House prices rise - really ?

[al**bear]

Another story saying House prices rise.

In Scotland we've just been told, that detached houses, that are being sold are 20% under, semis about 10% and flats 8% lower than asking price. Another story this morning from Scottish selling agencies say that they are very optimistic of more Sales, trouble is we've heard this for the last 3 years, with no increase really happening

On Sunday I went to my daughters, near me there are 3 massive estates of 'New' houses & flats. Most have been empty since they were built 2, 3 & 5 years ago. A lot of the occupied ones are by letting companies . I also saw a lot more near empty 'new estates' on the way to her town. It's a similar story across Scotland. Tons of £180k+ empty houses and very few 'New' houses at reasonable rents or even near average price. Hardly any new council or Housing association houses either.  Just when we need many many 1000s of small rentable 1 & 2 bedroom houses.

Scottish averages (this includes Edinburgh which raises the average)

Detached	£223,696
Semi-detached	£138,259
Terrace	£120,085
Flat	£113,132

-----------------------------------

Another story is that 1st time home buyers in the South are having to get a massive deposit and then gain a Mortgage at 4 times salary. This is how the housing market collapsed at the end of Thatchers era and then again in 2008.  Great with rock-bottom interest rates, can't stay that way, How many are getting initial rates of 2% rising to 5% , will they be able to pay that 5% in a few years time, never mind any raise in rates.

Why are we going that way again. How many think this is sustainable and the government are yet again entering the fray with 'help' for first time buyers , (yep we've been there as well) a policy that even some of it's supporters are saying is dangerous and aiding People to overstretch themselves.

So is Mr Osborne building the latest housing bubble , while IDS is causing panic in the lower renting sector.

[bankhaunter]

Come now surely you don't expect someone like the Chancellor of the Exchequer to know that making it easier for people to buy something where it is in short supply, will push up the price.

And which will in turn push up rents which will push up the cost of housing benefit.

They say goldfish have short memories but it would seem not as short as governments and at least goldfish learn by experience.

[cee-dee]

Justa minnit.

Look at it a different way.

Builders, even "big" builders need money to buy a site in the first place and even more to lay in infrastructure after "clearing" the site.

Where does that money come from? = Borrowed from banks.

The "men at the top" are usually very good at "putting a proposal forward" and making a good case so they can borrow big. What they don't do is what Aristotle Onassis used to say = "Borrow big but always pay it back".

Why do they do that? so they can cream of a huge salary and keep the Company going as long as possible by putting forward hugely overvalued paper assets so they can do the same again and again by borrowing "against" those assets.

When it comes to buyers, are there soooo many FirstTime Buyers who can afford even the "affordable" houses? If a FTB manages to buy in to one of those "affordable" houses, they're going to find it very difficult to sell on if they ever want to move because those "affordable" houses are usully crammed together and small. For what they were, new, they were a rip-off anyway, all flash and show and no lasting quality.

I've been watching a site over the last couple of years and although some houses are occupied, others remain empty. When they started work on the site, the builder was "putting it about" that a third of the houses were already sold "off plan" but what he didn't say was that they were sold en-bloc to a buy-to-let outfit and sold at a much lower price than that for which the other houses were subsequently advertised.

That the houses were built on rafts on made-up ground and built using Structural Insulated Panels with a brick skin is only part of the story and now another site is being prepared where colliery waste is being buried 10 - 12 feet down before a whole ruck of houses is built on top!

In the (distant?) future, there'll be loads of poor quality houses which have NO future! Who'll want them?

I see houses unsold which have been on the market for years and during that time there have been many "headlines" about "rising house prices", "increased confidence", "shortage of affordable homes" etc etc and so it goes on. There have been "statistics" showing percentage increases in the price of houses sold but that doesn't take in to account that the houses sold are the more expensive properties which has appeared to push up the "average" cost of those sold.

It's all a con to attempt to "scare" people in to getting in to the housing merry-go-round.

[**caution**opinion_ahead]

New builds of today are only being made to last 40 yrs or so, CD.  A house is not the investment it was.  "Safe as houses" needs a rethink.

Planning permission was given for 1400 new homes right by me about 9 yrs ago.  Still only one small section has been completed.  Sales are absolutely flat. 

