Fortsätt till huvudinnehåll

House price expectations


Tidy Street, Brighton
Originally uploaded by seadipper

I just received a questionaire from a Brighton estate agent asking what I expected would happen to house prices in the next year.

I do not have a crystal ball but If there was no expection of inflation I would say that prices are 20% too high. The house two doors away from me in a street like this is let for £1500 a month which is about £15,000 a year net. Others in the street, which is near the station, are on sale at about £380,000 which is about £10,000 less than what they were at the peak 12 months ago.

But I would expect inflation at 4% in the next 12 months and 7% in the 12 months after that. It might have been higher but the Monetary Policy Committee seems to be able and willing to resist calls to reduce interest rates.

If you work out how much you would need to leave in an account to get that amount in interest, and add on a bit for the expectation of future growth and allow for inflation, the right figure for a house such as those in the picture figure is in the region of £340,000. I think that is where the prices will settle in due course. But trading will be at reduced levels while present uncertainties and lack of confidence continue. There is a lot of fear around.

I would also expect to be the rental market to be fairly stable or possbily buoyant and rentals to rise roughly with inflation. This is the normal pattern.

Kommentarer

Skicka en kommentar

Populära inlägg i den här bloggen

Importing people to sustain demand

I got involved in a discussion with a Youtuber called “Philosophy all along”. This was in connection with criticism of Trump’s policy of deporting illegal migrants, which he argued would be bad for the economy as it would reduce demand. This implies that there is a need to import people to sustain demand. There is no obvious reason why a population should not be able to consume everything that the same population produces. If it can not, then something else is going on. It is a basic principle that wages are the least that workers will accept to do a job. Wages are a share of the value added by workers through their wages. The remainder is distributed as economic rent, after government has taken its cut in taxes. Monopoly profit is a temporary surplus that after a delay gets absorbed into economic rent. Land values in Silicon Valley are an example of this; it's like a gold rush. The miners get little out of it. Rent and tax syphon purchasing power away from those who produce the g...
Skicka en kommentar
Läs mer

The Zombie Train that refuses to die

The Guardian has published a couple more articles against HS2, one by specialist rail commentator Christian Wolmar, and another today by journalist Simon Jenkins. The main arguments in favour will doubtless be wheeled out by the commentators: the need for capacity and the disruption caused by upgrading existing routes. HST itself will severely disrupt services to Euston during the construction period. Capacity can be increased at a fraction of the cost by a variety of measures, provided that it is accepted that the additional traffic will run at existing speeds. It is not generally known that the Midland main line is, or was, four track all the way from London to Trent Junction, between Nottingham and Derby. This is because the additional tracks are separate, having been added for coal trains which trundled down to Brent sidings, on the edge of London, from a collection point at Toton in Nottinghamshire, where the Midland Railway build a huge marshalling yard. Beyond Derby, the main l...
Skicka en kommentar
Läs mer

How much more will the British tolerate?

The British are phlegmatic, tolerant and slow to rouse. Thus there was no great reaction after the terrorist attack in July 2005. The murder of Lee Rigby created a sense of outrage, but nothing more, since it appeared to be an isolated incident. Two serious incidents within a fortnight are another matter. Since the first major terrorist incident in 2001, authority has tried to persuade the public that Islam is a religion of peace, that these were isolated events, or the actions of deranged "lone wolves", having nothing to do with Islam, or to reassure that the chances of being killed in a terrorist attack were infinitesimally small. These assurances are are beginning to wear thin. They no longer convince. If government does not act effectively, people will take the law into their own hands. What, however, would effective action look like? What sort of effective action would not amount to rough justice for a lot of innocent people? Given the difficulties of keeping large n...
Skicka en kommentar
Läs mer