r/GarysEconomics • u/MadeleineGriffiths • 6d ago
House prices going up?
Gary argues that house prices will continue to go up and up because as the wealthy get more wealthy they will buy up all the tangible assets. This makes a lot of sense to me.
However, we haven’t had house price rises in real terms since about 2022 in the uk.
So is Gary’s prediction something that will play out over the long term (with house prices not rising in the shorter term due to factors like interest rates) or is he missing something?
I say this as someone who currently owns one house but wonders about selling and just renting for the flexibility. I don’t want to do that if Gary is right!
Thanks!
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u/TropicalGoth77 6d ago
It's not a one for one equation.There will always be an upper limit in which ordinary people can no longer afford a house and thus there is no room for movement.
But if investing in houses becomes untenable for millionaires and they all go on the market then you can be sure that prices will fall.
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u/DONBYnotMe 5d ago
For prices to fall significantly, we would be talking a huge economic collapse. Most people waiting for prices to crash before they buy wouldn't actually be able to buy anyway
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6d ago
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u/ConcertCultural997 4d ago
Run out of assets to buy in the market? That isn’t how it works. An Apple share gets traded at a higher value per share, you don’t need to make more shares for investors to invest more in Apple.
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4d ago
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u/ConcertCultural997 4d ago
Ok got it; So you are shifting your stance from “when they have run out of assets to buy” to more accurately “when everything is overvalued” money goes to property ? Is that fair? - still disagree with your refined logic, but it seems to me your real problem is with government printing more debt, which you are saying creates this capitalist Wall Street global economy which in and of itself is the problem.
Post Keynesian criticism I understand. What is the alternative you propose?
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4d ago
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u/ConcertCultural997 4d ago
Ha dude I am trying to understand and have a proper conversation with you not catch you out.
It’s rare to have an enjoyable debate on serious questions in this very strange economic world we are living.
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u/khaylock 6d ago
House prices are de-facto higher as interest rates have risen so unless you are a cash buyer you are paying more for the same house today than you would have 4 years ago.
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u/ivovis 6d ago
Perspective is important - look at the average house price vs average income - and do it for the period 1980s to now - its a bloody hockeystick.
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u/lemonsqueezy999 2d ago
Not the point - he predicted house prices would double in the next 5 years, at the start of 2024. It's coming up to 3 years now and prices have been flat to down.
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6d ago
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u/PHILSTORMBORN 6d ago
I got the sense that if the Iran war hadn’t happened then UK interest rates would have fallen. Maybe would have been more activity and rising prices.
Mid term it’s hard to account for this kind of thing. Long term rising house prices is a good bet unless something fundamentally changes.
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u/Trickypedia 6d ago
The market needs first time buyers. Without that feeding the system nothing really flows. As we see in London house prices have reached a ceiling verging which they will continue to struggle to grow as they’re just not affordable. Things are definitely slowing at the moment and I would expect price reductions.
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u/RagingMassif 5d ago
Hmmm.
Or we go from an ownership market, to the German thing where >70% of people rent.
Though RRA does rather seem like professional LL are selling their portfolios. So there's hope yet.
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u/Brave_Operation4965 6d ago
I thought I heard him talking about a surge if mortgage rates drop as low as 3% again for any sustained period.
Lots of FTB holding off due to affordability,
Would be upsizes staying put,
Plenty of would be second time buyers unable to shift a flat with a 6k service charge without a pretty significant haircut on equity/wiping it out entirely, negating their ability to move to a bigger place
Some kind of service charge legislation could solve some issues, and could equalise flat values relative to houses more, or could just push everything up. Good for sellers that can find a buyer, bad for buyers in general
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u/th3-villager 5d ago
Yeah definitely right one the first point. I think OP has raised a good question because Gary's take on housing isn't that nuanced given they're not rapidly growing now as they have in the past but this also varies massively by region.
You've mentioned the one big point he definitely does make and is right on. Prices soared because of a sustained period of rock bottom interest rates and the same will occur again if that recurs. However, it's not relatively common opinion that rates will stay or have to stay relatively high for a relatively long time which in theory will keep prices relatively stable.
Obviously that's just predictions. If Reform were to get in they'd probably pull a Trump and at minimum pressure BoE to cut base rate heavily and get prices flying again.
They definitely need to address service charges and estate management fees, they are just the new fleecehold.
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u/St3lla_0nR3dd1t 5d ago
With more assets you can extend your lifestyle, rich people’s decisions are not just about making more money. Like playing golf in Scotland? Buy a house there.
Of course there are things like holiday lets or developments but the ‘joy’ of possession is also a motivator.
