PricedOut > Blog - Fall in 'over-inflated' house prices inevitable - By Jonathan Wynne-Jones, Daily Telegraph

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Posted by: PricedOut	Sun, 13 Jan 2008 20:43:58 GMT
The cost of property in this country has risen faster than in any other affluent nation, making it increasingly difficult for first-time buyers and young families to own a home, an international study has found. House prices in Britain have risen at an average annual rate at least 10 times higher than in other developed nations, such as Japan and Switzerland, and twice as fast as in the United States. The research by Policy Exchange, a Right-wing think-tank, shows that since 1970, prices have gone up by more than four per cent a year over inflation. Property prices in Britain have risen for 13 successive years, and in the past decade the increase has been particularly steep. The price of an average home has risen from £70,000 when Labour came to power in 1997, to nearly £200,000 today. In the same period, the retail price index rose by only 30 per cent. An average home costs £156,000 in America, £149,000 in Germany and £141,000 in New Zealand. Financial experts say that prices have been boosted by optimistic buyers who expected the rapid growth in the market to continue. The total value of homes in Britain reached a record £4,000 billion last year - a figure nearly three times higher than the UK's £1,400 billion gross domestic product. Oliver Marc Hartwich, Policy Exchange's chief economist, said that the research, to be published in a report in the spring, highlighted an economy that had been out of control. "British houses have become grossly overpriced when compared with the rest of the world," he said. "This has led to a debt culture where people are unable to save because they are putting everything they have into their mortgages, but yet are getting far less for their money than they would do abroad." He said that house prices would correct themselves to a more affordable level over the next couple of years, but he urged the Government to build more homes to enable people to get on to the property ladder. "Otherwise, the country is at risk of losing a generation of well-qualified people who think Britain has become too unaffordable," he said. Between 2001 and 2005, the annual number of Britons emigrating to Australia almost tripled to 23,000. Over the same period, house prices rose by 48 per cent above inflation. The £300,000 cost of a typical two-bedroom flat in London would buy a six-bedroom house, with three bathrooms and a four-car garage, in Adelaide. David Miles, the chief economist at Morgan Stanley, said that even allowing for Britain being a densely populated country, house prices were too high. "The value of houses has gone up as people have expected them to continue to rise, probably taking the prices beyond a sustainable level, and now we are starting to see this change as these expectations drop," he said. In recent months the housing market has shown clear signs of a slow-down. The Halifax reported that property prices fell for three successive months at the end of 2007 before rallying last month. Grant Shapps, the shadow housing minister, said that owners had become nervous and many people were unable to get on the property ladder. "House prices are now utterly unaffordable to the point where they... are even hitting 20 times local earnings," he said. "The number of first-time buyers is at its lowest since 1980... The complete failure of government policies like Social HomeBuy has exacerbated the problem." He said that a Conservative government would abolish stamp duty for first-time buyers on properties up to £250,000. PricedOut comments - So everyone on the planet is agreed - UK house prices are too high. The question is "What are we going to DO about it?" Answers on a postcard please.........

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Re: Fall in 'over-inflated' house prices inevitable - By Jonathan Wynne-Jones, Daily Telegraph - 13/01/2008

By Rob H on Sun, 13 Jan 2008 20:50:22 GMT

The right wing think tank is spot on but the Conservatives aren't. Abolising stamp duty only props up prices. If anything, we need 10% stamp duty on anything over 125K and 20% stamp duty on anything over 250K. That would see prices fall massively and start to bring prices back into line with earnings. Noone will do this of course. A recession will have to take place before any sense returns to the price of a HOME.

Re: Fall in 'over-inflated' house prices inevitable - By Jonathan Wynne-Jones, Daily Telegraph - 13/01/2008

By Terry W on Mon, 28 Jan 2008 13:21:59 GMT

I am a network security expert and my salary is nearly 55k. The funny thing is you would expect me to be well off and one of the "lucky ones".. well you would be wrong! True the banks will lend me 280k mortgage but the repayments would mean that i would be better off on the dole!! I work very hard and have three kids and i really want to leave them something other than debt when i die.. I am feeling sorry for myself but God knows how a family on the average wage survives!! THis country is a joke and although i love the history and will miss my family i plan to be in Canada in 5 years. The funny thing is the "right to buy" has created a generation of scumbags who bouth their house for 40k and expect the rest of us younger people to buy it for 300!! Well not this one matey.. I think that owning a second home should be illegal or you should pay massive amounts of tax and council tax on it. I also think all this rich old gits moaning about their villages "dying out" and shops closing should maybe think about how we are being sweezed out of rural areas by them retiring and buying all the houses.. and instead of driving their 57 plate Audi to Waitrose should walk to the local shops and use them!.<br><br>Sorry for the rant.. This country is only good if you intend to utilise the benefit system. To be honest if i could do it all again i would just sign on and spend all my time with my kids.

