Why So Few Houses For Sale?

poor areas -  prices will stagnate

good areas- prices will keep going up ,up and up

bbc 2 mayfair in london counted as a good area watch how the rich and famous mingle with 1000,s in social housing in mayfairs distruict of london, so think you need to rephrase so called poor or good area,s, obviously the torys and boris ethnic cleansing of the capital will make it easier to tell

usually the case coachbuster.

but at some point the rich area then doesnt become attractive to live standard of living wise.
and standard of living is important

why can't social housing be in a good area ?

if that's where houses are also for sale they will go up more and more

folk want to live in decent areas - and these are becoming harder to find

Question.

What is the primary determinant of house prices in the UK?

What is the primary determinant of house prices in the UK?

confidence you wont lose money on it, like any other investment (which is what houses are now in uk, not a place to live)

but at some point the rich area then doesnt become attractive to live standard of living wise.
and standard of living is important
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it is -  but the good areas will generally be where the well paid employment is .

you will eventually have more and more gated communities

i dont get house prices and no one has ever give me a satisfactory answer as to why people use them as cash cows,some bloke on on location,location the other night was reluctant to buy in case prices went down,so chucking what your living in it for the rest of your live if needs be,who in their right minds trys to 2nd guess house prices over a 25 yr period
there was a question in the telegraph midweek about with cheap money about should you pay down debts or reinvest there were arguments either way
i just dont get it ive asked a 1oo times on here i own my own house worth roughly 200 grand on a good day but cant see anyway that helps me to borrow money,if ive got spare money to pay the monthly payments why the chuck would i want to borrow more and pay some bank the interest for doing so,sorry i dont get it,and we wont go down the interest only route there in a world of their own ,deluded one at that,
rant over,

good areas are where theres a plentiful supply of coffee shops to charge you £7 for a coffee,normal people cross off house built near parades of shops,etc londoners feel the need to be surrounded by them

Massive difference in London and the rest of the country - certainly the less rich areas.

I get the feeling London, and its property prices, is, one way or another, going to feck it up for everyone.

i doubt anyone living in a nice area would spend £7 on a coffee


don't know anywhere like that

nice areas don't charge any more for coffee than anywhere else like for like ,same prices for food ,petrol,heating etc

and i wouldn't necesarilly regard London as a nice area just because it's expensive  - it's nice in parts .

I'm talking more rural

demand exceeds supply...and in london demand is fuelled by the huge number of illegals who have lost themselves there. A lot of the illegals have come to work and only need limited accommodation eg a room in a houseshare. These illegals have no dependants here.

It shouldn't be cheaper to buy than it is to rent the same property.  Many are stuck paying rent on a property they could afford to buy but they cant get a mortgage.

the problem i have with landords (by to lets) is they have helped push up the prices which in turn has raised rents.

Negative thinking as usual, and very damaging measures suggested further down.
Landlords buying to let has in many areas helped to support prices from falling.
Falling prices mean no mortgages being granted and certainly no house building.
You end up worse than where you started, with even fewer houses to go around because nothing gets built during a pause.
And with low prices nothing will get built until prices recover sufficiently.
Then they skyrocket if things ever get going again because there are fewer properties to go around.
As usual leftie interference would simply make matters worse.

Supply and demand does not apply to housing and households. Increase the supply (number of houses) and the demand (number of households) simply increases in tandem.

Build an extra house and the 25-year-old living with his parents buys it and moves in. Build another house and his parents take out a buy-to-let mortgage and rent it out to his younger sister and her friend. Her friend then claims housing benefit which pays the interest-only mortgage.

The price of UK housing is determined by the price and availability of debt and the level of employment and wages which service it. It doesn't matter how many homes you build: the price will never fall while politicians, banks and their customers view anything other than living your whole life with the maximum possible debt as a sign of social failure.

^^^ exactly so, it will not be possible for house prices to rise in Britain again...at least for the next 40 or 50 years. Its counter-intuitive but an increase in population will mean a fall in house prices.

Then what has been pushing up house prices and rents if supply and demand isn't involved?

The price of UK housing is determined by the price and availability of debt and the level of employment and wages which service it

Availability of debt has been restricted by the high deposits demanded by lenders and everybody knows wages have been going nowhere for years.
Which demolishes your post straight away.

As for oversupply not affecting the housing market, you'd better ask the Irish and the Spanish why their housing markets crashed after building so many new properties, and why they've never properly recovered if oversupply isn't involved.

