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RichM

An Englishman's Home Is A Broom Cupboard

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THERE ARE ENOUGH BLO*DY HOUSES.

ITS A SPECULATIVE BUBBLE NOT RELATED AT ALL TO THE HOUSING SUPPLY.

IS ANYONE HERE HOMELESS? NO THEY ARE SO**ING NOT

SORRY

THAT STORY WAS BULLISH SPIN, THERE IS NO SHORTAGE.

PEOPLE ARE PAYING TOO MUCH

Edited by apom

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If there was a shortage of houses the housing market would be booming. The fact that the best bull reports show that the market is heading for a 'soft landing' (yeah, right), throws the argument out of the window. Simple supply and demand.

There is a shortage of affordable housing because of over zealous ramping up of the market.

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Oh dear christ, for once somebody has taken some notice of my signature message! ;)

Mind you, Alan W. Evans was saying this over 15 years ago but still we have density targets deemed cruel if applied to cattle.

The report is here.

Edited by BuyingBear

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THAT STORY WAS BULLISH SPIN, THERE IS NO SHORTAGE.

PEOPLE ARE PAYING TOO MUCH

Any boom leads to the inefficient allocation of assets, such as second homes, holiday homes, BTL, flipping, etc.

However, the levels of building have been below household formation levels for well over a decade, so there is a real shortage despite all that, but not enough to explain away this madness.

This is a longterm problem and doesn't explain the last 5 years, the recent boom is purely a monetary problem, demand hasn't risen 150% as prices have done, population figures obviously haven't grown anything like that, despite immigration. However, prices are set on the margins and determined by perceived value (such as perceived shortage). Every good bubble needs a germ of truth behind it, and supply is that factor, much like the development of the net being significant... just not significant enough to justify the bubble frenzy we saw in the dotcom era.

The point being made is not just about numbers but the quality and location of new build, which are tiny in horrible brownfield locations at high density. All this is thanks to government decree resulting from undue influence held by some lobby groups that blatantly lie about the true allocation of land in this country, hence the constant crisis of the "greenbelt"... despite the fact we have more than ever before.

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THERE ARE ENOUGH BLO*DY HOUSES.

ITS A SPECULATIVE BUBBLE NOT RELATED AT ALL TO THE HOUSING SUPPLY.

IS ANYONE HERE HOMELESS? NO THEY ARE SO**ING NOT

SORRY

THAT STORY WAS BULLISH SPIN, THERE IS NO SHORTAGE.

PEOPLE ARE PAYING TOO MUCH

no, Apom, it's a speculative bubble AND a shortage combined!

I think you'll find the two aren't mutually exclusive and their coexistence has got us to where we are now.

Everywhere you look there are lots of inter-war houses , 50s,60s and 70s houses all on what were previously greenfield sites but building since then has faltered owing to much more restrictive planning..In fact all the nimbies I know live in houses built on greenfield sites in the past 80 years......

If 90% of our ''overcrowded'' island is undeveloped would it really hurt to cut this to 88% and met the housing needs of the population?

Edited by Michael

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I agree with Michael, there is *somewhat* of a shortage, which triggered the boom in the first place. Now the speculative boom is the main driver for HPI.

Obviously supply shortages cannot explain the whole boom, since the supply / demand demand balance has not changed that radically over the past 6-8 years, the period of most HPI.

The boom is about 80% speculative and 20% fundamental I think.

frugalista

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no, Apom, it's a speculative bubble AND a shortage combined!

Shortage explains the (relatively small) size of UK housing but not the price paid, particularly as a multiple of earnings.

If there was twice as much land available then I would still expect the average price to be in the region of 3.5x annual earnings, just that the average UK house would be a 5 bed detached rather than a 3 bed semi.

Remember, the supply of housing has not changed significantly in the last 10 years, certainly not to the extent that would explain a doubling of average prices in the last 5 years.

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As I mentioned above, the author doesn't mention the speculative/cheap money element to the market.

But there is a shortage of affordable rental property, i.e. property affordable by, say, cleaners or care assistants. That includes a huge shortage of housing association/council flats that have multiple bedrooms. Where I am in London I know of teenage brothers and sisters having to share a bedroom. Older kids are unable to work very well in their bedrooms as they share with younger siblings.

Most housing built over the past 20-30 years seems to be too cramped, and the the very recent stuff is just a joke. In a free market supply can meet demand to reduce costs for joe public. Why shouldn't accommodation be dirt cheap? That would improve the lot of millions of people in this country.

...I would still expect the average price to be in the region of 3.5x annual earnings, just that the average UK house would be a 5 bed detached rather than a 3 bed semi.

Yes!

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But there is a shortage of affordable rental property, i.e. property affordable by, say, cleaners or care assistants. That includes a huge shortage of housing association/council flats that have multiple bedrooms. Where I am in London I know of teenage brothers and sisters having to share a bedroom. Older kids are unable to work very well in their bedrooms as they share with younger siblings.

What effect, if any, do you think a glut of one-bed, CLNBs is going to have? My thinking here is that if rents on these fall, it makes them more attractive compared to HMOs/house shares for single people and couples, which might reduce demand on rented houses and free them up for families. It's nigh on impossible to rent a house where we are - they've all been turned into HMOs.

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What effect, if any, do you think a glut of one-bed, CLNBs is going to have? My thinking here is that if rents on these fall, it makes them more attractive compared to HMOs/house shares for single people and couples, which might reduce demand on rented houses and free them up for families. It's nigh on impossible to rent a house where we are - they've all been turned into HMOs.

Conventional thinking on here is that there is not enough decent family-sized homes being built, but maybe you're right, maybe this will put pressure on rents for bigger homes. Anyone else?

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What we see is 6% of properties are being bought by FTBers. It used to be nearer 30%.

The missing 24% has been made up by BTL speculators. The extra demand for invetsment properties,

has pushed prices up BEYOND what most FTBers can afford / or want to pay.

I see this as temporary, driven by investors "irrational enthusiasm" for property meeting a new-found

desire of banks to lend aggressively in this sector. If property were truly in short supply, rents would

be rising. They are not, at least not by much. So investors, who are having an easy time borrowing,

are forcing out FTBers. That is what is driving property. And the rewards to those investors are

investments with low yields and stagnant returns. Many FTBers are more rational and are happy to stand

aside and wait for the irrational market to pass

Spot on. The key point to note is that the crash doesn't need interest rate rises, unemployment or recession to happen.

All that is required is for the recent BTLers to realise that they are not making the gains they expected, with that the irrational enthusiasm evaporates (quickly I think), no new money comes into the market and prices begin to slide.

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  • 336 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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