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An economist named Joe Sarling has produced a megachart of UK housing. It shows all the elements which influence the housing sector and how they all relate to one another:It really illustrates how complex our housing market it.SEE ALSO - Housing crisis? You ain't seen nothing yet! A "perfect storm" is brewing. UP NEXT - 9 irrefutable reasons why property is still a viable investment + Landlord SurvivalDON'T MISS - Where next for house prices?NOW WATCH:
That is a nice illustration on external factors that effect house prices.It is of course not comprehensive as "supply of housing" is not general, more supply of specific type of housing and the demand in the local area for it.
I do like it for illustrative purposes.
Looking for the Best BTL Mortgage? Call the Specialist Team at Bespoke Finance.The above post is not financial advice, its often me rambling - passing time on a coffee break.
Oh boy. I have another, more simple and more definitive chart:
ZIRP* = property prices up
no ZIRP = property prices down.
*Zero Interest Rate Policy
That is clearly a silly theory that can be proven to be silly in just two minutes
2007-2017 Nominal House Prices Land Registry
London booms +75%
North East Crashes -8%
If interest rates are the primary driver then how can you have the north east and London behave so differently? Same banks same interest rates same currency same base rate same government same people same language same habits same desires.
Clearly your simplistic ZIRP = boom idea is wrong. The truth is closer to stating local economic performance = driving house prices. London has been booming for 20 years hence the mega hpi while the NE really has not.
That chart shows what a fine balancing act the housing market is!
Just sharing this interesting comment from Aya on another thread:
I had to make an account just to comment on this statistic as the way in which it's being interpreted is completely contrary to the way in which it's been read in government. This data, and subsequent updates via the English Housing Survey shows that the buy-to-let sector has purchased 4/5 of 1 bed and 1/2 of 2 bed properties, which are the traditional 'bottom rung of the ladder' for first time buyers.
Contrary to Aya's suggestion it's not because people don't want to own a flat or a small two-up/two-down. The reality is that many people, especially young people, DO want to buy smaller properties but simply cannot, as their can neither save a deposit (due to high rents) nor afford to outbid landlords. By and by landlords have been able to access greater amounts of credit much more cheaply than owner occupiers and can therefore afford to pay higher prices than first time buyers. In turn these rising prices have given their existing properties greater value, which landlords have been able to access via MEW-ing. This capital growth then gives access to greater credit than was previously available and around the circle goes, with greater numbers of potential owner occupiers increasingly left by the wayside.
This is the reasoning behind the changes in stamp duty and section 24 - to give first time buyers the ability to compete in a market in which they have been excluded from. This is not simply for first time buyers benefits. Without fresh buyers at the bottom of the chain everyone else above them is unable to proceed. There are a hell of a lot of votes available from owner occupiers struggling to trade up and potential owner occupiers wanting to get started and they outnumber landlords by a large margin.
This impetus to take the PRS out of competition for 'first rung' properties is not going to go away and will continue to be felt in the sector in the form of legislation, taxation, and tightening lending criteria for commercial lending. In addition institutional build to rent is being encouraged and invested in as a way of both creating new supply and increasing competition in the sector. These institutions will be able to offer higher quality, professionally managed & modern properties on longer tenancies than your average landlord. Not to mention the removal of letting agent fees which will make it far easier for tenants to walk away from rent rises.
At this stage surely the private landlord must realise that the tides are turning against them. The game which has been favour for the past 20 years has now had the rules re-written in favour of owner occupiers. The smart thing to do for an investor at this stage would be to realise their capital gains, not to desperately and deliberately misread statistics to spuriously support their position.
I agree with all your thoughts other than the last paragraph. No-one can tell how long the PRS will be around for. While there is a demand that the PRS can supply it will. Yes there could be a change but it will take a long time, if at all.There has always been property rented out by individuals, just as there has been by companies and I can't see why this would change. Cash buyers will always be around and they're the ultimate force in the PRS. Those that require mortgages to purchase will just do so from now in a Ltd co.
Complete and utter twaddle
Another twit who has bought into Shelter propaganda.
For the umpteenth time LL do not compete with FTB..
They buy the properties FTB can't afford and don't want.
As for saying they can't afford to buy because of high rents, well boo hoo!!
The answer is to share or move to cheaper property.
I have tenant sharers who are busy saving for a deposit.
They are saving half the cost of rent which they are saving.
They have good jobs and in about 5 years they will have saved a good deposit.
They live a restrained lifestyle cos they are saving hard.
They have made adjustments to their domestic lifestyle.
The other couple is also saving hard and they are working all hours and again have a restricted social life.
You see given the right motivation it is perfectly possible to save for a deposit.
Unfortunately many of those professing to aspire to property ownership expect as of right to have it all now.
They seem to expect a deposit to drop into their lap!!!
Many aspiring homeowners could stay at home and save which is what I did.
Many parents are willing to accommodate their desires by not charging market rents.
Normally a small consideration is all that is required giving opportunity for substantial savings to be built up.
The problem is that when it comes to buying they are not prepared to move into a wreck and do it up which is what we all did back in the day.
No they expect to move into a ready made property with a furniture ready to go from day one.
Well a wakeup call to GR you can't have it all from day one.
LL do NOT compete with FTB.
FTB are able to buy with far smaller deposits than a LL.
About 50% of rental property is purchased by cash buyers, some owners, some LL.
They are NOT competing as such with FTB as they are entitled to spend their cash on what they want!!
So let's not repeat the same old twaddle that Shelter etc trot out on a regular basis.
They are simply wrong as is this poster.
FTB need to accept the reality of the current market and look to buying further afield from the bright lights
There they will find affordable value.
So get in there, get on the decorating clothes and spend many weekends doing up your own resi property.
Get used to watching DIY you tube videos!!
One done up get some cheap second hand furniture.
This means the brown stuff.
It might not be fashionable
Beggars can't be choosers.
I have brown furniture from 40 years ago, G plan.
Free from parents.
All perfectly functional.
I'm afraid FTB are going to have to wake up and smell the coffee!!
Lower aspirations and you mind find a little gem that you can do up as you want it.
But please LL are not preventing FTB from buying which iscwhy S24 is so fundamentally wrong.
Well, as the old saying goes, you can lead a horse to water but you can't make him drink.
My point is that your opinion regarding competition between FTB and LL is irrelevant.
The powers that be have looked at the data and decided that they do and they are not going to change their mind.
They are taking steps to remove advantages enjoyed by LL, put more obstacles up and re-write the rules in owner occupiers favour.
Whether they are right or wrong it doesn't matter as they are not going to change course. All political parties have put housing as a big issue in their manifestos. Extra SDLT has been levied. S24 is already happening. Letting agent fees will be banned in the coming months. From September Prudential Regulation Authority underwriting standards will ensure that the entire portfolio is stress tested when remortgaging. EPC regulations will kick in from April next year making many properties unlettable, at the same time that the next level of S24 comes in.
Why any investor wouldn't get out while the goings good is beyond me. This forum is full of informed people who are aware of the changes facing the sector and can move now before the stampede for the exits. When your average unaware landlord begins to twig it'll be too late to act.
Exactly, it's the uninformed or unaware landlords who'll be caught short. Those who keep themselves up to date with legislative and taxation changes will do what they need to do, according to their own circumstances. That may or may not involve selling properties. Not all property investors will or should 'get out while the going's good'.