House price Problem

[modeller]

The last time we had a stable housing market was way back in the 60s when the average house cost 5 times the average salary, today it is 10 times . No wonder first time buyers have major probems. We all live in overvalued homes. In order to restore the situation we need higher salaries or cheaper homes.
The media are trying to talk up house prices. They call it a recovery but is it the right strategy ? What's likely to happen ?

[VHG]

> In order to restore the situation we need higher salaries

IF you gave everyone a higher salary it would just enable people to take out bigger mortages and it would drive up house prices.

[rov1200]

Repossessions have been the highest for over a decade.

The government are building mini towns.

People are losing there jobs so will not be able to afford a mortgage.

Interest rates are soon to go up as inflation is near to 3% and we have to pay a lot more for imports. That means higher repayments.

Part time work does not pay for a mortgage.

RESULT:
Falling demand, lots of empty houses and a devaluing asset.

[jno]

the housing market isn't unstable, though like everything else it's in a bit of a trough at the moment. Generally though it's just responding to the laws of supply and demand. People want houses, generally in places where lots of other people want houses, so the prices go up. As VHG says, higher wages won't fix things.

What it means is that people who already have homes get richer with no effort on their part but their kids can't afford to get on the ladder themselves. Ideally the parents need to dig into their unearned wealth to help their kids out. This is what we're doing and I imagine lots of other parents too.

But you can always rent, which is what people in other countries do. You don't really *nned* to own a house - it's that perceived need that is driving the prices up.

[jno]

er, *need*, not nned

[modeller]

infund. I found the link highly informative. Thank you ! In my area we have a development consisting of shops and 50 odd 2 bed apartments . It was completed a few months ago but hardly anything has been taken despite a 10% price reduction and a shared equity scheme where the purchester buys 70% of the property. I'm not surprised, the apartments even with buying only a 70% of the equity are still 13 times the average single salary of a young couple.

[jno]

no, electoral votes meet demand: there aren't unused votes lying around (though there may be bits of unused paper, those aren't votes); nor is anyone denied one who wants one.

The mechanism isn't perfect; sometimes builders construct houses and can't sell them; sometimes there's a shortage. But broadly, house prices go up because there's competition for them. If the price is set too high, the seller will lower it.