Rory Sutherland: Breaking the Property Market Delusion
Disruptors
Rob Moore
4.8 • 1.4K Ratings
🗓️ 9 December 2024
⏱️ 55 minutes
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| 0:00.0 | I'm going to share a really weird thought experiment with you, which is part of the reason |
| 0:07.0 | we have a property crisis is we don't have enough supply. We'll park that for a second. Part of |
| 0:13.0 | it is low interest rates. Part of it is that effectively when mortgage companies basically set a norm that you can borrow, let's say, three and a half, four and a half times joint income. |
| 0:25.8 | Okay. |
| 0:27.6 | They thought they were creating a limit and they actually created a target. |
| 0:31.3 | So most people buy property in a way that nobody buys almost anything else they buy, which is they go, how much can we afford, |
| 0:39.1 | and then they start looking for properties around the maximum level. |
| 0:42.2 | Now, we don't do that with cars, okay? |
| 0:44.6 | If we do that with cars, if I went into a car dealership and said, well, I've got a 40,000 |
| 0:47.8 | deposit, and I reckon I can probably borrow another 200 and something, you know, we'd |
| 0:52.5 | all be driving around in a Bugatti Veron. |
| 0:54.0 | But because we framed |
| 0:56.0 | property as an investment, every single person who enters the property market does so with the |
| 1:01.0 | intention of maxing out. I'm an anomaly there. I actually went low. I bought apartments outside. |
| 1:07.0 | I live in an apartment outside London. It's in a grade one building, which was cheap. |
| 1:12.5 | It was less than I could afford. And I deliberately and consciously tried to do that. |
| 1:17.8 | But nearly everybody basically goes, what's the most I can afford? |
| 1:21.2 | This is driven by the banks. That's what I'm going to buy. Well, it's certainly very |
| 1:24.1 | convenient for the banks. Of course it is. Yeah. But this very convenient. |
| 1:26.8 | Because they're lending us all the money. Of course it is. Yeah. That didn't happen in the 70s because you didn't know how much you could borrow and you were nervous. |
| 1:31.3 | And people asked the question, what sort of house do I need before they ask the question, how much can I afford to spend? |
| 1:38.3 | Right. |
... |
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