The Irish and Spanish market crashed because it was a Ponzi scheme and house prices were being driven by the possibility of quick short term profit and were not linked to wages and job security. This is always unsustainable and applies to England also. More and more people in England will decide to rent simply because of job insecurity and low wages.

More and more people in England will decide to rent simply because of job insecurity and low wages.

More and more people won't have a choice but to rent because of those reasons.

The increase in house prices seen over the last decades was driven almost entirely by one thing and that was the icrease in the number of two income families...more and more both wives and husband went out to work until now this is the norm...this is far and away the main reason for house price increases.

Marvellous stuff ilc1971.

The Irish and Spanish didn't build too many properties by any chance as well did they?

No of course they didn't.

i,ll ask again
if job insecurity and low pay forces people to rent, with an increasing population living longer how do the millions pay their rent when they retire

LHA.

yes ist time poster, this is why rents and house prices must fall it is inevitable in a post manufacturing Britain with an increasing population.

If Britain was  t o cut its population radically and quickly it would lead to an increase in house prices.

"Supply and demand does not apply to housing and households." - followed by a lengthy description of demand for housing.

Of course supply and demand applies to housing.
Why the hell do you think councils are selling of houses for £1 in places nobody wants to live FFS?

OfF

"The price of UK housing is determined by the price and availability of debt and the level of employment and wages which service it."
And that is already factored into the price people will pay for rent/mortgages, this is extremely basic economics.

Twenty-five years ago mortgage lending was restricted to 3x main income plus 1x second income, interest rates were in double figures and interest-only mortgages with no means of paying back the debt were unheard of.

Now people are encouraged to borrow 4.5x two incomes at 2% with taxpayer-provided Help-To-Buy deposits and have to work every hour god gives to do so.

There's your house-price inflation. Nothing to do with supply and demand, but everything to do with more debt.

It's everything to do with supply and demand.
Please explain why are property prices so different in different areas of the country, when the purchasers and renters have the same mortgage deals available?
Explain that then?

The price of property in different parts of the country is determined by wages and foreign investment. London however cannot be immune to what is happening in the rest of England and will crash.

few years back bloke at work was telling me about his interest only mortgage and how he was a bit of a money wizzard by reading the odd bit in the daily mail,when i asked him about his plans to pay the capital back he said what capital then went onto describe a repayment model,theres 1000,s out there who dont no they,ve the capital to payback
another lad at work was always skint then told us he had consolidated all his debts mortgage etc and was paying a lot less a month and was taking the wife away for the weekend,me and my mate said thats alright aint it how does that work,the lad got about 20 yds away turned round and said i forgot to say my loans over 40 yrs now instead of 25,he was happy as larry

Please explain why are property prices so different in different areas of the country, when the purchasers and renters have the same mortgage deals available?
Explain that then?

Average wages in London are double those in the north. Mortgages are limited to a multiple of your income. And so property prices in London are double those in the north, as people are determined to amass as much debt as their income allows.

And, as 1st time poster notes, in literally millions of cases with no understanding that their monthly payments are not actually even paying back the debt.

You can build as many houses as you like, but with that level of ignorance combined with our lust for debt, all you'd do is provide more opportunities for lending the maximum.

''As safe as houses'' still holds good.

How many do you want for under 40k?Every village in the North East has them.Good houses,central heated,double glazed etc.but there's just no employment so consequently those who would traditionally have bought these houses can not get a mortage even if working because they are all on temporary contracts.The employment situation in this country is at the root of all this countries economic problems.Simple answer,get the employment to the regions & there'll be no housing shortage.Give people proper jobs with a full time contract & then those who are unfortunate to be on part time with no contract at the moment would be able to get mortages & buy the houses.

Nail on head.  We have entered a time of insecure low paid "self employed".  Banks won't lend so you're stuck renting and you've no chance of saving a deposit.

That's the inevitable consequences of over supply of labour.

I go to the North East three or four times a year. It never ceases to amaze me what sort of property you can get for a relatively small amount. My mate has got a decent three bed semi in a quiet cul de sac, not bad sized front and back garden, a garage, off road parking and only 20 minutes walk to St. James's Park. All yours for £130K o.n.o. It's a different world up there.

Good value ,but  Newcastle still more expensive than parts of the south east

probably because the n east have been brought up to think of a house as a home,theres about 6 of my family are mortgage free and own homes but you never hear people talk about their value,down sizing,equiy release,remortgaging etc,if they were all valued at a penny tomorrow it wouldnt even raise a titter,house prices talk is a young and southern thing

I could buy a 3 bed semi for 40k in the ex pit village I'm from up north.

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.

Question.

