Meanwhile...

http://www.theguardian.com/society/2014 ... edroom-tax

Apart from anything else, that's one hell of a 'guilty' reaction to a report that wouldn't even have made the headlines otherwise. Labelling someone Marxist? In this day and age?

Quite a lot of the tory party mentally aren't in this day and age.

It isn't doing that at all. There are a handful of ultra pricey locations where I couldn't afford to live at all, and I still couldn't if prices fell 90%. They are a separate city to the one I, and about 8 million other people, live in.

People who are nothing like me buy houses that are nothing like mine. Their abundance of wealth, and the relatively small number of absurd palaces for them to buy, are factors which cause the gaudy houses they like to buy to become ever more outrageously expensive. But this all has little to no effect on my house, for which these people never bid. Houses where I live are getting more expensive too, but that is because there are millions of normal people who want to live in normal houses, and not that many normal houses either.

There's plenty of bricks, plenty of land and plenty of scope to build houses faster than we do. But we waste time chasing party political canards, instead of attending to the factors that discourage small and medium sized companies from entering the house construction market.

This is a house near where I currently live, Zone 5 in London, at the end of the tube line.

Enfield house

It's £420,000 for a 2 bed semi detached 15 miles of the centre of London.
So keep telling yourself only the rich postcode have prices skyrocketing and the rest is fine because you're doing alright.

That's not what I said. You are smart enough to know that you are misrepresenting me, so why do it?

I said that billionaires buying tasteless golden mansions aren't what is driving up the costs of dull little houses in Cockfosters. And this is true, if you go to view that property, there will not be a moment of embarrassment as you leave and bump into the Sultan of Brunei on his way in is there?

What forces up the cost of that dingy hovel is competition with other hovel purchasers who would like to buy it.

The solution is to build more hovels, not to argue with billionaires about whether they sleep in their palaces as often as they ought.

I happen to think it everyone down the ladder as people cannot afford to move up into more luxurious properties and get stuck in smaller, dingier properties.

There was a funny article in the French papers a few months ago about the London expats complaining the couldnt afford to buy within south Kensington as they were being outbid by Greeks trying to protect their money. These are fairly wealthy people but hardly the "king of Brunei" extreme you're talking about.
These people are know buying properties in the Camden borough, making prices there rocket.

I think it is the Chinese this year with new builds. Last year it was the Italians who were the cash buyers. Two years ago it was the Greeks. All of this money is because they fear turmoil on their own countries and as a way to protect their wealth. Buying into a massive bubble is not a way to protect your wealth but as long as there are more fools out there this bubble will go on for a while. The price to income ratio for homes in London is now well above that at the height of the last property crash in 2008. So London property is on borrowed time but bubbles can go on for longer than people expect.

These big mansions were bought when Saudi Arabia had their own internal problems. They have homes all over the world including a Palace in Marbella, which is more convenient to the King and his mega yacht.

That's overstated. Foreigners buying to hoard properties only buy very specific things. What Jon missed in his piercing analysis of why people don't use their mansions as dwellings, is what else they do use them as. It's not just a proxy foreign bank account, it's also collateral for a loan or to facilitate a trade elsewhere. In addition, a 20 million pound house is rarely sold to anyone who has the intention of maintaining it with its current decor - or even usually its shape. Unless the building is listed, it will be extensively remodeled more or less every time it is sold.

Further down the ladder, people aren't buying properties for collateral. Those shifty Greeks are usually letting it out. And the power of this effect to transmit down the line is only inherited from reduced supply, and changing fashions.

In the early part of the 20th century, the middling sort of inner London neighbourhood (Kings Cross etc) became shabbier as transport changes made leafy suburbs more respectable. This continued as cars made areas that didn't even have good connections to the tube system more desirable. The nice old buildings came to be inhabited by not so nice people (junkies and whores) in some areas, or poorer immigrants in others.

It's only in the last three decades that the process has reversed and fashionable middle class types have started to reclaim the nice old houses in run down areas - pushing up prices through their willingness to spend more.

It's a relatively complex picture, but the key factor in this price escapade is the same one that always applies. Supply and demand will always move towards each other. You can fix it the sane way - by supplying more, or the insane way - through repression.