Is the rest of the world going mad?

[kenneal - lagger]

I was listening to the BBC News the other day and there was a reporter bemoaning the fact that the inflation in houses prices had dropped. Not that he put it that way: he said that the increase in house prices was falling as if that were a bad thing!

How is it that an increase in the price of food or water or fuel is a bad thing but an increase in the price of somewhere to live is good? We have been brainwashed by the *ankers, who really make the most profits from these increases, to think that an increase in the capital asset that is your house, really your place of abode, your shelter from the vagaries of the natural world, is a good thing. In reality any increase in value that we ordinary people see is swallowed up by the cost of helping our children to find a house to live in when they want to spread their wings and leave home.

The *ankers, meanwhile, see a continual increase in the interest that we pay on our always increasing mortgage. Because we spend so much on our mortgages most people have to go to the banks for a loan for their living expenses, and some of those loans are from the increasing number of, now legal, loan sharks that advertise on our TVs and billboards. All this is dressed up as a good thing and the sheeple fall for it.

Also new gas finds are hailed as a good thing even in papers which purport to have a conscience like the Grauniad. Madness all around!!

[careful_eugene]

I was listening to the BBC News the other day and there was a reporter bemoaning the fact that the inflation in houses prices had dropped. Not that he put it that way: he said that the increase in house prices was falling as if that were a bad thing!

How is it that an increase in the price of food or water or fuel is a bad thing but an increase in the price of somewhere to live is good? We have been brainwashed by the *ankers, who really make the most profits from these increases, to think that an increase in the capital asset that is your house, really your place of abode, your shelter from the vagaries of the natural world, is a good thing. In reality any increase in value that we ordinary people see is swallowed up by the cost of helping our children to find a house to live in when they want to spread their wings and leave home.

The *ankers, meanwhile, see a continual increase in the interest that we pay on our always increasing mortgage. Because we spend so much on our mortgages most people have to go to the banks for a loan for their living expenses, and some of those loans are from the increasing number of, now legal, loan sharks that advertise on our TVs and billboards. All this is dressed up as a good thing and the sheeple fall for it.

Also new gas finds are hailed as a good thing even in papers which purport to have a conscience like the Grauniad. Madness all around!!

Completely agree with this, god knows how young people manage to put a roof over their heads. I know lots of people who live in rented accommodation paying a large percentage of 2 salaries whilst struggling to just live. On the other hand I know a couple of landlords who say that this second house is "my pension" but don't seem to see that others are working hard to provide it for them. I'd love to see a big correction with house prices.

[Lurkalot]

On a similar theme with regarrds to housing I recently had a "difference of opinion" with a couple of friends on Facebook. It started with one posting about green belt being under pressure to be developed and I commented that population numbers are a large part of that pressure . Evidentially I'm wrong as a cvouple of friends then went on to explain. Seems the "real" problem is greedy developers and they haven't been building enough affordable housing and the solution to saving the green belt is to build more affordable houses. Whilst I agreed that brown field sites should be used first they had no real answer when I asked what to do when those brown field sites are used up or are unavailable . As an aside I always find the term affordable a tad annoying. Iff a developer builds an estate of houses all priced at half a million or more and then sells all of those houses surely that makes them affordable? What people really mean when they say affordable is cheap.
Completely off the topic of houses I was left a little speechless at work last week. I had gone to do a few jobs for a retired couple. While we werre going through the list of jobs she was rolling a cigarette , wheezing and telling me she has COPD ( chronic obstructive pulmonary diesease) .

[vtsnowedin]

Completely off the topic of houses I was left a little speechless at work last week. I had gone to do a few jobs for a retired couple. While we werre going through the list of jobs she was rolling a cigarette , wheezing and telling me she has COPD ( chronic obstructive pulmonary disease) .

Two things. One smoking is the usual cause of COPD and two it just shows you how addictive nicotine is.

[Lurkalot]

Yes very true. I suppose I just can't quite get why someone would continue to do the very thing that's caused their condition in the first place. Well I can understand the addiction part but hopefully you understand my dismay. They've obviously been addicted for a while as one of the jobs I have to do is repaint the nicotine stained walls and ceiling.
I always think it's sadder to see an old woman smoking than a young one. Teenagers do it to look grown up with their peers but the older woman ( or man for that matter , let's not be sexist) has had the benefit of decades to see the down sides . As you say , the power of addiction.

