Monday, October 6, 2008

On Topic – RICS latest absurd prediction

Rics warns building slowdown could reignite housing boom

Moves by housebuilders to down tools and mothball projects will demolish the government’s new homes target and could trigger another boom-bust cycle, the Royal Institution of Chartered Surveyors has warned. The government needs 200,000 homes built a year to hit its target of two million homes by 2016, but the total so far this year is only 66,200, said Rics. Failure to hit this target could see surging house prices if demand outstrips supply, said Rics senior economist Oliver Gilmartin.

Posted by jack c @ 09:13 AM (1176 views)
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23 thoughts on “On Topic – RICS latest absurd prediction

  • matt_the_hat says:

    I WISH PEOPLE WOULD STOP POSTING THIS DRIBBLE AND POST REAL STORIES

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  • another alan says:

    These posts are great. The desperation displayed by individuals and groups is very instructive.

    This ‘senior economist’ needs to know the difference between effective demand and demand.

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  • Actually Matt, RICS is being quite responsible here.

    Although they have a strong vested interest, they are making the valid point that if house building does not resume, the seeds of another boom-bust cycle will be sown.

    I am hoping that in the aftermath of this crash, there will be a political imperative to not allow such an event to happen again. Key to that is ensuring a demonstrable surplus of land available for development, thereby keeping land and property prices in check.

    It is also valid to express concern at the current lack of house building, as having thousands in the construction industry, and associated trades, laid off; will only worsen the current crisis.

    My bad news for RICS is that the construction industry, fuelled by easy profits, has let itself get immersed in a huge excess of bureaucracy – there are now far too many surveyors, and not enough brickies..

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  • Eternal Sceptic says:

    An absolute waste of cyber space, posting this pathetic nonsense.

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  • planning4acrash says:

    It’s possible, during hyperstag, or 2 coin a new term, hyper(staged)flation, never seen before, engineered 4 u, by central b(w)ankers,that prices go ballistic as £ gets worthless, yet prices fall against gold, silver& some other real mediums of exchange.

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  • I agree there is a supply and demand problem, but it will NOT force prices ever higher, at least not in the short to medium term. There is a huge demand for, but limited supply of AFFORDABLE housing in good areas, that fulfill the quality and space requirements of ‘social’ housing, not build ’em cheap, stack ’em high new builds of the last 10 years.

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  • matt_the_hat says:

    Are we still spouting this supply and demand problem – go into any city centre look at any new flat development ask how many are empty – the poles are going back to Poland to get a decent wage. Its never been supply and demand and thats why there are so many posts regarding credit – its a money supply problem – too much of it. But now its pay back time. Let bury this S&D argument for good.

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  • HPI requires credit. Credit is non-existent. This senior economist should collect their p45 and go directly to the dole office. Do not pass “go”. Do not collect £200.

    What I want to know is the following: does the senior economist truly believe what s/he says?!

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  • planning4acrash says:

    Uncle Tom, they are actually saying that, it times of low demand, builders restrict supply, to put a floor on prices. This good free market reaction somehow framed as bad by these lunatics. But, caused by intervention, it has -ive social
    Implication too.

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  • I’d hope that a senior economist could come up with something better than this. ‘The seeds of another boom bust?” I haven’t heard anything that suggests another boom bust is not going to happen anyway.

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  • planning4acrash says:

    It is the same as blaming short sellers 4 market collapse. They risk liquidity, that they inject if stocks fall to a stated level, thus providing liquidity & a floor 4 prices when everybody else is selling. But short sellers are enemies 2 asset strippers.

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  • p4c,

    The builders are not that well organised – if they can’t sell, they run out of cash and have to stop building – there’s no grand plan.

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  • planning4acrash says:

    Coz short limit prices from being artificially depressed, just as long sellers stop them being artificially inflated by taking away liquidity whilst everybody else is buying. The stability they provide is why they were banned,they threatened the parasites

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  • Landedgentry says:

    They seem to assume that demand can always be satisfied at any price. A lot of people wanted to fly on concorde before it was deemed too expensive to continue the project. What about people making do with alternatives?

