Why are property prices rocketing?!

[totallyfedup77]

I’ve just been reading the very depressing article below and don’t understand - we’ve just had Brexit and are still in the midst of a global pandemic. You’d expect prices to be falling if anything but according to this article, in some places they’re up by as much as 48% in a year! Why?!?!

www.dailymail.co.uk/property/article-9621715/Most-expensive-seaside-property-revealed-Salcombe-topping-list.html

Because the government pumped the market with 95% loans and no stamp duty under 500k. Because debt is exceedingly cheap. Because the government will do anything to avoid a house price crash.

Because in the long term property prices always increase

Oh yes. And also because high house values and low interest rates are the only things keeping the tories in power. If the market collapses or interest rates rocket it's game over for them.

Because in the long term property prices always increase

Yes, but not by up to 48% in a year. That’s just insanity!

I’ve been working hard for ages to buy a modest house in what was once considered a run of the mill, slightly down at heel area (but I’ve always loved it). Now the middle class hipster brigade have suddenly cottoned onto it and prices are going through the roof, no doubt made 10 times worse by the stamp duty holiday. I don’t think I’ll ever be able to buy there now - it’s soul destroying

and no stamp duty under 500k

I really think this was the stupidest policy. They pretend it’s to make properties more affordable but if anything it’s had the opposite effect as it’s led to insane price rises.

Because government policy is to do whatever it takes to keep house prices rising in all economic circumstances. So 95% mortgages are back, together with help to buy, permanent ultra-low interest rates, QE, stamp duty holidays etc etc. All to keep the bubble inflated because that benefits Tory voters who already own houses.

@totallyfedup77

Because in the long term property prices always increase

Yes, but not by up to 48% in a year. That’s just insanity!

I’ve been working hard for ages to buy a modest house in what was once considered a run of the mill, slightly down at heel area (but I’ve always loved it). Now the middle class hipster brigade have suddenly cottoned onto it and prices are going through the roof, no doubt made 10 times worse by the stamp duty holiday. I don’t think I’ll ever be able to buy there now - it’s soul destroying

we have been looking for over a year!! saved very hard to have a £325k budget, (we need min of 1 acre for our smallholding.) at the beginning of 2020 there was alot for our budget, the everything paused due to covid. so when the market started again everything was flying of, and we got priced out of the property we needed. so we went back to the bank and managed to get ourmortgage raised to £400k i knew that for £400k we shouldnt have problem finding anything....but then the property prices suddeny rose by 50k!! now we have been priced out again! a house just came on that we like we called immediately. she informed me that they have 2 viewings and she wont arrange a viewing after Monday as the property will be gone so there would be no point! im almost at the point of giving up! we are looking in Lincolnshire and surrounding areas...the price jump in these areas has been insane! a year ago for £400k you could get a large 4-5 bedroom house with 2 acres of land.....now your lucky to get a 3 bed with 1/4 of an acre! who is buying these properties for such stupid inflated prices!!?

Why? Just read an article in a US magazine where there is also a property frenzy. According to the Atlantic: Millennials are the largest generational cohort since the babyboomers, and they are now in the middle of their family formation years.

Second, the 2008 financial crisis stopped builders developing so many properties because the market was awash in foreclosures, so there's a deficit of a decade's new homes.

Third, WFH has changed what and where home buyers want to live.

Third, WFH has changed what and where home buyers want to live.

I can’t wait till everybody has to get back to the office, which I do believe will happen sooner rather than later. I think that’s another factor making places outside London (which has always been insanely expensive) completely unaffordable.

@totallyfedup77

Third, WFH has changed what and where home buyers want to live.

I can’t wait till everybody has to get back to the office, which I do believe will happen sooner rather than later. I think that’s another factor making places outside London (which has always been insanely expensive) completely unaffordable.

Don’t hold your breath - we’ve been told no chance before Jan 2022 and more likely later, and even then only on a limited basis. My partner’s firm have reduced their office space significantly and are also only allowing staff in on a rotational basis.

I may be wrong and perhaps someone in the know can comment. I thought it was because of not only the no stamp duty, but also people were wanting to escape cities due to Covid-19. I know in the USA people have bought houses without even viewing them. Very risky.

Those articles are quite misleading

Salcombe has always been a millionaires playground.

The way average house prices are calculated means that it only takes a few extra £5m mega houses to be sold to hugely inflate the average house price - and that’s what’s happening in lots of these seaside areas

There was an article in the FT a few days ago about Somerset.

The number of sales above £1m is up 92% this year compared to the same period in 2019

There are a lot of people using this as the time to downsize from their massive houses by selling to London cash buyers.

But at the normal end of the market, the prices haven’t moved very much.

A non-period property that doesn’t appeal to relocating families is the same price as it was before

But when the average stats get published, they will be up hugely, because in a town of £250k 3-bed semis, it only takes a couple of £1m manor houses to sell to ramp up the average price

*Millennials are the largest generational cohort since the babyboomers, and they are now in the middle of their family formation years.

Second, the 2008 financial crisis stopped builders developing so many properties because the market was awash in foreclosures, so there's a deficit of a decade's new homes.*

This, plus whomever mentioned the government being willing to do anything to stop a house price crash.

