House Shortage

[lewissheridan]

Is there a genuine housing shortage, supported by lack of development over recent years, that our generation of first-time-buyers are limited in what's available, and that prices are inflated due to this growing demand.

OR

There is sufficient property available, however more people have multiple homes either for pensions, buy-to-let, and from right-to-buy.

I want to know what the real issue is here, because if it's the latter, then our government needs to do something to realign the inequality that exists now - and stop forcing it's younger generation into this crippling debt, credit world.

Feel free to tell me if i am missing something here.

[theChuz]

Is there a genuine housing shortage, supported by lack of development over recent years, that our generation of first-time-buyers are limited in what's available, and that prices are inflated due to this growing demand.

OR

There is sufficient property available, however more people have multiple homes either for pensions, buy-to-let, and from right-to-buy.

I want to know what the real issue is here, because if it's the latter, then our government needs to do something to realign the inequality that exists now - and stop forcing it's younger generation into this crippling debt, credit world.

Feel free to tell me if i am missing something here.

there is a shortage of housing at the right price, shortage of affordable housing

[underpressuretobuy]

Is there a genuine housing shortage, supported by lack of development over recent years, that our generation of first-time-buyers are limited in what's available, and that prices are inflated due to this growing demand.

OR

There is sufficient property available, however more people have multiple homes either for pensions, buy-to-let, and from right-to-buy.

I want to know what the real issue is here, because if it's the latter, then our government needs to do something to realign the inequality that exists now - and stop forcing it's younger generation into this crippling debt, credit world.

Feel free to tell me if i am missing something here.

Voids in buy-to-let property make up a massive amount of empty property on top of the usual levels of empty properties in the UK.

How can there be a property shortage when birthrates have been falling for years and children are living with their parents for longer and longer and many young people are living in shared accomodation?

[lewissheridan]

Nice answer Chuz, have you thought of being a politician ?

So let me get this right, birth rates have been falling reducing demand, yet house prices have been going skywards due to increasing demand ? In addition people are living at home longer, and people are house-sharing - surely these would reduce demand yet again.

I think I must be missing something here - who on earth is buying these houses ?

[DoubleBubbleTrouble]

How can there be a property shortage when birthrates have been falling for years and children are living with their parents for longer and longer and many young people are living in shared accomodation?

A reasonable question with a good answer. Due to social changes, more people are living on their own, a lot more people.

Breakdown of households by number of people living in them;

Now if the cost of homes was cheap you could attempt to argue that the number of people living on their own was due to cheap and affordable housing causing people to want places to themselves. However quite the opposite is true. The change to single person homes is happening despite the worst prevailing conditions on housing costs ever.

Number of homes being built, recently hit the lowest since WW2...

Why a shortage of housing doesn't prevent house price crashes but makes them worse;

Why the housing shortage won't stop the crash

Edited May 13, 2006 by DoubleBubbleTrouble

[underpressuretobuy]

Nice answer Chuz, have you thought of being a politician ?

So let me get this right, birth rates have been falling reducing demand, yet house prices have been going skywards due to increasing demand ? In addition people are living at home longer, and people are house-sharing - surely these would reduce demand yet again.

I think I must be missing something here - who on earth is buying these houses ?

The people buying these houses are / were flippers and BTLs, in other words investors also known as speculators. That is why house prices have soared. Because people realised you could make a fortune just by buying a house and holding on to it for a while.

It is a classic speculative bubble.

People often talk about the housing market as if it is only full of people wanting a home to live in themselves. This is to forget about all those people who have bought a flat to rent because "all my friends have got one" or people who were up until recently flipping properties for a profit.

I have seen the evidence on nethouseprices, a house that has been bought and sold in six months - the only difference being that the sale price after six months was £100,000 more that it was bought for. A market like that is bound to attract speculative investment.

The other point is that you assume people are paying more for a house because it is worth more due to higher demand rather than the reality that people are taking on bigger mortgages to buy a place that they think is worth it.

