Jump to content
House Price Crash Forum
Sign in to follow this  
Charlie Don't Surf

House Prices Due To Demand Or Cheap Credit?

Recommended Posts

Have been having a 'discussion' on another post about the merits of building more houses and changing planning regualtions to allow more development on green field sites:

http://www.housepricecrash.co.uk/forum/ind...st&p=414793

I have to say I am vehemently opposed to any development as I think the UK is already overcrowded and countryside is at a premium. However, I was slightly suprised to find there are a fair few people who fully support the idea of relaxing planning regulations and are suggesting that the UK has more than enough countryside.

Apparently it is all explained in a report at http://www.policyexchange.org.uk/Publications.aspx?id=160

I really don't subscribe to this point of view. Yes the planning system might be a dinosaur but I don't think it is the root of current HPI. I also don't think building affordable housing is the solution - it isn't dealing with the problem.

At the end of the day I am firmly of the opinion that the current house price bubble is driven by cheap credit, home owning mentality fed by the media/VIs and speculation

House prices will ultimately correct like any other overvalued market, so in the meantime why settle for an 'affordable' (you get what you pay for) shoebox built on a green field site whilst the UK turned into a vast sub-urban sprawl

Share this post


Link to post
Share on other sites

Have been having a 'discussion' on another post about the merits of building more houses and changing planning regualtions to allow more development on green field sites:

http://www.housepricecrash.co.uk/forum/ind...st&p=414793

I have to say I am vehemently opposed to any development as I think the UK is already overcrowded and countryside is at a premium. However, I was slightly suprised to find there are a fair few people who fully support the idea of relaxing planning regulations and are suggesting that the UK has more than enough countryside.

Apparently it is all explained in a report at http://www.policyexchange.org.uk/Publications.aspx?id=160

I really don't subscribe to this point of view. Yes the planning system might be a dinosaur but I don't think it is the root of current HPI. I also don't think building affordable housing is the solution - it isn't dealing with the problem.

At the end of the day I am firmly of the opinion that the current house price bubble is driven by cheap credit, home owning mentality fed by the media/VIs and speculation

House prices will ultimately correct like any other overvalued market, so in the meantime why settle for an 'affordable' (you get what you pay for) shoebox built on a green field site whilst the UK turned into a vast sub-urban sprawl

I could never understand why they need to build so many new houses, has the UK had such a massive increase in population or are more people living on their own and old people are getting older. What is the truth, god only knows!!

Share this post


Link to post
Share on other sites

Apparently it is all explained in a report at http://www.policyexchange.org.uk/Publications.aspx?id=160

FFS - will you just go and read the report before wasting more time with your 'precious countryside' drivel.

I notice that you didn't reply to my last post on that thread and to another sensible post that suggested that you move to a town or city if you so much oppose development in the 'countryside'

As I said in the other post - the 'green fields' that you so want to preserve are not natural UK habitat anyway. Woodland is.

The woodlands were destroyed, burnt to provide fields to farm for food. Do you think your attitude of not cutting down anymore trees in our ancestors times would have made you very popular?

In essence you could argue that all green fields are in fact brown field sites as they have been created for industrial use - the industry of farming.

I really don't subscribe to this point of view. Yes the planning system might be a dinosaur but I don't think it is the root of current HPI. I also don't think building affordable housing is the solution - it isn't dealing with the problem.

Again - read the report and then comment. Starting to think that this is something that you are totally unable to do. Perhaps thats why your still stuck in Cornwall on minimum wage.

At the end of the day I am firmly of the opinion that the current house price bubble is driven by cheap credit, home owning mentality fed by the media/VIs and speculation

so why hasn't Germany experienced the same property bubbles that the Uk has? (almost same population density)

Edited by munimula

Share this post


Link to post
Share on other sites
Guest Alright Jack

Have been having a 'discussion' on another post about the merits of building more houses and changing planning regualtions to allow more development on green field sites:

http://www.housepricecrash.co.uk/forum/ind...st&p=414793

I have to say I am vehemently opposed to any development as I think the UK is already overcrowded and countryside is at a premium. However, I was slightly suprised to find there are a fair few people who fully support the idea of relaxing planning regulations and are suggesting that the UK has more than enough countryside.

