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

It's not surprising that a massive change in employment patterns to work from home has caused massive house price rises.

@totallyfedup77

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.

You can’t have it both ways. There’s a housing shortage that’s pushing prices up, the only way to solve that is building more. How are you going to put a smallholding on brownfield?

Who said anything about smallholdings? I don’t think anyone is planning to build many of those. More like massive housing estates of overpriced modern homes with no storage that all look the same.

It's not surprising that a massive change in employment patterns to work from home has caused massive house price rises.

I don’t believe the media reports that there’s been a mass exodus of people moving hundreds of miles from their offices. If there has then it’s rather short sighted of these people to say the least. It’s far too soon to say for sure what new working patterns will look like when life gets back to normal. If you’ve moved hundreds of miles away from the office then suddenly find yourself called back four days a week, then what?

Brownfield sites can be home to a wide range of biodiversity. Most countryside is actually in agriculture, so not as green as you seem to believe. I’m in an area which unsustainable growth and development but whilst there remains a lack of housing, house prices will remain high. It’s one of those conflicting areas, you can see the need to protect the environment but realise creating enough stock of affordable housing means building homes.

I also don’t see why companies need to make the move back to the office or why it’s unnatural. People worked from home before the pandemic. Not to this scale but people did work from home and enjoy it. Work from home will benefit some people and some people will need to be in an office.

I too wish it could all be done on brownfield sites, but I've others have said, at this point, it's just not feasible. Part of the issue is that greenbelt, which was a very specific piece of legislation to stop postwar London just sprawling like many US cities, has been massively over used. I agree we should have things in place to protect specific land that may contain unique habits etc, but the fact that it is increasingly difficult to build on agricultural land on the edge of suburbs is ridiculous. At this point we have no choice about being picky where we build unfortunately, we are going to have to build something a new large city every year just to stand still. And as we know, standing still is not an option either. The average house price in London is now 18 times the average salary, and around 8 times nationally. I would like to have a family at some point, but a lack of housing is going to make this very difficult, and as Country it is extremely damaging to have generations putting this off due to a lack of housing.

People have reassessed during Covid. Wfh will continue to some degree and people want larger houses with gardens. Where we are, nice little town in NW, houses that have been on EA books for literally years started flying 6 months ago. Most new to the market on our road are under offer within a fortnight, frequently going to sealed bids.

People with flats with no outside space in Manchester, Liverpool etc. are really struggling to sell though.

I agree we should have things in place to protect specific land that may contain unique habits etc, but the fact that it is increasingly difficult to build on agricultural land on the edge of suburbs is ridiculous.

But we need agricultural land to produce food. I find it depressing that people are so willing to sacrifice wildlife and the environment to build countless new homes - it’s very depressing. Maybe Hong Kong style tower blocks in concentrated areas (as a previous poster suggested) is the answer.

People have reassessed during Covid. Wfh will continue to some degree

To some degree yes, but not to such a level where millions of people will be able to relocate hundreds of miles from their offices like many seem to think. Many people who have “reassessed during Covid” may reassess again once the pandemic is over, cities start roaring back to life and they’re stuck in the middle of nowhere with a hellish commute 3-4 days a week.

Companies who genuinely believe working from home is more productive may want to have a read of this article...

www.forbes.com/sites/jackkelly/2021/05/26/study-shows-people-working-from-home-are-having-sex-dating-taking-naps-and-doing-side-hustles-on-company-time/?sh=375c879e444b

[quote totallyfedup77]Companies who genuinely believe working from home is more productive may want to have a read of this article...

www.forbes.com/sites/jackkelly/2021/05/26/study-shows-people-working-from-home-are-having-sex-dating-taking-naps-and-doing-side-hustles-on-company-time/?sh=375c879e444b[/quote]
It's been necessary as a temporary emergency measure during the pandemic, and it's good to continue with some flexibility particularly for people with disabilities or caring responsibilities.

However from a customer and client perspective it's been really rather shit. I wrote on a different thread about this. I'm not happy giving private information including financial to someone whilst I can hear their family noises in the background. It's also been rubbish trying to get hold of the right person and everything seems to take longer.

It's not good for social mobility and will significantly widen the gap between rich and poor. Those who have the privilege of spacious comfy homes will progress through their careers, whilst people who can't afford more than an HMO or tiny flat/house won't have equal access to the same employment opportunities.

How crap too for the young people just starting out in their careers. No vibrant work environment, no in-person interaction and natural networking with colleagues. Just stuck in their childhood bedroom or their room in a houseshare all day, everyday.

Again, totally agree with you @Tealightsandd. Which is why I don’t think the WFH trend is here to stay long term.

And to the poster above who asked why working from home is unnatural - it’s unnatural because the vast majority of humans are sociable, collaborative beings who enjoy and thrive on working in a group setting. Most people want to meet and interact with others face to face, not talk through a screen all day every day.

I hope you're right @totallyfedup77
I think the key is balance. Balance with employment opportunities spread more evenly across the UK, balance with house prices so they don't keep spiralling out of control, and balance with office work. Perhaps 2/3 days in the office, the rest at home - with extra flexibility (where possible depending on the job role) for the disabled and carers.

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

Not true where I am, house prices have jumped 27% this year on my street alone. We were going to live out out fix but even with the ERC it’s a winner to sell up and get into our longer term home now.

