studentbob Posted November 26, 2010 Share Posted November 26, 2010 You don't set a market rate, you measure it. Maybe a basic economics thread should be a prerequisite to posting in a thread like this! OK then I'll ask it another way. How will the rents be set for a council estate where there is no market rate to measure? ......No, this is still you not understanding the difference between investment and speculation. The verb to speculate has more than one definition. One is to ponder. Another is to invest. Maybe leafing through a dictionary from time to time would be beneficial if you want to be taken seriously. Link to comment Share on other sites More sharing options...
donkey Posted November 27, 2010 Share Posted November 27, 2010 You're still confusing profit from rent with profit from capital increase. You keep saying I am 'confused' between the value of houses and the value of rent. This is a strange assumption, which I can assure you is not true. You are missing the point concerning this issue. High value houses have high value rents. If the value of the property goes up, the value of the rent will go up, but this is equally true in reverse. Increasing rents put inflationary pressure on house prices. That is why measures to stabilise prices and prevent surges in the market would have to be aimed at preventing inflation in both sales values and rents. I'm not parrticularly impressed or intimidated by housing market or economics jargon, for the simple reason that so few of the people involved in the housing market predicted the crash - I did, and was roughly correct about the timing and scale of it - and the 'experts' have been pretty lame in there forecastes since. It has been clearly demonstrated that a knowledge of the technical phrases of economics does not neccessarily indicate an understanding of fundamental factors. In light of recent historical events, the presumption that a self-regulating market is the best provider of housing needs is becoming increasingly laughable. Pure free market capitalism, as an ideology has just failed on a scale similar to that which communism did 25 years earlier. It's just that a lot of people haven't realised it yet. No, this is still you not understanding the difference between investment and speculation. You are very much mistaken in your continuing assumption that I am only saying what I am due to basic ignorance of fundamental factors. Explain to me the difference between property investment and property speculation. Link to comment Share on other sites More sharing options...
Mecky Posted November 27, 2010 Share Posted November 27, 2010 Go on, I'm dying to hear you elaborate on that. You already know why, Tory Boy http://www.youtube.com/watch?v=SeLSNzEorbI Link to comment Share on other sites More sharing options...
Tony Posted November 27, 2010 Author Share Posted November 27, 2010 No, go ahead, let's hear it from the horses mouth. Explain this: You can't have an economy based on housing and consumerism Link to comment Share on other sites More sharing options...
Cyclone Posted November 27, 2010 Share Posted November 27, 2010 You keep saying I am 'confused' between the value of houses and the value of rent. This is a strange assumption, which I can assure you is not true. You are missing the point concerning this issue. High value houses have high value rents. If the value of the property goes up, the value of the rent will go up, but this is equally true in reverse. It is, low value properties will have lower rents. The relationship is not true in reverse though, you cannot artificially lower the rent and expect it to have a short term or stable affect on housing prices. Increasing rents put inflationary pressure on house prices. That is why measures to stabilise prices and prevent surges in the market would have to be aimed at preventing inflation in both sales values and rents. The relationship is one way, house value -> rent, not the reverse. I'm not parrticularly impressed or intimidated by housing market or economics jargon, for the simple reason that so few of the people involved in the housing market predicted the crash - I did, and was roughly correct about the timing and scale of it - and the 'experts' have been pretty lame in there forecastes since. It has been clearly demonstrated that a knowledge of the technical phrases of economics does not neccessarily indicate an understanding of fundamental factors. In light of recent historical events, the presumption that a self-regulating market is the best provider of housing needs is becoming increasingly laughable. Pure free market capitalism, as an ideology has just failed on a scale similar to that which communism did 25 years earlier. It's just that a lot of people haven't realised it yet. We've never had a pure free market economy in the UK, so I hope you're not suggesting that our market is an example of that failure. We have a moderated, regulated, market, labour failed to regulate the credit industry sufficiently and that has caused a number of problems. You are very much mistaken in your continuing assumption that I am only saying what I am due to basic ignorance of fundamental factors. Explain to me the difference between property investment and property speculation. It's already been explained at least 3 times. But once more. Speculation cares nothing for an ongoing return on investment (rent). It's buying in the hope that the capital value will continue to increase. Investment doesn't 'hope' that capital values will increase, it relies on being able to make a reasonable return (10% maybe, everyone chooses their own figure) per annum on the amount invested. This relies on rent and cares little for capital movement (although going up is a nice bonus of course). Fiddling with the rent will have no affect on a speculator, but given high prices at the moment will cause landlords to reconsider whether they are getting a decent ROI. If the house is worth 300k and you set a maximum rent of £400/pcm, then it would be better to sell and put the money into something else, as the ROI (before any costs at all) is only 1.6%. So as I said before, you'd destroy the private rental market, and cause a downwards blip in house prices as landlords sold up. Speculation (which isn't happening at the moment) would be unaffected, if housing started to appreciate again then buyers would jump in and speculate. Link to comment Share on other sites More sharing options...
