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Why We Must Not Read Too Much Into House Prices

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Guest wrongmove

Robert Barrie: Why we must not read too much into house prices, fascinating though they are to many

"The housing market - and in particular house prices - have a seemingly endless capacity to fascinate people. Some are interested in the UK housing market and house prices; others are concerned with the bigger picture, which means the US housing market and house prices; and others are interested in new ideas and concepts, which means the continental European housing market and house prices. We are all estate agents now....

...For most of us, rising house prices aren't really a big deal. We own the houses we live in because in a lot of cases there aren't a lot of alternatives. If the price of the house that we live in goes up, but so does the price of the one that we're about to move to, it's not obvious that we are any better or any worse off at all...."

Robert Barries tries to debunk the link between house prices and consumer spending. I'm not sure he succeeds though...

Edited by wrongmove

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Reminds me never to get involved with Credit Suisse.

I've never heard such a lot of unconnected claptrap. He has no arguments, no discussion of causality, but rather like a chartist, sees everything and understands nothing.

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Guest Shedfish

Clearly Mr Barrie is talking out of his ar5e. i notice there's no 'have your say' / comments option. chicken...

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Reminds me never to get involved with Credit Suisse.

I've never heard such a lot of unconnected claptrap. He has no arguments, no discussion of causality, but rather like a chartist, sees everything and understands nothing.

Couldn't agree more. I've always thought that economists employed by banks were nothing more than a part of the sales team, there in an attempt to add some intellectual weight and "expert authority" to the marketing pitch.

This proves it....

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CLearly he is talking about the property market on planet Mars. :lol:

Why? Two thirds of all property in the UK is owned outright. Only 7% FTB in the market.

Seems to me the market is probably more about swapping house higher up the chain, and less about buying a house for the first time.

I would be interested to know whether more/less no. of properties are mortgaged now compared to the last crash. Does anyone know? ta.

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2/3 of UK property is owned outright?

Quoi?

I had no idea!!! Where did you get that stat from please?

I thought the UK was a country owned by banks... But then maybe I shouldn't have watched Hitchikers Guide to the Galaxy last night :lol:

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2/3 of UK property is owned outright?

Quoi?

I had no idea!!! Where did you get that stat from please?

I thought the UK was a country owned by banks... But then maybe I shouldn't have watched Hitchikers Guide to the Galaxy last night :lol:

Yeah, I've seen that. I know what you mean! :lol:

I can't find the article I'm quoting from. It's somewhere in my internet history. I'll keep looking. Though I did find this one which is probably more relevant since it talks of housing stock (as opposed to all stock, business etc from which I was quoting.)

http://www.creditaction.org.uk/debtstats.htm

You have to scroll a fait bit down, but it reads;

The amount of unmortgaged property wealth held by UK home-owners currently stands at £3.6 trillion. Housing equity is the largest component of total wealth held by people living in the UK. Mortgage lending has helped fund a dramatic expansion of home-ownership, from 60% to 70% of the population during the last 20 years. Roughly 40% of the housing stock is owned outright, mainly by retired and older middle-aged households.

I wouldn't deny that we're owned by the banks and big business though. Read something else a while back about how more than 80% of the wealth is owned by 20% of the population. That was some time ago too. Probably worse now.

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Yeah, I've seen that. I know what you mean! :lol:

I can't find the article I'm quoting from. It's somewhere in my internet history. I'll keep looking. Though I did find this one which is probably more relevant since it talks of housing stock (as opposed to all stock, business etc from which I was quoting.)

http://www.creditaction.org.uk/debtstats.htm

You have to scroll a fait bit down, but it reads;

I wouldn't deny that we're owned by the banks and big business though. Read something else a while back about how more than 80% of the wealth is owned by 20% of the population. That was some time ago too. Probably worse now.

Now hold on, this is different to what you originally said. Sure mortgage debt is 1/3rd of housing equity, but that doesn't mean a 1/3rd of all housing stock is unmortgaged.

I would like to know the actual % of the housing stock (number of houses) is actually owned outright (i.e. not mortgage).

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Now hold on, this is different to what you originally said. Sure mortgage debt is 1/3rd of housing equity, but that doesn't mean a 1/3rd of all housing stock is unmortgaged.

I would like to know the actual % of the housing stock (number of houses) is actually owned outright (i.e. not mortgage).

That was my understanding as well Jason.

I would imagine the amount of housing stock to be owned outright to be much much lower....

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Now hold on, this is different to what you originally said. Sure mortgage debt is 1/3rd of housing equity, but that doesn't mean a 1/3rd of all housing stock is unmortgaged.

I would like to know the actual % of the housing stock (number of houses) is actually owned outright (i.e. not mortgage).

It's more than 30%!

The amount of unmortgaged property wealth held by UK home-owners currently stands at £3.6 trillion. Housing equity is the largest component of total wealth held by people living in the UK. Mortgage lending has helped fund a dramatic expansion of home-ownership, from 60% to 70% of the population during the last 20 years. Roughly 40% of the housing stock is owned outright, mainly by retired and older middle-aged households.

So much of the country's wealth (59.5%) tied up in non-productive property is a big part of the problem

Absolutely. I run my own business. Although my business is not related to housing, some of my clients are. I see time and again people prepared to spend *anything* on property - at the expense of other things in their life.

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I would be interested to know whether more/less no. of properties are mortgaged now compared to the last crash. Does anyone know? ta.

http://www.publications.parliament.uk/pa/c...xt/50606w47.htm

To answer my own question, I've done a bit more googling and found the above (need to scroll to the bottom). It's a bit out of date, but the table shows outright ownership vs. buying with mortgage over the last few years.

I couldn't be bothered to put it in a graph but you'll see that in line with a rising no. of people buying houses over the past decade, although more people are now mortgaged the no. of owned outright has increased far more. (gap closes)

I appreciate there's probably far more to this in terms of what amounts people are borrowing, cyclical marketing yadda yada etc. But since there is a limited supply of housing?, does it not suggest the market is effectively buying itself up?

In other words I think rising interest rates will have less effect on homeowners than some here tend to think. Left to its own devices there wont be enough of a market to crash (or boom come to think of it). Perhaps by then, people will have started investing in other things. I hope so.

Look, I'm no economics analyst and I would love to be proved wrong on this. Otherwise I’m liable to start preaching to my mates! Cheers.

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I couldn't be bothered to put it in a graph but you'll see that in line with a rising no. of people buying houses over the past decade, although more people are now mortgaged the no. of owned outright has increased far more. (gap closes)

I appreciate there's probably far more to this in terms of what amounts people are borrowing, cyclical marketing yadda yada etc. But since there is a limited supply of housing?, does it not suggest the market is effectively buying itself up?

Number of households owned outright will be growing due to the UK ageing and the fact that this number is mostly a "stock", not a "flow". More people are coming off their mortgages annually to own their houses outright than the other way around obviously.

The fact that the figures for the number of households with mortgages are pretty stable since 1991 is interesting but pretty uninformative as far as house price predictions are concerned. It shows that the numbers of mortgaged households are pretty insensitive to house price fluctuations. Neither the price falls of 1991-1993 nor the subsequent boom did anything worth noting to them.

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  • 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%



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