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Pipers

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The house builders have to build a certain number of houses to stay in business. What that number is, who knows. It doesn't cost that much to build a house. If they have to sell them at prices people can afford then land prices will have to come down. Land that they currently own may well have to utilised at a loss. Also, trade wages will come down as fewer houses are being built.

 

However, if folk can't afford to buy then more will have to rent. This will increase rental prices and thus house prices as more landlords buy more houses! It's another situation where a state of flux exists between a number of factors. A change in any of them results in a new state of equilibrium being reached.

 

Your first point is spot on, but more people renting does not necessarily equate to rents going up. Rents are limited by wages (or the government via housing benefit) so people would need to earn more to be able to afford rent increases. If wages do not rise, rents can still increase of course, but you can imagine the consequences. If we ever get to the stage where the majority find themselves paying too much for rent or being unable to even afford to rent then there would be political change, as in a democracy the majority rules. Shelter is not a want but a need, and if the private sector can not supply enough affordable housing, then logically the government will - via the majority voting according to their need. Today the majority of people are owner occupiers but the political parties are aware of the changing demographics. I would expect policies to change accordingly where there are votes to be won. 

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Your first point is spot on, but more people renting does not necessarily equate to rents going up. Rents are limited by wages (or the government via housing benefit) so people would need to earn more to be able to afford rent increases. If wages do not rise, rents can still increase of course, but you can imagine the consequences. If we ever get to the stage where the majority find themselves paying too much for rent or being unable to even afford to rent then there would be political change, as in a democracy the majority rules. Shelter is not a want but a need, and if the private sector can not supply enough affordable housing, then logically the government will - via the majority voting according to their need. Today the majority of people are owner occupiers but the political parties are aware of the changing demographics. I would expect policies to change accordingly where there are votes to be won. 

 

This is correct, the price is set by the renters as a collective not the landlords hence 'landlord benefit', hence the 'working wage'!! 

 

The problem is for the baby boomers and I know this is happening now, they cannot sell in the majority off the country at what is the supposed market rate to pay for a sheltered apartment with help.  

 

So who will buy the baby boomers houses in the majority of the country at the supposed market rate?  Or are we saying the market rate is to high because the young can no longer afford the mortgages.  It does not matter if 500,000 immigrants come here to live each year, if they are not wealthy the question remains who is going to by the properties at those prices?  

 

Answer maybe rich Landlords.  Then I would bat that back within 5 years a party would be elected to build lots of houses by a popular mandate landslide easy, this worries the establishment.

 

This leads me to conclude we could within 10-15 years see a major shift in housing in this country towards cheap rents or low price to buy eg pre-fabricated towns on now farmland.  Germany have been building this way for years.

 

Not convinced, ask yourself why should a house that with the land cost £30,000 to build sell for £160,000 who is getting the kick backs, who owns the land, and one last thing imagine going to buy a car a BMW and the sales man said its price was £160,000 you replied its only worth £30,000 are well the salesman smiles This is a BMW we have had 4 viewings of this car this morning there going up next week  you can buy this over 25 years at 2% interest and the Government will give you a massive deposit 20% as long as you keep the car, you can always give the car back if you cannot make the payments.  

 

You would tell the salesman where to go and rightly so,  so why have so many people fallen for this housing bubble.            

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UK money printing has exploded and set all time records.

Edit: Apologies, UK actual physical fiat currency printing has exploded rising by an incremental all time record.

Could this be because people are holding cash in the event the banks decide to pull a Greece on us - A reaction to the recent events of 50 euro a day restrictions?

 

I wonder what effect this will have on inflation down the line when people start spending again. Now that demand for physical currency is increasing, and therefore printing is increasing, this aspect of the monetary supply can not be controlled later down the line as easily can it? If people start spending all at once then in theory the BOE can reign in its outstanding QE to hold inflation down, but it also has to fight against the growing pool of physical currency that is being hoarded. In reality in the UK this printing is probably too small to have any real effect, but it is interesting non the less, and the conditions draws comparisons to other historical inflationary events. In the past rampant inflation has been caused by people hoarding money during tough economic times then going on a spending spree once economic conditions had changed.

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Could this be because people are holding cash in the event the banks decide to pull a Greece on us - A reaction to the recent events of 50 euro a day restrictions?

Don't think this is the case..... If they buy a paper and drink with a bank card are the clever enough to stack cash!!!!!! It annoys me having to wait while someone has to find card, put in pin wait for receipt......: JUST GIVE THEM A POUND COIN!!!!........ Or is it just me?

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It feels good that I can go into work next week and say 'I told you so' but at the same time, this holding off of a rate rise can't mean anything good. It basically acknowledges that the world economy is screwed.

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It feels good that I can go into work next week and say 'I told you so' but at the same time, this holding off of a rate rise can't mean anything good. It basically acknowledges that the world economy is screwed.

It's been baked in the cake since 2008.

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