion would almost certainly offend both groups. 

 

https://www.bankofengland.co.uk/-/media/boe/files/working-paper/2019/uk-house-prices-and-three-decades-of-decline-in-the-risk-free-real-interest-rate.pdf?la=en&hash=7C12A901353CB615C3FC1A58557918D50775E470

[iamnumerate]

4 minutes ago, dugsbody said:

https://www.bankofengland.co.uk/-/media/boe/files/working-paper/2019/uk-house-prices-and-three-decades-of-decline-in-the-risk-free-real-interest-rate.pdf?la=en&hash=7C12A901353CB615C3FC1A58557918D50775E470

Thanks but that paper says

Quote

We have not offered an explanation of regional differences in the trajectory of house prices. 

Quoting a paper that agrees with you that does not look at why house prices have had different percentage rises.

Is not really disproving my point, that different parts of the country have had different rises and this could be because of migration is it?

 

[dugsbody]

16 minutes ago, iamnumerate said:

Thanks but that paper says

Quoting a paper that agrees with you that does not look at why house prices have had different percentage rises.

Is not really disproving my point, that different parts of the country have had different rises and this could be because of migration is it?

 

The biggest driver in global house prices over the last few decades has been the trend toward zero interest rates and lengthening mortgage terms.

I don't even know what you're arguing, you're all over the place. You just seem intent on blaming immigration.

[msi]

1 hour ago, Huggy said:

You just happened to have more of one or two or three of the rest.

Not according to the troll squad here - it's all those pesky foreign types, dontchaknow.  If you say anything else you are a lefylibtardloserwokesheeple

[iamnumerate]

13 minutes ago, dugsbody said:

The biggest driver in global house prices over the last few decades has been the trend toward zero interest rates and lengthening mortgage terms.

I don't even know what you're arguing, you're all over the place. You just seem intent on blaming immigration.

Please stop misquoting me.

I said (I would say that Cornwall it is internal migration not immigration that has the caused it).

I also said "

Also I don't think that they (migration and credit) are the only two factors. Obviously changes in wages, government props and house supply are also important factors. (HTB had a massive affect in London)."

I am arguing that there are lots of factors of which migration is one - as differences in regional rises show. Is that really a difficult concept to grasp?  Even if you don't agree with it?

You seem to keep changing the argument because you don't want to even accept this might be a possibility.

[dugsbody]

11 minutes ago, iamnumerate said:

You seem to keep changing the argument because you don't want to even accept this might be a possibility.

********. I have been consistent in what I'm saying, which is that, again:

"The biggest driver in global house prices over the last few decades has been the trend toward zero interest rates and lengthening mortgage terms. "

You're the one who is denying that and you seem to jump from one disagreement to another. Why don't you state your position?

[iamnumerate]

13 minutes ago, dugsbody said:

********. I have been consistent in what I'm saying, which is that, again:

"The biggest driver in global house prices over the last few decades has been the trend toward zero interest rates and lengthening mortgage terms. "

You're the one who is denying that and you seem to jump from one disagreement to another. Why don't you state your position?

You want me to state my position again?

I am arguing that there are lots of factors which cause HPI. Of which migration is one* - as the massive differences in regional rises show. Is that really a difficult concept to grasp?  Even if you don't agree with it?

The others being credit, employment, wage growth, props, house building etc.

Your explanation ignores regional differences because it can't explain them. Of course any explanation that can't explain such massive differences is faulty.

 

Edited August 20, 2021 by iamnumerate

[dugsbody]

2 hours ago, iamnumerate said:

Your explanation ignores regional differences because it can't explain them. Of course any explanation that can't explain such massive differences is faulty.

I already explained regional differences. Scroll up. People with money spend more money to live in desirable areas. They have lots of money to spend because the cost of credit has dropped to near zero and mortgage terms are 35-40 years.

The biggest driver in the price of houses is credit. If rates were 7% and mortgages limited to 25 year terms I'd expect house prices to be half what they are now.

It's a global thing. Eastern Europeans are not driving up house prices around the world.

[iamnumerate]

15 minutes ago, dugsbody said:

 

The biggest driver in the price of houses is credit. If rates were 7% and mortgages limited to 25 year terms I'd expect house prices to be half what they are now.

 

Interest rates rising between 2003 and 2006 sadly did not make prices drop

https://www.bankofengland.co.uk/boeapps/database/Bank-Rate.asp

I am pretty sure that the consumer rates didn't change either.

Edited August 20, 2021 by iamnumerate

[dugsbody]

12 minutes ago, iamnumerate said:

Interest rates rising between 2003 and 2006 sadly did not make prices drop

https://www.bankofengland.co.uk/boeapps/database/Bank-Rate.asp

I am pretty sure that the consumer rates didn't change either.

