easy2012 Posted August 4, 2010 Share Posted August 4, 2010 http://www.ft.com/cms/s/0/ad4dec10-9f32-11df-8732-00144feabdc0.html?ftcamp=rss (need registration to read). I think the writer is spot on. Give the falling property market a push By Neil O’Brien Published: August 3 2010 20:14 | Last updated: August 3 2010 20:14 Last month British house prices fell for the first time since February, prompting gloomy headlines about a possible second recession. The fact that rising house prices are reported as a good news story, however, remains rather curious. We do not celebrate when a loaf of bread goes up in price, or cheer for a hike in the cost of a car. For homeowners, of course, the rising cost of houses is offset by a rise in the value of the asset they hold. Prices also rise during good times, while recessions bring falls. But in reality rising house prices do not cause growth, they help to choke it off. For any number of reasons, David Cameron should be taking steps to drive down the price of housing. For a cash-strapped government the costs should be obvious. Expensive houses mean bigger wage demands from public sector workers. They have also pushed up the housing benefit bill by £8bn since 1997, while blocking people from leaving social housing, doubling the waiting list and locking many families in dependency. Rising prices have also choked off a right-to-buy programme that used to generate billions in revenues. EDITOR’S CHOICE Council tenancies for life face axe - Aug-03 House sellers feel heat as lull hits prices - Aug-03 For individuals the cost is less obvious, but no less real. Property prices are embodied in everything you consume. The sandwich you buy at lunchtime costs more if the person who made it has to pay higher rent. Furthermore, rising house prices transfer wealth from poor to rich, and from the young to the baby boomers. They contribute to the inter-generational tension that Tory minister and thinker David Willetts has christened “The Pinch”. By 2009, nine out of 10 first-time buyers needed support from their parents, entrenching the transmission of wealth or poverty from one generation to another. It would be helpful, therefore, to reduce the price of housing. Fortunately, decades of rising prices have mainly been the result of supply constraints imposed by the government itself. To get a sense of how much value is locked up by our rigid planning system, look at how much permission is worth. Land designated for agriculture costs, on average, less than £20,000 a hectare. The same land with residential planning permission costs an astounding £1.87m. Tight planning controls mean less house-building, and therefore higher prices. Government figures suggest that 100,000 fewer new homes every year raises prices by 12-14 per cent over the next decade. As Alex Morton points out in a forthcoming paper for Policy Exchange, the past decade saw just 160,000 new homes a year – less than half the 360,000 built each year in the 1960s. Our new homes are smaller too, making the real reduction in supply even greater. As the homelessness charity Shelter recently pointed out, if other costs had risen as fast as house prices since 1970, a supermarket chicken would now cost £47. Indeed, this constriction in supply is now so severe that home ownership rates have started to fall back for the first time since the first world war. Of course, it is not wrong to want to stop development near your house. Indeed, it is often entirely rational. But the social costs are substantial, if more widely dispersed. Setting a new target to reduce the price of housing would make this trade-off much more visible. How would a target work? Just as with the Bank of England, the minister for housing could be instructed to write a letter to the chancellor when prices veer too far off target. Such a letter would set out steps to get them back on track. Alternatively, rising prices could automatically trigger a relaxation of planning laws. Such a target need not result in the type of negative equity that so frightens homeowners. Professor Tim Leunig at the London School of Economics has shown that prices could fall by “around 2 per cent in nominal terms per year” without creating or increasing negative equity, because people pay off their mortgages at the same time. If we were less ambitious, we could target nominal stability over the long term, and simply let inflation reduce the real price. To be fair, the new government is reforming planning law. But its objective is not clear. Ultimately, if we do not want spiralling prices, then, as Mr Cameron noted during the election, “we’ve got to build more houses”. That is the right aspiration, but to achieve it his government should be bolder, and move to break Britain’s house price ratchet once and for all. The writer is the director of the think-tank Policy Exchange Quote Link to comment Share on other sites More sharing options...
Frank Hovis Posted August 4, 2010 Share Posted August 4, 2010 A target to reduce the price of housing. If only! Quote Link to comment Share on other sites More sharing options...
exiges Posted August 4, 2010 Share Posted August 4, 2010 More houses for more people.. or fewer houses for fewer people. Quote Link to comment Share on other sites More sharing options...
kilroy Posted August 4, 2010 Share Posted August 4, 2010 LEAVE OUR PROPERTY PRICES ALONE! Quote Link to comment Share on other sites More sharing options...
