The main problem with the model is that the biggest driving variable by correlation is not wages but availability of credit. Then price of credit. THEN wages.
But for those of us invested in this system, there’s no way I’m going to lose on the poor ‘value’ in these exceedingly expensive assets we’ve acquired. No way!
I look at my house as a place live in. Pay it off asap and get out of mortgage. Any future value is out of my control. I am amazed my friends have entered the BTL market recently, with highly leveraged multiple houses and they think ther are rich already.
Actual sold prices from UK Land Registry: for Plymouth and West Devon, average house prices have fallen 17% since the peak in 2022. The data is always about 6 months out of date. I'm told by local Estatge Agents that buyers have disappeared and some are planning another round of reductions in September.
2022, was a bit of a spike though, not truly representative. The stamp holiday meant that people just slapped that saving on the cost of the house and also that lots of people felt more wealthy because of lockdowns. The correction was definitely necessary! I wouldn't see it as a downturn, more like a bump on the steady rise.
We haven’t just seen the end of a bubble… we have seen real time inflation and interest rates reflected in activity… you are seeing the bottom end of the most ridiculous UK property “actual” bubble this country has ever seen!
Great vid as always. You touched on this a little bit, but I really think we need to stop labelling house price inflation as "positive". It's the single biggest problem in our society, and in the majority of cases we're only getting richer in a very shallow and shortsighted interpretation of paper wealth. Property is a money black-hole. We're living as slaves to our mortgages, a house is an unproductive asset, and house price inflation is likely to be the main reason we have a low birth rate. You can't leave your house to your kids if you could never afford to have kids, and if they have to wait for you to die at 90 before they can get on the housing ladder, it's hardly beneficial.
To be it seems stupid that people complain bitterly when the price of a can of beans goes up 20p, yet when the most expensive thing most people ever buy goes up £20000 you get headlines in the likes of the Daily Express along the lines of "Great News. £20K bonanza for home owners (many of whom are anything but: they just pay £18K mortgage a year meaning they effectively live in the house for free).
Depends on the perspective. Roughly 65% of homes are owned by their occupiers, whether owned outright or with a mortgage. For this group, house price inflation *is* a good thing; either because it directly increases net worth for no input, or because it reduces LTV on the next remortgaging cycle.
@@ScottishJazzman but isn’t this just on paper. (Psychologicaly you feel rich) If my house has gone up 20 grand, I sell it, I still need somewhere to live but everyone else’s home has increased by 20,000 plus. Now the only way to realize any profit is to sell, and buy cheaper. But the other point point is when you get old, sick and are put in a nursing home, you can’t pass that down to your kids. It’s sold and the funds given to the nursing HOME. And a nursing home weekly fee will chew through 300,000 grand very quickly. And that’s about 1,400 pounds a week. As an ex NHS nurse I remember when homes used to be past down to the next generation when care was affordable.
I think perhaps you misinterpret the mathematical meaning of positive and negative. This does not automatically mean "good" and "bad". If inflation>0 it is positive. The ">" symbol means "more than". If inflation
If house prices outstrip someone's years earnings by 6, 7, 8x (sometimes more) then they are too expensive. Our housing stock is also very old and not energy efficient. We need prices to normalise
It depends. What is positive for some will be negative for others. As a homeowner I am concerned about the value of my asset, so I don't want it to fall. However, that doesn't mean that I want it to skyrocket, because that would make it very difficult to sell, should I wish to do so at some point in the future.
@@tancreddehauteville764 If you have a mortgage, you definitely don't want your house price to go down but if you have a mortgage free house, and only own one property, it would probably benefit you if all property lost even 50% value because this would not negatively impact you (unless you want to secure loans or pay for a nursing home) but it would massively help future generations. The one caveat to that is if you work for a bank or property related industry and hold investments or pensions that are tied to property prices in some way. Otherwise, if you moved house and all property had lost 50% of value, you would have lower moving costs and the younger generations would be able to get on the housing ladder. These insane, disgusting far-right anti-immigration riots are largely due to government and media misdirection which has built up since the 2008 financial crisis (when house prices were already massively overvalued). These people are angry at being unable to make a decent life in the UK and instead of blaming government policy and banks, which have fuelled house price growth, they are convinced it is too many immigrants have pushed up the prices. Because, it seems they all appear to believe that refugees can all easily afford a £280k house.
@@tancreddehauteville764 They're a positive for the ultra rich (£10+ million) and them only. Some average home owners might think prices going up is good for them, but really it's a veneer of a good thing. They're shooting the next generation into the foot, and allowing a stagnant wage to be turned into a covert falling wage hidden behind higher house prices, also hurting everyone. Asset prices going up is hurting everyone but the people who sustain themselves off the interest of their money alone. Anyone who has to work to gain money is being deeply damaged by this.
@@tancreddehauteville764exactly also many people ignore the fact if the younger generations who've not yet brought a house due to just entering the work force & those who are younger who are still in mandatory education or are yet to be born. When my parents brought their 1st house it was 9k then it quickly rose to 25k for their second home they upgraded to a semi detached in the East midlands. Fast-forward to today that 25k house is now 270k+, wages haven't kept up & probably won't so imagine if we have another increase like that, even less of the next generation will be able to afford to buy a house not to mention even rent. It's a race to price out the common working - middle class folk
It's interesting how HOUSE PRICE INFLATION is or was seen as great, but general inflation is seen as terrible. How much would a McDonald, or a cup of coffee be if general inflation followed the same as HOUSE PRICE inflation? One house sells for 175,000 then a month later a similar house in the same street goes up another 10,000. I think the estate agents also play a part in this. Nobody's salary has jumped 10,000 in one month. Affordable houses imho are a myth. It's some kind of scam of part ownership. But it all seems fake, if I make money on selling my house, it only means everyone else's has increased by the equivalent amount. So it is only noticeable when I downgrade or they sell it when I enter a nursing home. Finally, as you said, the UK government will Artificially pump up prices further. Homes seem to be for profit, and not families.
The problem is people with money buying houses as investments, buy to let, not as just somewhere to live which most people need. Also the tories sold off council houses in the 1980's often at a big discount to the market value. Also we've got big property developers sitting on loads of land with planning permission, but not actually building any properties, just waiting while the price of land goes up. The government should put a time limit on the planning permission, and if the developers don't build any homes before the time limit ends take their planning permission away. Also start investing in building more affordable council houses that would all help to suppress the house prices in general
@@fredatlas4396 I totally agree. It’s as though the government (previously)Labour and Tory were happy to cause a reduction in the availability of housing, knowing that it nudges prices higher, and the government also get their tax cut too. If developers don’t build within 1 year the land should be returned to the country. Possibly the land could be sold off to help people do self builds. Basically going to a self build company and they build it for you. Which is supposed to be also cheaper. But I think the banks et al will try to push for 35 years mortgages as a norm to help “affordability”. Totally spot on about landlords and properties as “investments”. Also the creation of AirBNB helped it along. The kids inherited a home, and instead of selling it as we did 30 years ago, it’s kept as a future pension pot and an income stream for today, as it’s either let out or switched to an air BnB, reducing homes for families further.
The bungalow opposite went up 28% in 27 months (between 2021 and 2023) without anything being done to it. The main problem is that trends in house prices move over decades rather than years. The house I bought in 1989 didn't go up at all over the next ten years. In fact in 1995 I couldn't sell it at a 20% loss. By 1999 affordability had doubled and FTBs were buying better houses. Then Gordon Brown encouraged BTL and backed it up with 10x salary Liar loans and the infamous Northern Rock 125% LTV mortgage. When it all went wrong in 2008 they slashed interest rates so 10 x salary was actually a good idea.
Simple, because a house is an ASSET., while a cup of coffee is a consumable object that is made to be drunk. That's the fundamental difference. You're right when you say that there is no such thing as affordable housing, for the reason that, in a free market, everything is priced at the highest point it can be in order to generate a sale. Housing is no different. Given that housing is constantly in high demand, prices are bound to be high. That said, it's the same with rentals. The only exception is social housing that is directly provided by the council, but even in these situations, councils will always seek to increase rents by as much as they can legally get away with. Even when you own a house and pay off the mortgage you will still have to pay rent to the council in the form of council tax; in effect council tax is a form of rent, given that it's assessed on the valuation of a property.
