Home Building Plans 'in Trouble'

[Darkman]

Surprise surprise. An attempt to prop up prices by limiting supply perhaps?

Home building plans 'in trouble'

A government pledge to build three million affordable new homes by 2020 is in trouble because of the recession, the housing minister has said.

Margaret Beckett said the government must now look at ways to put the programme "back on track" once the downturn comes to an end.

She said the government was doing what it could to help the building industry.

But housing bodies are calling on the government to do more, including invest in the UK's one million empty homes.

Waiting list

In 2007, Gordon Brown promised to build three million affordable homes to help reduce the housing waiting list, which now stands at nearly five million.

But Mrs Beckett said of the targets: "They were set because of the predicted levels of household growth - that is not going away.

"So of course we're in difficulty at the present time because there is very little building.

"But what we have to do now is to consider how we can tackle that," she told BBC News.

"Now we have to consider when this recession comes to an end, which it will, some day, how can we get back on track."

Richard Diment, of the Federation of Master Builders, said it was unlikely the targets would be met.

He said house building was at about 20% the rate that it was 12 months ago, making it "extremely difficult" to hit the targets.

Mrs Beckett insisted the government was doing all it could to help, including bringing forward £1.2bn of investment in construction, maintenance and repairs.

"We're doing everything we can to sustain and support [the construction industry].

"We're working with them to prepare for the upturn when it comes," she added.

The Royal Institute of Chartered Surveyors (Rics) suggested the only way to deal with the current housing problem was to renovate empty homes.

Simon Rubinsohn, of Rics, said: "While it's understandable that the government may not feel that this is the easiest way and perhaps the most opportune way of actually dealing with the problem, ultimately I think probably in the short-term, it is the only way."

David Ireland, head of the campaign group Empty Houses Agency, said the recession meant homes that became empty were staying empty.

He urged for policy change to ensure any investment was correctly targeted and called for housing associations to shift their focus from new builds to regeneration.

Sir Bob Kerslake, chief executive of the government's Homes and Communities Agency, accepted the government should be doing what it could to put empty properties back into use.

But he said they were empty for a number of reasons, including probate or refurbishment and about half were occupied again within six months.

Margaret Beckett said if there were empty homes the government could help, but urged the local authorities to do more to find them and make them habitable.

"What we're not going to do is do the jobs that local authorities should be doing.

"They do have opportunities, they do have their own resources and you know we're keen that they are more pro-active than sometimes some of them have been on this subject," she said.

http://news.bbc.co.uk/1/hi/uk/7969526.stm

[Mikhail Liebenstein]

Surprise surprise. An attempt to prop up prices by limiting supply perhaps?

http://news.bbc.co.uk/1/hi/uk/7969526.stm

This is all because builders can't make profits from overpriced and falling building plots.

There is a soluton that is 100% guaranteed to fix this and achieve the targets, its called massive green belt release.

[Abstra]

Surprise surprise. An attempt to prop up prices by limiting supply perhaps?

http://news.bbc.co.uk/1/hi/uk/7969526.stm

They are waiting for the economy to turn round in order to biuld these homes. Biulding these homes will help turn the economy round. The government is stuck, it has become powerless in the face of the financial crises. They know whats coming but can't do anything about it except speak positively.

The 1 million empty homes issue needs to be addressed and they are not doing that either.

[HAMISH_MCTAVISH]

The 1 million empty homes issue needs to be addressed and they are not doing that either.

From the same article, an interesting fact....

Sir Bob Kerslake, chief executive of the government's Homes and Communities Agency, accepted the government should be doing what it could to put empty properties back into use.

But he said they were empty for a number of reasons, including probate or refurbishment and about half were occupied again within six months.

So there aren't really a million empty homes, it's more like half a million, as the other half million are empty temporarily and for good reasons.

And of the half million that are genuinely empty, how many are empty simply because they are in the wrong areas, ie, areas where nobody wants to live?

The Times recently ran a story on the 1600 empty homes in Caithness and Sutherland in the far north of scotland, but what use are they to the teachers and policmen looking for a home in London?

This recession is building up an almighty supply shortage, the seeds of the next house price boom are being sown today.

[Game_Over]

Loads of empty homes around us with To Let signs up.

