Falling house prices means more affordable homes/ moving house with negative equity.

Indeed.

As I wrote in another thread recently, it demonstrates the warped attitude to house prices in this country. Basic common sense says that:

1) if something you need goes up in price, that's bad news 2) if something you own goes up in price, that's good news 3) if something you need *and* own goes up in price, that's pretty much neutral (although there may be peripheral advantages and disadvantages)

households are not houses... households are growing because of ever increasing divorce rates and the anti social habit of 'wanting your own place'

why do you believe it is like other markets? government interference in the housing markets is widespread...

that makes housing a prime hedge against inflation

No, there's flats as well.

Indeed. Plus every numpty telling you that you need to get your "foot on the property ladder" as soon as you can.

Because it is like other markets. Bubbles develop and explode or deflate. It happened in housing just 20 years ago.

Yes, and they're making it worse (or the last lot were anyway) by stoking the market with shared equity schemes and key workers schemes etc, creating an even bigger bubble than would otherwise have been.

Why is housing deflating now then?

many made by breaking up larger houses

and? that doesn't make it like other markets...eg the price of electronic goods and many other items is falling steadily

government interference in markets almost always makes things worse

primarily... because the banking systems has clagged up...and most people cannot pay cash... while some people have to get out as their only hope of escaping bankruptcy....

meanwhile the inflation is countering the price fall in numeric terms to some extent....

i'm not entirely clear just what you're asking...

you can't live in a tulip bulb or in a flat screen tv... is useful to distinguish a need from a want...

you don't need tulip bulbs or flat screen tvs... you need primarily 3 things...clothing, shelter and food...

you cannot expect markets to react the same way to wants as to needs...especially when governments mess with various sub-markets

Interference happens everywhere, eg. RPI-linked salary increases.

Perhaps instead of linking pay rises to RPI, they should either be unchanged, or be *reduced* by the RPI figure (although I'd guess that wouldn't be popular..).

Yes. And an increase in the amount of property per person. Single people getting told to "get their foot on the property ladder" rather than staying with their parents, or sharing a flat with their mates.

And you could see that in housing over the next decade or two. Historically house prices have followed a trend of 3x average earnings, now they're about 6x average earnings even after the recent falls. Wage inflation is likely to be muted, so if houses gradually return to historic trend levels they could decline for 10-20 years.

Er, yes. Single people don't need a 3-bed house to themselves, couples with no kids don't need a 4-bed house, nobody needs a holiday home in Devon. The increase in housing demand over the last decade has been fed by want, not need.

Erm, quite, but not necessarily Armarni suits, caviar and 3 spare bedrooms.

Population growth 3%, housing growth 9%. Demand is fuelled by want not need.

Single people should of course live in bedsits all the lives, or share a house with 'mates' even at the age of sixty.

For that matter, families don't need 3/4-bedroom houses either, they can all live communally in hostels.

Why does anybody need their own, private, independent home?

where did you get that? this is *before* the bliar/brown collapse:-

since then building activity has slowed vastly... in part because brown the clown said it would increase!

And your silly strawman illustrates the point perfectly. Demand is not being fed by people after a bedsit (ie need), it's being fed by people wanting spare bedrooms, holiday homes, and a place all to themselves (ie want).

Just like widescreen tellys.

Yes. That article states exactly what I've been saying! I quote:

"The size of the average English household has already fallen steadily from 3.1 in 1961 to 2.29 today.

The DCLG predicts that in the next 15 years that will fall even further, to just 2.21."

Ie the main driver of demand is "an increase in the amount of property per person", like I wrote above!

And house prices have *fallen* despite that.

Yebbut nobody believed anything he said.

what are you on about.... the size has fallen....demand drive is an increase per person??

which is a matter of being unable to raise the cash... that's not a lack of desire...it's a lack of means... neither is it a surplus of supply...

meanwhile the falls in the number prices are still small to non-existent...

to me it is very unclear what you are saying

well, at least that much is sane!

Now decreasing, as tends to happen after every credit bubble bursts.

There ain't no exceptions.

Which only affect things by making prices eveen more unstable than they'd otherwise be, in both directions.

That's what people said about tulips, and every other Golden Ticket in a credit bubble.

FoFP

If your theory was even close to being right, we'd have seen bubbles in clothing or food too. To my knowledge there haven't been any.

No economist would distinguish a want from a need. A "need" is just a want that someone can't pay for, but which a leftie thinks that they ought to get anyay.

FoFP

There's a big difference between debt for investing in an almost-guaranteed extra salary (modulo degrees in Golf Management and Medieval Basket Weaving) and debt for "investing" in speculative tokens.

I've already heard people saying "I'll never borrow another penny as long as I live". It's not something you'd have heard (other than from weirdos like me) during the bubble.

FoFP

food is both heavily subsidised in the eussr and has been subject to high competition via globalisation...

it has also been subject to growing productivity....

factors which have driven down real prices...though there are signs the shortages may start to erode those processes...

meanwhile, it is no 'theory' the food is a need rather than merely a want...

i'm well aware of the rigidity of market fundamentalists...

they are as intellectually idiotic as marxist...fortunately they tend to be less dangerous in the main

a need is not just a want...your suggestion is close to as crazy as marxism

as for what lefties 'think'...i've very little evidence they do anything that could be realistically regarded as 'thinking'

meanwhile your introduction of the concept of 'pay' in your context, is thought through... your idea of 'ought' is also dodgy in the extreme...

if this is too much for you... consider the hungry fellow you meet in a dark alley who decides to turn you into food...

where is the 'payment'? where is the 'ought'?

you sound like you believe food grows in cartons from your local supermarket...

your comments are so muddled and theoretical that i'll leave you to struggle with my other post at this time

But 'the amount of property per person' can't be measured solely by 'the average household'. You also have to take into account the amount of property per house, and that has fallen consistently and very significantly over the same period. Houses are now smaller, and so too, by a very considerable margin, are the plots on which they are built.

I wonder if, those factors being taken into account, there hasn't actually been a fall or at least no significant increase, in the amount of 'property' per person. Maybe it's a universal constant. Maybe people always want a certain number of rooms of a certain size on a certain size plot.

FFS, it's not a hard concept.

How many people had en-suites in 1961? Many didn't even have an inside toilet!

Er, yes. From 32% of a property to 44%.

Oh really...

So the record monthly fall in prices reported by the Halifax in September was due so people suddenly becoming poorer, or the banks suddenly restricted credit compared to a few months ago?

Snap. Try learning English.

If there's one area where we all ought to have learned to ignore predictions (*), surely it's housing and the economy?

FoFP

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