Re: Fall in 'over-inflated' house prices inevitable - By Jonathan Wynne-Jones, Daily Telegraph - 13/01/2008

By Donna A on Thu, 07 Feb 2008 13:09:59 GMT

With reference to Mr. Terry W's comment, I am one of the "scumbags" he is referring to! Three generations of my family have lived in our ex-council house and all of us have worked ALL our lives. In fact, my grandfather fought at Arnhem to preserve your freedom of speech! Unfortunately, factory workers and house maids never really earned enough money to buy houses, and it wasn't until my sister and I were both working that we could help my widdowed father to buy our council house. We were, and are, all still living in it. Our main motivation was that we wanted the security that other generations of our family never had, and there were rumours at the time that our council houses were being sold off to private tennants. I am now 44 years of age, and my boyfriend and I are unable to buy a house to live in. I live with my father and he lives with his mother. It is certainly not ideal, and we have done this for too many years. So next time, Mr. 55k-a-year, you start bleating about right-to-buy scumbags, you might like to open your eyes a little and stop seeing life through right-wing newspaper headlines.

Re: Fall in 'over-inflated' house prices inevitable - By Jonathan Wynne-Jones, Daily Telegraph - 13/01/2008

By Donna A on Thu, 07 Feb 2008 13:34:11 GMT

Re: Fall in 'over-inflated' house prices inevitable - By Jonathan Wynne-Jones, Daily Telegraph - 13/01/2008

By Caroline P on Tue, 12 Feb 2008 10:47:35 GMT

I think Terry is being a little bit too sweeping in his statements. Those people who bought years ago cannot help that fact! However, he does have a VERY VALID point about the multiple homeowners. I definitely think that should be addressed by the government, as it is most unfair for people not to be able to afford a first house when others can buy a second (or even more). My house was paid for years ago, but any surplus funds I have will go towards helping my children trying to get a first home now. I am sure there are many other parents doing the same thing.

Re: Fall in 'over-inflated' house prices inevitable - By Jonathan Wynne-Jones, Daily Telegraph - 13/01/2008	By saravana sundar mohan on Wed, 20 Feb 2008 20:42:25 GMT
Is it a right time to buy a house or wait for some more months to drop the house price? Please advice your comments

Re: Fall in 'over-inflated' house prices inevitable - By Jonathan Wynne-Jones, Daily Telegraph - 13/01/2008	By Michael C-B on Sat, 23 Feb 2008 21:45:41 GMT
Quite a agree wth Terry W's sentiments. Obviously there are exceptions to the 'scumbags' but why should people buy council property at huge discounts, only then to be able to sell at a profit? Surely getting a council house in the first place is being in receipt of assistance, without the double insentive of making a killing on it?

Re: Fall in 'over-inflated' house prices inevitable - By Jonathan Wynne-Jones, Daily Telegraph - 13/01/2008

By G Bell on Mon, 10 Mar 2008 07:52:17 GMT

....an interesting debate..............but to be honest, house prices will NOT carry on going up and up, they cant, look at the maths, its not sustainable. My landlord is struggling with meeting his payments as he overstretched himself, and has now put the rent up on our house from 900 a month to a grand! That is PLUS 200 a month council tax and plus bills, water rates etc! If we complain, we will be booted out, simple as that. Not a nice thing, and yes i earn a good wage too, around 60 k a year, but as i live in devon and all the londoners have bought up the houses to spend 2 weeks a year in, i havent got a hope in hell of getting on the ladder until the bubble bursts which i reckon it will. Estate agents are all having "sales" here, and their property ads all have "new price" or "reduced" next to them. I hope and pray that the bubble bursts as maybe, just maybe i can provide a secure home for my family instead of wondering when the next"you have 2 months to leave" notice will arrive, which has happened 2 times in a row now, as when the price rise so much, they cashed in and sold our house.

Re: Fall in 'over-inflated' house prices inevitable - By Jonathan Wynne-Jones, Daily Telegraph - 13/01/2008

By Andrew Kneeshaw on Sun, 23 Mar 2008 12:55:02 GMT

Actually, this is all about supply and demand and the availibility of land to build on. If land was freely available house builders would be putting houses up in their thousands, responding to a profitable housing market. The cost of house building has not risen significantly over the years and technologies are making house building even cheaper. It's the retrictive planning regulations that have got us into the mess we are in. Just look at land prices. Agricultural land is around £5k per acre, building land is often over a £million per acre, and its the same mucky stuff! The 'green belt' concept is nonsense. We have acres and acres of land to build on, and even if there was a free-for-all on building it would only take up a tiny percentage of that area . What do people want, a view or a roof over their heads? I agree, the allocation of large block areas of land near towns is a blight and leads to nothing more than 'horizontal tenements'. Ghettos with no shops, pubs or schools. So the government should force the allocation of lots of small building areas round towns and villages so that we can satisfy the demand for housing organically. Then we can all stop wasting silly amounts of money on housing and have a decent life. Why doesn't it happen? Well look who makes the decisions on planning. Well heeled town councillors who live in the suburbs and villages in their nice big paid-for detached houses. And would they want new developments in their district, bringing down the price of their nice big houses and bringing more people to thier district? No way. The buy-to-let debate is a distraction. Buy to let still puts roofs over people's heads but in the rented sector rather than the owned, and essentially, there's nothing wrong with that. No, the issue is 'not enough houses', and this is being caused by restrictive planning. It's as simple as that.

Re: Fall in 'over-inflated' house prices inevitable - By Jonathan Wynne-Jones, Daily Telegraph - 13/01/2008	By Hugh Wain on Thu, 17 Apr 2008 15:34:44 GMT
It can't come soon enough. The price of property in this country is ludicrous. The only solution is a MASSIVE house-build project. But no government wll do it because it'll piss-off the homeowning middle classes: precisely the social strata that all politicians are afeared of. (They couldn't give a toss about the proles, of course.)

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