[leroy]

Two things. One smoking is the usual cause of COPD and two it just shows you how addictive nicotine is.

Yup, used to be a respiratory nurse. Lotta smokers. Habit, addiction, denial. Cognitive biases, particularly discounting and cognitive dissonance. We all have them about something or things.

[raspberry-blower]

Two things. One smoking is the usual cause of COPD and two it just shows you how addictive nicotine is.

Yup, used to be a respiratory nurse. Lotta smokers. Habit, addiction, denial. Cognitive biases, particularly discounting and cognitive dissonance. We all have them about something or things.

Sad to say i also aw that when my mum - who was very anti-smoking btw as she had whooping cough as a child - was in hospital there was another woman on the same ward who had to nip out for a ciggy - even though she had a terminal COPD.

Back to the original topic of the insane infatuation of house prices. I wonder if Ken, or anyone else for that matter, had seen this?
In a nutshell, the house price hyperinflation unleashed by QE has stalled and that, in the "best case scenario" there will a long period of house price stagflation.
"Best case scenario" here appears to be defined as fairly full employment continuing into the next decade. Other definitions using different yardsticks are also available.

Bottom line is this: we don't have a gold backed standard any more - we have a mortgaged backed currency that is tied in with asset prices. The bursting of this bubble will become extremely problematic to those in charge very rapidly indeed

[vtsnowedin]

To get back on topic:
I think you need to look at housing prices in terms of cost per square foot. Houses and quality have grown substantially over the years and if you look at it in terms of inflation adjusted cost per unit of area they are almost flat. At the same time the number of people per household has been declining which increases the per person cost of housing.
Here is a piece from the US but I'm sure similar could be found in the UK.

The Census Bureau recently released its annual report on “Characteristics of New Housing,� with more than 700 pages of detailed data on the characteristics of new single-family houses and multifamily buildings in 2015. Here are some interesting details of new single-family houses built last year

1. Average/Median House Size. In 2015, the average size of new houses built in the US increased to an all-time high of 2,687 square feet (see dark blue line in top chart above), and the median size new house set a new record of 2,467 square feet (see light blue line in top chart). Over the last 42 years, the average new US house has increased in size by more than 1,000 square feet, from an average size of 1,660 square feet in 1973 (earliest year available from the Census Bureau) to 2,687 square feet last year. Likewise, the median-size house has increased in size by almost 1,000 square feet, from 1,525 square feet in 1973 to 2,467 last year. In percentage terms, both the average and median size of new US houses have increased by 62% since 1973.

2. Living Space per Person. While the average size of new US houses has increased over the last 42 years, the average household size has been declining over that period, from 3.01 persons per household on average in 1973 to a new record low of 2.54 persons per household in the last three years (2013, 2014 and 2015), a reduction of almost one-half persons per household over the last 42 years (see brown line in top chart).

Click the link if you care to see the charts.
http://www.aei.org/publication/new-us-h ... y-doubled/

[adam2]

AFAIK, average new home sizes in the UK have declined significantly in recent years, in contrast to the USA position.

It is alleged that builders equip show homes with special extra small furniture so as make them look more spacious.

[vtsnowedin]

AFAIK, average new home sizes in the UK have declined significantly in recent years, in contrast to the USA position.

It is alleged that builders equip show homes with special extra small furniture so as make them look more spacious.

Funny I saw a piece yesterday where the current fad of virtual tours of for sale properties were becoming heavily photo-shopped to show not" what is" but what you, "could" renovate it to, including possible additions and in ground pools.

[vtsnowedin]

AFAIK, average new home sizes in the UK have declined significantly in recent years, in contrast to the USA position.

It is alleged that builders equip show homes with special extra small furniture so as make them look more spacious.

If that is the case then you are being abused by the industry. It is one thing for Americans to choose to live in bigger and better houses because they can afford it (and those houses gain equity in a rising market faster then smaller less desirable homes) and quite another for you to be forced to accept a rabbit hutch sized home because they build no other.