What I mean is, if the banks say to everyone last year we would only lend you £100,000 mortgage but this year we are prepared to lend you £200,000 mortgage - people take on the larger mortgage without realising that everyone is doing the same thing.

When everyone takes on a bigger mortgage it just pushes the price up and a house you might have been able to buy for £100,000 now costs £200,000.

[BuyingBear]

Voids in buy-to-let property make up a massive amount of empty property on top of the usual levels of empty properties in the UK.

That's just liquidity and churn, much like unemployment, it's a basic function of the market. If you misallocate housing to BTL you have to expect voids. We're basically seeing a counter "right to buy" trend, now we have "Right-To-Rent"

[underpressuretobuy]

That's just liquidity and churn, much like unemployment, it's a basic function of the market. If you misallocate housing to BTL you have to expect voids. We're basically seeing a counter "right to buy" trend, now we have "Right-To-Rent"

I'm not sure whether you are agreeing with me or not.

What I was trying to say was that when a property is owner occupied it is less likely to be vacant and tends to be vacant for shorter periods of time compared to a rental property.

If you increase the proportion of rental properties in any given area that would normally be owner occupied you also increase the number of empty properties because voids are a normal part of renting / letting properties. An individual property may only be empty for a couple of months but when the voids across all rental properties are added up and compared to the length of time the properties might be empty if they were owner occupied that adds up to an awful lot of empty property.

For example (not trying to teach you to suck eggs just trying to be clear) four properties that are owner occupied are unlikely to have any void periods. Compared to four rental properties which experience individually three months of voids each that adds up to one property empty for an entire year. In other words BTL creates property shortages that would not otherwise exist.

[right_freds_dead]

its a pretty crap time to be simply looking for a home.

i am pissed off it was all allowed to happen.

its the priced out that are being asked to fuel a mew credit boom for everyone else.

its a pathetic situation for a developed country to be in.

and to say were taking in large amounts of immigrants into an already 'crowded' country i see no outcome other than leave or take on massive debt. i am begining to feel a crash might not happen. maybe its time to make other plans.

[underpressuretobuy]

i see no outcome other than leave or take on massive debt.

So are you leaving Salford or applying for the ultimate lie to buy IO mortgage?

i am begining to feel a crash might not happen. maybe its time to make other plans.

Nah, the vested interests are just getting you down.

HPI slow down then crash.

[lewissheridan]

its a pretty crap time to be simply looking for a home.

i am pissed off it was all allowed to happen.

its the priced out that are being asked to fuel a mew credit boom for everyone else.

its a pathetic situation for a developed country to be in.

and to say were taking in large amounts of immigrants into an already 'crowded' country i see no outcome other than leave or take on massive debt. i am begining to feel a crash might not happen. maybe its time to make other plans.

If a crash hasn't happened by this time next year i'm moving country. I have a wife and child to support but can't bloody house them - other than a rented one-bed flat! it's rediculous .. i earn above avg. wage for my age, even have a deposit... i feel royally screwed by this country - and not to mention my outstanding student loan

[BuyingBear]

I'm not sure whether you are agreeing with me or not.

What I was trying to say was that when a property is owner occupied it is less likely to be vacant and tends to be vacant for shorter periods of time compared to a rental property.

I agree, you're exactly right, voids are a function of the market. Say you wanted to move to another rented house and there was theoretically no voids you couldn't do so due to the lack of liquidity in the market place. Unless it's centrally planned a true market has to have a form of collective over-supply once the price level has been struck, 'choice' requires over-supply, you can see this in action when a supermarket has to sell off excess goods etc at the end of the day. If there was no liquidity rents would go through the roof, so to speak, but that hasn't happened and hence the huge lag behind general HPI and consequent falling yields and poor returns.