Indeed. In a normal healthy economy residential home prices should fall over time. It is after all a depreciating asset, it's aging, it's more expensive to maintain... In such a case I wouldn't be expecting my 50 year old house to be worth more after I'd lived in it my entire life, I'd consider myself very lucky if I could even break even! It''d be much like managing to sell a car you've accumulated miles on for the same price you bought it for.
There are also social changes having an affect as men no longer wish to marry western women or have kids with them. The marriage rate is very low and deaths exceed births for the first time. More than 50% of women aged up to 30 are single, unmarried, and childless. So people now face having to buy alone and not with a partner as long term relationships have collapsed too. In theory this creates demand for more houses, but in practice individuals often cannot afford to buy and have to rent. Often not having enough income to rent a whole property or even a room in a property. It’s hard to see how prices rise until the interest rate drops to 3% and a five year fix to below 3%, which is probably the end of 2025. The house building is not going to happen as we just don’t have enough skilled workers, unless more are imported and put more pressure on housing.
@@jabberwockytdi8901 Whatever that means. But the part about men and women not getting together, and the low birth rate are facts now, not projections. Of course no one knows what will happen exactly to mortgage rates but almost all analyses including the bank of England forecast steady reductions over the next few years. Obviously if inflation takes off again then who knows
If real average house prices have not increased since 2004, then why people believe house prices are expensive?? Could it be that average real wages have gone down compared to 2004 and the general cost of living has increased that make house prices appear expensive?
Or could it be people wanting a three beds house to live in single? In the past, the house was paid by a couple as a family with kids. Now, every teenager dreams of a house with at least two beds to get away from parents. Obviously, they can't afford it, by they add to the people whining about "housing crisis".
Average wage has increased significantly, over 20% since Covid, but with inflation your money doesn't go as far, so yes, we're currently earning less now than we were in 2004
As long as the UK has sky high immigration, house prices will be pushed up by landlords knowing demand will go up while salaries are suppressed by salary competition, so house prices are never going to get better for salaried workers.
Loyds bank has 80 thousand buy to lets, it is quite a big landlord. Other financial organisations are buying up the BTLs as individual people like you and me find new laws make it impossible for them to continue. We will have to stay poor while the big banks get rich
Inflation-adjusted UK house prices (or values) on average over the last 20 years are unchanged. Sadly, wages haven't kept up due to high levels of immigration & off-shoring.
I know it’s probably the industry-standard terminology, but I wince at house price increases being described as the “optimistic” scenario (even as a homeowner). Not that a crash would be good either.
What you and most of society need to understand is that the whole monetary system is built on debt and the debasement of currency, by central banks just constantly debasing their currency, through money printing, house prices and other assets seem like they are increasing in value, but in real terms as was pointed, they haven't. The debt based system, we have now, will not allow house prices or assets to crash, as the wealth illusion would be burst and the whole system exposed. The traditional theory of Supply and demand, now, has very little to do with house price inflation
Pre covid house prices were rising below inflation my guess is that is where we will go back to. First time buyers are paying 37% of income atm that will go back to the long term average. There are places with problems in areas of high demand and restricted supply outside of that it’s a problem a lack of public / subsidised housing. Also when you say houses are over priced try paying for a small extension you might realise houses aren’t cheap to build 50% you are deluded.
I live in a White Flight area in the North West, most of our house price growth is fuelled by Londoners moving up north to get away from knife gangs. Each home viewing still gets 30+ prospective buyers... and this is supposed to be to be a flat period? I can't imagine what it will be like in 2027.
@@tancreddehauteville764 Liverpool and it's surrounding area is a big place, it's not all bad. The people that move here say they're priced out of "Nice" areas down South so move to "Nice" areas up North. I'm not going to tell you some of the stories they tell me, it'll get "political" and probably taken down. In my village there's so many Southerners I'm pretty sure they're going to change our local accent within a decade.
@@TheLiverpoolDeltamost Londoners move to north Kent (where I am) and south Essex, for cheaper homes in lower crime areas, and can retain their London jobs via commuting times of under one hour. Kent always was an exile for Londoners (my Dad came from the East End) but a real increase in the last 10 years. I get that a decent number have also gone North, to the Liverpool area as you say, and I had friends who went to the North East. Only been once to Liverpool, went into downtown pubs, folks heard my (London-ish) accent and were so friendly, I had a great time and plan to go back. I can see the appeal from a southern viewpoint, plus the lower cost of houses of course.
@@TheLiverpoolDelta I'm well aware that parts of London are a toilet. I'm in Berkshire and even here things are getting worse, but if I had to move to the NW it would probably be Cheshire, or probably Shropshire, where my money would go further.
Noboby is running to the North. House prices have made great gains since 1985 and nobody was running up north. Crime, poor schools, grime, poor infrastructure notably the train service and inadequate health care. People move up North to live mortgage free in retirement as they can no longer move to Spain for example. A good indicator of a desirable area is how many visitors/tourists do you get. Not many in the dreary North which is a default move.
Ramin, can you ever compare the forecasters success by looking at previous forecasts and their accuracy. There is a lot of forecasting but who has been the most accurate ?
why do you class a house price increase as optimistic? unless you are invested in property, higher house prices don't matter to people who already own a house. As a first time buyer I class house price decrease as optimistic.
When you print money, asset prices inflate. Gold- record prices, stocks- record prices, house price will go the same. The extra £1T created during Covid will settle on house price growth. 10% year on year will continue in my opinion.
Money printing is a drug that no government can get themselves off of. Once they've started there is simply no stopping. All fiat currencies without exception eventually become worthless.
UK houses will soon be seen for what they are - liabilities not assets. When you own a home, you have to continually spend to maintain & develop your home or watch it's value reduce. I bought our current outer London home in 2004 for £287500 and it's now worth about £850000. Fantastic is how most youngsters would view things but I've spent £120000 on development, £100000 on mortgage payments, £25000 on council tax, so add those on and account for inflation and maybe I've made a real gain of 2%pa, which I'd only see if I downsized, and stamp duty on any new property & transaction costs would whittle that down further. The supply vs demand argument is clearly nonsense as London's population has increased by 2m since I've been here.
It's a home first, and an asset second. You could have paid 200,000 to 300,000 on rent over the same period for the same house and have nothing to show for it. It's a terrible investment of course, but the problem is you need a home.
Building a lot of affordable houses doesn't cause price drops across the board, that depresses the number of medium to large houses being built so the cost to move from a 1-2 bed young couples house say to a 3-4 bed family home can remain high.
I bought my house approximately 20 years ago, it was 8 times my salary and rates were between 5 and 6.5% Even then it was difficult to find houses that needed modernisation in order to get a good price because most were sold outright to builders who were renovating them. The housing market crashed shortly after and I couldn't sell it for anywhere close to what i paid, and couldn't remortgage either. I endured what we now call a cost of living crisis for many years. If you're willing to save early, go without, and have children later in life then it's possible. The biggest danger is always volatility in the market and the economy, which many of my younger friends have discovered the hard way after knowing too many years of low interest rates and not bothering to make a substantial overpayment at the end of their initial 5 years. Definitely easier if you have wealthy parents. 5% base rate isn't high, and offers elderly some additional income on the savings. I'm now saving to help my children, provided they retain a sensible attitude to personal finance 😂
The UK is fine. Young couples can still afford houses just not in the most desirable areas. Major cities in Canada or Australia make even London look cheap.
@@sma5605 there is a huge gap in prices in north and south yes. Very very difficult in the south. A two bedroom flat without a garden is the price of a four bedroom with huge garden, double garage up north
My belief is that house prices will either stabilise or fall in parts of the country where prices are currently very high, i.e. London and the South-East. In other parts of the country, such as the Midlands or the North-West, prices will continue to rise. Affordability is an issue, but it should be remembered that the trickle down effect from large inheritances is helping many middle class families to provide large deposits to young people within these families who wish to buy a home. This is what has so far prevented a house price crash in the wealthy south-east.
