Read or listen now | Explore the impact of debt, rates and money supply on the housing market. What happens next? Gain insights into affordability and future prospects.
Excellent Dominic. I run a business in the property and construction sector and housing and house prices but more importantly the cost of building a house, has always been a good barometer of the state of the nation. We have hit a perfect storm - cheap labour is no longer available as the construction work force is reduced . This isn’t just about Brexit, it’s more to do with Labour leaving the sector either because of increased construction insolvencies (bounce back loans, and a desire to prolong the lockdown mentality) at a higher rate than demand has fallen, a reliance on imported materials instead of manufacturing our own which has lead to some huge leaps in cost (timber frames cost 30% more now than in 2020, and a ridiculously, badly run planning system that lacks talent and leadership. Chuck in a rise in interest rates and it’s not good.
The market will adjust as always, a smart forestry landowner will convert to making timber frames and not garden sheds. Young people will realise that construction apprentices are in demand and come back into the profession etc. What won’t change in the short term is the state of the planning system. The people responsible for this debacle are hugely responsible for high land costs and the stifling of what should be a profitable and productive market. Keep up the good work.
Apologies Dominic, I don’t think I made my comment clear in the context of your post - as well as debt fuelling house price inflation, the cost of constructing a traditionally built house (I know you have posted previously that building a house should not be that expensive and I agree) for most developers has some upward pressure and land prices remain high because the larger developers tend to hold onto land and restrict supply coupled with a planning process that is archaic, inflexible and is not designed to promote development, again restricting supply. Developers need to make a profit (how dare they) so this adds to house price inflation. Throw in the debt issue and it’s a problem. Thanks again.
One interesting reference point for house prices compared to incomes is to consider values in The Good Life... Tom, a draughtsman designing plastic toys for cereal boxes was on about 8k a year then but his 4 bedroom house in Surbiton was around 26k, next door, Gerry, the higher flying executive, was on about 12k so therefore the big house was well under 3x income. Fast forward to present day, Gerry would be doing well to be on 80-100k as a high flyer in a cereal company, Tom’s job wouldn’t exist and that house in Surbiton would be atleast 1.5 to 2m. Well above a 3 or 5x or 10x good income. Basically something must have gone a bit out of kilter when you can be a top rate tax payer and not afford a 1 bedroom flat anywhere in your region.
The financial astrologers say the same 2025 / 2026 is when it all comes tumbling down. I'm waiting... just checking to see what you thought as I am tempted to buy but surely the arse is about to fall out of everything!
Excellent Dominic. I run a business in the property and construction sector and housing and house prices but more importantly the cost of building a house, has always been a good barometer of the state of the nation. We have hit a perfect storm - cheap labour is no longer available as the construction work force is reduced . This isn’t just about Brexit, it’s more to do with Labour leaving the sector either because of increased construction insolvencies (bounce back loans, and a desire to prolong the lockdown mentality) at a higher rate than demand has fallen, a reliance on imported materials instead of manufacturing our own which has lead to some huge leaps in cost (timber frames cost 30% more now than in 2020, and a ridiculously, badly run planning system that lacks talent and leadership. Chuck in a rise in interest rates and it’s not good.
The market will adjust as always, a smart forestry landowner will convert to making timber frames and not garden sheds. Young people will realise that construction apprentices are in demand and come back into the profession etc. What won’t change in the short term is the state of the planning system. The people responsible for this debacle are hugely responsible for high land costs and the stifling of what should be a profitable and productive market. Keep up the good work.
Thanks Matthew. Really interesting.
Apologies Dominic, I don’t think I made my comment clear in the context of your post - as well as debt fuelling house price inflation, the cost of constructing a traditionally built house (I know you have posted previously that building a house should not be that expensive and I agree) for most developers has some upward pressure and land prices remain high because the larger developers tend to hold onto land and restrict supply coupled with a planning process that is archaic, inflexible and is not designed to promote development, again restricting supply. Developers need to make a profit (how dare they) so this adds to house price inflation. Throw in the debt issue and it’s a problem. Thanks again.
Agreed!
Corresponds with my views entirely. Something has to correct. Keep up the good work.
Just listened to it. Anytime I hear anyone (normally a midwit) saying my house is worth £x000000, I ask them how they know that is the value.
The normal response is next door sold for £x000000 a few months ago and mine is much better.
After listening I put a £10 note on the table and say I will buy it for a tenner.
They are outraged and say I just said it is worth £x000000
I smile and reply have you had a better offer as the market value is the best price you have been offered
One interesting reference point for house prices compared to incomes is to consider values in The Good Life... Tom, a draughtsman designing plastic toys for cereal boxes was on about 8k a year then but his 4 bedroom house in Surbiton was around 26k, next door, Gerry, the higher flying executive, was on about 12k so therefore the big house was well under 3x income. Fast forward to present day, Gerry would be doing well to be on 80-100k as a high flyer in a cereal company, Tom’s job wouldn’t exist and that house in Surbiton would be atleast 1.5 to 2m. Well above a 3 or 5x or 10x good income. Basically something must have gone a bit out of kilter when you can be a top rate tax payer and not afford a 1 bedroom flat anywhere in your region.
That’s a very good illustration of how nuts things are
Excellent Domenic!
The financial astrologers say the same 2025 / 2026 is when it all comes tumbling down. I'm waiting... just checking to see what you thought as I am tempted to buy but surely the arse is about to fall out of everything!
2026 is the peak according to Fred Harrison and the 18-year property cycle
Thank you! 18.6 year nodal cycle in astro speak 🪐
Curious why MoneyWeek articles omits mention of the year in the last paragraph.
Curious why MoneyWeek article omits the year in the last paragraph?