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| The UK housing market: a bubble about to burst? |
The UK housing market
by Ed
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#1000115
of 3278
 04 Jul 2002
09:57 PM |
Think George Phillips has hit the nail on the head - fundamentally it's as simple as supply and demand and if you doubt that speak to someone who is actually trying to find a (decent) house!
And people are able to chase the price up so rapidly precisely because money IS so cheap i.e. affordable. I don't think there a bubble is waiting to burst - the value of my house actually has little real relevance to me - it may be 50K, 100K or 200K, more importantly can i afford my mortgage? Yes, easily, even if it is 4 times salary.
In the real world whilst comparisons are beginning to be made to the peak prices of the 80's houses still remain far more affordable in terms of % of household expenditure than then.
Back to the original point anything other than a massive house building program is only dealing with the symptoms of the real problem. |
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Is there a better way to restrain consumer credit?
by airgid
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#1000114
of 3278
04 Jul 2002
06:15 PM |
Fortunately the BoE resisted the pressure to punish the UK as a whole (and manufacturing in particular) by raising interest rates. The real problem is inability to manage credit beyond 'monthly outgoings". There is a problem in southern England, so deal with it.
There are a few ways:
a) require mortgagors and other fixed credit brokers to advance no more than 75% of the price of the house/car/whatever.
b) require rolling credit dealers (credit cards, store cards) to set the minimum monthly repayment to 10%, 15%, 20% - whatever it takes.
c) Increase property taxes.
We can't go on expecting the BoE, let alone the ECB, to bail us out. |
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Rising house prices
by Rob Waring
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#1000113
of 3278
04 Jul 2002
01:47 PM |
| The reality is that most houses have only doubled since 89 and the majority of growth has happened in the last 12-15 months. Demand is high while inflation and interest rates remain low. i believe that the market will slow down and a steady increase of 5-7% will combat the bubble from bursting. |
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The UK housing market
by George Phillips
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#1000112
of 3278
04 Jul 2002
10:19 AM |
The reason the prices are booming (particularly in the south east) is because we are restricting supply by not building enough new houses. Putting up interest rates is only short term, condemns the young and other financially-weaker parts of society to sub-standard housing and damages other parts of the economy.
More new housing is surely the answer! |
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Housing is a right
by S. Naidu
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#1000111
of 3278
04 Jul 2002
09:45 AM |
Housing is a basic right. While we should not expect the government to give us free houses, we definitely must expect the local and national government NOT to play the market to force housing shortage. The Councils are here to facilitate infrastructure, not to hinder it.
The argument that they play a constructive role in maintaining order in urban development is a big sham. Any untrained eye will see that most part of London is full of ugly architecture. Some of the buildings in Central London are so bad that the architects and engineers should be shot! Where were the Council experts then?
There is also this claim of Victorian and Georgian architecture and the need to maintain them. Get real. These houses are really old and need a lot of upgrading. The owners don't even bother cleaning the facade. Drive around Hampstead to see this. There is an urgent need for rethinking all this and forcing changes. Otherwise, Londoners will continue to be proud owners of 1-room basement flats (YUCKS!) and the only people smiling would be the renovators. |
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BANG !
by Guest User
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#1000110
of 3278
03 Jul 2002
05:23 PM |
| Whats all this about a 20-30% drop in property prices. they have gone up that much in the past two years from an already high level. When it pops it will go with a much bigger bang than last time since the dole will not pay intrest on a mortgage for 9 months and we are all paying more TAX plus than in 1989-90 where property droped by as much as 50% over a few years |
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Corruption & Inflation
by Burry
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#1000109
of 3278
03 Jul 2002
03:38 PM |
The laws of “offer & demand”,. “Demand” is difficult to manipulate,, though “offer” is very easy… “Town Halls” limit Building permission therby creating an artificial shrinkage of offer.
It is interesting to see who get planning permission… ¿ is there a whiff of corruption in the air coming from Town Hall? …..
Remember …. Today’s local town councillor is tomorrows MP (or Euro MP) then future Minister. If corruption is allowed to creep in the Town Hall then the Country really is doomed after 15 years. |
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interference
by john
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#1000108
of 3278
03 Jul 2002
02:52 PM |
The last 2 posts are bang off the mark again. We need less interference in this market, not more. Raised CGT or regulation simply distorts the market, and there will always be ways round it.
The property cycle is very slow, we are simply in a term in the cycle where people are focusing on the negatives. The buy to let market has gone, and once greedy individuals see that the rent does not cover the mortgage they will sell. We will see a lot of first time buyer properties come back onto the market in this way, which will bring prices down. This will take 2 - 3 years to run, and in the mean time, the demand for the next sector, ie 2 - 3 bed detached will continue, as those who were in rented look to buy. We will see the gaps between prices rise.
If you can afford it, get on the ladder. You are likely to hold your property or another one for a long time, and it will accumulate.
Yes it is primarily a place to live, so don't worry about price movements too much, they will be higher in 20 - 30 years time. |
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Praying for a crash
by the new age underclass
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#1000107
of 3278
03 Jul 2002
12:57 PM |
Like many of my single professional colleagues who have been priced out of the market for some years, I am praying for a crash.
As someone that has lived in Woking, Surrey for many years I have become accutely aware of the dire shortage of quality low-cost houses (not flates please!). The buy-to-let market has forced prices up ridiculously and the nimby factor prevents the building of new developments on greenfield sites.
