iamnumerate Posted October 25, 2006 Share Posted October 25, 2006 Some posters here believe that house prices will fall because they are historically expensive in terms of wages and so therefore will fall until they are 4 times earnings. But why should they ? A) People can now spend more on housing because other costs (food, electricals are lower) The population has grown in recent years but the housing supply has not. Therefore why will house prices fall to their historic ratio ? Other goods are cheaper/more expensive in real terms than 10/20/30 years ago, why not housing ? Do these people also believe council tax will fall to the average level of the rates 20 years ago ? Quote Link to comment Share on other sites More sharing options...
PropertyGuru Posted October 25, 2006 Share Posted October 25, 2006 Do these people also believe council tax will fall to the average level of the rates 20 years ago ? No, but in the long term, the PROPORTION of their money people spend on it will revert to a 'mean'. Rioting in the streets, wage inflation, change of govt, wholesale political unrest... As for your original question, I presume you mean 'Why', and I guess you already know the answer to that, so this thread is pretty pointless (reasons are explained many times all over the site, or if you prefer, wait till Q1 2007 end to see it in action ) Quote Link to comment Share on other sites More sharing options...
lulu Posted October 25, 2006 Share Posted October 25, 2006 A) People can now spend more on housing because other costs (food, electricals are lower) Yes but the tide is turning on these too - how much have electricity and gas risen in the past 12 months? You say that they are historically cheaper then ever, but surely a few more rises will lead to it reverting to normal. Also food - it will get more expensive too - don't forget that Tony and his pals (including Tesco's et al) are doing all they can to finish off British agriculture (much of which is highly efficient, whilst the same time doing its best for animal welfare - a difficult task when you are paid less then the cost of production for milk etc.). Do you really think that long term it is going to be cheaper to import food from abroad? not only are transportation costs going to increase (oil will remain high) but also working conditions (pay particularly) in the countries we might import from will improve and so along with them so will the food prices. Nothing is static - just look at the predictions for the cost of oranges this winter - a poor crop and the price goes through the roof, wheat has also struggled this year so again prices will rise. Next year things may be differant and they may become cheaper again. Quote Link to comment Share on other sites More sharing options...
adamUK Posted October 25, 2006 Share Posted October 25, 2006 Some posters here believe that house prices will fall because they are historically expensive in terms of wages and so therefore will fall until they are 4 times earnings. But why should they ? A) People can now spend more on housing because other costs (food, electricals are lower) The population has grown in recent years but the housing supply has not. Therefore why will house prices fall to their historic ratio ? Other goods are cheaper/more expensive in real terms than 10/20/30 years ago, why not housing ? Do these people also believe council tax will fall to the average level of the rates 20 years ago ? That's the case now but as more and more of people's incomes are spent on services (schooling for the kids, private dental care, council tax, etc.) rather than goods, and that the price inflation of these goods moves broadly in line with wage inflation, then the proportion of available income to spend on housing will diminsh. I am also expecting that as money finds it's next big thing (maybe somewhere in stocks, who knows) once the speculative aspect of the market diminishes, prices will return more broadly in line with historical averages. Quote Link to comment Share on other sites More sharing options...
Casual Observer Posted October 25, 2006 Share Posted October 25, 2006 Some posters here believe that house prices will fall because they are historically expensive in terms of wages and so therefore will fall until they are 4 times earnings. But why should they ? A) People can now spend more on housing because other costs (food, electricals are lower) The population has grown in recent years but the housing supply has not. Therefore why will house prices fall to their historic ratio ? Other goods are cheaper/more expensive in real terms than 10/20/30 years ago, why not housing ? Do these people also believe council tax will fall to the average level of the rates 20 years ago ? Because according to PG, nothing ever changes. Quote Link to comment Share on other sites More sharing options...
iamnumerate Posted October 25, 2006 Author Share Posted October 25, 2006 No, but in the long term, the PROPORTION of their money people spend on it will revert to a 'mean'. Rioting in the streets, wage inflation, change of govt, wholesale political unrest... As for your original question, I presume you mean 'Why', and I guess you already know the answer to that, so this thread is pretty pointless (reasons are explained many times all over the site, or if you prefer, wait till Q1 2007 end to see it in action ) Sorry for the typo. Actually I do not know the answer to that. I know that we spend less on food than 50 years ago (despite recent prices) and more on houses. Why therefore should affordibility stay the same. I can afford holidays today that only the very rich could 30 years ago. Why can't the reverse happen with housing especially since it is subsidised for some people ? Quote Link to comment Share on other sites More sharing options...
Guest barebear Posted October 25, 2006 Share Posted October 25, 2006 They were saying in the late eighties just before the last crash that housing was in short supply,so you would have expected that whaen the crash came and the repo's were rife that millions would have been homeless.......they weren't!! Quote Link to comment Share on other sites More sharing options...
