Broad Oak: your emotional support animal

Wednesday, August 06, 2008

House prices underpinned by shortages, boosted by inflation?

The Centre for Economics and Business Research reckons house prices will steady next year and shoot up for three years after that, thanks to housing shortages and building project cancellations - reports The Grumbler.

"Real estate could become a very good investment and inflation hedge once the government starts seriously printing money," commented Jim from San Marcos (who still has a realtor's licence) after his July 27th post.

3 comments:

Nick Drew said...

oh gawd, surely not again ! what does it take to shake people out of this time-expired logic ?

(a) for pity's sake, the banking sector is drifting towards meltdown ! So - there's the small problem of who's going to be left standing after the worst rigours of the downturn. This isn't going to be a 2-quarter blip, the casualty rate will be high, and it won't just be walking wounded ...

(b) elasticity in housing demand is great - albeit at the considerable discomfort and stress of doubling-up / overcrowding. Look how many migrant workers have been effortlessly 'accommodated' in the UK over the past 3 years

The way state and local authority care for the elderly is headed (as well as petrol prices) there could be a LOT less grannies living on their own a decade from now - and I'm not alluding to hypothermia

SACKERSON said...

Hi, Nick - you echo my own feelings about the housing shortage, i.e. that there isn't one, it's just that housing is misallocated, which suggests a pricing mechanism needs to be introduced.

E.g. instead of 100% relief on council tax for the very old, and 25% discount for those living alone, charge everyone according to the property only, and then the occupant/s can decide if the property is worth the running costs, to them.

Nick Drew said...

when I was Chair of housing in a large London borough we tried all the incentives & tricks (short of letting slip Rachman's dogs) to encourage under-occupiers - both public and private sector - to move to more suitable = smaller places and free up tremendous amounts of space

an uphill struggle ! and my old grandma was carried out feet first from her 3-bed house at the age of 97, we couldn't persuade her either

but times are a-changin ...