Do you have a point? Are you disagreeing that the largest driver of house prices globally is interest rates?

[iamnumerate]

8 minutes ago, dugsbody said:

Do you have a point? Are you disagreeing that the largest driver of house prices globally is interest rates?

My point is that it is not the only important driver.  I wouldn't like what to say what is the most important one but I think it is probably sentiment.

Do you agree with me that it is possible for interest rates and prices to go up at the same time?

Edited August 20, 2021 by iamnumerate

[dugsbody]

11 minutes ago, iamnumerate said:

My point is that it is not the only important driver.  I wouldn't like what to say what is the most important one but I think it is probably sentiment.

Do you agree with me that it is possible for interest rates and prices to go up at the same time?

Yes, I agree with you, that is possible - when an economy is booming and more money being generated, then interest rates can rise while house prices still rise. See what I did there? A straight, non politicians answer. I can give those because I'm not arguing with a vested interest.

Straight answer please, is it immigration or low interest rates that has mostly driven house prices so high globally over the last few decades?

[iamnumerate]

12 minutes ago, dugsbody said:

Yes, I agree with you, that is possible - when an economy is booming and more money being generated, then interest rates can rise while house prices still rise. See what I did there? A straight, non politicians answer. I can give those because I'm not arguing with a vested interest.

Straight answer please, is it immigration or low interest rates that has mostly driven house prices so high globally over the last few decades?

I am glad that you don't think that it is always interest rates.

Sorry answer I don't know exactly.

For the long answer more accurate answer.

According to the bank of England immigration caused interest rates to be lower - so it is not really an either or question.

As immigration lowered interest rates in the UK.

(This was pre global crisis, now I don't think anything would cause them to go up, sadly).

I don't know the exact causes of HPI and I think it is the wrong question.

What caused the cost of owning housing to go up is the correct answer.

In 2001, I had to pay 50% more for my property than 4 years before but the actual cost was 30%  in real terms because of lower interest rates and higher wages (if it had been zero then I would haven't cared about the 50% nominal increase).

I think as I have said before sentiment causes prices.  Which is a mixture of props, interest rates, BTL, immigration, wage inflation and people thinking what happened last year will continue to happen.

 

Apologies for such a long answer but I think HPI is multi factor and immigration and interest rates are only part of it - and they influence each other.

 

Edited August 20, 2021 by iamnumerate

[iamnumerate]

@Dugsbody I hope that makes sense and I think that we will have to agree to differ.

Although I hope you agree with me that idea Brexit would make prices cheaper was talked about before the referendum - by the losing side as opposed to the winning side. 

[14stFlyer]

6 hours ago, dugsbody said:

https://www.bankofengland.co.uk/-/media/boe/files/working-paper/2019/uk-house-prices-and-three-decades-of-decline-in-the-risk-free-real-interest-rate.pdf?la=en&hash=7C12A901353CB615C3FC1A58557918D50775E470

A rigorous and well argued paper dugs, Many thanks for posting. 🙏 

I take two things from this paper:

1.  The continued unexpected drop in “risk-free” real interest rates can be used to accurately model the increasing house prices in the U.K. over the last 30 years, and indeed increases seen throughout the G7 and other developed nations. It is undoubtedly the primary driver of HPI in my mind. 
 

2.  There are factors that make the U.K. somewhat special, and have exacerbated the effects here. These include the government ”props” (changes to taxes and debt access etc. ), but also unusually low supply elasticity and high demand elasticity. The lack of supply elasticity could be ascribed to many things, but certainly Iamnumerate’s views on migration (and immigration) would fit here (to coin my mother-in-law “England is full up already”). Similarly, the increased demand elasticity term can be related to increased competition for resources. 
 

I found this quote from the Bank of England paper most supportive of iamnumerate’s side of the argument, and suggesting that these differences could explain why the U.K. has seen larger HPI than say USA or Canada. 
 

“This would suggest that, if UK elasticities were closer to values in other developed countries (i.e. the supply elasticity larger, the income elasticity smaller) and the decline in gilt yields a little smaller, the model predicts real house price growth would have amounted to 88%, (of which, 55% would have been due to income growth, and 40% due to the decline in the risk-free rate – with a small offsetting effect from changes in taxation). This contrasts with the 173% predicted when UK values are used”. 

[winkie]

7 hours ago, dugsbody said:

The biggest driver in global house prices over the last few decades has been the trend toward zero interest rates and lengthening mortgage terms.

I don't even know what you're arguing, you're all over the place. You just seem intent on blaming immigration.

Agree.......another reason is the purchase of property as a safe store of value, a self fulfilling prophecy......it is not migration because property has been purchased by those that have no need to live here, and left empty.....being used as a sterling foreign bank account.