PropertyGuru Posted October 25, 2006 Share Posted October 25, 2006 Because according to PG, nothing ever changes. perhaps you'd like to provide a link to where I say that, a bit like this link to YOU saying that' trends are meaningless' Bozo. "An average trend is meaningless at any single point in time. That's why the home page graph looks like a roller coaster, since it reflects the differing inflation trends." gets funnier each time I read it!!! Casual Observer declares trends meaningless Quote Link to comment Share on other sites More sharing options...
PropertyGuru Posted October 25, 2006 Share Posted October 25, 2006 Sorry for the typo. Actually I do not know the answer to that. I know that we spend less on food than 50 years ago (despite recent prices) and more on houses. Why therefore should affordibility stay the same. I can afford holidays today that only the very rich could 30 years ago. Why can't the reverse happen with housing especially since it is subsidised for some people ? most things in this world are controlled by the 'haves' in order to get the 'have nots' to do a little work for them. the 'haves' enjoy extracting the last few drops of slavery from the 'have nots'. It's what they do. A lot of things have indeed fallen in price in recet times. But the proportion of money the 'have nots' cling on to at the end of the month has, if anything, fallen. over a trillion of extra debt proves this. Why? the 'haves' are a lot smarter than the 'have nots'. The secret is to control access to things that can be exchanged for work. That's why the UK has such a loony planning system. BUT... you can't just ruthlessly move those pesky 'have nots' into one area after another by command, you have to 'cajole' them into it. Wouldn't do to have a prole rebellion on their hands now, would it? So here's the rub - food got cheap, houses got expensive, everyone got obese. And in the NEXT part of the cycle? That's right. Food gets expensive, houses get cheap, and everyone gets thin. Quote Link to comment Share on other sites More sharing options...
the end is a bit nigher Posted October 25, 2006 Share Posted October 25, 2006 Some posters here believe that house prices will fall because they are historically expensive in terms of wages and so therefore will fall until they are 4 times earnings. But why should they ? A) People can now spend more on housing because other costs (food, electricals are lower) The population has grown in recent years but the housing supply has not. Therefore why will house prices fall to their historic ratio ? Other goods are cheaper/more expensive in real terms than 10/20/30 years ago, why not housing ? Do these people also believe council tax will fall to the average level of the rates 20 years ago ? houses could stay this high based on affordability - however, because the overall cost of housing would have doubled whilst people paid the same towards it, no-one would move up 'the ladder' - so if everyone is happy to stay where they are, we will end up in a situation whereby you buy the best house you can at the start of your working life and then stay in it until you die Quote Link to comment Share on other sites More sharing options...
iamnumerate Posted October 25, 2006 Author Share Posted October 25, 2006 They were saying in the late eighties just before the last crash that housing was in short supply,so you would have expected that whaen the crash came and the repo's were rife that millions would have been homeless.......they weren't!! But wasn't the last crash triggered by changes to MIRAS ? Also we had a strong pound policy (later ERM) which caused interest rates to rise a lot and almost zero net immigration. Now maybe the interest rates will rise but will the other things happen ? I am not saying that they will never be a crash but I can not see us getting back to historical affordibility in the next 10 years unless the BNP win power - which I do not want. Quote Link to comment Share on other sites More sharing options...
Impartial Posted October 25, 2006 Share Posted October 25, 2006 But wasn't the last crash triggered by changes to MIRAS ? Also we had a strong pound policy (later ERM) which caused interest rates to rise a lot and almost zero net immigration. Now maybe the interest rates will rise but will the other things happen ? I am not saying that they will never be a crash but I can not see us getting back to historical affordibility in the next 10 years unless the BNP win power - which I do not want. Then you're naive and your studies are incomplete. Since the dawn of man all markets have peaked and troughed but all revert back to their mean at some point. Housing is no different.. watch and learn. Quote Link to comment Share on other sites More sharing options...
Assurbanipal Posted October 25, 2006 Share Posted October 25, 2006 Some posters here believe that house prices will fall because they are historically expensive in terms of wages and so therefore will fall until they are 4 times earnings. But why should they ? A) People can now spend more on housing because other costs (food, electricals are lower) Now the prices of food and energy are picking up. The population has grown in recent years but the housing supply has not. Unemployment in the UK is picking up as well. Sooner or later (rather sooner) this wave of Eastern Europeanians partly will return home or move to another countries due to this fact. Secondly, recent raising in tuitition fees already reduced number of students. Not nice at all for BTL. Moreover, in many cities are under construction/already builded huge student accomodations - with very nice influence on rents (in Leeds, for instance, rents recently declined nicely when Opal One for 1000 students had been finished). Again, not nice at all for BTL. Therefore why will house prices fall to their historic ratio ? Other goods are cheaper/more expensive in real terms than 10/20/30 years ago, why not housing ? Goods with the time are usually cheaper...(due to advances in technology).Why not houses? Quote Link to comment Share on other sites More sharing options...
since the beginning Posted October 25, 2006 Share Posted October 25, 2006 As usual all the arguments are blown out of the water by the fact that rents haven't risen. Quote Link to comment Share on other sites More sharing options...
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