Is the UK Housing Market Really A Big Ponzi Scheme?
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- čas přidán 7. 02. 2023
- A look at why people may call the UK housing market fundamentally overvalued. Looking at factors that have changed in recent years and whether the 'shortage' of supply is as acute as we have been led to believe.
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► www.economicshelp.org was founded in 2006 by Tejvan Pettinger, who studied PPE at Oxford University and teaches economics. He has published several economics books, including:
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More on the crisis in the rental market. czcams.com/video/_3ECHqzEeGg/video.html
Small rooms, small garden , 3 bedrooms are actually 2.5 bedroom only big thing about the houses nowadays is the price tag
Let us not forget the big house builders are also some of the biggest of the Tory donors.
Even more disgraceful how they split what was a single house into 4 and then charge more for each one than the whole thing did 15 years ago
I'm a foreigner and this so called "double" rooms are only double bc of the huge bed that takes like 3/4 of the room. Crazy.
🤣🤣🤣
4:26- I imagine many of those "net additional dwellings" are not new builds, but existing houses subdivided into flats and HMOs. As an American, I enjoy watching Homes Under the Hammer for light entertainment. It's common for landlords to buy old single-family homes such as three-bed terraces and renovate them into five-unit HMOs; thereby adding four additional dwellings.
That's an interesting point I wonder how HMOs factor into these statistics. Surely one HMO is a single dwelling, rather than each individual sub unit.
Vastly, greatly, majorly, humongously overpriced. It just is what it is. I doubt they will lower in price until it's too late for the whole country.
Prices already down .....
@@alexmodeen6150 Where? They are up in west midlands
@@alexmodeen6150 only 9%......
@@rdtheskald OK believe that .. that's what they keep saying on the media but in reality not true.... place you property on the market and then you will know....
@@alexmodeen6150 Im looking to buy a house in the west midlands the prices have not dropped and in fact are rising. I'm not following media I'm talking from researching houses on the market.
Moved recently to Sweden earn more then in UK and after a year did buy 4 bed house with massive garden for 50k. And my house don't have mould....
What would it be worth now...i live in the north of England, 80k house.
The average house price is £267k so that reflects the enormous cost of South East property when reflected within the average cost.The 80k home is likely to be off the grid in terms of transport links and employment chances not to mention health and education facilities. In fact 90k doesn't buy much anywhere nice in Western Europe.
Housing became largely an investment opportunity in the 1980s when government economic policy was shifted from manufacturing to services. Now we have a situation where if there are enough houses built then the price goes down and homeowners would never vote for that, so housing supply is kept lower than needed in order to keep prices high.
It's called Greed. & it's killing communities around the UK.
Yes, this. Same is happening all over the west coast of the US. The only thing that gets approved is ultra "luxury" units aka overpriced wood framed trash complexes where you can hear everything your neighbor does and even smell their cooking. But it keeps the prices high!
For the last 20 years I’ve been hoping for price reductions. Still waiting and wondering.
Yep. I've got a deposit. Just waiting for a crash and then I'm going jump in and pray
Lol
Better buy soon. I bought my house at half a million in September and now houses in the area are 570-625k and they look like dumps. I am still renovating my self to save.
@@leosedf No thanks.
A very compelling reason why real estate prices are pumped up in Blighty is because the MPs are primary beneficiaries of this scam, and these particular turkeys have at least enough sense not to vote for early Christmas dinner. Democracy in action!
Applied to get my first mortgage in 1996, got approved for 17,500, had 1,500 deposit and found a slightly run down house on the market for 21,000. I stretched and offered 19,500 and got turned down because their minimum was 20,000. Then house prices blew up. I thought I'd wait until the market corrected. I'm now 44 and still renting.
Mate I feel ya.
My parents decided to sell in 96, just before the last big boom.
But they didn't buy, instead they spent five years arguing about where to live.
In the meantime our old house literally went from 90k to £250k...