Hi @tancreddehauteville764 thanks for your comment. That's the trend that we're seeing right now i.e. the expensive regions such as London & the South East are rising less or falling. Thanks, Ramin.
As someone who lives in the North West very central near the M6 with access to Manchester/Liverpool/Preston all within 25/30 minutes commute, I've met quite a few southerners who have moved away from London/SE. Your average Salary here can go much further but it's still not cheap and my house has appreciated £56k in 4 years so the market is definitely moving here.
Ramin , just to be picky - buyers are not "borrowing" 6 or even 10 x income. The house prices maybe 10x income but the average mortgage max is 5x income. Good video.
Indeed, my house is 6.6x my income, but obviously I've borrowed between 3x and 4x due to having had a different house previously (>4x) and a house before that. Also if you have dual earners that helps a lot as well.
Hi Ramin, nice video. A suggestion for an additional video: It would be interesting to have you look at the historical performance of those projections by others: you show a long time-series of projected increase/decrease in house prices - what did the prices actually do? How good are these projections? I´m guessing not great but maybe I´m wrong. A similar exercise could be done for stock-market projections etc
House prices going up, because mortgage terms are increasing by decades, and the general shrinkflation of the size of house you get for the same price, over time, is not to be celebrated. It's not a very meritocratic system if i have to rely on my parents, to lend me 50k, to even be able to go into 40 years of debillitating debt, just to have a tiny place to live.
The UK's inflation rate is 2.9%, while the base interest rate stands at 5%. How long can the base rate remain more than 200 basis points above inflation? Could we see a rapid rate cut, similar to the swift hikes we've experienced?
‘You will own nothing and be happy’ We’re on this path… Interest rates will decrease, inflation will increase as government debt needs to be inflated away and QE and other ridiculous policies will be introduced to keep markets propped up.
Like most markets, property prices are driven by supply and demand. Not enough homes for a growing population means poor value. 3 years of no growth at a time of high inflation has (in real terms) brought down the relative house prices.
Logic would dictate you are correct. However inflation has been higher than wage rise, the GPD is manipulated, the high demand boost prices up especially when stock available is low. First time buyers are often pushed to purchase new build, and generally new builds are 10% more expensive than older house and with smaller space. Non of these give a good starting projection for new buyers. House prices up in areas with better schools. The average person has very little savings. Urban areas are majorly forgotten by governments. Still, the prices will keep going up. You have plenty of corporate buyers pushing prices up. There is a reason why over the years, the yearly salary multiple for a mortgage, has increased, and will continue to increase.
For me the most important factor in the next few years will be what Labour do with the Inheritance Tax, Buy to Let and CGT. If they bring in very signifcant and poorly considered changes to these areas, it could result in the biggest shift in house prices we've seen in a very long time. Having huge sums tied up in a fixed asset could become suddenly a huge risk depending on factors such as age. Especially when you consider a studio flat in a place like Hounslow means you're already on the threshold of Inheritance Tax if single and without children. Therefore with fears of loss through taxation, or in the case of buy to let, risk of losing control completely of a property if rental reform is too unbalanced, lots of properties could suddenly come onto the market as owners offload second homes or downsize their main home to protect their wealth. Let's hope any measures introduced are sensible.
Hi @alexstone1492 as you suggest the biggest falls have been where house price to income ratios were highest i.e. the least affordable places. Thanks, Ramin.
@@Pensioncraft there were few months when only buyers who could transfer their low rate products were buying. Now the prices have corrected down there are more buyers.
There are many baked in economic drivers that push house prices up, including government policy, banks, investors and vested interests in house selling e.g. estate agents. However, the idea that house prices always go up is a fallacy. Ultimately, prices are driven by affordability and if you look a little further forward into the future, say 10 years, then we have millions of millennials and gen z who are priced out of housing even at today's prices. And one thing is for sure, these millions of people will definitely find housing. So house prices have a huge medium term problem. The answer isn't just to build more houses because this doesn't affect affordability. The obvious outcome is that one of two things will happen; either house prices will come down significantly or they must remain largely unchanged and wages need to increase significantly. Governments, banks and vested interests will all wish to see the latter, however it is no easy feat to achieve.
Housing is still expensive, especially in comparison to UK equities. That doesn't mean it can't get more expensive, but anyone expecting a major bull market from this point is likely to be disappointed. I think over the next 15 years there'll be a sea change where the automatic vehicle od investment for most people is stocks rather thancproperty. Plus, no one wants more expensive housing. It just means as a country we pay more for the same thing.
Hi @evilzzzability housing is still very expensive in most UK regions, as you say. Personally I like the liquidity of financial markets and the high return on arse (RoA) because you don't have to fix your global index fund's radiator at 2 in the morning. Thanks, Ramin.
on the forecast map they should have rain for areas where there is high growth - higher house prices are bad for everyone, its just that most people are too short sighted to see it.
I feel like non of the standard economic indicators actually impact house prices, as when house prices are higher houses are still snapped up just by corporate or foreign buyers instead.
If they had any sense they would put a large chunk of house price into the inflation basket. At the moment there is actually positive feedback (not a good thing as any engineer will tell you) in the system. If a landlords BTLS are shooting up in value they won't be bothered about increasing rents so inflation is deemed to be low so the bank rate is kept low. If anyone wants evidence from 2009 to 2011 I rented a property which eventually sold for £400K for £850 a month. That was trough a lettings agency so the landlord was happy to get a return of less than 2.5% while prices recovered from 2008.
how can house prices be driven by wages when house prices are outgrowing wages in real terms every year as time goes on. That's why there's an affordability crisis.
I dare say you will remove this comment but you kind of predicted continued price growth on the UK housing market 2 years ago and regardless of fudged figures, the market is in the doldrums.... lack of viewings, lack of offers and lack of demand from those who can afford large houses in particular..... May I remind you that all these asset prices have been pumped by phoney printed cash and when you go through that kind of era the party normally comes to an end with an almighty burst.... The correction that was badly needed in 2008 was deferred due to QE.... it has been incessant since particularly following the covid debacle and something is definitely going to break.... I cannot believe that you continue to ignore that elephant in the room....Asset prices have not been allowed to correct organically and there will be a huge price to pay for that...
Best possible item to speculate on is surely a necessity. The UK needs pop growth to pay for pensions. House prices will continue to rise, prices increase and inevitably mortgage durations, the cycle continues.
The old go to bed smiling about their house price appreciation. The young go to bed hoping prices fall so they can finally buy & start a family (and have what the old people are smiling about). Sad times.
at 14:10 in the video, you say that the new Help To Buy scheme will artificially inflate the low end of the market, but because of increased supply of these artificially inflated HTB properties... that should push down prices... doesn't make any kind of logical sense.
You say mortgage rates are falling, but we have still gone from an 'era' of very low interest rates... to a new 'era' of higher interest rates... they are not going back to what they were... therefore asset prices including property have to re-adjust to this new era of higher rates... prices will come down. (Also, if we do see this global recession in 2024/25 - Sahm Rule - then house prices will come down)
It doesn't look good. With Labour in power and the Fed's recent decision, I believe investing in UK houses makes zero sense. A huge number of property "investors" will go bust, and this will release those properties on the market. That's not bad at all actually🎉
It's fine if the property has decent cashflow and you aren't leveraged. What is over is landlords buying 30 properties using the banks money. Those guys are in serious trouble.
@@Paul-zu2hf It's not serious trouble, but life-changing trouble, the one that you don't wish on anybody. It's really going to the level of having it all to scraping food from the food bank...I have seen it...
We haven’t just seen a saggy bubble… we have seen real time inflation and interest rates reflected in activity… you are seeing the bottom end of the most ridiculous UK property “actual” bubble this country has ever seen!
Labour wont achieve their house building targets , even for “ugly” homes. Local opposition is too powerful. Combine that with small majorities it’s a big challenge. Hundreds of houses per day, every day of this parliament needs to be built and they would need serious penalties for local authorities not doing enough.
