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Why It's A Good Thing That Some People Are Priced Out

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'Pricing out' is viewed by some as a deliberate policy:

In terms of home ownership - there is a wider political debate about the ”ideal” level of owner occupation - a too high level can impact on labour market flexibility etc.

I wonder if Liam is raising his kids in rented accomodation on a 6 month AST so that he can help to provide 'labour market flexibility'. And this Knight Frank expert also sees a return to Victorian times on the cards:

In the UK despite a rapid growth in the size of the buy to let market, we still have a relatively small private rented sector and I think this sector is likely to expand over future years as investors retain their position in the new homes sector.

http://www.ft.com/cms/s/2/c5f73f00-7285-11...00779fd2ac.html

Edited by newbie

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This growth [i.e. a 50 per cent increase in central London residential property prices over the next five years] is not unrealistic: over the past 20 years according to the Knight Frank Prime Central London Index prices have risen on average by 13.6 per cent annually.

Interesting argument. On the lines of 'red just came up 8 times, ergo red will come up next time'. No more valid than 'red just came up 8 times, ergo black will come up next time'.

The fact is that in the UK we have seen and are forecast to see, the formation of new households race well ahead of the supply of new housing. Every time the DCLG revise their house building targets, they tend to be catching up with the satiation on the ground.

Same old 'shortage of housing' argument. Saw that in the 1980's. What is the statistical evidence for this. The DCLG seems to be a government lobby organisation. I did search on 'methodology' on their site and found this

http://www.communities.gov.uk/documents/corporate/pdf/145094

which contains the stunning argument that their forecast 'show the number of households that would form if recent demographic trends continue.' Hardly differs from Bailey's argument. And hardly explains the housing bubble in the US, where they have been building like crazy for the last 10 years.

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Estate agents and lenders say that house prices will plateau for the next few years. Can you please give some historical examples where any asset that has boomed in price over 10 years has then plateaued?

Anil Vasisht, Bexleyheath

Liam Bailey: Unfortunately historic data on the housing market only takes us back to the 1970s with any certainty - the early 1970s and early 1990s bubbles and crashes were both occasioned by rapidly high financing costs and in the 1990s case by a severe economic recession.

We have never really seen the current situation before

That would be the 'this time it's different' argument. However, economist Robert Shiller found that ``residential investment as a percentage of gross domestic product has had a prominent peak before almost every recession since 1950.''

http://www.bloomberg.com/apps/news?pid=206...id=a44j8DSY0_ps

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That would be the 'this time it's different' argument. However, economist Robert Shiller found that ``residential investment as a percentage of gross domestic product has had a prominent peak before almost every recession since 1950.''

http://www.bloomberg.com/apps/news?pid=206...id=a44j8DSY0_ps

What are you doing, man? Reading around the subject, learning and applying the lessons of history? You brave, crazy fool. ;)

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stocks outperform property in the long term. but one always needs a place to live. I will buy a house/flat at some point in the next 2-5 years and stay there. at the point that the place is 3-4x my earnings then is a good time. currently 7-12x so will continue to save.

mad times

as I've posted before - I really like the rule of thirds:

1/3 on rent/mort

1/3 savings

1/3 bills and beer

that to me seems a formula for happiness

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as I've posted before - I really like the rule of thirds:

1/3 on rent/mort

1/3 savings

1/3 bills and beer

I like that too. I may use it!

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