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Why So Few Houses For Sale?
Why So Few Houses For Sale?
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Replies: 137
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It does all boil down to supply and demand. Screaming talks about lending multiples - well that directly affects demand!
One element that always gets me is when they say there is a shortage of housing. There are loads of houses for sale or rent where I live. What a housing shortage means is that there are a lot of people who want something they can't afford to pay for. Might as well say there is a Aston Martin shortage. |
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Question.
What is the primary determinant of house prices in the UK? Answer Housing Benefit |
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^I agree to some extent.
Lack of rented properties letting to LHA claimers in a certain area would tend to push up the value of properties there. While obvious signs of LHA properties would have a seriously damaging effect on prices. |
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Would you buy a house next door to a family whose last home was a mud hut?
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damaging effect on prices.
that the negative way to look at it.  if prices come down the knock on effect benefits the economy. |
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that the negative way to look at it.
See my last post. |
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if prices come down the knock on effect benefits the economy
How? Immediately the treasury would lose on capital gains tax and stamp duty let alone all the taxes on commissions levied by the professions in the business. Rentals yield plenty of tax for the exchequer as well, it's in the interests of the government to let price rip. |
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more money for the masses....more spending....more jobs...etc
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oh and less housing benefit
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more jobs more taxes.
less positions filled higher wages. higher wages less housing benefits. the uk is stuck in a vicious circle at present. have to say looking at property prices abroad...learn a new language imo |
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Question. What is the primary determinant of house prices in the UK? Answer Housing Benefit With 26m households and 5m HB claimants, that would be the tail wagging the dog a bit. I was hoping someone was going to say interest rates. Out of interest, what rise in interest rates would be required to halt and reverse house price increases. |
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Depends on the circumstances. If interest rates are raised by the Bank of England to curb inflation in an economy that's powering ahead with new jobs and wage rises, you'd need a large rise in rates.
But if interest rates are rising generally because the interest rate on gilts is rising (i.e. the UK government is having to pay more to borrow owing to investors' fears of the state of the UK economy), then even a rise of even just 0.5% would crash the market at current rates. With most entrants to the market cheerfully taking on 2% teaser rates in order to lumber themselves with the maximum possible debt, then a rise of 0.5% would represent a 25% increase in interest payments. This is the problem: virtually nobody approaches house purchases by looking for the cheapest suitable dwelling, then raising the finance. Instead everyone wants to know the maximum amount they can possibly borrow, then looks for a house expensive enough to swallow all that figure. |
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... Hence my contention that property prices are determined by the availability of credit and not by the number or condition of dwellings.
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No this is what you wrote before:
The price of UK housing is determined by the price and availability of debt and the level of employment and wages which service it. So which one is it now? |
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??
You obtain credit to get yourself in debt. What's the issue? The availability of debt is equal to the availability of credit. |
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Which ever one you settle on you will still be only half right.
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You included wages and employment in your first statement.
Don't they count now? |
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If interest rates are raised by the Bank of England to curb inflation in an economy that's powering ahead with new jobs and wage rises, you'd need a large rise in rates.
But if interest rates are rising generally because the interest rate on gilts is rising (i.e. the UK government is having to pay more to borrow owing to investors' fears of the state of the UK economy), then even a rise of even just 0.5% would crash the market at current rates. ___________________________ ... property prices are determined by the availability of credit ... The availability of credit is determined by the level of employment and wages available to service it (i.e. make the payments). The level of payments is determined by the rate of interest on the debt. We haven't yet reached the stage where you can get a mortgage without employment. |
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So why are house prices so high in London?
Higher wages aren't the reason. |
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And why are house prices much lower in other parts of the country?
They've all got access to the same credit. |
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Higher wages aren't the reason.
That ought to be: Higher wages don't explain the big difference. |
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No they don't have access to the same credit, because they don't have access to the same jobs and wages.