Obviously you dont know what is comming if you come with all this statements...a lot of people will come out of fixed mortgages and will struggle to keep the payments up...high inflation and economy slowing it paints a better and more realistic picture...talking up people to buy now and looking at price houses increasing as being a positive when is already overinflated it makes me think you dont know what you're talking about...
Yep urban 15min city hell hole ‘living’ will be the way forward under the WEF labour government, all rented nothing owned, oh and you;l be happy apparently!
Aren’t most homes in Europe haunted? They’re so old laying on ancient ground. It makes for some serious case studies. In other words, what makes a haunted house a tourist attraction and if so what is its worth because of this.
Labour want not just 1.5 million houses, they want 1.5 million affordable houses that meet net Zero requirements. Building a 3 bed net zero house costs £400,000 to construct. Is that affordable housing??
Yeah, made me shiver too. The Don draper at incogni missed this. Maybe they have a “Oven ready” setting too, perhaps their fee on the side of a large vehicle too !
I got to the point where "wages" and I gave up. Nothing in the house market driven by wages. You are putting the cart before the horse. Sure, a mortgage is driven by wages and the lender's function of multiples but ..... ...the whole system is driven these days by deposit. So where does the deposit come from ? Not from mama and papa But from grandma and grandpapa If you have to 3rd generation income, you cannot earn enough to fund a deposit. Andy Johnston - investment bank trader, economist, statistician, pauper before, left nothing by any family, homeless in London aged 16, sponsor of many
If the speculation about the labour party rebanding properties for council tax is true, you can kiss goodbye to your hypothesis. The housing market, along with the UK economy, will collapse. I sincerely hope it is just speculation.
Even if anything like 1.5 million houses are built, we have open borders and a rapidly rising population. Therefore demand will mean the housing shortage continues.
Hi @Wilson-ee6bf that's true house purchases are often leveraged. However, in the UK a surprising fact is that _more_ houses are now owned outright rather than being owned with a mortgage. The percentages from the 2021 census are - **32.8% owned outright** of households (8.1 million) owned the accommodation they lived in outright, an increase from 30.8% (7.2 million) in 2011- **29.7% mortgage or shared ownership** (7.4 million) owned their accommodation with a mortgage or loan or shared ownership, which is a smaller proportion than in 2011 (33.5%, 7.8 million) - **20.3% rented privately** (5.0 million) rented their accommodation privately, up from 16.7% (3.9 million) in 2011 - **17.1% social rented sector** (4.2 million) were in the social rented sector, for example through a local council or housing association; this is a smaller proportion than in 2011 (17.6%, 4.1 million) Thanks, Ramin
Sorry but ‘GDP up’ does not reflect the GDP per head being down significantly, so there is less £ in everyone’s pockets. Also Bank of England being idiots and not reducing interest rates by more than 0.25, and then late as usual will have a downward if not recessionary effect on our economy. Just look at detail of ONS on prices, the only significant and sustained increase in prices is on rents and mortgages, this also represents around 35% of the total Index, and is a lagging indicator. If interest rates went down cost of living would go down. Additionally the Govt have just increased public sector workers pay by a minimum of 5% and doctors up over 20%. This is inflationary, not to mention the National Debt which no one wants to talk about or address…. All of this and new laws for Landlords means the housing market is and will continue to be a mess, which only the rich will gain from..
I disagree that house prince to income ratios should mean revert IF you look at individual incomes, as increasingly householdsa are dual-income. Unless you're already using household income, rather than individual?
UK have no export grow so hausing the only source of economic grow. That is since 2008 financial crash nothing change for UK since then. Housing Housing and Housing even more after brexit. Off course in order to make sure that housing is needed UK need more and more mass immigration.I do understand that UK voters vote against mass immigration. However is mass immigration will stop the housing economy may stop and then another housing crash may come and politician wants to delay that us long us then can.
The unfair house system is supported by youngsters who stubbornly want to live in the UK. We decided to use our deposit to buy a 5 bedroom house in Japan (no need for a mortgage) and it was a game changer for our little family.
Number goes up, so if have one or mores houses - you’re set for life; if you don’t have a house - lol your poor & gonna stay poor forever (Sorry that’s how it felt buying my first house with my wife at 35 - 7 years ago, I dread what the market is like now)
Nonsense. Renting is cheaper when rates aren't zero. If you invest the difference sensibly you'll be way better off than owning a home. House prices are stagnant over 20 years, add in maintenance costs and mortgage interest and you're well down. Ask anyone right now that owns a home and is complaining about how much it costs to fix their leaking roof. Owning a home is just a lifestyle choice because landlords are mostly terrible people.
@@Paul-zu2hf Errm howd you work that out ? landlords have to take more in rent than their financing costs to make a profit . And even if renting was cheaper , what happens when your income drops 30-50% when you retire and rents keep going up...... Was different when you could stay in your council house at reasonable rents, but Maggie put paid to that.
@@jabberwockytdi8901 not all landlords are leveraged. The ones that aren't have much lower costs and rent at more competitive rates. Leveraged landlords are finished. My rent is significantly less per month than a mortgage on the same property. Even with a pretty decent deposit. And my rent is practically the same than the interest portion of the mortgage. Renting is less money per month AND the same dead money per month. Then factor in maintenance if I owned....huge difference. My landlord isn't leveraged.
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The main problem with the model is that the biggest driving variable by correlation is not wages but availability of credit. Then price of credit. THEN wages.
UK houses are overvalued and offer poor value for money. This comes from a home owner.
100%👍👍👍🇬🇧
Not only hugely overvalued, but probably the worst quality in Europe, including Eastern Europe....
But for those of us invested in this system, there’s no way I’m going to lose on the poor ‘value’ in these exceedingly expensive assets we’ve acquired. No way!
@@j.j.911 Unfortunately all invested in UK housing will lose big time. Less so in the North. The SE will be a mayhem...
I look at my house as a place live in. Pay it off asap and get out of mortgage. Any future value is out of my control. I am amazed my friends have entered the BTL market recently, with highly leveraged multiple houses and they think ther are rich already.
Actual sold prices from UK Land Registry: for Plymouth and West Devon, average house prices have fallen 17% since the peak in 2022. The data is always about 6 months out of date. I'm told by local Estatge Agents that buyers have disappeared and some are planning another round of reductions in September.
But there are barely any jobs down there right?
That was all to do with the pandemic. Much more realistic now.
2022, was a bit of a spike though, not truly representative. The stamp holiday meant that people just slapped that saving on the cost of the house and also that lots of people felt more wealthy because of lockdowns. The correction was definitely necessary! I wouldn't see it as a downturn, more like a bump on the steady rise.
We haven’t just seen the end of a bubble… we have seen real time inflation and interest rates reflected in activity… you are seeing the bottom end of the most ridiculous UK property “actual” bubble this country has ever seen!
Great vid as always. You touched on this a little bit, but I really think we need to stop labelling house price inflation as "positive". It's the single biggest problem in our society, and in the majority of cases we're only getting richer in a very shallow and shortsighted interpretation of paper wealth. Property is a money black-hole. We're living as slaves to our mortgages, a house is an unproductive asset, and house price inflation is likely to be the main reason we have a low birth rate. You can't leave your house to your kids if you could never afford to have kids, and if they have to wait for you to die at 90 before they can get on the housing ladder, it's hardly beneficial.
To be it seems stupid that people complain bitterly when the price of a can of beans goes up 20p, yet when the most expensive thing most people ever buy goes up £20000 you get headlines in the likes of the Daily Express along the lines of "Great News. £20K bonanza for home owners (many of whom are anything but: they just pay £18K mortgage a year meaning they effectively live in the house for free).
Depends on the perspective. Roughly 65% of homes are owned by their occupiers, whether owned outright or with a mortgage. For this group, house price inflation *is* a good thing; either because it directly increases net worth for no input, or because it reduces LTV on the next remortgaging cycle.