I would welcome regulation enforcing:
-securing greenfield sites for new housing developments
-penalties for companies building single high-cost mansions where several houses could be built
-taxation of gains made on property sales inline with taxation applied to other investments
To cut the amount of investment buying:
-restriction of new sales to first time buyers and moving families (i.e. buy-to-live-in instead of buy-to-let)
-restriction of housing sales to those living within borough for 5 years or those moving for work
These may sound extreme, but with the lowest house building in the SE for years, the threat of immigration further inflating prices, and Mr.Blairs low-inflation (ironic) plans preventing pay-rises, many of us are in a desperate situation. |
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Forget interest rates and stamp duty
by Nick Seddon
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#1000106
of 3278
03 Jul 2002
12:52 PM |
One of the main factors causing house price inflation (please note: inflation, not growth) is multiple property ownership and the current fad for 'investing' in houses. Taming the market is not the Bank of England's problem, it is the Government's problem, and their refusal to act on the issue must be seen as a serious policy failure.
Of course, it does mean that if (when) things go wrong, the Government has a convenient scapegoat on hand.
If they cannot bring themselves to introduce house rationing then an alternative would be to abolish stamp duty altogether and replace it with capital gains tax at a high rate (75% or more) on property sales unless
the property is being sold to finance the purchase of another property. (Why should people have to pay tax on moving house?)
Houses are for living in. They are too important a social need to be used as speculators' playthings. |
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Stamp duty!! THEFT!
by john
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#1000105
of 3278
02 Jul 2002
02:50 PM |
Raising Stamp duty is an obscene suggestion. Stamp duty is already far too high, and is encouraging home extensions rather than moving. We live in an estate of 1920 - 30's 2 & 3 bed houses. The proximity of good schools and a good train link into London has encouraged demand. We could not afford to move, a genuine 3 bed house £300k+ or indeed anything detached without leaving our home area.
Our street is losing it's character, the basic small houses have unnatractive extensions like boils on the side of a face, and the local authority rules require an extra car park space for each additional bedroom. Hence front gardens have become car parks.
Raise stamp duty does not cool the market, it distorts it towards remortgages for extensions. |
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Comment on John Muellbausr's Property Tax item
by Albert Scott
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#1000104
of 3278
02 Jul 2002
01:37 PM |
Rather than using an economic cure for house price inflation as proposed by John Muellbauer, we should address the physical reason; an acute shortage of low cost homes.
We need a practical solution to raise our building rate from its lowest level for sixty years. |
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Housing prices/ Euro
by Tom
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#1000103
of 3278
02 Jul 2002
12:54 PM |
The real issue is what the impact joining the Euro would have on a currently inflated market. My view (a biased one considering I am a recent first-time buyer) is that this will drive the market to increase substantially.
Lastly has the government considered using taxation as a counter-balance to interest rates. All the talk has been of increasing interest rates - I am fairly convinced that increasing stamp duty by 2% for houses under £250,000 would take the heat out of the market. Particularly if the government made it clear they would continue to use this instrument to restrain price growth in the future. |
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Don't forget availability
by Martin H
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#1000102
of 3278
01 Jul 2002
06:39 PM |
Whilst it may seem illogical for house prices to continue to rise and be forcasted to do so for the next 18 months, there are several factors that must be taken into account.
Whilst incomes are not keeping pace with the rises, a buyer may have an existing property to sell at a large profit to the price paid and the mortgage outstanding. This enables the buyer to partially, or substantially, close the gap in affordability.
Yet at the end of the day, the prices in popular areas will continue to remain high if new property is not built. Take London as and example. The mayor has announced a new plan for the capital that will involve a population rise of 700,000 without changing the boundaries. Those additional people will have to be found homes of all types. This will provide a secure base for prices whilst the population increase happens.
As we are now building the lowest number of houses since the 1920s, is it any wonder that prices are rising?
As for it being the next dotcom style collapse, quite possibly when the number of houses built starts to match the demand. But will builders let it get that far? They have their profit to consider as well, so are always likely to keep the market short and thus prices stable if not rising.
The only way that it could change dramatically is if the government decided to re-enter the housing market in the same way as its predecessors did after WW2 through to the late 70s. Then you have a new ball game completely. |
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History repeating itself?
by Chris T
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#1000101
of 3278
01 Jul 2002
06:14 PM |
Today we've just seen findings from two groups, including the Nationwide, suggesting that house prices will rise by 18-20% this year and that further growth is sustainable, albeit at lower rates. This completely contradicts research from many other groups and a huge amount of discussion in the press.
Does this remind anyone of 1999, when many many people were saying the stock markets were hugely over-valued but those with vested interests - the investment banks and tech companies looking to raise capital - were predicting further growth and justifying the corresponding valuations as the new economic reality?
Now we've all seen who was right there, although I'm not suggesting a property crash would be so dramatic. To me it seems that we have certain groups interested only in talking up the market and I view this as more cynical than over hyping stocks. What are the chances that 2003 will see people suing the estate agents and mortgage lenders for intentionally miss-leading advice after buying at the wrong time and falling into the negative-equity trap?
If I was at Nationwide I might delete my email files - lets at least learn something from the tech boom. |
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