If you're now 44, in 1996 you would have been 17. Why would a bank lend to a 17-year old?
@@gigikontra7023 Check your maths.
@@fiddley the year is 2023 AD and you say you're 44 years old. You also say you took a mortgage in year 1996 AD. That's 27 years ago. 44-27=17. You were 17 at the time? Who are you trying to fool, my boy?
@@gigikontra7023 i was 17 in 1996, but not all of 1996
You’ve really put your finger on something here. Thank you for pulling this data together and creating a very informative piece
Just to say I've used your website for years but never even considered you had a CZcams channel. Looks like it's been dormant until last year. Great content and well presented, glad your here!
Cheers Ollie. I've had a YT account since 2008, but only really started using last year, quite fun.
It is not just the housing market we also have the car leasing ponzi scheme and generally personal unsecured debt. Our service economy is just a case of taking in each other's washing and living on tick.
We are now in the mexican stand off era of the housing market. Where sellers have missed the boat but still want top dollar and buyers are not crazy enough to take out a expensive mortgage. If I really had to sell my house in this market I would drop it now instead of being forced to drop it later on. Only foreign investors or more cheap money can slow the drop.
Your videos are fantastic, really well explained and you deserve more views!
Great video, I think you should do another one, and include schemes the government come up with to keep the house prices inflating. Such as equity loans like help to buy and shared ownership schemes.
Yes, help to buy definitely had an effect at inflating prices at a high cost
the government does this so it does not suffer a brain drain, after investing 20 years raising a child for them to just leave, the British government knows our skills and knowledge is HIGHLY valuable abroad.
the government is not paying for free schools and free health care for another country to benefit
its just business
@@economicshelp add to that but to let. Everyone's a property magnete these days. Thanks Sarah beanie. And all the other property programs which fuelled the buy to let economy.
I love how clear your explanations of economic issues are. I live in the U.S. but your explanation of markets applies across the ocean too.
Yes.
I had to move out of London because the price of property was increasing faster than my wages. Just when I was getting close to get on the property ladder, there was another surge in prices, and my company started laying everyone off and rehiring them on lower wages just because they could.
I enjoy your podcasts very much. They are very interesting. Although I was born in UK I now live in Ireland (where thankfully house prices are half those in SE England and salaries are nearly double in the public service). Therefore I immediately recognised Cobh in your picture at 15 seconds!
Thanks. It is a nice picture. It reminds me of the coloured terraced housing in Oxford and Bristol.
What’s the podcast called??
Housing should be an existential right of each person and not a market instrument. The prices (or at least the rental price) needs to be centrally controlled to ensure it corresponds to a reasonable proportion of the average salary. Things work great in Switzerland in this respect. The housing market may not be a Ponzi scheme but it is very, very wrong in many ways.
And this is the core problem. A place to live is a human right but don't fell the UK government that
Nice picture of Kobh at the start.
I didn't realise the humble brick had inflated in price so much over the years
Wonderful explanation on the current housing market in the UK. Great insights and sensible analysis.
As someone who just bought a house it wasn’t a question of is the house over priced but does it get us off the mad rental market 😂
This is the real issue, It doesn't matter how "over priced" housing is if the mortage repayments are way less than renting the same thing. housing isn't optional nobody can say yeah i'll just be homeless for a couple of years and wait to see how the market is then.
@@northeuhot the nail on the head sir.
Yes, we need to get back to single house, single buyer, single salary. Like many, I would take a hit on this, but the system just burdens people for a lifetime and prevents almost all from even getting started.
Half a million of your finest English pounds please sir for an ex council house on the outskirts of London, it's just bullshit.
Really interesting and clear. Have just shared with my year 12s. Thank you!
Glad it was helpful!
EH is a legend, used his website over 10 years ago when I was doing my A-levels, and he's still pushing out great content.
Really, really interesting and thoughtful video. Thank you!
