Friday, Feb 05, 2010
"The government knows more houses need to be built or prices could soar"
Citywire: Can pension funds make house prices affordable?
The government knows more houses need to be built or prices could soar – but their plans leave something to be desired.Despite the headlines you and I know that UK house prices are not really rising except for in a few highly desirable areas.We treat every daily update from a myriad of people – mostly with vested interests – telling us house prices have risen 2% to 3%, or stopped rising as fast, or will rise 10% with a healthy dose of skepticism. How can prices be going up when the for sale signs we pass every day are never replaced by sold signs, when reduced asking prices are now an important part of any estate agent's sales arsenal, when unemployment is still rising and the economic and tax outlook looks grim?
Posted by jack c @ 02:09 PM (879 views) Add Comment
7 Comments
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1. mark wadsworth said...
Jack C, I have learned a lot from you over the years, but you've completely misquoted this. The actual article reads:
"The government knows that new construction has to be keep to a minimum or else prices won't stay at their inflated levels – but their plans leave something to be desired. Despite the headlines you and I know that UK house prices are only just about being kept afloat in all but a few highly desirable areas. We treat every daily update from a myriad of people – mostly with vested interests – telling us house prices have risen 2% to 3%, or stopped rising as fast, or will rise 10% with a healthy dose of skepticism.
How can we achieve our core target of 10% growth each and every year, for ever and ever, when the for sale signs we pass every day are never replaced by sold signs, when reduced asking prices are now an important part of any estate agent's sales arsenal, when unemployment is still rising and the economic and tax outlook looks grim?
Simple really - block all new developments, cut Council Tax, subsidise mortgage interest payments and keep interest rates at an all time low, and as a fall back, offer tax breaks to pension funds to get them to pour their money into 'bricks and mortar' when all they are doing is buying fresh air."
2. jack c said...
Mark, thanks for the compliment - I'm now off to Specsavers.
3. Neil B said...
"The government knows more houses need to be built or prices could soar"
Well yes in a normal market however there are hardly any sales.
4. Simon said...
Building more housing would not dent a perceived shortage of housing cos it would all be sucked up by speculators .
Rather than looking at the US Circa 1930 for inspiration , better to look to Germany circa 1946 when they had to claw there way back up from nothing .
They managed to avoid our houseownerist (houseonanist) mentality with proper regulated rents , obligations for landlords and rights for tennants .
Better to provide a mechanism whereby people can build up a decent pension without resorting to housing speculation and to take steps to ensure a shrinking population .
5. Jayk said...
What rubbish in the precis. A few desirable areas do not raise national figures by nearly 10%. I live in Woking. Last summer, a decent 3-bed Victorian end of terrace with a driveway and a nice back garden in my street went for 190k. Last month, a 2-bed flat in an identikit block of six apartments just a hundred yards down the very same road went for 185k. I know because a friend bought the first and another friend sold the second! If anyone thinks Woking is highly desirable then they're on something. Yes, it's just a single example, but I see it everywhere. Another new block of about 20 flats went up near me last year, and every one was sold quickly. And now nearly every one has been rented out. Sales are healthy, prices are rising and BTL is thriving. Thank god we bought early last year, as soon as we could afford to and not a day later.
6. Chilli said...
The cost of actually building a house is 40k. That hasn't changed over the last couple of decades (not speaking for inflation). Its land values that are the issue, not the building of houses.
7. stillthinking said...
I think all this is skirting around the very obvious solution of changing planning laws. There is not a shortage of housing, there is a shortage of land for housing. The two are very different. There has been little inflation in construction costs which form a lower and lower portion of the purchase price.
If I have access to land, I can order the construction of a house myself, and so can anybody.
From a different perspective, this ignores the bleak situation that the UK is in, we -have- to grow exports. We need to invest in export industries. So the situation is that funds, as pointed out, have an easy risk free choice of just supporting government expenditure (which does not include housing construction), or the returns of export growth. There isn't going to be enough money in the UK for all of these things, we can't build a house at the same time as working off our debt to Herr Schmidt and numerous others.