Housing Rubble

Should a House be a Home, or an Investment?

Posted by admin Wed, 28 Nov 2007 17:29:00 GMT

It is often said that if you are buying a house to live in then you should think of it as a home, not an investment. In other words you should be more focused on finding a house that you like, than what is likely to happen to its value in the future. This is broadly a sensible approach - a house, after all, has to be a place that you are content to live in, and will have a considerable impact on your future happiness and well-being.

There is, however, a danger inherent in the statement. Buying a house is, for most people, the biggest financial decision of their lives, and the impact on their finances should be considered very carefully.

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Is There A Housing Shortage?

Posted by admin Tue, 13 Nov 2007 20:50:00 GMT

The short answer is yes, but not in the way that most people think, and certainly not in the way that the media describe.

The assertation that high house prices are due to "supply and demand", or "too many people" is, in and of itself, incorrect. At a very basic level, if there were "too many people" for too few houses, we would expect people to be living 10 to a room, or on the street, and this simply has not happened.

To understand this, you have to look more deeply into the issue of what "supply and demand" actually means. It is not the case that simply because there is more people who wish to buy a house than there are houses available to buy, that there is a housing shortage. To illustrate the absurdity of this argument, you can look to the example of a Ferrari and a ten year old boy. There are hundreds of thousands of ten year old boys across the world who dream of owning a Ferrari, but they do not represent "demand" for one. There is not a "shortage" of Ferraris. Similarly there are thousands of recent immigrants in Britain who would probably like to buy a house, but that does not prove there is a shortage of housing.

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