Very nice clear concise commentary ……. I feel for the young, but it is the well off voters of my generation who have laid the foundations for this disaster.
In the past governments sought to ensure everyone was housed properly. The peak year for new units of social housing was 1969 when there were 300,000 additions. Now it’s about 30,000 pa despite there being a lot more people and households. The number built by the private sector is pretty much the same year on year. We have become fixated on the housing market and not that everyone is decently housed
because the tories want to keep it this way so they can make more money
@@Ana05702 Believe or not but in the 1950s and 60s Tory governments used to compete with Labour to see who could build the most social housing. The system was financed by pooled rents. That is the surplus generated by long term renting financed new build. Right to Buy introduced in the 80s destroyed this system.
Market fundamentalism. I don't know what it will take to shake people out of this delusional idiocy. Housing is a right not a commodity. Most importantly it being a commodity directly conflicts with said right because the best way to maximise prices is to restrict supply (it's not like we have more land being created).
Not noticed all those building sites everywhere you look?
Well I have and it also breeds choked roads and no hospital appointments or doctors ones either, not to mention food, energy, water, fuel hyperinflation which is caused by demand exceeding supply massively!
@@OldeJanner I am going to make a wild guess and say, you are quite comfortably housed yourself. The latest research from the NHF estimates there are 3.8 million people in need of social housing. There are 1.6 million households on Council waiting lists. The proportion of households privately renting almost doubled 2010-20 from just under 10% to just under 20%. But they don’t count because you are alright.
Ill give you an example of the ponzinomics involved in the housing market. There is a property right now listed on the market. Over 70 years old, possible structural damage due to a leaking roof, dont forget asbestos included. Not a single part of the house renovated and it is basically as is since it was built. Heating system is single pipe and there isnt electrics in each room. The garage is being propped up by a car jack as the foundation has subsided and brickwork leaning over, could collapse any minute. Its listed for £395k....£395k for what? A house older than my dead gam gam? What am i paying for here? Get real. Rip off. Send this unrealistic market to goblin town already.
Could you paste the link here if you can please. I'd like to see the state of that property. Appreciated:)
@Sun Set Yeah me to... I've seen a 7 bedroom derelict building for sale in West Midlands for £450k
You wouldn't let rats live there... well actually, you probably would...
Cool story
@@Dr.Stacker tell me you poured your life savings in to a liability without telling me. 🤡
@@bobodyuknow You sound bitter but I understand as I myself was in your position not long ago. It shouldn't be this expensive but thats the current market condition. What angered me more is that I pissed away 40K on rent over 3 years with nothing to show for it. I will be mortgage free in 11 years on a 4 bed detached house right on the outskirts of london so I don't really regret it.
The majority of new builds are 3+ bedrooms or so called executive housing which most people cannot afford hence the housing shortage for most people
Very interesting and insightful analysis on the real estate bubble. It’s not just happening in the UK, but also all over the world, in places like Toronto and Vancouver.
Its 'The Great Reset' going ahead as planned. You fools laughed at anyone warning you as conspiracy theorists but now its happening you are all shocked lol
And Australia
And Portugal
And US.
A guy I know just bought a buy to let and was asked for a 50% deposit, if that's not an indicator of how far Banks think prices will drop I don't know what is.
Good thinking!!!
Max LTV on most BTL's is circa 75%-80%, they are factoring in a 25% fall
Landlords dream is a shortage of housing,
I assume this was inspired by the article in the New Statesman. Whilst I don't 100% agree with their take, a severe market correction is overdue. Your point on the validity of the 300k new houses claim is very interesting and not something I'd thought about before.
As a Landlord, i stopped investing 4 years ago, the rental income, tenant issues, tax has all made it uninvestable !! Why should I offer a service, take on the hassle, pay agent commissions & all to become a tax collector for the Govt ? Property cannot be seen as a Pension income, tax payable on higher interest and as the Govt pushed for ltd companies in order to have a lower interest rate the possible tax on appreciation in the future its just not worth it. Why would i want to take on high debt just to pay more & more tax to Govt but am responsible for all the issues, headaches involved, no Thankyou !!