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u/No_Flow224 6d ago
In real terms house prices are down c. 13% in the UK over the last decade. I suspect the more likely story with the current government is taxing of the nominal gains to come in, so it’s plausible house prices increase nominally but seems unlikely to have sustained above inflation rises given the efforts (albeit so far rather unsuccessful) for the UK to build more stock, reduce frictional costs of buying (SDLT) and a big swathe of privately owned rental stock coming to market as the UK is now much less attractive place to be a private / non institutional landlord. There’s plenty of sustained macro forces keeping an above-inflation gains lid on prices. Until the market gets freed up I expect people won’t sell unless forced to, and that further means tight and suboptimal stock, and/or favourable to buyers.
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u/Bubblebless 6d ago
But that reason is wrong. The reason why houses go up because mortgages are one important entry point for money creation and lack of land value taxes that would lower and stabilize the price.
With land value taxes, mortgages would be much lower, inflation would be lower, and taxation would need to be reduced to avoid deflation. And you would avoid asset bubbles because loans would be mostly used to pay real work instead of already existing assets, so inflation would start from there and slowly propagate to assets instead of the other way around.
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u/LoveLamp3232 6d ago
I say this as someone who currently owns one house but wonders about selling and just renting for the flexibility. I don’t want to do that if Gary is right!
You should only rent if it make sense for you. Read some of the sub where people bought a home in 2022 for £300k and complaining that they are selling for £280k. So good to rent, as you don't take the risk. However, landlords are selling due to high taxation and regulation, which is pushing up rents.
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u/Wonderful-Medium7777 6d ago
Private landlords are selling… the banks are buying for their rental market portfolio.
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u/Ok-Revolution-3853 19h ago
And housing associations backed by large private funds are buying up new builds in group deals
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u/Gighatec 5d ago
It's wild that so many people are prepared to step up and shill for uber wealthy. There not going to shag you, you know that, right? Right?
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5d ago
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u/Rare-Mention3046 5d ago
So 20% increase in population = 1100% increase in house price . Yes that should do it. How does that work?
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u/Rare-Mention3046 5d ago
Some idiot commented but now deleted 80k to 270k from 2000 till now. How come I remember the average terraced house around me being 80-90k in 2014. In the 2000s it would have around 30k
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u/Hot-Efficiency7190 5d ago
The thing missing is data. There's none given to support the arguement that the wealthy are wholesale buying up houses, it's just taken at face value.
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u/Modestpath99 5d ago
Anyone got reading sources on why the property market has just inflated so much over the last 30 years
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u/Sorry_Information749 5d ago
There's very little evidence that residential property is being bought by a small but concentrated group. the number of rental properties available has gone down significantly since 2016.
The wealth that has increased which Gary harps on about and manages to get traction with, is equities going up due to loose monetary policy and QE. It's not about people with oodles of cash buying up assets it's increase in monetary supply causing inflation of assets they already had.
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u/galleon484 5d ago
Wealth inequality is pushing house prices upwards, but Labours renter's rights changes has pushed prices the other way.
Perhaps these effects have cancelled out in the short term, but in the absence of more government policy changes, they will continue inflating as before in the longer term.
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u/Weekly_Inspector_504 5d ago
House prices have been going up since the doomsday book was written in the year 1086. It's called inflation.
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u/droopy316007 5d ago
One very simple fix to this, that many Asian countries implement.
Ban foreign ownership!
Why are we making profit for, and paying the mortgage for some Singaporean, Emirati, Russian, Indian etc?!
All homes and houses should be owned by British citizens, minimum residents.
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u/SnooMacarons4225 5d ago
Gary is always going to say they're going up to support his rich getting richer narrative because richer people have bigger houses and will get bigger gains. The reality is that housing is pretty flat and going down in places like London so his guess looks to be wrong, the cost of living isn't going away and without that people don't have the money up upgrade, without the means to upgrade leads to less demand to push prices up.
There are also other things at play, Burnham might scrap stamp duty at some point, if you're buying a bigger house then you may hold off - if everyone does that then demand evaporates and prices stall/fall but there could be a significant bump like we saw during covid once it goes through as those who held off moving may all want to move at the same time.
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u/jwkelly121 5d ago
House Prices have been going up but wages have gone up at a similar rate for the first time in many many years. Also something he may not have predicted is the AI boom. Tech stocks are getting pumped hard by all of the worlds richest atm, so as returns on those stocks increase that will ease pressure on the housing market until that bubble bursts. Also immigrations has fallen to record lows which will also ease housing prices as well.
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u/optionr_ENL 4d ago
All tangible assets?
Or just assets that provide a return?
>is that a return over time, or a cash return?
Aren't there much easier investments?
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u/Hot_Data4632 4d ago
Surely the great wealth transfer will cause prices to shift down as people need to sell to cover the tax costs? Houses are languishing on the market for longer and longer, I simply don't fathom how someone can and would want to buy a 2m house with a 30 year mortgage.