Sellers are trying to avoid taking losses by renting out until the 'market recovers'

These hundreds of thousands of empty properties represent a last ditch attempt by sellers to shore up an already plummeting market.

When these properties are forced back onto the market, prices will take another big hit.

IMHO

[the end is a bit nigher]

This recession is building up an almighty supply shortage, the seeds of the next house price boom are being sown today.

You believe that if you wish. The fact is, housebuilders will not build unless they get the massive profit they believe they deserve. The government plan for 3m affordable homes had nothing to do with them being at a realistic price. They were to be built and then bought with the governments useless 'affordability' schemes, with no intention of prices being lowered.

Brown has said recently that house prices were not a problem, but availability of credit was. So it doesn't matter how expensive house prices are, as long as you can borrow as much as you want to pay for them. Pretty much sums up Labour.

[CviewUK]

Several local Housing Associations are unable to sell their newly built affordable housing as nobody can actually afford to buy them.

[HAMISH_MCTAVISH]

Several local Housing Associations are unable to sell their newly built affordable housing as nobody can actually afford to buy them.

More like that nobody who would actually want to live there can get approved for a mortgage for them, but close enough.

Edited March 28, 2009 by HAMISH_MCTAVISH

[tinker]

No need to sacrifice the Green Belt, builder and developers are sitting on swathes of land banked acres, many with planning permission. This not only extends to building companies but also the supermarkets.

Developers have seen their share value fall as the value of their land assets tumble (bought at too high a price).

http://www.guardian.co.uk/business/2008/jun/29/taylorwimpey

http://www.telegraph.co.uk/finance/markets...strictions.html

The market has crashed because property became unaffordable (the credit inflating the market dried up) and the 'real' demand as opposed to speculative demand wasn't there, hence the vacant and unsold property.

The 3m homes was another bit of bubble-based, hollow spin, that failed to deal with the real problem; the government's judgement clouded by favours from retail and construction friends.

[SarahBell]

Affordable housing isn't.

Until some numbnut in power realises this and accepts it and does something about it, then there's no point building them.

I did read some HA's shared ownership properties were being rented rather than (half)sold as they had no takers.

[cashinmattress]

Oh McSpamish. Back to entertain us I see, and you've refilled the VI venom glands too!

Are you still sure of your central argument that affordable housing equates to Armageddon? Or that we are all robbing from your poor helpless granny by not being forced into overpaying for a place to live by guys like you?

Your signature was better before.

[CviewUK]

I did read some HA's shared ownership properties were being rented rather than (half)sold as they had no takers.

That is my local Housing Associations.

[Prof]

Hamish, your signature states -

Aberdeen average house price, ROS data, Jan 2007 £159,531

Aberdeen average house price, ROS data, Jan 2009 £172,308

Total average house capital gain £12,777

Cost of renting Aberdeen "average house" for 2 years in the meantime.... £19,200

Total loss from delaying a purchase in Aberdeen = £31,977

FYI. I delayed (indefinately) a house purchase in Aberdeen, and I haven`t lost anything, as far as I know.

What`s so special about Aberdeen ?

Anyway, well done of finding some good(?) news among the current doom and gloom.

I`ll add further to the evidence that the crash is almost over, I believe that the average property price in Solihull actually rose 0.1% in February, according to Land Registry stats. The green shoots are growing fast. At this rate, it`ll be boom time by August.

[Prof]

Oh, and another thing Hamish,

The figures in your signature are all well and good, but slightly flawed.

You show the cost of renting, but what about the cost of buying ?

I know mortgage rates are relatively low at the moment, but I doubt that anyone would have got a 0% mortgage back in Jan 07, and don`t you need to pay for a solicitor, mortgage arrangement fees etc. when buying a property ?

A good attempt, but please try harder.

[cashinmattress]

Why bother Prof?

It's like telling a teenage boy that masturbation is the devil.

[Prof]

OK, here`s my simple plan.

If we have such a shortgage of affordable property, why doesn`t Gordy B do something sensible for once ?

Use some of the money he`s throwing at the banks to employ some of the now unemployed builders to build new homes. This will save a lot of money, the unemployed builders will not be claiming benefits, and the government will be cutting out the greedy and inept middlemen (the banks). The government can sell their shiny new homes for a small profit, and it will start to "get things moving again".