Yes. Yes it is. If a 2 bed house costs more than the average individual person in that area earns in 20 to 30 years. Then it costs too much and the government needs to do something to increase supply and disincentivise the ownership of multiple properties, through multiplicative taxes, the more properties that someone has.
The native British population has been falling since the 1980s. The birthrate is now somewhere around 1.3 which means that every year there are fewer native British people than the year before. But the population keeps going up, what can that be due to? Without immigration, property prices and rents would fall. Now you know why they refuse to stop the flood of immigration into the UK.
But the birth rate is that low because few can afford to have children, which is in part due to bonkers house prices.
@@megasoctopuslegionofcake6248 100% right. Applauding high house prices is like sheep applauding the butcher.
It's remarkable that politicians know all of this and just say "This is fine".
The housing price chart goes exponential around the time of Blair and mass immigration. This is a major area to look at it in my opinion.
mate they planned and knew exactly what was coming and got into position.
i grew up up in east London/essex from the mid 90s onwards
and very annoyed i was not taught that London is fucking tiny, but as a kid everywhere feels big for a long time if u Don't start stretching ur legs.
Those politicians and co are very well educated especially in geography.
Housing situation is a London and surrounding counties problem lets be honest
if you grew up anywhere else u got no excuses even at todays prices
Great video, well researched and explained thanks
The behaviour of buy and sell your way up the housing ladder has been a "thing" since the 1970s, amplified in the 1980s post "Right to buy".
Part of the problem is lack of cheaper first properties for the first rung on the ladder. Lots of big homes are getting built.
Fascinating video - so good on so many levels. Thank you.
How could I get hold of the Nationwide document containing the graph (house price to earnings ratios) at 1 minute 58?
Surely it is a fact that every year far less than 300,000 homes are being built in the UK? If so, surely the national housing market has demand exceeding supply?
I think the most worrying thing for existing homeowners is that the true demand for housing is constrained by the supply of mortgages. I think that the demand for homes is a derived demand" (is that the correct term?). So when the banks don't feel like lending, then demand for homes falls off a cliff and the price of homes falls.
I also think that a major factor is the slow growth of incomes in the UK; ie the rise in the price of homes is in the realm of "normal for the UK" (admittedly odd compared to the rest of Europe) but the Increase in wages in the UK since 2007 has been way below normal for the UK.
I am not one of them, but many higher rate taxpayers who own buy to let property in their own names are unable to claim tax relief at their marginal rate of tax on their mortgage interest (this was introduced by George Osborne and is referred to as "Section 24"). This means that many landlords now make a loss , but are taxed as if they made a profit and increasing interest rates causes their taxes to increase further even though their losses are increasing (I kid you not - check with an accountant if you think this cant be right). So it is primarily government policy which is driving residential landlords to sell up. All this further drives up rents and drives down the supply of private rented housing with no increase in social hhousing.
Rents are so high, will renters become reliant on inherited wealth to be able to afford to rent?
When I studied inflation in the early 1980s the data suggested that over many different time periods there seemed to be no evidence that increasing interest rates reduced inflation (neither in the US, nor in the UK). Do you know if subsequently the data actually supports the case that increased interest rates causes inflation to reduce? I do suspect that the data supports the case that increasing interest rates reduces the price of homes!!
It would be truly ironic if increasing interest rates causes misery for home owners, but without actually reducing inflation, which is itself causing misery for everyone.
Thanks for thoughtful comment. To find graphs I usually put them on my website where they are easier to download. www.economicshelp.org/blog/183045/housing/are-uk-house-prices-overvalued/
Very interesting comment. If interest rate hikes do not tip the scale towards reduced inflation indeed, then what do you think does?
The see saw is a great way to visualise whats causing this.
