tag:blogger.com,1999:blog-6263577133333272085.post8795959892797425159..comments2024-03-28T11:04:16.315+00:00Comments on Boffy's Blog: The Great Property Market Conspiracy – A €55 Trillion Plus Problem! - Part 2Boffyhttp://www.blogger.com/profile/08157650969929097569noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-6263577133333272085.post-5579530557798747992013-06-15T20:04:56.794+01:002013-06-15T20:04:56.794+01:00George,
There is no shortage of supply! I set ou...George,<br /><br />There is no shortage of supply! I set out why some time ago <a href="http://boffyblog.blogspot.co.uk/2011/10/house-price-crash.html" rel="nofollow">here</a>.<br /><br />In 2009, when credit became hard to obtain, prices crashed by 20% overnight. Have houses suddenly become in short supply since then? No, clearly not, which is why outside London, prices are falling by around 30%, and why huge numbers of houses are remaining unsold for more than year.<br /><br />David is wrong in his analysis about it needing 500k houses a year to send prices down. In 1990, prices fell by 40% within a few months. It certainly was not because the supply suddenly increased. The same is true in pretty much every other instance of a house price crash following a bubble.<br /><br />The only one that doesn't follow that is probably the one that arose at the end of the 1940's. In 1947, when my dad came out of the army, like many other people at the time, he and my mum were desperate for somewhere to live. Eventually, they paid £1,000 for a terraced house. Could they have waited just over two years, they could have bought a new semi-detached house in the same village for just £250!!!<br /><br />Its that kind of consequence that makes me very concerned that many people are being set up for a life time of debt that they will never escape from as prices crash.<br /><br />In fact, there is 50% more housing provision per head of population today than there was in the 1970's. What, in fact has changed is that the structure of households has changed with more single people being convinced they should go into debt to buy their own house. It is really an increase in demand sparked by low interest rates and easy credit that is behind the speculation not shortage of supply.<br /><br />In fact, private housebuilding is not much different than it has been historically. The difference in building is almost exclusively public, but public house building has been sporadic, historically.<br /><br />Finally, its not particularly planning that restricts supply, by land hoarding. As house prices crash, land prices will crash too, and the hoarders will quickly turn in to anxious sellers.Boffyhttps://www.blogger.com/profile/08157650969929097569noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-72983180523607490822013-06-15T16:46:02.232+01:002013-06-15T16:46:02.232+01:00Isn't property in Britain in short supply thou...Isn't property in Britain in short supply though (which is why the prices have stayed up) due to draconian planning restrictions, unlike in the United States, Ireland and Spain, where vast amounts of speculative construction caused oversupply and a price crash?<br /><br /><i>The only way to push prices down significantly would be to build roughly 500k new homes a year for a decade (increasing stock from 27 to 32 million), of which 70-80% would have to be social housing funded by government (or local government) borrowing. Don't hold your breath.<br /><br />Despite populist gestures like Help to Buy, the future is therefore less about mortgages and more about outright ownership for both occupation and renting out, with homes becoming cherished legacies and mobility from renting to buying grinding to a near halt. The musical chairs of the last 30 years has now stopped, which is why the government is trying to jump-start the market with cheap loans. Another way of looking at this is that we're seeing a gradual unwinding of historic property debt, which is likely to last for at least another decade and possibly two. A large scale house building programme would jeopardise this orderly liquidation, so it is likely that supply will continue to be constrained in order to keep asset holders and developers happy (and we'll blame restrictive planning regulations instead). That does not look like much of a recovery.</i><br /><br /><a href="http://fromarsetoelbow.blogspot.co.uk/2013/06/happy-days-are-here-again.html" rel="nofollow">From Arse To Elbow: Happy Days are Here Again</a>George Cartyhttps://www.blogger.com/profile/12170378024031141482noreply@blogger.com