Apparently it is all explained in a report at http://www.policyexchange.org.uk/Publications.aspx?id=160

I really don't subscribe to this point of view. Yes the planning system might be a dinosaur but I don't think it is the root of current HPI. I also don't think building affordable housing is the solution - it isn't dealing with the problem.

At the end of the day I am firmly of the opinion that the current house price bubble is driven by cheap credit, home owning mentality fed by the media/VIs and speculation

House prices will ultimately correct like any other overvalued market, so in the meantime why settle for an 'affordable' (you get what you pay for) shoebox built on a green field site whilst the UK turned into a vast sub-urban sprawl

I agree with everything you say. the source of this malinvestment in real estate is money creation. Therefore, the solution must lie within that and NOT in attempting to further satiate demand that is artificial to begin with.

In addition to this, suppose the demand were not artificial I think it would be a mistake to allow more population sprawl over area that may be required for agriculture in the coming years. It is really time accept that there are limits to population growth. It is more than probable that we have already grossly overshoot carrying capacity already.

Share this post


Link to post
Share on other sites

I agree with everything you say. the source of this malinvestment in real estate is money creation. Therefore, the solution must lie within that and NOT in attempting to further satiate demand that is artificial to begin with.

In addition to this, suppose the demand were not artificial I think it would be a mistake to allow more population sprawl over area that may be required for agriculture in the coming years. It is really time accept that there are limits to population growth. It is more than probable that we have already grossly overshoot carrying capacity already.

It's funny as most of the leading policticians, Labour included now subscribe to changing the existing planning laws, recognising the problems highlighted in the Barker report, that there is not enough building land made available and that green field development has to be allowed to build the housing that the country needs.

David Cameron has even described the way the current planning laws work as BANANA

Building Absolutely Nothing Absolutely Near Anywhere.

So changes will be made....

Nobody is saying that current high prices are not down to cheap credit and other factors but the cost of land and the availability of land is the BIGGEST factor.

Share this post


Link to post
Share on other sites
Perhaps thats why your still stuck in Cornwall on minimum wage

Ha, ha, ha - you're such a patronsing pr1ck.

I guess the difference between us (making one of your wild assumptions) is I earn around double the national average wage and from my privileged position I can look at the market objectively and decide not to buy rather than not having the choice and desperately grasping at any straw that will get you on the ladder!

I have read enough of your holy grail report and it didn't impress.

so why hasn't Germany experienced the same property bubbles that the Uk has? (almost same population density)

They rent and don't have the same hang ups about being property owners. Maybe you should read more (facts)!

Share this post


Link to post
Share on other sites

Ha, ha, ha - you're such a patronsing pr1ck.

I guess the difference between us (making one of your wild assumptions) is I earn around double the national average wage and from my privileged position I can look at the market objectively and decide not to buy rather than not having the choice and desperately grasping at any straw that will get you on the ladder!

I also earn considerably above average and have very decent savings.

I choose not to buy. In fact I'm going back to uni in 2 months. Life is more important than housing.

In some respects we are probably very similar ;)

Share this post


Link to post
Share on other sites

They rent and don't have the same hang ups about being property owners. Maybe you should read more (facts)!

Twenty somethings are looking at the elder population & envying their apparent asset wealth.

Low or no mortgage, equity release available to cushion pensions.

It has happened as a result of previous property cycles.

You cannot blame them for wishing to be in a similar position some years into the future.

It is a mindset at the moment that short term inconvenience will reap long term reward.

If it is what people want, let them have it.

If it is apparent that the properties are not required , bulldoze 'em & you have the fields back.