Marvelously clear, thanks!
What an amazing video, so concise and well explained.
So if you look at some houses mid sized detached in Wales, it would be difficult to rebuild it for the price asked for sale, it’s cheaper than the build price. How much could you build the house for? The example you have could be built for a lot less than asking price. It’s often overlooked as is land price.
We aren’t seeing sold signs where we live, houses are just sitting on the market. House builders are advertising that they’ll pay towards your mortgage for a year or that you can have £20,000 of free upgrades. Housing materials are surging in price. How can it carry on?
Does anyone know the number of total households vs total houses as apposed to the increase between 2011-2021?
Also hmos ie 1 House many households has been killed with planning rules eg article 4s and other fire regs in many areas so that also cuts supply. Additional licencing of 257 hmos has caused many small apartment biuldings being knocked back into large houses rather than split into further flats and many hmos are being converted back to houses
There will be a period of stagnation on house prices, and some decline, but initially it will probably not be as great a decrease as some hope, but over time it will be significant.
Housing shortages are a very real issue in many areas, and the other problem is the cost of new build. Building costs have increased significantly recently, and there is a price below which it makes no sense to fund building. As prices stagnate, new build numbers will decline. This in turn impacts on the supply side.
For numerous reasons, wise politicians would invest more in social housing in declining markets, and over time seek to bring down the cost of older housing stock, surging rental costs and the costs associated with housing the homeless. Sharp adjustments are more likely to lead to boom and bust cycles in construction.
No one ever mentions the fact that buying a house now relies on 2 earners not 1 back in eighties when prices rose to soak up that extra wage now housing pretty ruined poor private rents and no social housing
The problem is there are loads of vacant properties but no one can afford them as a lot of them cost more to rent per month than you earn from a full time working wage. So they will STAY empty until either they bring the cost down to a realistic level or wages rise dramatically, Which is more likely???
Sir, your charts are great 👍
This is very similar to my video on the matter. As someone who's parents are broke its taken a lot of sacrifice to even get close to owning. Hopefully completion will occur soon.
I watched a bit of it and found the subtitles off putting, consider dropping them.
Thanks for this clear information.
was the selling of social housing right?
0:15 shows Cobh, Co.Cork. The second largest natural harbour in the world, former Royal Navy base, last departure point for Titanic, landing point for the Lusitania tragedy and departure point of Annie Moore, the first immigrant to be received at Ellis Island. St.Coleman’s Cathedral in the background.
Thanks a lot for this video. Historically low interest rates after 2008 financial crisis, was mainly a policy conducted and promoted by US end EU central banks (including UK before Brexit). Yet, I'm afraid we should ask today, didn't they go rather too far on that road? And worse, isn't already too late to even ask this question?
I live in Oxford and find the property shortage argument very frustrating, there's plenty of empty housing. I can find figure from the Chinese government which detail home many homes have people actually living in them. I quick google reveals some startling figures of the uk's issues but who is checking to make sure this is the total extent of the problem and its not worse? A fabricated shortage would be far worse than an actual shortage.
This is especially dangerous if hostage plots, buy to leave and lots of empty homes are owned by foreign companies based in crown principalities.
What happens if these all rush to market for a quick sale because there returns turn negative?
Or worse what happens if they remain empty like the Robert Maxwell 'pension' properties which lay empty and derelict much of the early 90's.
Why should the public finances be stretched to pay the council tax of the empty homes?
Did you watch the video? He explains how the empty house myth is not much of a factor
With the vast increase in building materials & labour costs will the
New house builders be able lower prices if second hand homes
Devalue in price or will new home building stop.
Great job!
How is the audio on the street better than when you’re indoors with a microphone on a boom??
Great content 😎👊🏻
Pertinent video but are you sure that mic is on? It if was, the sound would be much better than this! I suspect the sound we hear was recorded in camera. If you like, I can give you some hints and tips with regards to setup
It's kind to offer. The mic was on, and I used that separate audio track, but I will check booster.