BTL has sucked up existing owner-occupier stock and this hasn't been replaced by new housing in the market place, the majority of construction has been of the wrong type and in the wrong locations, no amount of supply side 'push' can buck the market, prices for such inner-city crackdens are exhibiting falls even in the tail end of a secular bull market. So the matched supply is simply not there to satisfy demand and the reverse of the above rental model takes place, you see an inflection point resulting from built up shortages over many decades and this leads to hyperbolic growth when combined with cheap money and easy lending, the shortage and more importantly the never ending perceived shortage then drive prices higher. By granting planning applications overnight for 400,000 medium density family homes you would knock one of the legs from under this market, the other is of course interest rates.

In the 1960's you could tell an agent or developer to shove their price demands up their well appointed rear garden if they tried it on, you would visit another office on one of another dozen new developments and simply take your pick.

It's actually wrong to describe our model as a "housing market", it's anything but a market, a true market responds to demand. How often do you hear people talk about the "toothpaste market" or the "bread crisis"?

Edited May 13, 2006 by BuyingBear

[DoubleBubbleTrouble]

its a pretty crap time to be simply looking for a home.

i am pissed off it was all allowed to happen.

its the priced out that are being asked to fuel a mew credit boom for everyone else.

its a pathetic situation for a developed country to be in.

If you are angry about the current situation do something about it... see sig for some suggestions.

If a crash hasn't happened by this time next year i'm moving country. I have a wife and child to support but can't bloody house them - other than a rented one-bed flat! it's rediculous .. i earn above avg. wage for my age, even have a deposit... i feel royally screwed by this country - and not to mention my outstanding student loan

At the risk of repeating myself.... see sig...

You might not think it can achieve much but it's amazing how a little simple concerted pressure can tip things...

Edited May 13, 2006 by DoubleBubbleTrouble

[Guest mattsta1964]

I bought my home because I wanted control over my own environment and not be pestered by a property management company or a shitty landlord.

I didn't buy a home to make money, to get rich, or to take advantage of other people's hardship. I just want to own my own home. I work bloody hard, I pay my taxes, I obey the laws, I don't cheat old grannies out of their savings.

It is very sad that home ownershp has become a money making scheme for people with cash to splash. It should never have come to this. Most people just want a home so they can raise their family and remain unmolested by unscrupulous landlords and money grabbers. Instead, we are all held to ransom and our future is at the behest of financial markets and greedy people out to make money.

The thing that sets housing apart from all other forms of investment IS that affordable housing is THE most fundamental requirement for any, so called, civilised society. If you are working, paying your taxes, and making a positive contribution to society, you should..at the very least, be able to afford a home where you can raise a family and enjoy a reasonable quality of life, NOT just line your pockets at other peoples expense.

I am not a socialist, I am not against people doing well or making money, but allowing housing to have become the de facto way for investors and speculators to make money at the expense of so many other people and future generations is a fekkn disgrace. If you buy into the property market at the wrong time, the consequences will be dire. Owning a home has become the most important investment decision you will ever make in your life. It will make you or break you....quite literally! Buy at the wrong time and you will screw yourself beyond comprehension.

If you wanna get rich...Fine! Buy antiques, buy classic cars and motorbikes, buy stamps, buy gold, buy currency, buy stocks and shares, buy alien excrement, buy absolutely any fekkn thing you want, but property should always have been off limits to 'The Greedies'.

The hard...and awful fact is, property is the single biggest driving force in the UK economy. We live in a country which in reality doesn't earn a living for itself The property market will ultimately destroy that very same economy that it has sustained for such a long time.

I often contemplate the sacrifice I have made becoming a member of the property owning democracy, even though I became a first time buyer in 2001 when property was already overvalued. I see the amount of money I must earn to pay back the mortgage + interest and I seriously wonder why I bothered. For me, raising a family is out of the question. I'm single and trying to pay quite a big mortgage on my own.

After paying the mortgage and 50% of my hard earned cash in taxes, I might as well sell up, live in a tent and sell ice cream on a beach. I'd be happier and my life would be enriched by not being enslaved by such crippling levels of debt. It REALLY IS food for thought. Perhaps i should sell now before the whole thing turns ugly

And remember....I owe 85K on my mortgage. There are people on here who owe twice that. How do they sleep at night?

[BandWagon]

Feel free to tell me if i am missing something here.