The only losers will be property developers.

Share this post


Link to post
Share on other sites

I can't speak about other areas of the country but there is definitely no shortage of property in the NW. For example, I know alot of empty new build properties in Liverpool and Manchester. Prices have not risen, nor have they fallen for over a year now. I can show you other FTB properties that have been on the market for a long time. My guess is that the new builds have been sold by developers to first level investors for BTL or re-sale at an inflated price. But they are not able to find tenants now or to sell.

Personally I think that all speculators should be targeted in an intensive campaign. If we have numbers we could create a real battle in this country. This is the fault of individual British people as well as, if not more so, than government.

Share this post


Link to post
Share on other sites

Why the bubble? - I agree with the 'cheap credit' answer, coupled with the ramping of property speculation by the media, the attractiveness to many of property as an alternative pension-plan in the wake of other pension-fund screwups, & the BTL mortgage phenomenon; IMO, a major scandal of our age is 2nd-home ownership, & the failure of govt to discourage their perceived middle-England election-deciders by any kind of financial penalty - I would very much like to know the numbers on this; where I live (South Coast ), many towns/villages are dead in winter thru empty 2nd homes, it must add up to many thousands nationally, let alone speculative buying abroad. IMO, the bubble WILL burst, & panic will ensue when it does, & things will get very messy on their way back to normal - the US picture is worth following, since they are ahead of the UK in starting to reap the rewards of recent years' 'creative' credit now hitting reality..

Share this post


Link to post
Share on other sites

Yeah, cheap credit is my choice too.

If you suddenly let everyone borrow another 100k then everyone is still competing on the same level respective to eachother just at a higher level. Cheap credit also gave rise to the btl tosspot, where everyone's a winner/massively leveraged speculating knobstick.

Share this post


Link to post
Share on other sites

I can't speak about other areas of the country but there is definitely no shortage of property in the NW.

On the contrary, the North West is the most urbanised region according to the report. It is also, unfortunately, one area of the country facing an exodus rather than an increase in population. But rejoice, because your descendants will benefit from a hugely better standard of living. In the NW, ordinary people still live in nice detached houses. Yes, in the last year or two things have got silly there as well, but long term it will correct more than places like London. People up there have larger sized homes as well as more money left after housing costs. Perversely low prices mean it is perceived as a bad place to live.

What everyone in the South wants at the moment is the building to go on somewhere else. No politician is prepared to tackle this commonly held 'truth' about tarmac-covered England. And until young people affected by these policies form successful lobbying groups to counteract the received wisdom of the CPRE, it will not change.

Share this post


Link to post
Share on other sites

Yeah, cheap credit is my choice too.

If you suddenly let everyone borrow another 100k then everyone is still competing on the same level respective to eachother just at a higher level. Cheap credit also gave rise to the btl tosspot, where everyone's a winner/massively leveraged speculating knobstick.

It's a very interesting debate IMHO. Highlights the polarity of short supply vs large demand.

On one hand some people believe that the shortage of housing drives up prices, on the other hand people believe lax credit, speculation, immigration, and changes in lifestyle are to blame.

No-one can actually know, because the figures are all fudged. How much inventory is actually available empty, how much is being built, and how much is planned, in the face of how much demand?

It would be nice to know which it really is.

Share this post


Link to post
Share on other sites

When is comes to planning permission, its nice to keep the true countryside but there is nothing special about our farmland. Most farms are sterile deserts of mono culture.

Share this post


Link to post
Share on other sites

I grew up in Hong Kong. To me the UK has a ridiculous amount of free open space. When I sit on a train all I see for hours is greenery! Just build on it ffs!

Share this post


Link to post
Share on other sites

Have been having a 'discussion' on another post about the merits of building more houses and changing planning regualtions to allow more development on green field sites:

The most basic indicator is the increase in house prices

that has occurred over the period during which the British

planning system has been in operation. As we have said

earlier, increasing demand, as incomes and population

have increased over time, has not been met. Instead, the

supply of land and housing has been constrained and this

has resulted in significant increases in the price of housing.