The banks won`t like it. Property speculators won`t like it (only genuine FTBers should be able to buy these homes). Even if these homes aren`t sold, the government will have (dare I say it) an increase in the supply council houses. Seems like a win-win situation to me.

OK, tell me why it`s a bad idea (it must be, as it hasn`t been done*).

*Come to think of it, it probably hasn`t been done because it is a good idea. I`ve had several other good ideas over the past few years, such as - Include house prices in the calculation of inflation, Do a proper investigation into "Liar Loans", Introduce stricter restrictions on BTL investment, Pay off my mortgage ASAP (which I did), Save a bit of money for a possible downturn (which I did). All mostly ignored, but all now seem to be "with hindsight, we would have done" ideas.

Edited March 28, 2009 by Prof

[Greenstuff]

Didn't the great Financial Planner say in one of his interviews in response to someone referring to the governments plans to build x social houses by y 'then Gordon Brown will need to get his trowel out'

The Government were never building these houses, they were simply forcing builders to hand over 30% of properties they built at cost in exchange for planning permission.

Also, my neighbour went to look at a newbuild, these were upwards of 600k houses on an 'exclusive' development, she asked about social housing and was told there wasnt any as they paid a 'substantial sum' to the local authority so they could build some elswhere....

[Greenstuff]

Surprise surprise. An attempt to prop up prices by limiting supply perhaps?

http://news.bbc.co.uk/1/hi/uk/7969526.stm

Or surprise surprise a prelude to the Government announcing it will buy up unsold and repo'd properties to give to the 'poor'

[spivT]

You believe that if you wish. The fact is, housebuilders will not build unless they get the massive profit they believe they deserve. The government plan for 3m affordable homes had nothing to do with them being at a realistic price. They were to be built and then bought with the governments useless 'affordability' schemes, with no intention of prices being lowered.

Brown has said recently that house prices were not a problem, but availability of credit was. So it doesn't matter how expensive house prices are, as long as you can borrow as much as you want to pay for them. Pretty much sums up Labour.

yep, new housebuilding isn't so much a way to fulfill a chronic supply issue for housing as to profiteer. During the boom, when the demand was there not purely as a function of supply but through sentiment and the banks willingness to fund such speculative designs everything was great....you could build on an old rubbish tip, well away from shopping areas, and you'd sell some units and the financing and margins were there for housebuilders. And ofcourse govt. affordability schemes were there to satisfy the needs of desperate and despairing ftb's.

when you have the bursting of the bubble, the dirty word that is newbuild, becomes one of the first to suffer, and the type of maisonette apartment so favoured by housebuilders in built up areas makes neither a good home nor a great investment except at absolutely the right price. Without that speculative frenzy both buyers AND lender [not just lenders] become more circumspect. What has new building accomplished anyway, probably made up for the numbers of owner occupiers who dabbled into a bit of BTLing by reducing supply without increasing owner occupancy percentages...but that's about it. Either that or redevelopment schemes where EXISTING crumbling social housing was replaced with new build....many of the more daring schemes become overbuilt white elephants, many of them now struggle to sell, and many were built well away from local amenities thereby not contributing one iota to any perceived supply problem for mctavishes 'teachers' and 'policeman' who want to live in or near the communities they serve.

Edited March 28, 2009 by spivtastic

[HAMISH_MCTAVISH]

You show the cost of renting, but what about the cost of buying ?

A typical person has to pay to house themselves from roughly the age of 18 or 20 until the day they die, lets assume a 55-60 year span. In that time they can either pay rent for 60 years, or pay a mortgage for 25 years, or a combination of both.

All rental costs in a persons lifetime are a straight addition to lifetime housing costs versus buying. They only pay off if the market crashes by a large amount in a short timeframe. This has happened in some local areas, not in others.

[HAMISH_MCTAVISH]

Oh, and another thing Hamish,

The figures in your signature are all well and good, but slightly flawed.

The figures in the signature are for a cash buyer. There are an almost infinite number of possibilities with mortgages, such as LTV, IR%, Term, etc. But even on an absolute worst case scenario for a 2007 purchaser, with a 100% LTV, fixed at 5%, without taking advantage of the low rates since, the 2007 purchaser would still be ahead by 15K plus versus renting.

don`t you need to pay for a solicitor, mortgage arrangement fees etc. when buying a property ?