Median gross weekly earnings vary from £658 in London to £460 in N Ireland. http://www.ons.gov.uk/ons/rel/ashe/annual-survey-of-hours-and-earnings/2013-provisional-results/stb-ashe-statistical-bulletin-2013.html |
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Houses arent amny dearer now than in the 70s
the real price of a house may have doubled since 1976 but interest rates are less than half ,so the housebuyer is currently paying less per month now than the old man did 30 odd years ago |
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only bug bear is now you have to have a huge deposit - answer must surely be interest only loans - what is the point of a repayment mortgage ? doesn't have any direct benefits
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Median gross weekly earnings vary from £658 in London to £460 in N Ireland.
Well there you go. How does that difference in wages explain this: ''Average house price in capital breaks through £400,000 barrier – double UK average – reports Nationwide'' And they refer to the average not the lowest region, which has to be even lower. There is clearly a lot more to the different values than simply wages. |
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only bug bear is now you have to have a huge deposit - answer must surely be interest only loans - what is the point of a repayment mortgage ? doesn't have any direct benefits
As Ms stew pointed out to me, interest only mortgages last so long, ie. 25 years. That when the banks/building society's want the original loan paid back. It's usually a case of down sizing as the property is worth much more. This is not ideal for everyone as moving can be a big upheaval. (she deals in sourcing mortgages for clients) |
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Housing costs don't take up all the wages, Dr Crippen. Other costs of living are much the same across the UK.
Say you spend £300/week on food, transport, entertainment, home maintenance etc. That leaves you with £358/week for mortgage payments in London, but only £160/week in N Ireland. And that's the reason house prices in London are more than double those in N Ireland. |
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I forgot to add that this scenario usually hits people in their sixties or retired. Not ideal if you're settled in a nice home/area.
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Another clue.
Credit is being restricted by the high deposits demanded by lenders yet house prices are still rising. Availability of credit is clearly not the only element involved here in the latest rise in house prices. |
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stewarty,i'm thinking that after 25 years you could then start to pay off the loan -
by then the original amount will be manageable - so the mortgage effec' stays the same for 50 years albeit a lower sum - instead opf hefty payments at the start and low payments towards the end |
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50 ? i meant 40
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stewarty -= yes - esp if you took out the mortgage in your 30s - but the house could still be yours to live in , just owe the interest and then deduct at death
sounds morbid ,but perfectly workable |
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would need banks co-operation - govt must see this as cheaper than housing benefit payments
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The other problem with interest-only mortgages is that without an additional savings vehicle you never actually own the property, even when the mortgage is finished. You are simply renting the house for 25 years with the bank as the landlord. The only real difference from normal renting is that you, rather than the landlord, are responsible for all upkeep and maintenance.
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''Prices in the capital rose by 25.8% between the second quarter of 2013 and the same period this year,''
2 July 2014 And did wages increase by the same amount? Of course they didn't. |
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The other problem with interest-only mortgages is that without an additional savings vehicle you never actually own the property
____________________ people don't already for most of their life - besides you would gain an asset (or part of ) even using my suggestion you would have a positive balance on death - and no landlord to tell you when they want you to leave or worry about repairs NOT getting done as well as...smoking /keeping pets /erecting a shed etc etc |
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people must understand London is an isolated situation .
It's like the Premier league is to football it's a fairycake scenario that doesn't apply anywhere else |
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And did the population of the capital increase by the same amount?
Of course it didn't. Population of London increased by 100,000, or 1.2% in that period. Even if not one single new dwelling was built during those 12 months, supply and demand had nothing to do with the cost of properties rising by a quarter. That was down to falling introductory mortgage rates and people borrowing deposits from mum and dad to front-run the effects of the Tories' Help-To-Buy schemes. |
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I see, and I suppose the rest of the country couldn't take advantage of what you mentioned there?
London prices have seen a staggering rise over the years compared with other regions. Supply and demand is not the full picture, but it is certainly the biggest part of it where London is concerned. |
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You own some of the property from the very first monthly payment with a repayment mortgage, Coachbuster, and a bit more every month thereafter.
And how can you be sure there would be a positive balance on death? Property is not a one-way bet. I spent £92,500 buying a house in 1991 from a Somerset property developer who had purchased it for £150,000 two years earlier and who had, according to men who worked for him, spent a further £50,000 restoring it. What went wrong for him? Interest rates and the cost of credit rose. |