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Affordability – Improved as a result of – Low interest rates, quantitative easing, Help to Buy, Bank of Mum and Dad, relaxed lending, Buy to Let being based on rent cover and low interest rates
I lean to the biggest cause of HPI being affordability, if people could not afford the higher prices this would keep a cap on the cost of homes. Supply and demand obviously affects prices but sales prices must come back to affordability.
Demand - More single households, increases in population – including immigration, lack of social housing, Buy to Let
Supply - lack of social housing, insufficient new build
So what will happen when interest rates increase, Help to Buy is withdrawn and quantitative easing is reversed - or will other market stimulants be introduced
The local economy determines the direction of house prices.
We have the north of the country where prices are flat on the decade and we have London were prices are double what they were on the decade
The banks the taxes the rules the regulations the help to buy and bank of mum and dad the interest rates the BTL-ers are all present in both locations yet one boomed and the other one was flat in nominal terms
The difference is the London economy is booming while the North-East is still in recession.
So the future of house prices will depends on what the local economy does. The story for the next 2-5 years is going to be Brexit if it hits the economy house prices will be flat or fall while if Brexit is a success or called off that will likely mean a return to economic growth and a return to increasing house prices
You are right - Demand and Supply, and the real time reality of each, and the changing factors that occur. Also perceptions of future economic change
Full time Landlord in WestYorkshire, mentor and property education to new and inexperienced PRS investors. 25+ years of working knowledge. Accredited NLA member http://www.landlordgeoff.co.uk [color=#800080]
People look at "Supply and Demand" as a simple black and white:
Infact "Supply and Demand" takes into account affordability - you can read about it under "Price elasticity of demand".
Put simply - Its all well "wanting" a house but you are not pushing up asking prices unless you can afford it, you want it and feel secure.
Imigration is not going to cause house prices to rise - unless they can afford to buy and effect the supply/demand ratio?Sure! One big Exception though perhaps a Landlord will see this demand and seek to buy a property to rent to them? so demand goes up.
What causes House Price Inflation? - High demand for limited amount of resources.
_________________________________________________________________________The above post is not financial advice, its often me rambling - passing time on a coffee break.If you are looking for the Best BTL Mortgage? Call the Specialist Team at Bespoke Finance._________________________________________________________________________
The biggest cause of HPI has been women entering the workforce.
Where a working man could buy and support a family on one wage this is no longer the case
Now two full time wages are needed
The days of earning pin money are long gone.
Two incomes are now needed to support a household
That is what female emancipation has caused
Oh! and plus the additional wage now has to be spent on childcare so all a bit pointless for the illusory benefits of women working
Had the woman stayed at home
No childcare costs and cheaper properties.
Women in the UK have always worked go look at each census for the data
Women worked a bit less in the past as they could retire age 60 but now must work to the same age as men. Women also had more children in the past so had to take more time off of work for childcare. If you take those two factors into account you will find it was largely a myth that men worked and women stayed at home. The truth was both sexes worked for most of their lives
The exception was the rich, but it was the rich who had the time to write history. Even then there were exceptions.
For part of 19th century in Lancashire the women and children would go out to work in the factories, whilst the fathers would stay home and weave. There are still cottages built for that around where I live - three stories with large south facing windows on the top floor. The top floor would have been one big shared room.
Not sure what you are advocating there Paul but you are a very brave man!
I suggest you never publish your telephone number.
Not advocating anything just pointing out that the ability to obtain more mortgage credit because of women working caused prices to increase..
Not suggesting for one moment that women shouldn't work.
But you have to ask is it worth doing so just to pay all the extra income in child care fees when by not working women could care for their own child!
Surely mothers would be better off looking after their children for the first 5 years before returning to work.
I believe the State should pay the mother what they would have paid for the free child care fees for 30 hrs pw.
Both supply and demand go towards "unaffordable" house prices but changing the balance by increasing supply is less painful IMHO than by reducing demand.
Govt could reduce demand and bring house prices down my increasing interest rates, if your mortgage payments were 2 or 3 times the price or even if you feared that's where they were heading you would be much less likely to commit to buy and house prices would fall. House prices would be "affordable" but mortgage payments would be "unaffordable" and not many homeowners would thank a govt for that.
Increasing supply by relaxing development restrictions, on extensions, flat conversions, maybe building on greenbelt and penalising vacant lots would be part of my solution but that wouldn't be popular either and it would be unpopular too and slow taking years to make much difference to supply. I think the future needs to be proportionally more large flats and fewer small houses, smaller gardens, and three storeys not 2, and unfortunately people who can't afford one area having to move to a cheaper one.
This is why some public figures prefer to be indignant in opposition rather than having to really wrestle with problems in government.
I'm glad I am not in charge.
Govt could reduce demand and bring house prices down my increasing interest rates
Except that Gordon Brown made the BoE independant so the government can't increase interest rates. Nor can they be seen to be making things more difficult for FTBs.
Recently lots of flats have been build in Manchester and Reading, but local conditions suited this. Reading had a surplus of offices. four office blocks on the same half mile stretch of road as my flat have been converted to flats. Manchester had very few resisdential properties in the center, so entire blocks have been bought up and reveleoped, with several skyscrapers having been built and more coming.