I think you're missing quite a bit.

The value of a housing service can be determined by the economic value it provides, which is reflected by the rents.

The simple reality is that rents have barely been rising. I am renting a far better flat in a better par of London for less money than I did 5 years ago. In inflation adjusted terms the rents are significantly lower.

If there was a housing shortage of any form, rents would have risen in line with prices.

Now this hasn't happened, which shows that we don't have a housing shortage.

What we do have is a shortage of housing at a reasonable price to buy, and this has been caused not by population or a shortage of bricks, but simply by a surplus of money.

ie it's not a housing bubble, it's a credit bubble.

[warwickbloke]

I guess there is a housing shortage, so lots of people sell lots of houses & make lots of money & lots of people build lots of houses & make lots of money, then there are too many houses & builders go bust & house prices go down & lots of people lose lots of money.

There are winners & losers.

Then it starts all over again.

It's called an 'economic cycle'.

Copy all the comments here, log off, come back in AD2020, just click on a reply box & paste.

You'll probably find your comments are once again applicable.

[newaccount99]

I think you're missing quite a bit.

The value of a housing service can be determined by the economic value it provides, which is reflected by the rents.

The simple reality is that rents have barely been rising. I am renting a far better flat in a better par of London for less money than I did 5 years ago. In inflation adjusted terms the rents are significantly lower.

If there was a housing shortage of any form, rents would have risen in line with prices.

Now this hasn't happened, which shows that we don't have a housing shortage.

What we do have is a shortage of housing at a reasonable price to buy, and this has been caused not by population or a shortage of bricks, but simply by a surplus of money.

ie it's not a housing bubble, it's a credit bubble.

Absolutely Bandwagon.

We are always quoted by the VI's that it's all down to Supply v Demand (this bit is true).....but they push the idea that it is the supply that is short....not that the demand is speculative or overfed.

If there wasn't enough housing per se, rents would be soaring....au contraire, rents are surpisingly good value for money and there is an abundance of stock to choose from.

There's a huge PR machine at work in order to create and feed this demand.

Edited May 14, 2006 by BTLOptingOut

[apom]

Is there a genuine housing shortage, supported by lack of development over recent years, that our generation of first-time-buyers are limited in what's available, and that prices are inflated due to this growing demand.

OR

There is sufficient property available, however more people have multiple homes either for pensions, buy-to-let, and from right-to-buy.

I want to know what the real issue is here, because if it's the latter, then our government needs to do something to realign the inequality that exists now - and stop forcing it's younger generation into this crippling debt, credit world.

Feel free to tell me if i am missing something here.

Shortage.

at the start of the boom there were 2.76 homes per person... i.e lowest house prices...

4 years ago there were 2.6

today a new home is being built for every 2.1 people that the population has been growing by...

So we have more homes per head of capita then at any times in history. the boom generated the perception of a shortage as people clamoured to buy to invest.

there is no shortage.

Bulls will tell you that more people want to lie alone now, with a spare home to keep their shoes in..

this is bunk as

1: come on, its been a decade, only bull desperation would say that the housing boom happened because everyone decided they wanted to live alone.

2: I know of three people who live alone.

3: Look at the popluation bell curve for age groups on the ONS site.

I will not pretend that the population is shrinking yet... (birth rate massivly low...) but the bulls must never claim there to be a shortage.. and anyone who says there is a shortage of affordable housing is missing a very clear point.. and needs to go the the back of the class

Absolutely Bandwagon.

We are always quoted by the VI's that it's all down to Supply v Demand (this bit is true).....but they push the idea that it is the supply that is short....not that the demand is speculative or overfed.

If there wasn't enough housing per se, rents would be soaring....au contraire, rents are surpisingly good value for money and there is an abundance of stock to choose from.

There's a huge PR machine at work in order to create and feed this demand.

Also. docklands would not look like a scene from a mass alien kidnap movie..

Why are they all empty.. the BBC (labour paswn *****ers) say there is a massive shortage..?