Reluctant Heretic Posted August 4, 2010 Share Posted August 4, 2010 (edited) This journalist is worth his weight in gold but then again he is only stating the blindingly obvious. The problem with his argument is that such policies would be in the national interest and not in the interest of a small but powerful/vociferous minority therefore it is unlikely that any government will embrace it. Now I'm stating the obvious. Hmmm ... new thought... just read 'Policy Exchange' website - endorsed by Boris Johnson, Michael Gove, George Osborne ? !!!! So does this mean that politics is now seeking to be driven by common sense? There's radical for you. Edited August 4, 2010 by Reluctant Heretic Quote Link to comment Share on other sites More sharing options...
Tired of Waiting Posted August 4, 2010 Share Posted August 4, 2010 This journalist is worth his weight in gold but then again he is only stating the blindingly obvious. The problem with his argument is that such policies would be in the national interest and not in the interest of a small but powerful/vociferous minority therefore it is unlikely that any government will embrace it. Now I'm stating the obvious. Hmmm ... new thought... just read 'Policy Exchange' website - endorsed by Boris Johnson, Michael Gove, George Osborne ? !!!! So does this mean that politics is now seeking to be driven by common sense? There's radical for you. Is this "Policy Exchange" one of the coalition's think tank?! If so - jeez that is good news. And it would confirm that other thread, a few weeks ago, linking some news about the Treasury, under the new coalition, wanting to bring HP down by around 25%. Did you see that thread? Quote Link to comment Share on other sites More sharing options...
the flying pig Posted August 4, 2010 Share Posted August 4, 2010 unfortunately most of the tories' support comes from the middle aged & blue rinse brigades who couldn't even spell 'conservatism' or 'free market' or 'capitalism' or 'libertarian' or whatever else the politicians would hope they stand for, but who know that they don't like their taxes being used to allow immigrants to give diana's memory cancer [or whatever other ******** the daily mail has cooked up on that day] and most definitely know that, as kilroy says, they want their house prices left alone. so i won't be holding my breath. Quote Link to comment Share on other sites More sharing options...
Si1 Posted August 4, 2010 Share Posted August 4, 2010 (edited) unfortunately most of the tories' support comes from the middle aged & blue rinse brigades who couldn't even spell 'conservatism' or 'free market' or 'capitalism' or 'libertarian' ... indeed - but they are getting a bit old now, and are outnumbered by 'liberal' (providing they get a bigger slice) boomers the tories see an opportunity with post-boomers by making housing affordable - a generation of grateful tory voters Edited August 4, 2010 by Si1 Quote Link to comment Share on other sites More sharing options...
JMcLane Posted August 4, 2010 Share Posted August 4, 2010 Oh I would love to see a change in attitude. I so want a home but I cannot shake the niggling feeling I have about a coming seachange (nothing to back it up apart from the bad and good news that I read) which I just know will happen the day after I move in. I dont mind loosing some of my cash in a decline but anything over my deposit would really annoy me. The RSPCA is crying out for people to home dogs and that is the only reason I want my own home, so I can hang the TV and have some dogs. Quote Link to comment Share on other sites More sharing options...
Freeholder Posted August 4, 2010 Share Posted August 4, 2010 Policy Exchange is a British conservative think tank based in London. The Daily Telegraph has described it as "the largest, but also the most influential think tank on the right".[1] The New Statesman called it as David Cameron's 'favourite think tank',[2] a view shared by the Political Editor of the Evening Standard, Joe Murphy, who referred to it as ‘the intellectual boot camp of the Tory modernisers’.[3] Its alumni include Anthony Browne, one of London Mayor Boris Johnson’s policy directors, and a number of individuals identified by The Guardian as being the ‘thinkers behind fresh Tory policies’.[4] http://en.wikipedia.org/wiki/Policy_Exchange There is, I think, hope. Quote Link to comment Share on other sites More sharing options...
Tired of Waiting Posted August 4, 2010 Share Posted August 4, 2010 Oh I would love to see a change in attitude. I so want a home but I cannot shake the niggling feeling I have about a coming seachange (nothing to back it up apart from the bad and good news that I read) which I just know will happen the day after I move in. I dont mind loosing some of my cash in a decline but anything over my deposit would really annoy me. The RSPCA is crying out for people to home dogs and that is the only reason I want my own home, so I can hang the TV and have some dogs. Same here! Quote Link to comment Share on other sites More sharing options...
