Talk me through the economics

[madd0ct0r]

UK housing market.

Demand for housing is relatively inflexible:
Demand slowly increases over time as the population grows
Demand has rapidly increased over last few decades due to more people divorcing ect, but this effect is nearly played out now.
Demand has slightly increased in university cities due to the much larger proportion of people at uni - students will cram into houses though, so it's not a huge increase.
Demand inside London is also increased by influx of foriegn capital

Does people taking advantage of buy-to-let tax breaks also increase demand?

3 types of people in the population - settled owners, happy renters and renting house-seekers.

Given house prices continue to rise, does that indicate demand exceeds supply, or is there something else at work?
Will house prices continue to rise indefinetly or is there a hard limit?

[Purple]

Well unless new homes are being built any sort of increase in demand, no matter how small will eventually outpace supply. Does that count?

[someone_else]

Here houses and other "immobile" possessions are bought by companies and banks to boost their stats. As now that money is no more "cash" but "assets" and that gives them higher standing in the financial market.
Don't know if it it's just because Italy's financial market is horribly broken (it is), but may be the same there as well.

[The Guid]

Does people taking advantage of buy-to-let tax breaks also increase demand?

Complicated. On the one hand it can increase demand for homes to purchase because it means more people are able to buy. On the other hand, however, it can offset that by making the rental market less attractive for landlords because people are more able to buy and therefore less willing to rent.

Given house prices continue to rise, does that indicate demand exceeds supply, or is there something else at work?

There isn't that much at work really. There is the cultural issue of renting being seen as a less "proper"option, along with tenants not having as much security or as many rights as other countries, but as per above, this can be offset by diminishing rental demand.

[energiewende]

Given house prices continue to rise, does that indicate demand exceeds supply, or is there something else at work?

As you outline in your post there are a few important reasons why demand for housing is increasing. At the same time, supply is heavily restricted by regulations on new building.

Will house prices continue to rise indefinetly or is there a hard limit?

The point at which people start emigrating on net from England due to low purchasing power adjusted living standards. Given how bad things are in most of the world, the answer is probably not really.

Here houses and other "immobile" possessions are bought by companies and banks to boost their stats. As now that money is no more "cash" but "assets" and that gives them higher standing in the financial market.
Don't know if it it's just because Italy's financial market is horribly broken (it is), but may be the same there as well.

I am strongly suspecting this is either completely false or horrendously misinterpreted.

[Sea Skimmer]

Here houses and other "immobile" possessions are bought by companies and banks to boost their stats. As now that money is no more "cash" but "assets" and that gives them higher standing in the financial market.
Don't know if it it's just because Italy's financial market is horribly broken (it is), but may be the same there as well.

Anywhere you go a company is usually valued higher for owning useful assets than cash, as long as it still has reasonable amounts of operating capital. A good reason exists for that, if the company has cash it can go out and do incredibly stupid things without warning like buy some internet startup that direct markets cat posters, or convert its cash into a different form of currency that suddenly crashes in value or awarding its CEO a 200 billion dollar bonus.

If they own assets, then in principle you can solidly you can examine the long term value and return on those assets. In principle anyway. Excessive cash can actually hurt a company, as it has Apple, if not many others, because it indicates that the company has no idea what it actually should be doing to continue to grow and generate return for investors.