I guess there is a housing shortage, so lots of people sell lots of houses & make lots of money & lots of people build lots of houses & make lots of money, then there are too many houses & builders go bust & house prices go down & lots of people lose lots of money.

There are winners & losers.

Then it starts all over again.

It's called an 'economic cycle'.

Copy all the comments here, log off, come back in AD2020, just click on a reply box & paste.

You'll probably find your comments are once again applicable.

No, gordon Brown is an economic genious and has fixed the eomic cycle at the top of the biggest boom in history...!!!!

lol....

My answer to a bull has been..

"For you to be right gordon Brown would have to be an economic genious who has fixed the economic cycle at the top of the biggesst boom in history... If I were to believe thatI would have to be a c**t" its aggressive... implies the bull is a c**t (which I am cool with) and cannot be argued...

If you do need to argue..

"And what is really embarrasing is that the IMF are screaming warnings at us like we are the morrons of Europe and no one listens... all they do is dribble.. take out massive loans and run around saying how rich they are.. the c**t's" Look dowbn on bull like you just cleaned him of your shoe... and stroll of..

If you are to waste your money do so on an Xbox 360 or too many motorcycles.... not housing. not right now

[dog]

The people buying these houses are / were flippers and BTLs, in other words investors also known as speculators. That is why house prices have soared. Because people realised you could make a fortune just by buying a house and holding on to it for a while.

It is a classic speculative bubble.

And if the property hoaders decide that the bubble has popped, the market will become flooded with property. A small change in legislation such as a premium council tax on second homes could help unlock this spare capacity.

[null_nil]

its a pretty crap time to be simply looking for a home.

i am pissed off it was all allowed to happen.

its the priced out that are being asked to fuel a mew credit boom for everyone else.

its a pathetic situation for a developed country to be in.

and to say were taking in large amounts of immigrants into an already 'crowded' country i see no outcome other than leave or take on massive debt. i am begining to feel a crash might not happen. maybe its time to make other plans.

Good!!!! this is exactly when & why the crash will happend. people changing their view on the housing....

[DoubleBubbleTrouble]

If there was a housing shortage of any form, rents would have risen in line with prices.

Now this hasn't happened, which shows that we don't have a housing shortage.

What we do have is a shortage of housing at a reasonable price to buy, and this has been caused not by population or a shortage of bricks, but simply by a surplus of money.

ie it's not a housing bubble, it's a credit bubble.

Wrong it's both.

You are implying that oversupply of rental properties means oversupply of housing. That doesn't follow.

Remember the rental market is a small subsection of the entire housing market with it's own market dynamics, i.e. the type of properties, the number of inhabitants, general locations, etc. etc.

A much more likely explanation for falling rents is oversupply of rental properties, this explains why purchase costs of rental properties remains extremely high yet yields are extremely low. This is something we have all seen personally with the flood of get rich quick BTL'ers piling into their idea of the "perfect can't lose investment".

Issues like credit bubbles don't explain why the UK has the highest long term average HPI in Europe (2.3% compared to an average of 1.1%) when you factor out the natural housing market booms and busts or why we have the smallest homes in Europe. Much more fundamental economic or social reason must be driving this.

It isn't hard to see why we have shortage of homes. It isn't hard to see why it motivates people to spend too much on homes. If you hear hooves think horse not zebra.

[warwickbloke]

No, gordon Brown is an economic genious and has fixed the eomic cycle at the top of the biggest boom in history...!!!!

lol....

Of course, I have overlooked this.

Shame on me.

I guess if 'economic genius' is to take a healthy solvent account & turn it into debt ridden crisis then all will be well as there are a great many 'economic geniuses' out there.

Everything's going to be OK then!

[DoubleBubbleTrouble]

4 years ago there were 2.6

today a new home is being built for every 2.1 people that the population has been growing by...

Your figures are wrong, where on earth did you get them?

In 2000 it was 2.35, there are no figures for today only estimates, 2003 was 2.32 making it likely today is about 2.30.

During that period the number of single person homes has rocketed by over 500,000.