Housey housey:
Getting fed up with lazy journalism about house prices? Me too. In plain English, these ten factors are why our housing market is booming:

1) there are simply more ‘households’ around to fill houses – people now live longer, live alone, get divorced more often, there is significant ongoing immigration, and full employment means young people can leave their parents’ home sooner.

2) far fewer new homes are being built annually than in the past; although these are mainly “ticky-tacky Brookside estates” & “expensive upmarket flats”. The majority of buyers prefer more mature built-to-last homes such as 1930s semi’s and Victorian/Edwardian terraces, of which there is only a finite supply.

3) almost no new Council housing is being built, so the free market takes the slack, and prices rise accordingly. Existing Council estates now only house “the worst cases”; so even when Council housing is an option, people prefer to rent on the free market. (Note for USA readers; ‘Council’ = ‘Project’).

4) with the pensions crisis and the stock-market depression, ‘buy-to-let’ landlords are in the market for lower-priced homes. Most of them are in it for the long-term, as a recent survey showed; they won’t sell up even if there’s a small reverse in prices in 2006.

5) in the last decade, people who inherited a house didn’t automatically sell it; they seriously considered keeping it & renting it out. Many did just that.

6) the mass migration of 30+ ‘downshifters’ out of the cities is boosting suburban/semi-rural “needs improvement” property prices.

7) the 50+ ‘baby-boomer’ generation can increasingly afford second homes, especially in seaside & rural market-towns. As commuting becomes ever more stressful, some long-distance commuters have bought a small second-home flat or terrace for use on weekdays, within cycling distance of work.

8) with a big rise in the university-student population, there is a small but significant number of affluent parents who buy their child a house to live in for five years (don’t forget the M.A. they pay for too), and then rent it out afterwards.

9) near full-employment means that many young couples have been able to afford to buy a first home, especially if relations helped out with raising a deposit & paying for furnishing.

10) people increasingly have monthly earnings from investments & other earnings that pad out their basic monthly wage-packet. This means that they feel able to pay more for a property, and this makes a nonsense of using the old “prices-earnings ratio” to predict future house prices.

One other aspect of house prices that goes un-reported. When a builder agrees a “section 106” agreement with a local Council, to make a certain percentage of new apartments “affordable”, this bumps up the price of the unsubsidised apartments. The developers pass on the S.106 costs to buyers. Buyers who buy at the full price thus effectively subsidise housing associations who buy up the “affordable” apartments and put “hard to place” tenants in them, tenants who can then effectively blight the development. This has happened near me, when a local charity bought 10 “affordable” apartments in a nice off-plan development and put in hard drug-users and those with “chronic alcohol and mental health issues”. The full-price buyers effectively paid extra to have their investment blighted by idiots.