TeddyBear Posted August 4, 2010 Share Posted August 4, 2010 Sounds like a lot of posts from here....I think the writer must be a member! Quote Link to comment Share on other sites More sharing options...
easy2012 Posted August 4, 2010 Author Share Posted August 4, 2010 unfortunately most of the tories' support comes from the middle aged & blue rinse brigades who couldn't even spell 'conservatism' or 'free market' or 'capitalism' or 'libertarian' or whatever else the politicians would hope they stand for, but who know that they don't like their taxes being used to allow immigrants to give diana's memory cancer [or whatever other ******** the daily mail has cooked up on that day] and most definitely know that, as kilroy says, they want their house prices left alone. so i won't be holding my breath. Don't agree with this generalisation. Many BTL landlords are Labour supporter and have benefited hugely from Labour's policies (crazy HB system etc) Many Tories voters are sensible business people who know that high properties prices (residential and commercial) are not good for the economy. Even for the middle aged brigade, the ability of their children to buy a decent place to live must have started to worry them. Quote Link to comment Share on other sites More sharing options...
(Blizzard) Posted August 4, 2010 Share Posted August 4, 2010 ....It would be helpful, therefore, to reduce the price of housing. Fortunately, decades of rising prices have mainly been the result of supply constraints imposed by the government itself. To get a sense of how much value is locked up by our rigid planning system, look at how much permission is worth. Land designated for agriculture costs, on average, less than £20,000 a hectare. The same land with residential planning permission costs an astounding £1.87m... How much of the difference in price is caused by the difficulty of borrowing against land without planning permission, and not just the scarcity of such land? Quote Link to comment Share on other sites More sharing options...
Traktion Posted August 4, 2010 Share Posted August 4, 2010 Is this "Policy Exchange" one of the coalition's think tank?! If so - jeez that is good news. And it would confirm that other thread, a few weeks ago, linking some news about the Treasury, under the new coalition, wanting to bring HP down by around 25%. Did you see that thread? I notice the Adam Smith Institute is becoming rather vocal. As the name suggests, they are rather into the idea of a Land Value Tax too (http://www.adamsmith.org/blog/tax-and-economy/property-bubbles,-credit-bubbles,-and-land-value-tax/, http://www.adamsmith.org/blog/tax-and-economy/tax-simplification:-the-case-for-a-land-value-tax/). As well as TV Licence changes, but I'll leave that one in the other thread! With the Cobden Centre also discussion changes in the monetary system, it seems we're having a flurry of new groups airing their views. It's such a breath of fresh air. Quote Link to comment Share on other sites More sharing options...
Tired of Waiting Posted August 5, 2010 Share Posted August 5, 2010 (edited) I notice the Adam Smith Institute is becoming rather vocal. As the name suggests, they are rather into the idea of a Land Value Tax too (http://www.adamsmith.org/blog/tax-and-economy/property-bubbles,-credit-bubbles,-and-land-value-tax/, http://www.adamsmith.org/blog/tax-and-economy/tax-simplification:-the-case-for-a-land-value-tax/). As well as TV Licence changes, but I'll leave that one in the other thread! With the Cobden Centre also discussion changes in the monetary system, it seems we're having a flurry of new groups airing their views. It's such a breath of fresh air. These are indeed very good news. I agree 100% re. breath of fresh air. It is such a huge relief when a government is ... well, not bonkers! Under the previous one it felt like "the world" had gone crazy! Though the worry is that millions still "think" (too strong a word, I know), within the previous "framework". That is very scary. EDIT: I have reinstated the forum signature I was using until a few weeks ago (when I had to change temporarily to Matt's briliant anti-BNP cartoon). Anyway, the sig is back, and with a little extension. If the FT author has indeed visited this forum, perhaps he saw it, and/or perhaps the original thread about it, re. that OECD study re. high property prices and international competitiveness. I'll post this new FT article in that thread now. It should come up to the Forum front page soon. See you, ToW Edited August 5, 2010 by Tired of Waiting Quote Link to comment Share on other sites More sharing options...
Chugger Posted August 5, 2010 Share Posted August 5, 2010 The RSPCA is crying out for people to home dogs and that is the only reason I want my own home Same here. The whole "NO PETS" thing is disastrous for animals that need a loving home. Quote Link to comment Share on other sites More sharing options...
Lucifer Posted August 5, 2010 Share Posted August 5, 2010 Oh I would love to see a change in attitude. I so want a home but I cannot shake the niggling feeling I have about a coming seachange (nothing to back it up apart from the bad and good news that I read) which I just know will happen the day after I move in. I dont mind loosing some of my cash in a decline but anything over my deposit would really annoy me. The RSPCA is crying out for people to home dogs and that is the only reason I want my own home, so I can hang the TV and have some dogs. What a lovely goal to have in life. Bless you. Quote Link to comment Share on other sites More sharing options...