[raspberry-blower]

AFAIK, average new home sizes in the UK have declined significantly in recent years, in contrast to the USA position.

It is alleged that builders equip show homes with special extra small furniture so as make them look more spacious.

If that is the case then you are being abused by the industry. It is one thing for Americans to choose to live in bigger and better houses because they can afford it (and those houses gain equity in a rising market faster then smaller less desirable homes) and quite another for you to be forced to accept a rabbit hutch sized home because they build no other.

The rules of the game have been shifted towards the greedy developers. Ever heard of Permitted Development Rights?

That’s the other thing that is so controversial: under so-called “permitted development rights� (PDR), office-to-residential conversions don’t require planning permission – the developer simply has to notify the local authority of its intentions and gain what is called “prior approval�. This effectively means planning approval has already been granted by the secretary of state – but without seeing any of the actual proposals.

What can go wrong? Well a hell of a lot is the actual answer

There would be no private or communal garden space at the Balham development. And because you would be living on a busy industrial estate, it’s claimed that just a short distance from your front door you will have heavy lorries coming and going, cutting equipment being used, forklift trucks moving items around, and businesses that start work as early as 4am and don’t shut up shop until 11pm. So you might want to think twice about letting the children play outside.

Julia Park, who is head of housing research at architects Levitt Bernstein and one of the London mayor’s “design advocates�, claims that if the conversion is allowed to go ahead, “the risk to the wellbeing – mental health in particular – of any occupants would be considerable�.

And, with the plans indicating that four of the proposed flats have no vertical windows at all, she adds: “Our prisons do better than that.�

To add insult to injury:

Caridon Developments was contacted by Money but declined to comment. On its website, Caridon says of its developments arm: “We identify projects, take them through the planning process and build quality accommodation which delivers impressive return on investment.�

Quality accommodation for whom? Rabbits? Hamsters? It is not fit for human habitation
Guardian: Will these be the worst new "rabbit hutch" in Britain?

Disclaimer: having done survey work on some of these places all I can say is that they are grim. Unsurprisingly residential turnover is high - they are all bought on the Buy-To-Let market as no-one in their right mind would want to actually live there. A significant number of them are empty for a considerable length of time too..

[adam2]

AFAIK, average new home sizes in the UK have declined significantly in recent years, in contrast to the USA position.

It is alleged that builders equip show homes with special extra small furniture so as make them look more spacious.

If that is the case then you are being abused by the industry. It is one thing for Americans to choose to live in bigger and better houses because they can afford it (and those houses gain equity in a rising market faster then smaller less desirable homes) and quite another for you to be forced to accept a rabbit hutch sized home because they build no other.

UK developers do build SOME larger homes, but the AVERAGE size is decreasing.
In the USA, purchasers tend to ask "how many square feet do I get for my money" Those able to afford only a modest home, would still prefer 1,500 square feet, to 1,200.
In the UK, the purchaser is more likely to ask "how many bedrooms does it have" This gives a clear incentive to build both the house and the rooms therein as small as the building regulations permit.

[kenneal - lagger]

A typical nineties or naughties four or even five bed spec built home would fit into a seventies three bedroom home. The national building companies have a virtual monopoly on the market and people are so desperate to buy a house that they will buy whatever they are offered. Prices are also rising so much that they are grateful to find something that they can afford.

[BritDownUnder]

AFAIK, average new home sizes in the UK have declined significantly in recent years, in contrast to the USA position.

It is alleged that builders equip show homes with special extra small furniture so as make them look more spacious.

That's very interesting. I have recently been looking at property in New Zealand as a potential bug out location and there the online adverts contain photographs that appear to have been stretched along the axes emanating from the vanishing point of the photograph. Some very sophisticated software is clearly being used. So much so that all beds in bedrooms appear to be a super-king size and bathroom tiles that are obviously square appear highly rectangular. Cooking stoves appear to be super wide like on those celebrity chef shows. I could go on but you get the point. Here is a fairly tame example. If I had time I could find some real bizzare examples but unfortunately I am rather busy at work.

It appears that different countries have different solutions to house sizes.