Building Our Way Out Of Recession

[munro]

1) It costs just around £80k to have a family home built.

2) The private sector (developer) can do that.

3) New houses' environmental standards requirements can will be much higher.

4) Aha! That is your fear, "innit" The lowering of housing costs are a "public good". Google this concept. Very useful as an ethical life-guide. I strongly recommend it.

5) Yes. I agree. Of course it will! This is self evident. And from then onwards, lower living costs for workers (top to bottom) will improve our international competitiveness - like Germany does now.

6) Pastures, actually - very under-utilized land. Please see Post # 135, above.

7) The exact opposite. The market - home buyers and builders - have been desperate to build more for years. It is the "Stalinist central planning" (and local planning + NIMBYs) that are blocking us from building our own homes.

8) No. It is a political decision - to allow or not families to build their own homes.

Private sector developer build the infrastructure - sure. And by the time they've done that you'll be way over £80k. And pastures are not "under utilized land". On that basis we should chop down the rain forest for useful timber and then use the land to grow crops. If you regard land as something just waiting there to be exploited by humans you're on the way to Easter Island.

However tongue in cheek you might think you are, you are completely wrong about my views on negative equity. I'm happy to see millions of people trapped in it. I don't own a house and I want prices to crash so I can buy one. But as far as the argument goes, what I want is irrelevant. From what you are saying, though, you want a cheap land-grab near where you live that will benefit you, and a few other people in your situation. I think that would be bad for the country as a whole.

You also took my comments about NE out of context. My point is that if you try and crash house prices by a construction boom, you will extend the stupid credit boom we've had for a few more years while it goes on. Then there will be an almighty crash and the houses built will be white elephants. But before that the downward effect on house prices coupled with a need to create more credit without breaching BASLE 2 capital requirements directive and bad debts arising from people in NE will take out the banking sector.

I agree with you that lower house prices would be good for the country, for much the same reasons. I disagree with you on how to do this. I think we should radically cut back the supply of credit and tax btlers out of "business", so that housing stock can be liberated for owner-occupiers. The fall-out from the banks can be dealt with as and when. People in NE will just have to lump it until the prices come back eventually, as they did in the late 1990s. I don't like special pleading as that's what we get out of btlers claiming that they are "providing housing" for people who "prefer to rent for the flexibility". If the sort of land-grab you are asking for is permitted in 2010, there'll be a website in 2020 with a bunch of angry people moaning about the "selfish people" who got away with it back then leaving them stuck in ex-btl slaveboxes as it's all they can afford while people a few years older got cheap three-bedders with gardens in the country.

[Tired of Waiting]

1) Private sector developer build the infrastructure - sure. And by the time they've done that you'll be way over £80k. And pastures are not "under utilized land". On that basis we should chop down the rain forest for useful timber and then use the land to grow crops. If you regard land as something just waiting there to be exploited by humans you're on the way to Easter Island.

2) However tongue in cheek you might think you are, you are completely wrong about my views on negative equity. I'm happy to see millions of people trapped in it. I don't own a house and I want prices to crash so I can buy one. But as far as the argument goes, what I want is irrelevant. From what you are saying, though, you want a cheap land-grab near where you live that will benefit you, and a few other people in your situation. I think that would be bad for the country as a whole.

3) You also took my comments about NE out of context. My point is that if you try and crash house prices by a construction boom, you will extend the stupid credit boom we've had for a few more years while it goes on. Then there will be an almighty crash and the houses built will be white elephants. But before that the downward effect on house prices coupled with a need to create more credit without breaching BASLE 2 capital requirements directive and bad debts arising from people in NE will take out the banking sector.