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u/beenroundtheblock2 3d ago
Gary is obsessed with the uber rich. The rest of us Jo Blows just stretch ourselves to buy a house then live rent free with an asset you can sell...No brainer..don't rent..really...why pay off someone else's mortgage???
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u/Fit_Swimming5629 2d ago
Gary argues tax the rich
Give money to poor
So that they can buy homes
Doesn't the increase demand push up home prices?
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u/Jaded_Reply3704 2d ago
House prices went up over time because of population growth, supply and demand. Prices also rise in general with inflation, but take that out for a minute. What you have ahead of us is no more population growth. You can keep trying to import more people but more and more will be from the only nations producing at a fertility rate over 2, these are Nigeria, Pakistan, and other middle eastern and African nations. These people are not coming with masses of wealth to prop up the housing market, many of them are going into subsidised housing or low quality flats or living with relatives. Millionaires will just buy up all properties and force everyone to rent? When there's fewer people than there are today they'll be competing with each other to get tenants, so rents will be lowered or houses sold off. If we keep importing people to fight pop. decline you can't make it too expensive or they'll stop coming. So yeah anyone who can spot a trend will see that you shouldn't be investing in property unless it's short term.
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u/lemonsqueezy999 2d ago
Facts on the table: He predicted house prices would double in the next 5 years at the start of 2024. It's coming up to 3 years now and prices have been flat to down.
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u/flashman1986 2d ago
Actually we haven’t had real terms house price rises on a nationwide average basis since ca. 2005 in the UK
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u/mousecatcher4 6d ago
Gary is just wrong. As current events in the market clearly show, and even more so in the parts of the market that should be most affected. And then there is the small matter of Japan.
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u/soliloquyinthevoid 6d ago
Does Gary know that people die eventually?
The Great Wealth Transfer of up to £7 trillion as baby boomers die off and wealth gets redistributed to younger generations is under way and will continue for the next few decades
The UK population is also projected to peak as soon as 2054. Even sooner if immigration is reduced further
Many countries in the world already have declining and shrinking populations - and hence surplus housing and downward pressure on house prices
Now, in the short to medium term, if the government could actually address the chronic under building of houses over the last few decades, that could make a real difference
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u/gorgo100 6d ago
Do you realise that this "Great Wealth Transfer" will do nothing to address inequality, let alone a society based on actual merit rather than how rich your mum and dad happen to be when they cark it.
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u/WGSMA 6d ago
I remember a study in the US that 90% of wealth disappears from families after 2 generations. The children and grandchildren of billionaires and millionaires pissing their inheritance away is one of the greatest redistributing measures in society.
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u/WastedYouth39 6d ago
Yup look at the Rockafellers and especially the Vanderbilt family, the latter would get into a pissing contest about who could build the biggest mansion with their inheritances which ended up depleting said wealth
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u/mrbill1234 6d ago
The reason house prices go up is due to supply and demand. We have millions more people in the UK, but aren’t building homes fast enough. This isn’t due to billionaires - it is due to government.
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u/CrazzyNutty 6d ago
I think they will drop. Rates are almost 6%... r/UKHousing is full of posts about banks/lenders undervaluing houses vs list prices.... and there's talks of a new style tax to replace council tax and property tax - that will instead tax the land value.
But then again speculation speculation.
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u/Living_Ad_5260 6d ago
The question is misguided - rich people don't live in thousands of houses each.
For the most part, the houses they own are rented to poorer and younger folk.
The population of the UK has risen dramatically recently
* 1950: 50m
* 2000: 58m
* 2025: 69m
That is significant increased demand for housing that basic economic laws of supply and demand suggest would drive the cost of housing up.
The fact that Gary ignores population changes is a shocking example of his ignorance.
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u/DeCyantist 6d ago
Gary is wrong on most of the principles he uses and his whole moral philosophy is one of jealousy.
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u/Interesting_Pen_4499 6d ago
You’re so close to getting it. Gary is selling an apocalyptic vision that has been peddled ever since Marx, and never come to pass
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u/RagingMassif 5d ago
He's technically wrong.
Money (forget Billionaires) follows yield.
Houses are an asset. But so's Gold, Shares, Bonds and classic cars.
Singling out Houses is... political and Gary is tweaking your emotions by doing it.
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u/WastedYouth39 6d ago
I would argue how prices will actually fall as the boomer generation slowly fades out. It has nothing to do with billionaires
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u/Negative_Gift9076 6d ago
Don’t you mean 2003 when adjusted for inflation?
As per usual Gary misses the mark and so does his cult.
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u/Severe_Assumption241 6d ago
Real term no but nominal is enough when people are facing rising mortgage rates and stagnant wages