Cyclone Posted November 27, 2010 Share Posted November 27, 2010 OK then I'll ask it another way. How will the rents be set for a council estate where there is no market rate to measure? Why is there no market, can you find a council estate with no privately owned and let houses on it. No privately owned houses even nearby. Do they exist in their own little vacuums? The verb to speculate has more than one definition. One is to ponder. Another is to invest. Maybe leafing through a dictionary from time to time would be beneficial if you want to be taken seriously. To invest in the hope that the capital value of the investment rises. Maybe you should go a little bit further than trying to learn economics from a dictionary:rolleyes: Link to comment Share on other sites More sharing options...
studentbob Posted November 27, 2010 Share Posted November 27, 2010 Why is there no market, can you find a council estate with no privately owned and let houses on it. No privately owned houses even nearby. Do they exist in their own little vacuums? There are privately owned houses but the ones I know of are owner occupied. I did find one on the neighbouring estate which Haybrooks have just let for £500 per month but it is bigger and part furnished so not like for like. (Having said that, it's still not worth £500 imo) To invest in the hope that the capital value of the investment rises. Maybe you should go a little bit further than trying to learn economics from a dictionary:rolleyes: Invest? Speculate? Still the same thing. You use money in the hope of making more. I'd rather take my definitions of words (because that's all they are) from the Oxford Dictionary. Link to comment Share on other sites More sharing options...
indicator Posted November 27, 2010 Share Posted November 27, 2010 Im still unsure on this one. Although ive just asked my partner and she said she thinks they shouldnt. I think the benefits of her council house over the private house im renting is that if she lost her job she wouldnt lose the house, shes a pet owner, her rent is £300 a month including water rates, she keeps it nice and tidy and is always changing the decor, has a garden front and back which she can do what she wants with, shes within walking distance of her elderly parents and the shops. The house i rent is just round the corner costs me £500 pcm but i pay separate water bills, would be concerned for the roof over my head if i lost my job, had to ask my L/L to even put a dartboard up (drilling required), pets a no no. I must admit i do feel a bit restricted when compared to my partners situation. I would love to buy my own place and could probably afford the mortgage but its the deposit that lets me down, im trying to save for a deposit but after everything is paid out im not left with much. I dont have sky or a car or any massive tv's or luxurys like that. I do think the council could have done a better job on her kitchen though, holes everywhere.... Link to comment Share on other sites More sharing options...
jgharston Posted November 28, 2010 Share Posted November 28, 2010 How are you judging something to be overpriced?Easy. My income has gone up about x2 since 1990, but property prices have gone up about x5. The property market because a runaway speculators' paradise when rent controls were abolished around about 1990. I've voted "yes" as all rented housing should be at normal market value - ie, about half of what it currently is. Invest? Speculate? Still the same thing. You use money in the hope of making more. Investment is spending money in the hope of having continuing repeated future income. Speculation is spending money in the hope of having a single lump of income. Buying a racehorse is investment. Betting on a racehorse is speculation. Link to comment Share on other sites More sharing options...
Cyclone Posted November 28, 2010 Share Posted November 28, 2010 Invest? Speculate? Still the same thing. You use money in the hope of making more. I'd rather take my definitions of words (because that's all they are) from the Oxford Dictionary. They're definitely different behaviours. They both involve using money to make more money (something which our entire economy happens to be based on), but they rely on different techniques to make the return. Why would two words with identical definitions exist? You don't think it's more likely that there is a subtle difference? Link to comment Share on other sites More sharing options...
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