What is the primary determinant of house prices in the UK?

Answer

Housing Benefit

^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.

Would you buy a house next door to a family whose last home was a mud hut?

damaging effect on prices.

that the negative way to look at it.

if prices come down the knock on effect benefits the economy.

that the negative way to look at it.

See my last post.

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.

more money for the masses....more spending....more jobs...etc

oh and less housing benefit

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

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.

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.

... Hence my contention that property prices are determined by the availability of credit and not by the number or condition of dwellings.

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?

??

You obtain credit to get yourself in debt. What's the issue? The availability of debt is equal to the availability of credit.

Which ever one you settle on you will still be only half right.

You included wages and employment in your first statement.

Don't they count now?

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.

So why are house prices so high in London?

Higher wages aren't the reason.

And why are house prices much lower in other parts of the country?

They've all got access to the same credit.

Higher wages aren't the reason.

That ought to be:

Higher wages don't explain the big difference.

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

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

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

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.

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)

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.

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.

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.

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

50 ? i meant 40

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

would need banks co-operation  - govt must see this as cheaper than housing benefit payments

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.

''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.

The other problem with interest-only mortgages is that without an additional savings vehicle you never actually own the property
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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

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

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.

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.

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.

people are falling over themselves to get on these new rates talk of 1% or less ,but what you lender wont tell you is that he,s given you a great rate for a £1500 fee for a house thats probably over priced by 20 to 25%,if you keep jumping on 2 years fixes thats 12 x £1500 over 25 years, you need mortgages of 200 grand plus just to be in the ball park

I can only go by averages in the same way that you don't always have a positive balance in the house from the first month .

repayment is a scam in the sense it makes folk feel they are better off ,but all it does is encourage higher house prices  at the bottom end .

In REALITY it also makes folk pay indirectly for the 'privalage'  - that money though has tax and NI deductions - so better not to have it at all

Coachbuster


         Coachbuster   







  16 Feb 15 16:51 
Joined:   08 Apr 06      | Topic/replies: 27,578  | Blogger: Coachbuster's blog   



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



Coach, Ms stew is out tonight but I'm fairly sure she told me that the banks are not that lenient....for want of a better word.

can't be doing with all the scams that are going on  in this green and pleasant land .

No .stewarty - because the system makes too much money at the moment -  it's money for nothing ,and  as has been correctly mentioned on here it's also extra money from

Land  duty 
solicitors fees
estate agents fees
other professional fees via comms


and they pay VAT

which is even more money for the treasury



it's worse than BETFAIRS Premium charge 

* I'm fairly sure she also told me that interest only mortgages are more or less non-existent any more.

* Unless you maybe have say, a 50% deposit.

they are probably harder to get hold of ,like i say - not enough money in it for greedy banks

or they know something about house prices that we don't

High deposits mean either the banks are strapped for cash, or they're fearful of falls in the housing market.

Which one is it?

Both

so if banks are sh1t scared what is fueling the market?

cash buying in from abroad

incredibly cheap credit means that every man and his dog wants to put money into property. BoE has indicated rates will not rise in the medium term, so all good as far as investors are concerned.

in response to the OP - I regularly attend house auctions in the midlands (3 this month). The cash rich asians (pakistanis) do tend to snap up all the larger family type homes (min 3 bed) at the lower end of the market to let out.

and how have they become cash rich ?

Where at Emden Villa Park?

and how have they become cash rich ?

There's one I know of who buys houses that estate agents can't sell and puts them through the auction.
His costs are very high if you read his selling terms - that would catch a good many out for a start.

He put one through which I know had got a mining report attached to it from an old advertisement on an estate agents website.
There was no mining report in the online legal pack submitted through the auctioneers.
It went for far too much.

You can drop some right clangers buying from an auction if you don't do your homework properly.

The housing market ahs been strangled by politicians interfering in the mortgage market,ostensibly for good reasons. The RDR system for mortgage advisers and limitations imposed to 'protect' those who would want to get a mortgage from themselves has caused the approvals process to become so tortuous too many sales have fallen through and the chains have been breaking down. Sellers then give up,think back to early last year when the media went crackers about the housing market overheating and the B.o.E tightened up to stop it.When it cooled the politicians patted themselves on the back.

if the housing market has been strangled then why do people get housing benefits whilst working full time?

surely that indicates they are over valued?

They get housing benefit despite having a job because their wages are dire.

The price of a new house, is based on the cost of the ground and what it costs to build it with the builder's profit on top.

If somebody can't afford to buy it, it's not because the house is overvalued it's because they haven't got enough money.