I think this says it all.

What everyone in the South wants at the moment is the building to go on somewhere else. No politician is prepared to tackle this commonly held 'truth' about tarmac-covered England. And until young people affected by these policies form successful lobbying groups to counteract the received wisdom of the CPRE, it will not change.

I think you've hit it on the head.

There should be an opposing campaign - something like the Campaign for the Protection of Urban England (CPUE) facing down the CPRE which has far too much control over planning, is a group full of NIMBY's, a minority group that is protecting their rights at the expense of a deteriorating envirnoment for the majority.

Share this post


Link to post
Share on other sites

When is comes to planning permission, its nice to keep the true countryside but there is nothing special about our farmland. Most farms are sterile deserts of mono culture.

True. As I've said earlier, 'green fields' are not natural habitat anyway. Natual habitat is woodland - removed to create unnatural 'green fields'

Cities are bad for environment – interestingly, it seems

that the kind of low rise, low density housing that

planners and guardians of the countryside dislike is

better for biodiversity than monocultural farmland.

Share this post


Link to post
Share on other sites

If cheap credit is indeed the underlying cause of HP bubble (as I believe), the question arises as to why the option has been so enthusiastically taken up by the public? - my parents ( the pre WW2 generation) had an attitude of general aversion to indebtedness, which seems to have steadily lessened thru the genrations, to the point where today, people are committing themselves to huge risks, as tho the world were a giant casino; availability of credit is one thing, but why the reckless take-up of it?Why so little regard for possible negative consequences for years to come? Just because 'everyone else is doing it'? or something-for-nothing gain by speculation? beats me..

Share this post


Link to post
Share on other sites
The most basic indicator is the increase in house prices

that has occurred over the period during which the British

planning system has been in operation. As we have said

earlier, increasing demand, as incomes and population

have increased over time, has not been met. Instead, the

supply of land and housing has been constrained and this

has resulted in significant increases in the price of housing.

What period is this and what are the population figures over this period?

Also, could someone point out where all this countryside that we apparently have is. I live in one of the lowest density areas of the UK and there doesn't seem to be an actual excess of it

Share this post


Link to post
Share on other sites

Interestingly the CPRE came out with a report debunking Barker here

They share in many ways the same analysis of HPC - that the level of price rises cannot be explained by supply and demand imbalances, but the real problem is demand sided by changes in the nature of demand through investment actors. A shortage of housing isn't the problem.

Problem is that they aren't really taken seriously becuase they have a clear position of not wanting tarmacing.

The additional great argument backing up CPRE's side is that the building and development industry is short termist and slash and burn - knock up cr@p **** hutches and shove shed loads of peasants in em. No long term view of building or creating decent liveable communities. The English curse - as a French friend said to me "Ah you English, you like to do businezz and live in shitty housezz.. I certainly wouldn't want to hand the future of this country over to Wimpey homes.

CPRE also have a pop at Policy Exchange in a recent report. "CPRE take on Policy Exchange I can't comment on it myself, but having been to Policy Exchange's offices I would take their views with a pinch of salt - they are a small, new and clearly right wing outfit - bookshelves have a disturbingly high proportion of Thatcher biographies - who are clearly out to get as many headlines as they can get.

Share this post


Link to post
Share on other sites

Bert, do you know where milk comes from?! And oxygen?

Wake up NIMBY!

that the proportion of the UK which

was used for agriculture was the highest in the old European

Economic Community, 78 per cent compared with an

average of 64.2 percent

We aren't talking about 'covering' the UK in tarmac.

If 8% is currently urban for population of 60M then the loss of a further 1% which would accomodate a further 6-10M (or more) is not really going to change the countryside

Share this post


Link to post
Share on other sites

Bert, do you know where milk comes from?! And oxygen?