@@ScottishJazzman but isn’t this just on paper. (Psychologicaly you feel rich) If my house has gone up 20 grand, I sell it, I still need somewhere to live but everyone else’s home has increased by 20,000 plus. Now the only way to realize any profit is to sell, and buy cheaper. But the other point point is when you get old, sick and are put in a nursing home, you can’t pass that down to your kids. It’s sold and the funds given to the nursing HOME. And a nursing home weekly fee will chew through 300,000 grand very quickly. And that’s about 1,400 pounds a week. As an ex NHS nurse I remember when homes used to be past down to the next generation when care was affordable.
Well said!
I think perhaps you misinterpret the mathematical meaning of positive and negative. This does not automatically mean "good" and "bad". If inflation>0 it is positive. The ">" symbol means "more than". If inflation
If house prices outstrip someone's years earnings by 6, 7, 8x (sometimes more) then they are too expensive. Our housing stock is also very old and not energy efficient.
We need prices to normalise
We need salaries to get back to what they were, in real terms, twenty years ago.
Higher prices is not a positive
It depends. What is positive for some will be negative for others. As a homeowner I am concerned about the value of my asset, so I don't want it to fall. However, that doesn't mean that I want it to skyrocket, because that would make it very difficult to sell, should I wish to do so at some point in the future.
@@tancreddehauteville764House prices have rocketed.
@@tancreddehauteville764 If you have a mortgage, you definitely don't want your house price to go down but if you have a mortgage free house, and only own one property, it would probably benefit you if all property lost even 50% value because this would not negatively impact you (unless you want to secure loans or pay for a nursing home) but it would massively help future generations. The one caveat to that is if you work for a bank or property related industry and hold investments or pensions that are tied to property prices in some way. Otherwise, if you moved house and all property had lost 50% of value, you would have lower moving costs and the younger generations would be able to get on the housing ladder.
These insane, disgusting far-right anti-immigration riots are largely due to government and media misdirection which has built up since the 2008 financial crisis (when house prices were already massively overvalued). These people are angry at being unable to make a decent life in the UK and instead of blaming government policy and banks, which have fuelled house price growth, they are convinced it is too many immigrants have pushed up the prices. Because, it seems they all appear to believe that refugees can all easily afford a £280k house.
@@tancreddehauteville764 They're a positive for the ultra rich (£10+ million) and them only.
Some average home owners might think prices going up is good for them, but really it's a veneer of a good thing. They're shooting the next generation into the foot, and allowing a stagnant wage to be turned into a covert falling wage hidden behind higher house prices, also hurting everyone.
Asset prices going up is hurting everyone but the people who sustain themselves off the interest of their money alone. Anyone who has to work to gain money is being deeply damaged by this.
@@tancreddehauteville764exactly also many people ignore the fact if the younger generations who've not yet brought a house due to just entering the work force & those who are younger who are still in mandatory education or are yet to be born. When my parents brought their 1st house it was 9k then it quickly rose to 25k for their second home they upgraded to a semi detached in the East midlands. Fast-forward to today that 25k house is now 270k+, wages haven't kept up & probably won't so imagine if we have another increase like that, even less of the next generation will be able to afford to buy a house not to mention even rent. It's a race to price out the common working - middle class folk
It's interesting how HOUSE PRICE INFLATION is or was seen as great, but general inflation is seen as terrible. How much would a McDonald, or a cup of coffee be if general inflation followed the same as HOUSE PRICE inflation? One house sells for 175,000 then a month later a similar house in the same street goes up another 10,000. I think the estate agents also play a part in this. Nobody's salary has jumped 10,000 in one month. Affordable houses imho are a myth. It's some kind of scam of part ownership. But it all seems fake, if I make money on selling my house, it only means everyone else's has increased by the equivalent amount. So it is only noticeable when I
downgrade or they sell it when I enter a nursing home. Finally, as you said, the UK government will Artificially pump up prices further. Homes seem to be for profit, and not families.
The problem is people with money buying houses as investments, buy to let, not as just somewhere to live which most people need. Also the tories sold off council houses in the 1980's often at a big discount to the market value. Also we've got big property developers sitting on loads of land with planning permission, but not actually building any properties, just waiting while the price of land goes up. The government should put a time limit on the planning permission, and if the developers don't build any homes before the time limit ends take their planning permission away. Also start investing in building more affordable council houses that would all help to suppress the house prices in general
@@fredatlas4396 I totally agree. It’s as though the government (previously)Labour and Tory were happy to cause a reduction in the availability of housing, knowing that it nudges prices higher, and the government also get their tax cut too. If developers don’t build within 1 year the land should be returned to the country. Possibly the land could be sold off to help people do self builds. Basically going to a self build company and they build it for you. Which is supposed to be also cheaper. But I think the banks et al will try to push for 35 years mortgages as a norm to help “affordability”. Totally spot on about landlords and properties as “investments”. Also the creation of AirBNB helped it along. The kids inherited a home, and instead of selling it as we did 30 years ago, it’s kept as a future pension pot and an income stream for today, as it’s either let out or switched to an air BnB, reducing homes for families further.
The bungalow opposite went up 28% in 27 months (between 2021 and 2023) without anything being done to it.
The main problem is that trends in house prices move over decades rather than years. The house I bought in 1989 didn't go up at all over the next ten years. In fact in 1995 I couldn't sell it at a 20% loss. By 1999 affordability had doubled and FTBs were buying better houses. Then Gordon Brown encouraged BTL and backed it up with 10x salary Liar loans and the infamous Northern Rock 125% LTV mortgage. When it all went wrong in 2008 they slashed interest rates so 10 x salary was actually a good idea.
Simple, because a house is an ASSET., while a cup of coffee is a consumable object that is made to be drunk. That's the fundamental difference. You're right when you say that there is no such thing as affordable housing, for the reason that, in a free market, everything is priced at the highest point it can be in order to generate a sale. Housing is no different. Given that housing is constantly in high demand, prices are bound to be high. That said, it's the same with rentals. The only exception is social housing that is directly provided by the council, but even in these situations, councils will always seek to increase rents by as much as they can legally get away with. Even when you own a house and pay off the mortgage you will still have to pay rent to the council in the form of council tax; in effect council tax is a form of rent, given that it's assessed on the valuation of a property.
Indeed. In a normal healthy economy residential home prices should fall over time. It is after all a depreciating asset, it's aging, it's more expensive to maintain... In such a case I wouldn't be expecting my 50 year old house to be worth more after I'd lived in it my entire life, I'd consider myself very lucky if I could even break even!
It''d be much like managing to sell a car you've accumulated miles on for the same price you bought it for.
There are also social changes having an affect as men no longer wish to marry western women or have kids with them. The marriage rate is very low and deaths exceed births for the first time. More than 50% of women aged up to 30 are single, unmarried, and childless.
So people now face having to buy alone and not with a partner as long term relationships have collapsed too. In theory this creates demand for more houses, but in practice individuals often cannot afford to buy and have to rent. Often not having enough income to rent a whole property or even a room in a property.
It’s hard to see how prices rise until the interest rate drops to 3% and a five year fix to below 3%, which is probably the end of 2025. The house building is not going to happen as we just don’t have enough skilled workers, unless more are imported and put more pressure on housing.
Trumpian projection......
@@jabberwockytdi8901 Whatever that means. But the part about men and women not getting together, and the low birth rate are facts now, not projections. Of course no one knows what will happen exactly to mortgage rates but almost all analyses including the bank of England forecast steady reductions over the next few years. Obviously if inflation takes off again then who knows
Certainly these are factors, among others.
Correction: western women do not want to marry western men
@@jillybe1873 unless he is a millionaire
If real average house prices have not increased since 2004, then why people believe house prices are expensive?? Could it be that average real wages have gone down compared to 2004 and the general cost of living has increased that make house prices appear expensive?
Correct
No. It's mostly media hype. But remember 2004 the market had been really quite hot for 7 years before that
Or could it be people wanting a three beds house to live in single? In the past, the house was paid by a couple as a family with kids.
Now, every teenager dreams of a house with at least two beds to get away from parents. Obviously, they can't afford it, by they add to the people whining about "housing crisis".
Average wage has increased significantly, over 20% since Covid, but with inflation your money doesn't go as far, so yes, we're currently earning less now than we were in 2004
Prices have risen a lot since 2004 🙄
As long as the UK has sky high immigration, house prices will be pushed up by landlords knowing demand will go up while salaries are suppressed by salary competition, so house prices are never going to get better for salaried workers.
