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boo

High House Prices Causing Job Losses?

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Hi

I know there are other economic factors around the spate of recent large scale job losses, but I cant help thinking that high house prices must have something to do with it.

How can we compete with eastern europe, india and china when the cost of putting a roof over your head is on average 6 times your salary?

Everytime there is an announcement of job losses , its ususally down to it being cheaper to produce elsewhere.

We need high wages to pay for our stupidly expensive housing, and this is stopping us from being competitive.

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Spot On and twas ever thus

People will bitch on about oil price and such but it's basically the price of land that's screwing us.

Classical Economics talks of Land, Labour & Capital

You do the maths...................

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boo,

You hit the nail on the head there, and this is a good argument for a government to deliberately keeping house prices as low as possible.

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I would agree. On the "plus" side MEW has pumped borrowed money into the economy, boosting it over the past few years. On the "negative" side, higher house prices means that there is less for homebuyers to spend in the shops each month for the next 25 years and this is bad for employment.

The latter is more damaging and makes the economy more exposed to moves in interest rates and so more cyclical. A bad thing.

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So the question now is why is the government not doing something? Low house prices mean that peope can be paid lower making business competitive. High houses prices dont benefit anyone (or do they?)

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Because their only options cause pain.

Tax BTL? All the recent BTLers stop voting for them.

Forcibly lower prices (dunno how)? All the people seeing their huge house price increases stop voting for them.

They'd much rather pander to the house owners. Our generation is completely unimportant to them.

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I know there are other economic factors around the spate of recent large scale job losses, but I cant help thinking that high house prices must have something to do with it.

There seems to be a widely held view that house price inflation (or 'growth' as some would have it) does not contribute to overall inflation. It's a 'miracle'! Clearly the money that you buy houses with and pay rent with is a magic form of money and is in no way related to the normal money that buys food, petrol and electricity. ;)

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Because their only options cause pain.

Tax BTL? All the recent BTLers stop voting for them.

Forcibly lower prices (dunno how)? All the people seeing their huge house price increases stop voting for them.

They'd much rather pander to the house owners. Our generation is completely unimportant to them.

Agreed, bascially we are screwed, prices will keep going up and wages demands will force companies to close down and move abroad. Then no one will be able to buy anything!

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Hi,

Ahh, now you're talking, this is the age old debate about the UK economy, does housing drive the economy or does the economy drive housing?

I quite like this old synposis by the UK economist James Ferguson ;

I think we all agree that all families in this country aspire to house ownership, and probably to the best, biggest, most southeasterly house they can afford. The real question is at what point can they no longer afford to buy. It isn’t what they want, but what they’re capable of. When they can’t pay any more, the market crashes. That’s what caused the crash at the end of the 1980s. Do you know that unemployment was at a decade-low at the top of the last housing bubble? Unemployment is always low before a crash.........

Edited by boom_and_bust

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  • 338 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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