[bankhaunter]

The problem is that where the houses are avasilable at a low price is not where people want to live or where there is an adequate job supply..

A house in Yorkshire is not much good to a teacher in London.

[sir_arthur_strebe-grebling]

I think the biggest problem with this whole country is the ridiculous obsession with house prices. So much of the wealth of the country is tied up in useless, unproductive assets and would be much better put into productive ones such as education, manufacturing and proper infrastructure (transport, communications etc).

Why do so many people think inflation a bad thing for everything else but a good thing for house prices? They talk about the 'property ladder' when what we need is a few 'property snakes'.

I agree with Al () that it is crazy for this government to be following the mistakes of the last, encouraging people to borrow more than they can afford to buy overpriced houses. It will only end in tears (again).

[cee-dee]

OK, so this is an extreme example about what I said above:-

http://www.bloomberg.com/news/2012-07-19/ireland-bulldozes-ghost-estate-in-life-after-real-estate-bu...

If you take the trouble to search, there's many more news reports about unfinished developments.

To a lesser extent the same thing's happening here (mainland UK). If there was a shortage of houses, there wouldn't be unsold houses and unfinished estates.

[joe_bloggs*]

I think property ownership is slipping away from many young people and renting will become the norm,many places on the continent renting is considered the norm and not looked down upon,people have longer secured tenancies and can threfore plan their future better,

Large housebuilders in this country are sitting on land banks,but building workers wages have actually fallen,The only solution is a massive social house building program for the millions awaiting housing that they can afford to rent,but sadly none of the main political parties will commit to this as it will lower property prices,Some local councils are actually building social housing,but with their limited resources it will not make much of a dent in waiting lists

[ed_blackadder_1]

A while back the powers that be did a survey to see how many new affordable homes were needed in the village, the number that came out was 7. since then we have had sites earmarked for over 300 new homes!,  would double the size of the village, one development has been done 27 houses, ranging in price £175 thousand (affordable ?) to £350 thousand, 5 have been sold the others are empty. No youngsters around here can afford the affordable! ones they earn between 12 and 17 thousand pounds, rent is between £595 and £795 per month, not a chance to save, so not helpful. My son is 21 and doesn't stand a hope in hells chance of staying in the village at those prices. So either he rents for ever or he stays with us for another 20 years.

[cee-dee]

Things have changed so much these days and the biggest change is in attitude.

Now we have the "want it now" attitude. Young people seem to think they should have everything NOW, things that older people have worked hard to get.

It seems that many things have absolutely no second-hand value because those that once were happy with what they can afford, now seem to think they can "afford" what they want by borrowing the money to buy everything new.

No more do they seek to set up home with things they can pay for all gradually acquired from the second-hand shop (fast disappearing), the auctions (some of those closing down) or from friends and relatives. Oh no, it's on finance if they've not smashed the plastic.

And so to houses.... The reason for so much discontent is.... people are not prepared to cut their suit according to their cloth, they want (and ensure they get) what they can't afford and not only that, they fritter other money away on non-essentals.

Before long, if the current rate of house-building continues, houses will become just another thing which depreciates as soon as they've bought it, The only profit will be made by those who built the house and it won't be a case of bragging about how much profit they made when they sold on, they'll be bragging about how they minimised what they lost when they sold.

[al**bear]

Capitalists don't want people 'Investing in houses' , they want people investing in Stocks and Shares. In the US it is the 'Money men' who criticise 'Investing in property' the most.

The Waterfront in Glasgow, had luxury Apartments and Flats built all along it for the last 7/8 years. Thing is you can't get a Mortgage , they only have a expected life of 40 years or so, and they are very Expensive and more are opening soon.

CD -   the estates and flats I'm on about in my OP are small and crammed together

'Want it Now attitude' , been that way since 80s , City slickers, spend spend spend, it's boom time, the consumer rules, get it all Now, with your little plastic friend, you can get anything, it's OK your property is now worth, £50k more than you paid for it, oops now £60k, oops now £ 75k on and on and on. And People went out and spend all that 'Paper profit' money, hand over fist. Then interest started to rise = crash , thing is People didn't stop using their little Plastic friend, another crash, then another.

Interest rates are at rock bottom, Salaries stagnant, another crash in the offing when Rates rise.