[iamnumerate]

2 hours ago, 14stFlyer said:

 

2.  There are factors that make the U.K. somewhat special, and have exacerbated the effects here. These include the government ”props” (changes to taxes and debt access etc. ), but also unusually low supply elasticity and high demand elasticity. The lack of supply elasticity could be ascribed to many things, but certainly Iamnumerate’s views on migration (and immigration) would fit here (to coin my mother-in-law “England is full up already”). Similarly, the increased demand elasticity term can be related to increased competition for resources. 
 

 

Thanks for your reading of that.

Can I just say I don't really have a problem with immigration per se provided that housing can be provided. 

If a politician in the past had said, "the EU is wonderful, and we need to build loads of houses to house EU immigrants" and then said an amazing plan to do so, I could have ended up supporting remain (providing we had changed the benefit system, I don't like paying people to come here).

Just saying that migration is irrelevant, I don't think is honest - and to be honest probably didn't help remain.

[iamnumerate]

1 hour ago, winkie said:

Agree.......another reason is the purchase of property as a safe store of value, a self fulfilling prophecy......it is not migration because property has been purchased by those that have no need to live here, and left empty.....being used as a sterling foreign bank account.

No that is sentiment not credit.  

[winkie]

9 hours ago, iamnumerate said:

No that is sentiment not credit.  

Okay, not all might be empty all of the time, but there is property that was once homes that are now second homes, holiday homes, and bolt homes meaning they are temporary homes, owned by residents and people from all over the world.......that creates a shortage of homes for people to buy to live in, that inturn creates an increase in prices using cheap easy credit for those who have easy access to it.

[GregBowman]

14 hours ago, iamnumerate said:

I am glad that you don't think that it is always interest rates.

Sorry answer I don't know exactly.

For the long answer more accurate answer.

According to the bank of England immigration caused interest rates to be lower - so it is not really an either or question.

As immigration lowered interest rates in the UK.

(This was pre global crisis, now I don't think anything would cause them to go up, sadly).

I don't know the exact causes of HPI and I think it is the wrong question.

What caused the cost of owning housing to go up is the correct answer.

In 2001, I had to pay 50% more for my property than 4 years before but the actual cost was 30%  in real terms because of lower interest rates and higher wages (if it had been zero then I would haven't cared about the 50% nominal increase).

I think as I have said before sentiment causes prices.  Which is a mixture of props, interest rates, BTL, immigration, wage inflation and people thinking what happened last year will continue to happen.

 

Apologies for such a long answer but I think HPI is multi factor and immigration and interest rates are only part of it - and they influence each other.

 

A thread about house prices how novel ! My two penny worth is a factor I think that is larger than people think is families splitting up and needing individual properties. I know 3 couples in their 50’s who have split up recently almost overnight you go to double the housing needs 

[PeanutButter]

10 minutes ago, GregBowman said:

A thread about house prices how novel ! My two penny worth is a factor I think that is larger than people think is families splitting up and needing individual properties. I know 3 couples in their 50’s who have split up recently almost overnight you go to double the housing needs 

Ditto when they die and pass on big wodges to all the kids, which turn into…house deposits. 

As wild as it is to imagine, chain free renter friends were outbid this summer twice on 1mil+ houses by cash buyers. 

 

[GregBowman]

5 minutes ago, PeanutButter said:

Ditto when they die and pass on big wodges to all the kids, which turn into…house deposits. 

As wild as it is to imagine, chain free renter friends were outbid this summer twice on 1mil+ houses by cash buyers. 

 

Not wild at all my ex sister in law just bought a house £700k cash when the family home was finally sold.

[iamnumerate]

1 hour ago, GregBowman said:

A thread about house prices how novel ! My two penny worth is a factor I think that is larger than people think is families splitting up and needing individual properties. I know 3 couples in their 50’s who have split up recently almost overnight you go to double the housing needs 

Very true - I really think HPI is a mixture of factors.  

[iamnumerate]

2 hours ago, winkie said:

Okay, not all might be empty all of the time, but there is property that was once homes that are now second homes, holiday homes, and bolt homes meaning they are temporary homes, owned by residents and people from all over the world.......that creates a shortage of homes for people to buy to live in, that inturn creates an increase in prices using cheap easy credit for those who have easy access to it.

I would definitely increase council tax for second homes a lot.

[GregBowman]

1 minute ago, iamnumerate said:

I would definitely increase council tax for second homes a lot.

I would as well , I have bored people on here many times , I am a petrol head I pay through the nose in petrol duty and VED for performance machines and extra insurance. I don’t need them I want them the same logic should apply to 2nd home taxation