This is a property bubble, inflated by governments desperate to keep the ball rolling. The pin to pop it (and probably the stock market too) is rising inflation. Inflation is definitely rising and the only way to control it is to raise interest rates. That, along with many more houses going on the market when mortgage forgiveness ends etc... means that anyone would be mad to buy now. 2022 will probably be when the shtf.

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

So not true, every house from the smallest I bed modern terrace has increased massively, it’s not just unique period properties that have increased at all, we are in the middle of a massive housing price boom nationwide, to say 3 bed semi’s have not increased in price is ridiculous.

I'm in a "normal" apartment and bought before the price crash (2007? Ish) at the very highest point
Just had it valued at 5k over what I paid for it then. And there's nothing on the market nearby, everything is sold from apartments to houses! It's bonkers. The estate agent basically told me not to move as I have a private garden and a lot of room and that unless I go into a penthouse or 3 bed, it won't match the space I have now

People with flats with no outside space in Manchester, Liverpool etc. are really struggling to sell though.

On the bright side this should make home ownership achievable for people with limited funds, even if it isn't their dream home.

I live in the countryside. I work 4 days a week from home (in a creative industry job - glamour but low paid) 100% of the time. I spend a lot of time in the garden. We eat in restaurants or do theatre-type stuff very rarely. We could afford it, but it's a hassle as it's so far away and to be honest the quality is medicore. Local schools are poor, really poor. My entire salary (and some) goes on our child's private school fees, and even that school is a 50 minute drive away.

My husband grew up in central London. His family still live there. They eat out frequently, seem to be constantly out and about, eating out with friends, doing stuff. They live a city-centric life. But they are also talking about moving out of London, post-Covid.

Seriously?

Even if they do it, I think they won't last. They will miss the culture, the buzz, the endless distractions. Their children are still young. Will they be happy with the very limited schooling options? Even if they do move, withing 5 years I think they will be back.

I really do think this is a Covid thing. Flats will be en vogue again in 5 years.

I don't think the government has had much to do with the (frankly daft) price movements on property but the freedom to work remotely has changed a lot of people's mind sets on what's feasible. I live in a very pretty estuary village on the Devon/Cornwall border, and have done for 30 years. All my (freelance) work was from London, so I used to drive to Exeter twice weekly and be in London by 10.00 am, and travel home after 7:00 pm for the cheapest fares. I worked ridiculous hours for eight months per year and took the summer off. Very suddenly, the world has discovered our village, which doesn't have any famous restaurants or must-see destinations, and they are buying every property that comes on the market as soon as it is listed, and put it on Air BnB the next week. Young people cannot compete on price in this race. I watched the village I grew up in fall victim to second homes and get hollowed out from the 1960s onwards, so that the only people living there between October half term and Easter were well over 80 by 2005. I am really quite angry. It's not that my son won't be able to live here, because his chosen profession means he won't want to for the next 20 years, he will have to go where the work takes him but it is a tragedy for the butchers and bakers and electricians and plumbers that every community has to have who will be shifted out to make way for the incomers. Who will reinforce a service-based economy. Which is shite for year-round properly paid jobs.

Lots of places outside London have excellent state schools @HugeBowlofChips. I imagine most people will be taking that into account when they move.

Life is not all about school and exam results, though it sometimes feels like that's all that matters on MN.

Stamp duty holiday, 95% mortgages, the near shut down of the market last year. Additionally, those who will now be fully or partly working from home have realized they need more space - especially if there's more than one of them. There is also a new desire for gardens.

Add in a sprinkling of optimistic home owners who perhaps weren't planning to sell yet but want to take advantage of inflated prices and you arrive where we are now.

It's awful.

I've been trying to convince DH for 2 years to upsize and he was having none of it!
He then decided in March to agree!! 🙄

The reason? After a year of working from the kitchen table he wanted his own office space and bolt hole.

He will only be wfh 1 day a week but wants his own space.

The detached houses we could have comfortably afforded 2 years ago are now too expensive by about 100k!!!

So we've had to compromise. But I'm still pretty annoyed he didn't agree even a year ago!

I’d echo a lot of what others have said, these are the reasons I think they’ve gone up:

• Under supply of housing
• Too much quantitative easing plus furlough has financially benefited quite a few (yes some haven’t but it’s made the comfortable more comfortable).
• London flight
• Stamp duty kicking off a got to buy now feeling

And for those who are saying people who currently own benefit, the only home owners who benefit from house price inflation are downsizers, inheritors or buy to letters looking to offload and to some extent people with poor LTV who are desperate to move.

The math:
Let’s say I own a house that I bought for £300k in 2020, my house in 2022 is worth 20% more 🥳, it’d now sell for £360k, I’ve made £60k! Unfortunately the houses I’ve had my eye on since I bought my current house have also increased by 20%, they were £350k in 2020, they are now £420k.

If their had been no house price inflation I would have had to find £50k to upgrade. But as it’s 20% I now need to find £80k to move. The double wammy is the interest rate on my savings in the last two years has been crap despite high inflation usually resulting in the BOE increasing interest rates. The govt would rather devalue the currency and print more money than raise interest rates, after all imagine how much they will have to pay back on all the debt they are in if they raised interest rates.

Apologies, Rant over.

I really do think this is a Covid thing. Flats will be en vogue again in 5 years.

Totally agree (though think it might be sooner than 5 years).