But at the normal end of the market, the prices haven’t moved very much.

Sadly that’s not the case where I am. Maybe we’ll all have to move to Somerset?! Flats here are not moving now, 2 and 3 beds have gone up about £90k since we were viewing them in January last year.

Supply. Demand will increase as long as we are above replacement rate for our population, but the government has made this worse as others said by creating bubbles with stamp duty holidays. But the biggest reason is that we haven't been building enough houses for 30 years. Spent a fair bit of time studying this at uni, and the ONLY way our housing sector is going to get at all sensible is by building hundreds of thousands of houses of excess a year for decades, that is the only way prices can stabilise. Governments of both colours have been told this for decades yet they have just made building building more houses more difficult, and so now for people like me in my 20s it is an utterly ridiculous situation.

Another option if you want to beat the crazy market - buy a flat! No one else seems to want one so it should be a doddle.

@totallyfedup77

and no stamp duty under 500k

I really think this was the stupidest policy. They pretend it’s to make properties more affordable but if anything it’s had the opposite effect as it’s led to insane price rises.

Depends if you're a home owner or not. It's a not a bad policy policy if you already own.

Don’t hold your breath - we’ve been told no chance before Jan 2022 and more likely later, and even then only on a limited basis. My partner’s firm have reduced their office space significantly and are also only allowing staff in on a rotational basis.

Once life gets back to normal I think firms like these will need to change their tune and fast. Most people will be keen to return to normality rather than being isolated at home, which let’s face it, is a very unnatural way to be. Also the majority of people don’t have living conditions (i.e. small houses!) that are conducive to working from home long term.

It's a not a bad policy policy if you already own.

Why would it even be relevant if you already own? My parents own their own home and are horrified by the way prices have risen so fast, as they recognize it has priced so many younger people out of the market.

But the biggest reason is that we haven't been building enough houses for 30 years.

I’m someone who really wants to buy a home, but I also really worry about the environmental impact of building “hundreds of thousands” of homes. How can concreting over countless acres of beautiful countryside, destroying countless wildlife habitats in the process, be the right thing to do? We need to utilise empty buildings and brownfield sites - building on countryside and green belt should not be an option.

@GappyValley That makes sense and gives me some hope, thanks.

totallyfedup77 Sat 29-May-21 17:27:14
But the biggest reason is that we haven't been building enough houses for 30 years.

I’m someone who really wants to buy a home, but I also really worry about the environmental impact of building “hundreds of thousands” of homes. How can concreting over countless acres of beautiful countryside, destroying countless wildlife habitats in the process, be the right thing to do? We need to utilise empty buildings and brownfield sites - building on countryside and green belt should not be an option.

Unfortunately, I don't think there is another option. By 2040, the island we live on will have another 5 million people (ONS figure). That means we have to build the equivalent of a city the size of Manchester, every two years, for the next nineteen years, to accommodate them.

Two late now, to address that population time bomb.

Hoping you can house an extra five million people, by building only on 'brownfield' sites is wishful thinking; unless maybe, all new housing was in the form of Hong Kong style 50 story+ tower blocks.

By 2040, the island we live on will have another 5 million people (ONS figure). That means we have to build the equivalent of a city the size of Manchester, every two years, for the next nineteen years, to accommodate them.

Then as a nation, how can we claim to give a damn about the environment when we’re quite happy to destroy it by building all over it?

@totallyfedup77

and no stamp duty under 500k

I really think this was the stupidest policy. They pretend it’s to make properties more affordable but if anything it’s had the opposite effect as it’s led to insane price rises.

Yes. Terrible policy that's fuelling the housing - and homelessness crisis (which costs us all through expensive taxpayer funded temporary accommodation).

It's a not a bad policy policy if you already own.
Some people want their children and grandchildren to have a stable home too. It might also be a good idea to have homes affordable for essential workers - because somebody already owning doesn't help getting teachers to teach their children, bin men to empty their bins, nurses to care for them in hospitals.

It's not just affecting first time buyers anyway. It's made stepping up the ladder harder - people who want to move from a FTB flat to a family home.

places outside London (which has always been insanely expensive) completely unaffordable.
London hasn't always been insanely expensive. Until Blair it was just a few select areas.

True though, whilst the house price bubble is a huge problem, GappyValley is right. That article references areas that were already expensive and out of reach for many long before the pandemic. People come from across the UK to London, push up prices there, then leave to do it in other areas too. It's been going on for a while now.

@totallyfedup77

By 2040, the island we live on will have another 5 million people (ONS figure). That means we have to build the equivalent of a city the size of Manchester, every two years, for the next nineteen years, to accommodate them.

Then as a nation, how can we claim to give a damn about the environment when we’re quite happy to destroy it by building all over it?

We can't.

Some people want their children and grandchildren to have a stable home too. It might also be a good idea to have homes affordable for essential workers - because somebody already owning doesn't help getting teachers to teach their children, bin men to empty their bins, nurses to care for them in hospitals.

Exactly @Tealightsandd, well said!