@@economicshelp Yes, it's all about boosting the signal when it comes to the SM7B. It's a lovely mic. The Cloudlifter's well-worth getting in this context. Other brands are available. I'm enjoying your videos. You're clear and concise. I'll subscribe. Thanks for sharing your knowledge
Homes should not be investments, homes are to be lived in.
Here in New Zealand, landlords no longer will be able to deduct the interest on the mortgage for a rental property which is an expense in any accounting principle and end up paying tax on an expense, and with rising interest rates they do not even break even after paying the mortgage, agent fees, council rates, insurance, repairs and maintenance and tax. Even Karl Marx did not think about this when he wrote Das Kapital in 1867 but the New Zealand Labour Government did. The Finance Minister described the deductibility of interest on TV as a "Loophole" and the Revenues Minister described it as "inappropriate" in a letter, a beggar's belief. Landlords who own uneconomical rentals are selling and who is buying their properties? The cash rich, they then rent them at higher rents, all to the disadvantage of renters.
It is not just in New Zealand. Sadly there are always more votes to be gained by bashing landlords - there are more tenants than landlords. Politicians never learn from history, mostly because they never study the history of similar proposals adopted in the past. That does not mean that all restrictions on landlords are bad - a good example in the UK, is the requirement that tenant deposits be held in a separate account usually operated by an independent trustee/agent. That has stopped a lot of bad landlord behaviour and for the good landlord's it has barely cost them anything
There were many things Karl Marx didn't think about. and the one he did think about, he got them as wrong as he possibly could have.
Didn't Gordon Brown change the bank requirement for 3x salaries for mortgages?
Economic investigator Frank G Melbourne Australia 🇦🇺 still watching this very informative content cheers Frank
Where I live in Victoria, Australia the average house price is 7x annual earnings, in Sydney it's 13.3x annual earnings just falling behind Hong Kong.
When it blows up its going to be catastrophic
Number of households would count houses of multiple occupancy twice or more, the number of hmos is probably increasing significantly
If the market doesn't correct now when will it?
For me as foreigner it is. UK have one of the poorest building standards from nearly entire European Union countries and one of the most expensive properties. It is balloon ready to pop anytime especially in London. I cannot justify how on earth 3 bed, semidetached with rising mould, no cellar or proper loft space and energy rating standing on G and no proper ventilation system can cost £700000.00 it’s just ridiculous.
4:30 the number of dwellings dose not really tell you anything. If I divide my 4 bed detached house into 2 flats. (Or 2 semi detached house) or a 5 bedroom HMO I have added housing units. But I have not broken ground, there is no more squair footage.
I don’t think you will ever see any significant price falls in prime locations specially we’re property is often purchased mortgage free. They tend to just stay flat during down times and then keep going up in better times
Good video but at 4:30 you talk about net increase in households, but this doesn't go into what counts as a household. For many young professionals in their 30s and upwards, living in HMOs is still the only option in cities due to high rents, which wasn't the case in previous generations. The way this has been framed ignores the potential of single-person households that is curbed by high rents.
Brilliant you bought your ex council house for 50k and your house is now valued at half a million, well done. But who the hell is going to buy it? 90% of the regular people don't have a cat in hells chance of ever getting a mortgage to buy it.
The only other that can will be people moving sideways.
The real issue with house purchase v’s rental is dead money. Rent paid produces nothing and creates no asset for the payee. Paying a mortgage creates an asset and ultimately a form of security for the payee as they don’t then pay rent once the property is purchased. Planning restrictions and the NIMBY brigade have a lot to answer for as they live where they want or more importantly can afford. Those not on the property ladder have to take what’s offered.
Yes if there was no access to mortgages the “prices” would;d be 50% to 80% lower … UK house prices, Amelia function of the availability of credit and expectation of bars to be able to sell on at an even moreinflated price to the nextboerson
I feel sorry for all youngsters now. I remember it was just the same back in the 1980's when I was beginning to think about buying a house - only to see them suddenly inflate well beyond my pitifully low, pre-minimum wage.
