UK house price to crash as global asset prices unravel

[chem1st]

It is hardly a speculative investment when house prices have increased 17 fold over the last 40 years. There will be dips, but overall it is difficult to imagine a situation where at the end of a mortgage period a house isn't worth many times more than it was when purchased

 

There has been inflation in everything in £ terms as the value of the currency has fallen repeatedly. House price inflation has exceeded the fall in the value of currency.

 

House prices have also increased in real terms faster than everything else.

 

This suggests house prices are massively overvalued in both nominal and real terms to me, and if they were to fall consistently for 40 years they could still be overvalued. They cannot continue to increase forever in real terms without falling at some point, unless they were massively undervalued to start with, and they continue to increase until they reach a fair price.

 

They can be demonstrated to be massively overvalued in price in many different ways, a return to a more realistic and 'fair' value is due at some point in the future, based upon wages/build cost. + land tenure system.

[unbeliever]

There has been inflation in everything in £ terms as the value of the currency has fallen repeatedly. House price inflation has exceeded the fall in the value of currency.

 

House prices have also increased in real terms faster than everything else.

 

This suggests house prices are massively overvalued in both nominal and real terms to me, and if they were to fall consistently for 40 years they could still be overvalued. They cannot continue to increase forever in real terms without falling at some point, unless they were massively undervalued to start with, and they continue to increase until they reach a fair price.

 

They can be demonstrated to be massively overvalued in price in many different ways, a return to a more realistic and 'fair' value is due at some point in the future, based upon wages/build cost. + land tenure system.

 

That doesn't make much sense to me.

As a result of population growth and regulation the cost of both a house and the land to build it on invariably rise.

Demand will continue to outstrip supply as long as these 2 drivers are in place and therefore over the long term prices will continue to trend upwards in real terms.

[Cyclone]

There has been inflation in everything in £ terms as the value of the currency has fallen repeatedly. House price inflation has exceeded the fall in the value of currency.

 

House prices have also increased in real terms faster than everything else.

 

This suggests house prices are massively overvalued in both nominal and real terms to me, and if they were to fall consistently for 40 years they could still be overvalued. They cannot continue to increase forever in real terms without falling at some point, unless they were massively undervalued to start with, and they continue to increase until they reach a fair price.

 

They can be demonstrated to be massively overvalued in price in many different ways, a return to a more realistic and 'fair' value is due at some point in the future, based upon wages/build cost. + land tenure system.

 

Unless there are underlying structural changes, such as an increase in the population that fundamentally alters the position on the supply/demand curve.

[foxy lady]

There has been inflation in everything in £ terms as the value of the currency has fallen repeatedly. House price inflation has exceeded the fall in the value of currency.

 

House prices have also increased in real terms faster than everything else.

 

This suggests house prices are massively overvalued in both nominal and real terms to me, and if they were to fall consistently for 40 years they could still be overvalued. They cannot continue to increase forever in real terms without falling at some point, unless they were massively undervalued to start with, and they continue to increase until they reach a fair price.

 

They can be demonstrated to be massively overvalued in price in many different ways, a return to a more realistic and 'fair' value is due at some point in the future, based upon wages/build cost. + land tenure system.

 

There are several factors that led to a spiral in house prices. I doubt that any of them are going to change in our life time. If you are waiting for a general reduction to enable you to get on the housing ladder you've missed the boat.

 

1. Population of country increasing and supply of land finite.

2. Increased liesure time caused by automation and computerisation means there is demand for land for golf causes and parks.

3. Automation means less man power required by industry and a requirement for land to build more business premises.

4. Increased affluence caused by the above means more cash to buy what housing is available.

5. That increased affluence leads to demand for holiday homes.

6. Reduction in family size. No longer 3 generations and 8 people living in one house.

7. The only one likely to change. Investments aren't doing well, so folk will continue to buy housing as it is a safe bet.

 

If you imagine house prices have peaked you clearly didn't anticipate that some folk will pay £30 million for a 50 year old car.