From:

http://www.adamsmith.org/images/uploads/pu...landeconomy.pdf

In Britain, 90% of the population live in urban areas amounting to no more

than 8% of total land space.1 At the same time, ecologists and planners tell us

that there is simply no room to expand our bursting cities. It seems antiquated

for us, the fifth largest economy in the world, to remain so attached to our

countryside. Our land use policy is not a reflection of a modern, service-based

economy: it is out of date and it does not match supply and demand, leaving

our economy sub-optimal.

We do not have enough houses, and our present housing developments are

inefficient and wasteful. We continue to protect a degraded countryside

which benefits comparatively few people in a way that prevents thousands

from getting onto the housing ladder.

Sometimes, shortcomings in planning

offices themselves make it harder for people to submit applications that are

likely to be successful. The planning authority in Swindon employs 70 staff,

who make 2500 decisions a year (less than one per week each), on a budget of

£4.9 million, and yet the Audit Commission rates it as a two stars (‘good’)

service.

Green belt land is now simply too toxic to be able to support a variety of

creatures. Indeed, Dr Keith Porter of English Nature remarked that lowdensity

developments with gardens and public open spaces would provide

more favourable habitats for species than the giant pesticide-treated cereal

fields that dominate much of the countryside now.

The study, by Professor Josef

Reichholf, found that, “agricultural areas had fewer than 10 per cent of the

[butterfly and moth] species that were found in low-density ‘sprawl’ areas,

and even the city centre itself had greater biodiversity than the agricultural

areas.”

Nevertheless, as Gavin Cameron, Economics lecturer at the University of

Oxford, notes, “in 1988 175,000 private dwellings were built in England,

whereas in 2002, only 125,000 were completed,”27despite the fact of rising

demand for housing. Developers’ inability to obtain planning permission is

hindering the government’s attempts to meet its own housing targets.

Across England as a whole 71% of households average less

than 0.5 people per room; but in London that figure is considerably lower at

63%34. England’s rooms average 15.8 metres squared; Germany’s average 21.4

metres squared.35 Yet London and the wider Southeast now boast an

incredible 601,410 hectares of green belt land at a time when there is an

unprecedented strain on housing.

In 1994, new developments averaged 44 dwellings per

hectare but this had risen to 73 by the end of 2004.

The Institute of Economic Affairs pointed out that 84% of the Government’s

spending on rural areas was directed at farmers, despite the fact that farming

accounts for only 3% of rural employment.47 At the same time (2002-3) that

the Government was spending £2,622 million a year on agricultural subsidies,

just £10 million went towards farm diversification projects.

The 224,400 agricultural holdings in England and Wales average about

213,080 square metres each.49 If some of these were converted to sympathetic

development consisting of 90 percent woodland (including small lakes and

rivers), and 5 percent each for housing and supporting infrastructure, each

farm whose use was changed in this way would yield 191,772 square metres

of new woodland, together with 140 average sized new homes.

The proposal is that some 3 percent of farms in England and Wales be thus

converted over a 10 year period. This will result in about 950,000 new houses

and, importantly, almost 130,000 hectares of new woodland, roughly an 11

percent increase in the wooded cover of England and Wales.

Any why aren't my quotes showing properly?

Edited by The Colour

Share this post


Link to post
Share on other sites
The additional great argument backing up CPRE's side is that the building and development industry is short termist and slash and burn

What do you expect when the nimbies pretty much give the developers a monopoly on new housing? The amounts of new land available for building are tiny and extortionately priced, therefore they mostly end up in the hands of developers. Particularly as those developers are generally the only ones with the clout to push planning permission through.

If I could buy an acre of land tomorrow for a few thousand pounds and pay someone to build a house on it, I guarantee you it wouldn't be a cardboard shit-box. But thanks to the nimbies, I can't.

Edited by MarkG

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 301 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.