But back then, there was much, much less of this habit of buying property as an investment. Now it's a case of millionaires, billionaires and corporations selfishly buying up multiple houses, entire streets, and brand new luxury apartment complexes (which feel as if they were purpose built for the rich to invest in).
The field next to my present home went up for sale last year. Before I could even discuss buying a small portion of it - it was sold.
3 people had jumped the gun and put in an offer '2 weeks' before the auction was due to take place. 2 of those people represented international corporations... Very fortunately, another neighbour was keen to keep the status quo, putting in an extreme bid to keep it as a field.
When multiple people are haggling over a damp, reed-ridden field - what chance do youngsters have of buying a nice, small starter home?
I saw the sort of houses being constructed on the video - they are a common type often seen now - and definitely not built for those hoping to get their first shaky foot on the housing ladder.
They're built to put maximum house on a minimum plot, all shoehorned in together, probably 4/5 bedrooms apiece (when family sizes in Britain are getting smaller, not larger), and almost no garden by the look of things.
What's the point of building at all, if building companies are going to build ridiculously large houses and the rich are going to swipe up at least a portion of them to swell their investment portfolio?
Is there another factor? One I had heard is that banks are driving up the purchasing power of buyers by incrementaly offering larger mortgages which drives up prices. Essentially they are optimising their loans to you. They want you to take the largest possible loan you can afford, in order to make the most return in interest. In the past people could afford their loans comfortably. Banks want you to be just on the edge, so that every spare penny you have, goes to them.
As someone that work in the industry I put a lot of the blame on new build companies (or more specifically the lack of non profit focused buildings) on a new estate you will have most detached and semi detached all with inflated values. however for the same land space you could build terrace houses covering the same area but in bigger quantities. There is an element of people saying "well what if someone wants semi etc" that's fine. but crucially many people don't or many people would be happy with a place to call there own.
Ultimately the UK housing market now needs more direct regulation or intervention from the gov but the economy is soo dependent upon house sales etc that its a double edged sword - and don't get me started on holiday lets!!!
Thats a product of zoning density set by the council. Terraced houses are cheaper to build per unit. Ultimately its down to profit per sq.ft which is the builders mindset and the less land needed the higher that tends to be.
For me I suppose the biggest thing that stops me from really understanding a lot of this is the fundamental thought: Why is it generally considered that rising house prices are good, but falling house prices are bad? For the individual who bought their home purely as an investment I sort of get them not wanting the price to fall (negative equity), but for other persons it confuses me somewhat.
I also think housing is probably a somewhat unique market compared to other goods. A car of a certain make and model is pretty much interchangeable with any other car of that model. But a house has a fixed location and so no 2 houses are truly interchangeable. Even in my flat, the one above it is of the exact same size and layout. But mine being on the ground floor means I cannot (for example) leave my window open at night whilst my upstairs neighbour can.
rose faster than volume demand, which is not the same as demand.
Demand is fuelled by more than population, but by cheap credit and increased wealth. Both of those are on the retreat, which means economic demand (again, NOT the same as volume demand) is falling
4:18 - but these figures are misleading because they include properties targeting overseas investors and more up market profitable properties, rather than affordable housing.
Up north the houses are "cheap as chips". You xan fet a 3 bed detached for 200k in many places.
The houses made of the same materials in Poland would cost 3 times cheaper. Of course, they are overvalued!
Land is more expensive in the UK and labour costs and cost of living
With a lot of houses owned as an investment, instead of a dwelling (at least by the owner) surely that means that prices could crash VERY quickly, as there is no incentive for investors to hold on to home the instant that there is a risk of prices falling?
Another increase in interest rates is all it would take to trigger it.
Price's won't go down much. If at all. As there is not anoth housing to house everyone.
