UK housing market is 'overvalued'
03 August 2007, 11:22 AM
#61
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Demand and supply ARE what affects price.
Demand is NOT the same as desire. We all want to live in nice big luxurious properties, however we can't all afford it. Similiarly we all don't want to live in tiny crapholes.
The niceness of the area, the number of people with the budget etc. drive up or down the demand of the property. People's budget comes or up down (e.g. due to interest rates, salary etc) affects demand. The number of people looking to buy affects demand (driven up by immigration/single occupancy etc.). People having kids affects demand (couple with 2.4 kids are after 3/4 bed properties, not 1 bed flats etc.).
Demand itself is not a *criteria*, it is the net result of all the criterias that make up the demand.
100 people want a 3 bed house. If there are 100 houses then great, if there are 150 houses they the price falls as there's more houses than buyers. If there are 50 houses then prices rise.
Problem is, the demand has been growing, however the supply has not hence high house prices. Simply, not enough houses are being built. Plenty of flats however, where you'd normally get a plot of land that could fit 2/3 houses, you're getting 12/15 flats instead. Many flats are not growing in value, houses on the other hand aren't being built in great enough numbers.
So, to reduce price inflation you either need to increase supply or reduce demand (i.e. lower lending, higher interest rates, higher general cost of living and so on).
Demand is NOT the same as desire. We all want to live in nice big luxurious properties, however we can't all afford it. Similiarly we all don't want to live in tiny crapholes.
The niceness of the area, the number of people with the budget etc. drive up or down the demand of the property. People's budget comes or up down (e.g. due to interest rates, salary etc) affects demand. The number of people looking to buy affects demand (driven up by immigration/single occupancy etc.). People having kids affects demand (couple with 2.4 kids are after 3/4 bed properties, not 1 bed flats etc.).
Demand itself is not a *criteria*, it is the net result of all the criterias that make up the demand.
100 people want a 3 bed house. If there are 100 houses then great, if there are 150 houses they the price falls as there's more houses than buyers. If there are 50 houses then prices rise.
Problem is, the demand has been growing, however the supply has not hence high house prices. Simply, not enough houses are being built. Plenty of flats however, where you'd normally get a plot of land that could fit 2/3 houses, you're getting 12/15 flats instead. Many flats are not growing in value, houses on the other hand aren't being built in great enough numbers.
So, to reduce price inflation you either need to increase supply or reduce demand (i.e. lower lending, higher interest rates, higher general cost of living and so on).
Last edited by Dracoro; 03 August 2007 at 11:24 AM.
03 August 2007, 11:42 AM
#62
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BBC NEWS | In Depth | UK House Prices | Maidstone
Many of the lower prices areas in the Maidstone area have risen more than Tunbridge Wells - For example, the lowest average , Medway, has gone up 9.4% in the last year, versus 3,2 for Tunbridge.
Of course specific local anecdotal examples may be different, but on the whole, there is a uniform rise, if anything, more of a rise in less expensive areas - Supply/Demand is not the only criteria.
Many of the lower prices areas in the Maidstone area have risen more than Tunbridge Wells - For example, the lowest average , Medway, has gone up 9.4% in the last year, versus 3,2 for Tunbridge.
Of course specific local anecdotal examples may be different, but on the whole, there is a uniform rise, if anything, more of a rise in less expensive areas - Supply/Demand is not the only criteria.
and are having a lot of new houses built in the process which are aimed at the higher price market compared to the rest of the area.The area I live in in Maidstone must be one of the most undesirable areas to live in in Maidstone, it took me 6 months to sell the house at a considerable lesser figure than it went on the market with at Christmas. The stupid thing is there is no reason for it, the road i'm in is quiet and rather nice and full of modern detached houses. Every place has its problems with youths so the local troublemakers can't be a reason as everywhere in Maidstone has those.
Those figures for Maidstone cover the whole area which is huge as its the county town and includes a lot of nicer areas on top of the centre of Maidstone and its undesirable estates.
A mate up in Harrogate bought his semi detached 3 bed with no garage about the same time I bought my 3 bed detached with garage for the same money. His has gone up over £45k in value in the same period mine has only gone up £30k. Thats the big problem, the gap is growing bigger and bigger in the less desirable places making it more and more difficult to move out - the supply is greater than the demand for the area which is against the general reverse of that situation for most of the rest of the country.
03 August 2007, 12:00 PM
#63
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A mate up in Harrogate bought his semi detached 3 bed with no garage about the same time I bought my 3 bed detached with garage for the same money. His has gone up over £45k in value in the same period mine has only gone up £30k. Thats the big problem, the gap is growing bigger and bigger in the less desirable places making it more and more difficult to move out - the supply is greater than the demand for the area which is against the general reverse of that situation for most of the rest of the country.
Obviously, your house is under offer but just because your mate's house is Harrogate is valued at £45k higher doesn't mean it'll sell for that. Essentially, what you're saying about supply and demand is correct although I think some people are missing the point regarding money supply (lending) which is part of the demand side.
03 August 2007, 12:17 PM
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Stock markets have got their knickers in a twist over debt exposure, so lending is almost certainly going to get increasing difficult, having been probably the most slack its ever been over the past couple of years.
Living costs are increasing quite quickly - food prices, fuel prices, council tax, consumer products are all increasing a lot, hence bigger dent in peoples net incomes and increased inflation, hence further interest rate rises...
Along with this supply will increase as planning laws are being relaxed, and if house prices keep rising those BTL and buy-to-sit empty lot will sell, further increasing supply.
03 August 2007, 12:42 PM
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Bravo - are your sure about those figures? The problem with people quoting house values is that usually they're using headline figures from Estate Agents, whereas there's usually a disparity between the asking and selling price.
Obviously, your house is under offer but just because your mate's house is Harrogate is valued at £45k higher doesn't mean it'll sell for that. Essentially, what you're saying about supply and demand is correct although I think some people are missing the point regarding money supply (lending) which is part of the demand side.
Obviously, your house is under offer but just because your mate's house is Harrogate is valued at £45k higher doesn't mean it'll sell for that. Essentially, what you're saying about supply and demand is correct although I think some people are missing the point regarding money supply (lending) which is part of the demand side.
Its not just his area though, having had mine for sale for over 6 months and constantly lookinging at whats was available over that time at a set price the type of houses by June were far less in terms of what I wanted at the same price compared to back at Christmas so have had to borrow a lot more to get the house I wanted. In hindsight I would have been better off selling mine for less at Christmas and avoiding the huge gap increase that occured over the last 6 months.
03 August 2007, 02:56 PM
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I wouldn't worry too much as its now very much a buyers market in this area. The prices you're seeing are probably not being achieved. Mine is on for silly money and so far I've had no takers even after three months but the market in our village is being made by one estate agent, which is probably what's happening around you.
Put in some very cheeky offers (unless you look at my house in Surrey!) and you may be surprised.
Put in some very cheeky offers (unless you look at my house in Surrey!) and you may be surprised.
03 August 2007, 05:49 PM
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I already have somewhere and only managed £5k off the asking price which was basically nothing, pushed it and pushed it but the seller would not budge and said unless I agreed to what she wanted she would just carry on marketing it until she did get a buyer who would pay it. Had to give in in the end or I would have lost out. Its only a buyers market if you find someone who is desperate to sell their property like I was.
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