Cogs Posted August 5, 2010 Share Posted August 5, 2010 Don't agree with this generalisation. Many BTL landlords are Labour supporter and have benefited hugely from Labour's policies (crazy HB system etc) Many Tories voters are sensible business people who know that high properties prices (residential and commercial) are not good for the economy. Even for the middle aged brigade, the ability of their children to buy a decent place to live must have started to worry them. Pathetic. Quote Link to comment Share on other sites More sharing options...
babesagainstmachines Posted August 5, 2010 Share Posted August 5, 2010 They talk and talk and talk and nothing changes. I'll believe it when I see it. Meanwhile Three cheers for bank profits! Three cheers for bank bonuses! Three cheers for austerity for the majority! Three cheers for "unexpected" inflation! Three cheers for asian protectionism and offshoring! Quote Link to comment Share on other sites More sharing options...
Guest Skinty Posted August 5, 2010 Share Posted August 5, 2010 The RSPCA is crying out for people to home dogs and that is the only reason I want my own home, so I can hang the TV and have some dogs. I'm really wanting some job security and my own place. And the moment I achieve this, I'll get my own pack of rescue dogs as well. I absolutely miss having dogs and can't help but fuss over any that I come across. My neighbour's dogs always come bounding over when they see me in the garden for example. For me it's the equivalent of having children. Quote Link to comment Share on other sites More sharing options...
Tired of Waiting Posted August 5, 2010 Share Posted August 5, 2010 Don't agree with this generalisation. Many BTL landlords are Labour supporter and have benefited hugely from Labour's policies (crazy HB system etc) Many Tories voters are sensible business people who know that high properties prices (residential and commercial) are not good for the economy. Even for the middle aged brigade, the ability of their children to buy a decent place to live must have started to worry them. Yes, generalisations are usually misleading. I agree that most BTLers were probably Labour supporters. But most property owners will not like to see HP going down. Prices will have to go down very gently indeed, imperceptibly, just a few % points per year, nominal. Never near double digits nominal in one year period - IF they can manage that. Quote Link to comment Share on other sites More sharing options...
JMcLane Posted August 5, 2010 Share Posted August 5, 2010 What a lovely goal to have in life. Bless you. Aww thanks, I got the warm fuzzy feeling reading your post. I'm really wanting some job security and my own place. And the moment I achieve this, I'll get my own pack of rescue dogs as well. I absolutely miss having dogs and can't help but fuss over any that I come across. My neighbour's dogs always come bounding over when they see me in the garden for example. For me it's the equivalent of having children. I had to wait a few years since my last one passed away... took a long time to get over it, he was 3mths and died age 13yrs, great life and I want to do it again now with a couple of rescue dogs. I watched the show on battersea dogs home the other night about the staffies and I was in tears. I hope it works out for all us pet lovers soon. Quote Link to comment Share on other sites More sharing options...
Tired of Waiting Posted August 5, 2010 Share Posted August 5, 2010 A target to reduce the price of housing. If only! There are other strong signs in this direction. The number leaked to mortgage industry professionals was 25%. I think it means 25% real prices, in this parliament. If we have some 3% inflation per year, or around 15% in 5 years, the n ominal fall would be only 10% - almost stable for the sheeple. See this: http://www.housepricecrash.co.uk/forum/index.php?showtopic=147307&view=findpost&p=2624404 Quote Link to comment Share on other sites More sharing options...
easy2012 Posted August 5, 2010 Author Share Posted August 5, 2010 (edited) Yes, generalisations are usually misleading. I agree that most BTLers were probably Labour supporters. But most property owners will not like to see HP going down. Prices will have to go down very gently indeed, imperceptibly, just a few % points per year, nominal. Never near double digits nominal in one year period - IF they can manage that. I agree that some properties owner will not like HP going down. For some, HPC means a chance to upgrade. It is not just residential property as well, for commercial properties users, Prop PC will lead to lower rents. Those at the top of the ladder and BTLers obviously don't like HPC but it is unclear how many % of Tories voters are in that categories and how many are in the categories where they will benefit from a HPC. Probably fairly to say that those at the top of the property ladder (according to their aspiration/circumstances) and those in negative equities would not want a HPC, for others, it is not a problem really. Like your OECD/Propeerty price & competitiveness article (being revived today) Edited August 5, 2010 by easybetman Quote Link to comment Share on other sites More sharing options...
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