So looks rental property is the most inflated/overpriced segment? OFC the rental market is propped up by those who are priced out of buying, but this effect can work in reverse if prices fall, accelerating the falls in both rents and consequent forced sale of homes for rent. Suspect a few landlords are going to get burned, I noticed a lot are complaining already.
The private sector limits the type and number of houses built to keep prices up.
Overall good video but your point re. fixing the housing shortage at 4:18 is deeply flawed. While the figures you've shown are true that housing construction has outstripped increase in households, you completely ignored all of possible underlying causes of this i.e. people unable/unwilling to start their own households/families due to being priced out of renting/owning property. This would manifest itself in more young people not moving out of their family homes until much later in life, an increase in people renting with flatmates, an increase in HMOs, and an overall decrease in the number of babies being born (with the decrease per age/income group being proportional to their ability to afford property). Statistics for all of these measures indicate that existing housing shortages and the associated financial burdens are suppressing peoples ability and therefore willingness to form households which in turn is artificially depressing demand for further dwellings. It very much needs to be a case of "build it and they will come" if we are to avoid some form of population collapse.
Is house prices to high or is the value of you currency decreasing
very good and well considered.
This is a good video. The fundamentals of any property market is based on supply and demand, which is easy to say, but the housing market is not a single market, its divided into many segments which has some going up and some going down. To try and understand any specific market-segment will require a lot of research, but there is a higher level you can look at. House prices are affected by population, supply, inflation, economic growth and interest rates. Identify what is changing at any point in time will help you understand why prices are going down or up. The wild card metric is inflation, as housing prices is often a leading indicator of inflation, so it goes up before general inflation goes up and vice versa. If you are confused, I don’t blame you as in all complex situations, its complex. I suspect the key factor right now is interest rates. If unemployment goes up it may flip to economic decline.
A house is only worth the mortgage a bank is prepared to give you ....
All the above mentioned problems are also present here in Denmark. I sometimes wonder if placing a higher tax on houses would work?? At least, for the last couple of decades buying a house has been the best investment - better than stocks etc...
Market forces will work. Government schemes and central banks are actively trying to prop the market up though, they don't want the mess on their watch.
If you ask me they're cowards and are prolonging and worsening the suffering of everyone in the long run.
No it shouldn't because its a place to live. What we need to do though is remove the profit incentives
@@anthonyfaucy2761 By taxing the profit when selling?
@@larslarsen5414 I guess they could tax the equity
Same in Poland. Houses/flats in cities are just investments and many of them are only for investment purpose. I can see most of low mortgage rates for 2019-2021 flats are still empty. Our government even did calculation and it turned out we have over 2milion of empty housing. All this while we are facing a housing crisis.
Inflation IS NOT wealth. If you have 1 apple worth £1 and you double the money supply so it sells for £2. You didn't get any wealthier. You still only have 1 apple. What you did was devalue the purchasing power of the money.
some people fortunate that they have a room over their head at all times, be it with parents, relatives, or friends, who can even just about step on the ladder, would rather not as if you find a house in the £150k mark up north somewhere, the fact that taxes, fuel, food, heating, electric, just all seem to go up anyway that when you finally have your house you realise the spare cash you have is spent on the upkeep of the house.
Only way I can see house prices falling to an affordable level is if everyone holds back buying houses for a year or 2.
House prices won't drop more than %10 as the supply is incredibly low compared to demand.
All the research I’ve done has suggested the uk has a housing shortage in the region of 1.2 million to 1.4 million houses and the governments house building target is being missed by about 100 thousand houses a year.
If these figures are correct?
We need to build 3 to 4 cities the size of Birmingham to be built for the supply side to catch up with the demand.
As an economist could you please do some research and do a video on the facts and figures of the shortage please.
Because if the deficit really is as large as we are led to believe house prices will only rise in the mid to long term and the narrative being suggested by the media currently at the moment is misleading.