Loyds bank has 80 thousand buy to lets, it is quite a big landlord. Other financial organisations are buying up the BTLs as individual people like you and me find new laws make it impossible for them to continue. We will have to stay poor while the big banks get rich
@@risenshine2783 Tory Politicians are buying up majority of the BTL..
This is the only comment needed on this video or any video related to the topic of housing in the UK, absolutely nailed it!
Inflation-adjusted UK house prices (or values) on average over the last 20 years are unchanged. Sadly, wages haven't kept up due to high levels of immigration & off-shoring.
I know it’s probably the industry-standard terminology, but I wince at house price increases being described as the “optimistic” scenario (even as a homeowner).
Not that a crash would be good either.
What you and most of society need to understand is that the whole monetary system is built on debt and the debasement of currency, by central banks just constantly debasing their currency, through money printing, house prices and other assets seem like they are increasing in value, but in real terms as was pointed, they haven't. The debt based system, we have now, will not allow house prices or assets to crash, as the wealth illusion would be burst and the whole system exposed. The traditional theory of Supply and demand, now, has very little to do with house price inflation
Crash would be excellent, leveraged investments should go down as well as up. House prices should fall by at least 50% and stay there for a long time.
Also a homeowner. I would far prefer a crash to prices staying this high. This state of affairs is hurting us all.
@@dananskidolftry getting a decent mortgage rate if you’re underwater
Pre covid house prices were rising below inflation my guess is that is where we will go back to. First time buyers are paying 37% of income atm that will go back to the long term average. There are places with problems in areas of high demand and restricted supply outside of that it’s a problem a lack of public / subsidised housing. Also when you say houses are over priced try paying for a small extension you might realise houses aren’t cheap to build 50% you are deluded.
I live in a White Flight area in the North West, most of our house price growth is fuelled by Londoners moving up north to get away from knife gangs. Each home viewing still gets 30+ prospective buyers... and this is supposed to be to be a flat period? I can't imagine what it will be like in 2027.
Why would Londoners want to move to Liverpool to escape gangs? Sounds to me like moving from a frying pan into a fire!
@@tancreddehauteville764 Liverpool and it's surrounding area is a big place, it's not all bad. The people that move here say they're priced out of "Nice" areas down South so move to "Nice" areas up North. I'm not going to tell you some of the stories they tell me, it'll get "political" and probably taken down. In my village there's so many Southerners I'm pretty sure they're going to change our local accent within a decade.
@@TheLiverpoolDeltamost Londoners move to north Kent (where I am) and south Essex, for cheaper homes in lower crime areas, and can retain their London jobs via commuting times of under one hour. Kent always was an exile for Londoners (my Dad came from the East End) but a real increase in the last 10 years.
I get that a decent number have also gone North, to the Liverpool area as you say, and I had friends who went to the North East.
Only been once to Liverpool, went into downtown pubs, folks heard my (London-ish) accent and were so friendly, I had a great time and plan to go back. I can see the appeal from a southern viewpoint, plus the lower cost of houses of course.
@@TheLiverpoolDelta I'm well aware that parts of London are a toilet. I'm in Berkshire and even here things are getting worse, but if I had to move to the NW it would probably be Cheshire, or probably Shropshire, where my money would go further.
Noboby is running to the North. House prices have made great gains since 1985 and nobody was running up north. Crime, poor schools, grime, poor infrastructure notably the train service and inadequate health care. People move up North to live mortgage free in retirement as they can no longer move to Spain for example. A good indicator of a desirable area is how many visitors/tourists do you get. Not many in the dreary North which is a default move.
Ramin, can you ever compare the forecasters success by looking at previous forecasts and their accuracy. There is a lot of forecasting but who has been the most accurate ?
why do you class a house price increase as optimistic? unless you are invested in property, higher house prices don't matter to people who already own a house. As a first time buyer I class house price decrease as optimistic.
When you print money, asset prices inflate. Gold- record prices, stocks- record prices, house price will go the same. The extra £1T created during Covid will settle on house price growth. 10% year on year will continue in my opinion.
Money printing is a drug that no government can get themselves off of. Once they've started there is simply no stopping. All fiat currencies without exception eventually become worthless.
UK houses will soon be seen for what they are - liabilities not assets. When you own a home, you have to continually spend to maintain & develop your home or watch it's value reduce. I bought our current outer London home in 2004 for £287500 and it's now worth about £850000. Fantastic is how most youngsters would view things but I've spent £120000 on development, £100000 on mortgage payments, £25000 on council tax, so add those on and account for inflation and maybe I've made a real gain of 2%pa, which I'd only see if I downsized, and stamp duty on any new property & transaction costs would whittle that down further. The supply vs demand argument is clearly nonsense as London's population has increased by 2m since I've been here.
It's a home first, and an asset second. You could have paid 200,000 to 300,000 on rent over the same period for the same house and have nothing to show for it. It's a terrible investment of course, but the problem is you need a home.
Building a lot of affordable houses doesn't cause price drops across the board, that depresses the number of medium to large houses being built so the cost to move from a 1-2 bed young couples house say to a 3-4 bed family home can remain high.
Imagine being a young married couple, starting out, trying to buy a house to raise a family on an average wage today.
Can only do it on inheritance. That’s the only benefit of these ridiculous house prices is the split when someone’s house is sold
I bought my house approximately 20 years ago, it was 8 times my salary and rates were between 5 and 6.5% Even then it was difficult to find houses that needed modernisation in order to get a good price because most were sold outright to builders who were renovating them. The housing market crashed shortly after and I couldn't sell it for anywhere close to what i paid, and couldn't remortgage either. I endured what we now call a cost of living crisis for many years. If you're willing to save early, go without, and have children later in life then it's possible. The biggest danger is always volatility in the market and the economy, which many of my younger friends have discovered the hard way after knowing too many years of low interest rates and not bothering to make a substantial overpayment at the end of their initial 5 years. Definitely easier if you have wealthy parents. 5% base rate isn't high, and offers elderly some additional income on the savings. I'm now saving to help my children, provided they retain a sensible attitude to personal finance 😂
The UK is fine. Young couples can still afford houses just not in the most desirable areas. Major cities in Canada or Australia make even London look cheap.
@@sma5605 there is a huge gap in prices in north and south yes. Very very difficult in the south. A two bedroom flat without a garden is the price of a four bedroom with huge garden, double garage up north
@@gdogg4002 And for the price of a two bedroom flat in London you can get a parking spot in Vancouver or Sydney.
My belief is that house prices will either stabilise or fall in parts of the country where prices are currently very high, i.e. London and the South-East. In other parts of the country, such as the Midlands or the North-West, prices will continue to rise. Affordability is an issue, but it should be remembered that the trickle down effect from large inheritances is helping many middle class families to provide large deposits to young people within these families who wish to buy a home. This is what has so far prevented a house price crash in the wealthy south-east.
Hi @tancreddehauteville764 thanks for your comment. That's the trend that we're seeing right now i.e. the expensive regions such as London & the South East are rising less or falling. Thanks, Ramin.
Why pay for old decaying ,damp, crumbling rotten,
Houses filling streets
With😮all looking
Alike ,1 bath for 3 beds .Norfitfortodays times .
As someone who lives in the North West very central near the M6 with access to Manchester/Liverpool/Preston all within 25/30 minutes commute, I've met quite a few southerners who have moved away from London/SE. Your average Salary here can go much further but it's still not cheap and my house has appreciated £56k in 4 years so the market is definitely moving here.
House prices need to drop 50%. People are spending too much of their income on mortgages or rent. This guy is talking nonsense
Do a projection of demographic change over the next decade and then try to link it with UK economy/ housing market.
Prices are just too high!
Ramin , just to be picky - buyers are not "borrowing" 6 or even 10 x income. The house prices maybe 10x income but the average mortgage max is 5x income. Good video.
That's what he said for London. 10x.
It won't be the same figure everywhere
@@MontysKillerRabbit OP’s point is correct
@@jamiemacnaughton8837
Except he said the same as the video.
