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Originally Posted by park381
Did'nt think housing prices were linked to the stock market, thought it was more like supply and demand that controlled house prices in any given area of the country. But I'll go along with the speculator bit.
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What has happened ost 9/11 was stock and shares became a bit more dicey and a lot of money was re-routed into property and capital fueling the northern housing boom. And as that became a prosperous market more investors saw quick gains. All estate agents had several multi millionaire clients on their books ordered to enter the buy to let market regardless. Many investors were not even interested in which properties were bought or whether they were in fact let as profits from rising prices outstripped all considerations about rent. A false speculative market that curiously had nothing to do with household demand and everything to do with speculator demand. A bit like pieces of art really. Perceived value rather than actual value. In theory the market should re-adjust as quickly as soon as the speculators pull out. However they aren't and the original housing market in Hyndburn was dampened below its actual/real value. These factors account for the exceptional increases in house values.
This has actually been tragic. Not only have we created a bunch of non wealth creating millionaires, but a lot of first time buyers may have difficulty. The private rented market is more problematic and accounts for 11% of all houses in Hyndburn. Landlords can see how much they will benefit from a high price sale and so charge rent equally accordingly in order to stay renting.
I have put the peculier situation to strategic housing; that empty properties do not impact on rent ie supply and demand doesnt work because landlords are working on a sale or rent equation and that sale prices are determind not by supply and demand but by surplus capital in the economy. The old brake on this was council housing which afforded low rents and made high house prices unrealistic. With RTB and a diminshing low rent council sector, expanding private sector rents can be forced up considerably. Its a strange set of circumstances which Keith Hill, the Housing minister could not understand when I quizzed him last year.