Tuesday, July 8, 2014

Crapitalism in operation

'rental gazumping' as new figures show rental rates rising twice as fast as incomes

“It remains to be seen if anticipated central bank intervention in the mortgage market will stimulate further demand in the private rental sector at the expense of home ownership and whether this will generate positive response from would-be buy-to-let landlords.”

Posted by khards @ 07:52 AM (2879 views)
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6 thoughts on “Crapitalism in operation

  • Funny, when energy companies fail to pass on lower wholesale costs, there’s an investigation and media outcry. Landlord costs on the other hand have plummeted due to falling interest rates, but rents march inexorably upward. I suppose we just need to accept that rents are a percentage of wages rather than cost + a non-monopoly profit margin?

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  • BTW I see the rents have gone up 4.6% compared to 1.7% wages, but the growth in the workforce means more aggregate wages chasing the same number of houses…

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  • House prices lag rentals because for house prices to rise in an area, because surveyors value houses based on what has sold locally, previously. Thus, cash buyers willing to buy above the surveyor’s judgement determine prices, on the margins of the market. To secure a rental however, there is no need to have a surveyor restricting prices. Rising rent is therefore indicative of sustained house price increase.

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  • Dublin rents collapsed when the __BUBBLE__ popped.

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  • So did London rents. About 20%. People keep talking about rising rents in London, but they forget that a lot of the recent rise was reversing the sudden falls of 2008/9.

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  • @5 from the ONS website (http://www.ons.gov.uk/ons/publications/re-reference-tables.html?edition=tcm%3A77-355299) England rents (index base 100 on Jan 2011) went from 94.9 in Jan 2005 to peak at 100.1 in March 2009. Then a dip to 99.5 in July 2010, i.e. drop of a whole 0.6 percentage points over more than year. Then the march upwards began again to reach 104.0 in March 2014. Ricardo’s Law of Rent in action. Rents bear no relation to cost, they are just the same as a tax on wages.
    For London the dip is similar – peak May 2009 at 100.2, trough June 2010 at 99.4. London rents have marched higher faster though – now at 106.4. London has sucked in more wages than the rest of the country so that explains that in my opinion…

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