Saturday, 27 January 2018

Supply and demand

This should be interesting.

The current wisdom is that we need to build more houses to bring the price down, it's all about supply and demand. Here we have a good example of oversupply, so, the prices should start coming down and a long way down, if the "current wisdom" is correct, because if oversupply is to reduce prices from their current level to an affordable one, it's going to have to have a really powerful influence.

Funny that the Guardian didn't mention massive price falls in their article though...

9 comments:

jack ketch said...

Hmmmm all those flats for city high flyers empty...could it be a sign of the impending Zombie Apocalypse? Surely it can't be because 'the City' distrusts May's assurances regarding Brexit, heaven forefend. There was a time not so very long ago that the mere phrase' green shoots' would have bankers and their ilk reaching for the coke or prozac. "Brexit means Brexit" no doubt has a similar effect down Canary Wharf way.

Bayard said...

I think it much more likely that it is simply a bubble that has reached its peak. Speculators, sorry, investors are seeing that prices aren't going up any more and are steering clear. This has been building up since long before the Brexit vote. If anything that vote helped to prolong the bubble, by precipitating a long-overdue collapse in the pound and making these overpriced flats look cheaper.

DBC Reed said...

To be fair to the Guardian, they published an article by Ann Pettifor yesterday which said the right things, starting with the title "Building more homes will not solve our housing crisis" and calling for property taxes and "a different sort of economic order."

Ben Jamin' said...


Who'd want to pay top dollar to live in characterless and soulless new build high rise flats?

The whole appeal of buying in London is for posh Georgian and designer scruff Victorian experience.

These property developers are clueless. The Duke must be having a little chuckle.

Bayard said...

DBCR, nice to know that the message is getting through, but it does still seem that people like Ann are lone voices crying in the wilderness. It will take years to overturn all the brainwashing.

"Who'd want to pay top dollar to live in characterless and soulless new build high rise flats?"

Well quite, that's why I called them speculators.

Mark Wadsworth said...

Nice one!

But what will happen is that if "developers" realise there is oversupply, they will just mothball the next phases until the old stock is cleared, so you'll never be able to prove that there's little correlation.

Also, the much vaunted "over supply" is minimal, 15,000 flats in a city with 3 million homes?

Bayard said...

But I will be able to prove that, whatever the cause, the oversupply did not result in the sort of price falls that the gut-thinkers say it should.

Mark Wadsworth said...

B, they still won't believe you. They'll say the oversupply want big enough to have an impact.

Bayard said...

Then I'll hit them with Ireland in the 2000's (no need to tell me, I know they still won't believe me, been there before).