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  • charlie brooker says:

    The assertion about the risk of another boom here assume that credit is available and that people want to buy. Only a simpleton could think both or even either are true right now.

    If the markets recover to something near normal then he would have a point buty until then RICS would do well to pay more attention to what is going on the in world economy and financial system.

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  • planning4acrash says:

    UT,Free markets=natural law. The grand plan is socialist attempts 2 thwart free markets 4 vested interests. Free markets put a floor on prices, & stablise them, but low volumes harm surveyors. They sell us that this free market mechanism is bad 4 us all.

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  • There may be a boom after a 50% correction first, and a rise of 10% from those lower levels may be considered a boom.

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  • planning4acrash says:

    Charlie. With government buying mortgages at stated, not market value, that they may pay though the nose4 foreclosed properties. Big government is harmed by low prices, particulary 4 houses, because they liberate people 2 be independent from government.

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  • It’s interesting what you said earlier P4ac – that prices might actually shoot upwards due to fiat currency while still being valued less compared to real mediums of exchange. Even if we do end up in hyperinflation instead of depression, the only thing that really matters is the price of a house relative to earning power – the same way that gold and oil are generally valued and remain quite stable while currencies vascillate up and down.

    I still don’t see an answer to the hyperinflation/deflation debate.

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  • Boom and busts are not caused by shortages, unless it’s a temporary shortage followed by a glut. There is a big question over whether there was ever a housing shortage anyway. It was plentiful credit and the belief that houses were a one-way bet to riches (bubble thinking) that made the boom.

    If there is a housing shortage, the cost of living in one (buying or renting) will gradually increase in the long term. Whether there is another boom and bust will depend on how quickly people forget (pretty quickly) and how much easy money there is in future. It will be interesting to see how the next few years play out. At present it does not seem that likely that 2014 will be like 1996. Maybe this really is the big one.

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  • The old supply and demand chestnut !

    When the hordes of illegal immigrants and bonfide economic migrants start struggling paying their rents, find they can’t get anymore black market work or contract work anymore and the benefit system has no meaning for them, lets see how the supply and demand thesis works then.

    All the property related umbrella groups are going to be shouting the loudest over the coming months. RICS, NAEA, the builders federation and countless others (tradesman organisations) will see their memberships halve. We have had a booming econmy and the property market has seen a missive rise in building.

    It is a fallacy that their is a shortage of housing here, purely based on affordability. It is obvious that the blubbermint and others have absolutely no idea about “supply & demand”.

    Easy credit made property shoot up in value year on year (on year). Demand for property went through the roof as everyone tried to make a buck outta property. Property almost quadrupled in ten years. The bubble burst, and we now have nearly a million empty properties. Supply could never, when properties were gaining between 20-30% every year, keep up. It was an exponentual rise in prices.

    The demand issue was raised by the desire to make money and not a bonfide shortgage of properties. Pleople flocked here from all around the world and thought, wow, I can make money here. Every cabbie, teacher, window cleaners and dinner ladies even, had BTL portfolios it seemed.

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  • Reckon this all depends on which definition of demand you go with:
    1. Demand = “would like to own my own house” – always very high
    2. Demand = “would like to own my own house and am in a financial position to buy” – always lower – currently very low
    3. Demand = “would like to own my own house, am in a position to buy and am willing to buy” – always lower still, currently virtually zero.
    Whilst the VI’s can and do use 1 to add weight to their arguments, the one that matters is 3 and I can’t see this outstripping supply until we have seen another 40% come of prices.

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  • There wasn’t a huge demand for housing, otherwise the rent for Rosie Millard’s two flats in central London would have gone up more than 20% since 1999. What there was a huge demand for was making a tax-free, risk-free five- or six- digit profit for doing nothing cleverer than getting a mortgage to buy the house you lived in. Now that the five-digit profits have turned to five-digit losses, the demand has disappeared too. It won’t be back until house prices turn upwards again several years from now.

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