[geo1pat1]

This will be the FOURTH attempt to make this post!

And lets not overlook estate agents hype in all this talk of  higher property prices ..................It is in their interests to “talk it up”.........and unfortunately the gullible fall for it.

[**caution**opinion_ahead]

---

@al**bear wrote:

'Want it Now attitude' , been that way since 80s

---

The "want it now" attitude was deliberately engineered, because debt generates vast incomes for lenders.  It was also used to mask the fact that standards of living were not improving.  People didn't notice this because they seemed to have more than the previous generation had. 

The long term effect of easy credit has been that it now takes two average wages to run a household, where before it took only one.   We have been sleep-walked into a form of slavery effectively. 

[bankhaunter]

The "want it now" attitude was deliberately engineered, because debt generates vast incomes for lenders.

Would that be the Access adverts that said "Take the waiting out of wanting".

It was also used to mask the fact that standards of living were not improving

They were improving I remember the late 40s and early 50s, but you couldn't get something better without paying more.

[**caution**opinion_ahead]

Standards of living had pretty much stopped improving by the mid-70s though.  The development of credit for all allowed this to be masked ... with the added advantage it created a vast income stream for the financial industry.

[papko]

Rising House prices are meant to give the "illusion " thta people are wealthy .

 This is encouraged by the Govt (of whatever colour ) , as people who feel wealthy tend to spend more , and a virtuouse cycle is unleashed , which ends in a credit crunch we are going through now .

 Unless you have multiple properties rising prices are going to benefitt no one

And there is grave risk in alienating athe whole young generation , who are being saddled with paid for education , and paid for eveything else , before paying more than anyone before them , for some cheap build property .

I do wish some major incident occurrred and the UK had to raise Interest rates , if they were back at 5% , there would be blood on the streets , but maybe we could start a proper recovery

[bankhaunter]

Standards of living had pretty much stopped improving by the mid-70s though

But doesn't that depend on just what any particular person would consider to be a rise.

Also couldn't it be the law of diminishing returns, you spend more but get less for your money, I could buy a fishing rod for £100 or another for £600 but the second one wouldn't be 6 times better, nearer to only a 50% improvement if that.

[papko]

Standards of living in the Uk are in decline

 its only to be expected , how can you be wealthy if you dont work ?

 For centureis the British had a captive market in the Empire , we got cheap raw materials , and kept millions of people in abject poverty .

 Then our own "working classes " had their glory days , in factory , mill and pit , processing cheap materials into goods , which were then used to pay for said materials .

 We are 50% inactive now , so our wealth is fast plummeting compared to up and coming countries , like China , |Brazil , Vietnam , BNigeria , Russia .

 its patently iniquitous that some workshy waster can get hold of 26k a year in Britain , wheras a Doctor in Chian earns half that .

 the scales of Justice are just being rebalanced , and a British person who watches telly all day , will be able to afford very little , in coming years .

 Which is a good thing for the World

[**caution**opinion_ahead]

---

@bankhaunter wrote:

Standards of living had pretty much stopped improving by the mid-70s though

But doesn't that depend on just what any particular person would consider to be a rise.

---

Well, yes.  Perception is all in these things really.  But credit for the masses relieved unrest that was growing at the time, and probably eased some of the social changes of the 80s.  There will always be an "I'm alright, Jack" element.

I'm not condoning the use of wide-scale credit.  Far from it.  I'm just saying it was a response to satisfy desire ... and it worked, short-term for the masses and long-term for the financial industry. 

[**caution**opinion_ahead]

---

@papko wrote:

Rising House prices are meant to give the "illusion " thta people are wealthy .

 This is encouraged by the Govt (of whatever colour ) , as people who feel wealthy tend to spend more , and a virtuouse cycle is unleashed , which ends in a credit crunch we are going through now .

 Unless you have multiple properties rising prices are going to benefitt no one

And there is grave risk in alienating athe whole young generation , who are being saddled with paid for education , and paid for eveything else , before paying more than anyone before them , for some cheap build property .

I do wish some major incident occurrred and the UK had to raise Interest rates , if they were back at 5% , there would be blood on the streets , but maybe we could start a proper recovery

---

Broadly, I'd agree.