Indeed, my house is 6.6x my income, but obviously I've borrowed between 3x and 4x due to having had a different house previously (>4x) and a house before that. Also if you have dual earners that helps a lot as well.
Future of this country is a big problem
House prices are driven by wealth not income. Wealth can rise from investment in property, equities, bitcoin, savings etc.
Hi Ramin, nice video. A suggestion for an additional video: It would be interesting to have you look at the historical performance of those projections by others: you show a long time-series of projected increase/decrease in house prices - what did the prices actually do? How good are these projections? I´m guessing not great but maybe I´m wrong. A similar exercise could be done for stock-market projections etc
House prices going up, because mortgage terms are increasing by decades, and the general shrinkflation of the size of house you get for the same price, over time, is not to be celebrated. It's not a very meritocratic system if i have to rely on my parents, to lend me 50k, to even be able to go into 40 years of debillitating debt, just to have a tiny place to live.
The UK's inflation rate is 2.9%, while the base interest rate stands at 5%. How long can the base rate remain more than 200 basis points above inflation? Could we see a rapid rate cut, similar to the swift hikes we've experienced?
‘You will own nothing and be happy’
We’re on this path… Interest rates will decrease, inflation will increase as government debt needs to be inflated away and QE and other ridiculous policies will be introduced to keep markets propped up.
Maybe this changes if Trump comes in and Farage in the UK
Like most markets, property prices are driven by supply and demand. Not enough homes for a growing population means poor value. 3 years of no growth at a time of high inflation has (in real terms) brought down the relative house prices.
Hi @CoreRye thanks for your comment. I find that average prices haven't risen for 20 years (using Nationwide house price data). Thanks, Ramin.
I think there needs to be a chart that highlights the increase in unemployment and the dip in rates and how this affects the value of property.
I like your videos it's so refreshing to have a balanced and well supported view in sea of click bait and doom and gloom type videos on you tube
So pleased you enjoyed it @rickyclarke6845
Good weather presenter
Logic would dictate you are correct. However inflation has been higher than wage rise, the GPD is manipulated, the high demand boost prices up especially when stock available is low. First time buyers are often pushed to purchase new build, and generally new builds are 10% more expensive than older house and with smaller space. Non of these give a good starting projection for new buyers. House prices up in areas with better schools. The average person has very little savings. Urban areas are majorly forgotten by governments. Still, the prices will keep going up. You have plenty of corporate buyers pushing prices up. There is a reason why over the years, the yearly salary multiple for a mortgage, has increased, and will continue to increase.
For me the most important factor in the next few years will be what Labour do with the Inheritance Tax, Buy to Let and CGT. If they bring in very signifcant and poorly considered changes to these areas, it could result in the biggest shift in house prices we've seen in a very long time. Having huge sums tied up in a fixed asset could become suddenly a huge risk depending on factors such as age. Especially when you consider a studio flat in a place like Hounslow means you're already on the threshold of Inheritance Tax if single and without children. Therefore with fears of loss through taxation, or in the case of buy to let, risk of losing control completely of a property if rental reform is too unbalanced, lots of properties could suddenly come onto the market as owners offload second homes or downsize their main home to protect their wealth. Let's hope any measures introduced are sensible.
House prices in London have fallen at least 10% over the last 12 months
Hi @alexstone1492 as you suggest the biggest falls have been where house price to income ratios were highest i.e. the least affordable places. Thanks, Ramin.
@@Pensioncraft there were few months when only buyers who could transfer their low rate products were buying. Now the prices have corrected down there are more buyers.
There are many baked in economic drivers that push house prices up, including government policy, banks, investors and vested interests in house selling e.g. estate agents. However, the idea that house prices always go up is a fallacy. Ultimately, prices are driven by affordability and if you look a little further forward into the future, say 10 years, then we have millions of millennials and gen z who are priced out of housing even at today's prices. And one thing is for sure, these millions of people will definitely find housing. So house prices have a huge medium term problem.
The answer isn't just to build more houses because this doesn't affect affordability. The obvious outcome is that one of two things will happen; either house prices will come down significantly or they must remain largely unchanged and wages need to increase significantly. Governments, banks and vested interests will all wish to see the latter, however it is no easy feat to achieve.
Thank you
Thanks Mr Ramin
Housing is still expensive, especially in comparison to UK equities. That doesn't mean it can't get more expensive, but anyone expecting a major bull market from this point is likely to be disappointed.
I think over the next 15 years there'll be a sea change where the automatic vehicle od investment for most people is stocks rather thancproperty.
Plus, no one wants more expensive housing. It just means as a country we pay more for the same thing.
Hi @evilzzzability housing is still very expensive in most UK regions, as you say. Personally I like the liquidity of financial markets and the high return on arse (RoA) because you don't have to fix your global index fund's radiator at 2 in the morning. Thanks, Ramin.
Positive for market is when prices increase? Ok then, prices of food are increasing and it is positive. Right, author?
New houses are ridiculously expensive, and nothing is affordable anymore. Price have trebled in our area, and since Covid things are even worse.
on the forecast map they should have rain for areas where there is high growth - higher house prices are bad for everyone, its just that most people are too short sighted to see it.
Thinks we will see an inflation increase shortly
I feel like non of the standard economic indicators actually impact house prices, as when house prices are higher houses are still snapped up just by corporate or foreign buyers instead.
If they had any sense they would put a large chunk of house price into the inflation basket. At the moment there is actually positive feedback (not a good thing as any engineer will tell you) in the system.
If a landlords BTLS are shooting up in value they won't be bothered about increasing rents so inflation is deemed to be low so the bank rate is kept low.
If anyone wants evidence from 2009 to 2011 I rented a property which eventually sold for £400K for £850 a month. That was trough a lettings agency so the landlord was happy to get a return of less than 2.5% while prices recovered from 2008.
how can house prices be driven by wages when house prices are outgrowing wages in real terms every year as time goes on. That's why there's an affordability crisis.
Houses here should be 80% cheaper
Well... you almost convinced me to buy US small caps in previous vid. I have decided not to. 😛
Small cap value are good diversifier during bad times.
If I was young now I’d probably give up or move far away somewhere cheaper
Only two worthwhile choices unless I earned goood money
I dare say you will remove this comment but you kind of predicted continued price growth on the UK housing market 2 years ago and regardless of fudged figures, the market is in the doldrums.... lack of viewings, lack of offers and lack of demand from those who can afford large houses in particular..... May I remind you that all these asset prices have been pumped by phoney printed cash and when you go through that kind of era the party normally comes to an end with an almighty burst.... The correction that was badly needed in 2008 was deferred due to QE.... it has been incessant since particularly following the covid debacle and something is definitely going to break.... I cannot believe that you continue to ignore that elephant in the room....Asset prices have not been allowed to correct organically and there will be a huge price to pay for that...
Try doing Australia if you want hard mode
It'd be better for house prices to crash. More fool the people who use what should be a necessity as a speculative gamble.
Best possible item to speculate on is surely a necessity. The UK needs pop growth to pay for pensions. House prices will continue to rise, prices increase and inevitably mortgage durations, the cycle continues.
House prices are going up!
The old go to bed smiling about their house price appreciation.
The young go to bed hoping prices fall so they can finally buy & start a family (and have what the old people are smiling about).
Sad times.
at 14:10 in the video, you say that the new Help To Buy scheme will artificially inflate the low end of the market, but because of increased supply of these artificially inflated HTB properties... that should push down prices... doesn't make any kind of logical sense.
No mention of the dollar failing and a market crash looking more and more likely/
The outlook is always going to be UP when there's less supply and more demand ....Any new supply will simply be snapped up as 35% should be affordable
You say mortgage rates are falling, but we have still gone from an 'era' of very low interest rates... to a new 'era' of higher interest rates... they are not going back to what they were... therefore asset prices including property have to re-adjust to this new era of higher rates... prices will come down. (Also, if we do see this global recession in 2024/25 - Sahm Rule - then house prices will come down)
Until there is a control over the money supply house prices will always go up- simple !