2-3K for that price of house. Hardly significant, and you'll still have to pay that anyway when you do buy. Thats why the signature states for delaying purchase.

[Prof]

A typical person has to pay to house themselves from roughly the age of 18 or 20 until the day they die, lets assume a 55-60 year span. In that time they can either pay rent for 60 years, or pay a mortgage for 25 years, or a combination of both.

All rental costs in a persons lifetime are a straight addition to lifetime housing costs versus buying. They only pay off if the market crashes by a large amount in a short timeframe. This has happened in some local areas, not in others.

I think that a typical person pays to house themselves from much later than 18 or 20. I`m guessing that more and more are "staying with parents" for longer. Am I wrong ? Yes, I know that many 18 year olds will have to contribute towards the cost of keeping the roof over their heads, but not many will be paying the total cost.

I don`t quite "get" what you are trying to say in your second statement, but I have a feeling that whatever it is, it will be wrong. I think you might mean that all rental expenditure is wasted, compared with buying. Well, I disagree (again). It may cost more to rent for a whole lifetime, rather than buying a property, but the cost of rental isn`t a "straight addition" to the cost of buying. The difference between the cost of buying versus a lifetime of renting is the additional cost.

Bottom line : Property bulls and speculators will always try and convince others to "buy in" to their pyramid scheme, and we just end up with boom and bust (I think you`ll find that recent history proves me right). If we had sensible lending, we wouldn`t have the incentive to buy up every pile of bricks in sight for ridiculous prices. Renting wouldn`t be a dirty word, and we`d be living in a much more stable, happy country. Open up a country`s property market as a "free for all" and you end up with what we see today. I`ve said before that a government`s first priority should be to provide affordable homes and food for it`s population, failure to do this is a sign of a failed government.

Edited March 28, 2009 by Prof

[HAMISH_MCTAVISH]

I`ve said before that a government`s first priority should be to provide affordable homes and food for it`s population, failure to do this is a sign of a failed government.

A government should have no such responsibility.

It's main priority should be to ensure a free and open market where people have the opportunity to earn enough to provide housing and food for themselves.

Edited March 28, 2009 by HAMISH_MCTAVISH

[kingsgate]

They are waiting for the economy to turn round in order to biuld these homes. Biulding these homes will help turn the economy round. The government is stuck, it has become powerless in the face of the financial crises. They know whats coming but can't do anything about it except speak positively.

The 1 million empty homes issue needs to be addressed and they are not doing that either.

Particularly given that a large proportion of the longest-empty properties, when you investigate, turn out to belong, in some way, to the government or local council.

Or other state-sector body - hospitals, schools, MoD, you name it.

Several occasions over the years I have wanted to find out about a near derelict house that has been an eyesore for years, gradually falling to bits, vandalised, boarded-up, garden full of rubbish etc, and it turns out to belong the council, who haven't got the money to fix it up, but won't sell it either!

Of course, its not just government - but private owners tend not to be able to afford to leave places empty for too long, because it's their own money they are wasting......

[Prof]

The figures in the signature are for a cash buyer. There are an almost infinite number of possibilities with mortgages, such as LTV, IR%, Term, etc. But even on an absolute worst case scenario for a 2007 purchaser, with a 100% LTV, fixed at 5%, without taking advantage of the low rates since, the 2007 purchaser would still be ahead by 15K plus versus renting.

2-3K for that price of house. Hardly significant, and you'll still have to pay that anyway when you do buy. Thats why the signature states for delaying purchase.

Another flawed explanation. If the "cash buyer" didn`t buy, wouldn`t he/she get some interest on the money they didn`t spend on the house ? I`m not trying to say that renting is the better option, but what I am doing is slowly DESTROYING your credibility.

Second point - (This is too easy). If you further delay buying in Aberdeen, who`s to say that waiting another year won`t wipe out any gain you may have made in the past year or two ? You can`t have it both ways. If you are trying to show the difference between renting and buying between 2 dates, do the calculations including all relevant costs. 2-3K is significant over this timescale, as is the interest that you would have earned on the money you didn`t buy the house with.

Edited March 28, 2009 by Prof