It doesn't look good. With Labour in power and the Fed's recent decision, I believe investing in UK houses makes zero sense. A huge number of property "investors" will go bust, and this will release those properties on the market. That's not bad at all actually🎉
It's fine if the property has decent cashflow and you aren't leveraged. What is over is landlords buying 30 properties using the banks money. Those guys are in serious trouble.
It will be when all those properties bought in the past 5+ years hit negative equity. The market will collapse.
@@Paul-zu2hf It's not serious trouble, but life-changing trouble, the one that you don't wish on anybody. It's really going to the level of having it all to scraping food from the food bank...I have seen it...
@@Hemswell It is happening already. The stock market is the forerunner, next is the property market...it will be very ugly
@@SycAamoreThe stock market has jumped today and will continue to do so. I’m sorry.
Funny thing is everyone needs a house . . . Get your house ! If you can afford it remember dont live beyond your means
Affordability effect everything
We haven’t just seen a saggy bubble… we have seen real time inflation and interest rates reflected in activity… you are seeing the bottom end of the most ridiculous UK property “actual” bubble this country has ever seen!
Labour wont achieve their house building targets , even for “ugly” homes. Local opposition is too powerful. Combine that with small majorities it’s a big challenge. Hundreds of houses per day, every day of this parliament needs to be built and they would need serious penalties for local authorities not doing enough.
Obviously you dont know what is comming if you come with all this statements...a lot of people will come out of fixed mortgages and will struggle to keep the payments up...high inflation and economy slowing it paints a better and more realistic picture...talking up people to buy now and looking at price houses increasing as being a positive when is already overinflated it makes me think you dont know what you're talking about...
Cheaper than paying for the hotel
It benefits every one
Lower interest rates paradoxically are good for keeping house prices low.
Minimum house in London 7 to 1.million where the houses go to
Not a snowball in hells chance they'll build 300k "houses" per year. More like 300k studio and 1 bed apartments the size of pigeon coops
Yep urban 15min city hell hole ‘living’ will be the way forward under the WEF labour government, all rented nothing owned, oh and you;l be happy apparently!
Just offer 30 year terms, should fix it
live on a narrow boat, most british citizens in the uk there
Aren’t most homes in Europe haunted? They’re so old laying on ancient ground. It makes for some serious case studies. In other words, what makes a haunted house a tourist attraction and if so what is its worth because of this.
Hi @angloedu5499 they're often haunted by poor build quality. Laura & I are always forking out for repairs on our house 8-) Thanks, Ramin.
😂😂
Obviously hasn't heard of the magnetic pole shift disaster coming soon ❤
Prices wont rise. Government will print more money and cause bigger inflation. Basically our monwy would be worth lessz not houses worth more.
House prices are already overvalued
Labour want not just 1.5 million houses, they want 1.5 million affordable houses that meet net Zero requirements. Building a 3 bed net zero house costs £400,000 to construct. Is that affordable housing??
“Take back control”… ouch. That still term still stings today.
Yeah, made me shiver too. The Don draper at incogni missed this. Maybe they have a “Oven ready” setting too, perhaps their fee on the side of a large vehicle too !
I got to the point where "wages" and I gave up. Nothing in the house market driven by wages.
You are putting the cart before the horse.
Sure, a mortgage is driven by wages and the lender's function of multiples but .....
...the whole system is driven these days by deposit.
So where does the deposit come from ?
Not from mama and papa
But from grandma and grandpapa
If you have to 3rd generation income, you cannot earn enough to fund a deposit.
Andy Johnston - investment bank trader, economist, statistician, pauper before, left nothing by any family, homeless in London aged 16, sponsor of many
If the speculation about the labour party rebanding properties for council tax is true, you can kiss goodbye to your hypothesis. The housing market, along with the UK economy, will collapse. I sincerely hope it is just speculation.
Even if anything like 1.5 million houses are built, we have open borders and a rapidly rising population. Therefore demand will mean the housing shortage continues.
Buying house is a leverage. Most of the investors are not cashbuyers. Even the house price doesn't increase, they get 4 times profile rate.
Hi @Wilson-ee6bf that's true house purchases are often leveraged. However, in the UK a surprising fact is that _more_ houses are now owned outright rather than being owned with a mortgage. The percentages from the 2021 census are
- **32.8% owned outright** of households (8.1 million) owned the accommodation they lived in outright, an increase from 30.8% (7.2 million) in 2011- **29.7% mortgage or shared ownership** (7.4 million) owned their accommodation with a mortgage or loan or shared ownership, which is a smaller proportion than in 2011 (33.5%, 7.8 million)
- **20.3% rented privately** (5.0 million) rented their accommodation privately, up from 16.7% (3.9 million) in 2011
- **17.1% social rented sector** (4.2 million) were in the social rented sector, for example through a local council or housing association; this is a smaller proportion than in 2011 (17.6%, 4.1 million)
Thanks, Ramin
UP.
Sorry but ‘GDP up’ does not reflect the GDP per head being down significantly, so there is less £ in everyone’s pockets. Also Bank of England being idiots and not reducing interest rates by more than 0.25, and then late as usual will have a downward if not recessionary effect on our economy. Just look at detail of ONS on prices, the only significant and sustained increase in prices is on rents and mortgages, this also represents around 35% of the total Index, and is a lagging indicator. If interest rates went down cost of living would go down. Additionally the Govt have just increased public sector workers pay by a minimum of 5% and doctors up over 20%. This is inflationary, not to mention the National Debt which no one wants to talk about or address…. All of this and new laws for Landlords means the housing market is and will continue to be a mess, which only the rich will gain from..
I disagree that house prince to income ratios should mean revert IF you look at individual incomes, as increasingly householdsa are dual-income.
Unless you're already using household income, rather than individual?
Value will only go up with net +700,000 migration year on year
Over 500,000 Brits leave UK every year to live in other countries. ...
@@GeoPolitics791Both correct. 1,200,000 new come in, 500,000 leave, thus 700,000 net migration.
UK have no export grow so hausing the only source of economic grow. That is since 2008 financial crash nothing change for UK since then. Housing Housing and Housing even more after brexit. Off course in order to make sure that housing is needed UK need more and more mass immigration.I do understand that UK voters vote against mass immigration. However is mass immigration will stop the housing economy may stop and then another housing crash may come and politician wants to delay that us long us then can.
The unfair house system is supported by youngsters who stubbornly want to live in the UK.
We decided to use our deposit to buy a 5 bedroom house in Japan (no need for a mortgage) and it was a game changer for our little family.
You want housing you can afford now?
Anyone can post a silly comment and get years of free housing in jail!
Oh-o , the "reformists" are out in force in the comments.....
Uh oh here comes the moving home with Charlie brigade !
Number goes up, so if have one or mores houses - you’re set for life; if you don’t have a house - lol your poor & gonna stay poor forever
(Sorry that’s how it felt buying my first house with my wife at 35 - 7 years ago, I dread what the market is like now)
Nonsense. Renting is cheaper when rates aren't zero. If you invest the difference sensibly you'll be way better off than owning a home. House prices are stagnant over 20 years, add in maintenance costs and mortgage interest and you're well down. Ask anyone right now that owns a home and is complaining about how much it costs to fix their leaking roof. Owning a home is just a lifestyle choice because landlords are mostly terrible people.
@@Paul-zu2hf Errm howd you work that out ? landlords have to take more in rent than their financing costs to make a profit . And even if renting was cheaper , what happens when your income drops 30-50% when you retire and rents keep going up...... Was different when you could stay in your council house at reasonable rents, but Maggie put paid to that.
@@jabberwockytdi8901 not all landlords are leveraged. The ones that aren't have much lower costs and rent at more competitive rates. Leveraged landlords are finished. My rent is significantly less per month than a mortgage on the same property. Even with a pretty decent deposit. And my rent is practically the same than the interest portion of the mortgage. Renting is less money per month AND the same dead money per month. Then factor in maintenance if I owned....huge difference. My landlord isn't leveraged.
We Pakistani and Arabs need more affordable house
We are poor people
Having lost all wealth in the war
Need help
75 % cheaper than market valve