4) I agree with you that lower house prices would be good for the country, for much the same reasons. I disagree with you on how to do this. I think we should radically cut back the supply of credit and tax btlers out of "business", so that housing stock can be liberated for owner-occupiers. The fall-out from the banks can be dealt with as and when. People in NE will just have to lump it until the prices come back eventually, as they did in the late 1990s. I don't like special pleading as that's what we get out of btlers claiming that they are "providing housing" for people who "prefer to rent for the flexibility". If the sort of land-grab you are asking for is permitted in 2010, there'll be a website in 2020 with a bunch of angry people moaning about the "selfish people" who got away with it back then leaving them stuck in ex-btl slaveboxes as it's all they can afford while people a few years older got cheap three-bedders with gardens in the country.

1) Yes, it will be more than 80k, of course, but not by as much as a semi-detached costs now. We don't have forests any more, they were turned into pastures.

2) An increased supply of houses will reduce the prices of all houses. (And you must know that. Why waste our time?)

3) houses will never be white elephants. They will keep being houses, but then they will be spacious and cheap. Like in many other countries.

4) An increased supply of houses will reduce the prices of all houses. (And you must know that. Why waste our time?)

[munro]

1) Yes, it will be more than 80k, of course, but not by as much as a semi-detached costs now. We don't have forests any more, they were turned into pastures.

2) An increased supply of houses will reduce the prices of all houses. (And you must know that. Why waste our time?)

3) houses will never be white elephants. They will keep being houses, but then they will be spacious and cheap. Like in many other countries.

4) An increased supply of houses will reduce the prices of all houses. (And you must know that. Why waste our time?)

I fundamentally disagree with you that the way to bring about lower house prices is by building more of them. I think it is a simplistic solution that will have lots of unintended consequences, and these consequences will overwhelm the alleged benefits of building on greenfield land.

Furthermore, I don't agree with you that increasing supply will necessarily bring about a fall in price. Not unless you can also control credit. Since the same goal can be achieved by controlling credit, I'd rather do that first and see what happens.

Houses never white elephants? Try telling that to the Irish: http://www.irishcentral.com/story/roots/ireland_calling/ireland-the-country-of-empty-ghost-houses-82185972.html

I think you are far too focused on one answer to an undoubted problem, and I think it's the wrong answer. I note that you haven't addressed any of the issues around a construction boom, immigrant labour to build it, additional costs due to additional demand for construction workers and equipment, where the money is going to come from to pay for all this, loss of ecosystems, etc etc. Turning the point about the rainforests into a specifically national point is irrelevant. My point concerns the mindset that sees land not being used by people as an underutilized asset just waiting to be exploited. It isn't. It has a value in its own right; try this: http://www.sciencedaily.com/releases/2008/09/080915122725.htm

We live in an immensely complex system, and simplistic answers generally work out badly. I think you are wrong, and pretty much all I can hear is special pleading.

[behr]

Sorry NonFrog, but you sounded a bit angry there, and a bit rude.

Re. shortage, it depends on what part of the country you are. I am in West Sussex, and we do have housing shortage here. If you don't mind me asking, in what part of the country are you? London? North?

Re. redeveloping brownfield sites first, frankly, this is obvious. (Forgive me, but it is a bit of a waste of everybody's time to say that). And the availability of these sites also depends where you are in the country. Here in West Sussex, unfortunately, these sites have already been redeveloped to smithereens. And all barns and farm buildings have been converted. Go to an estate agent asking for a "project" and they will laugh out loud.

We do have plenty of pastures though, producing very typical low yields, as you may know.

But just to know where are you coming from, please just suppose for a moment that there is an area of the country where:

- There are no more brown field sites to develop;

- Lots of families need houses, and are wiling to build them themselves, and pay for the infrastructure;

- And there are lots of pastures around.

In this hypothetical case, would you then agree that this land would be more socially useful as plots for family homes than as pasture?

Thanks Senior Veteran,

nonfrog doesn't seem to understand the state of housing in the south east or he would realise that little 1000' semis could only sell for £350k a pop if there was a shortage! Perhaps he ought to come and take a look, the high price is a function of the supply demand balance. By building on green belt and there is plenty of it around london the problem could be solved. Also he doesn't seem to appreciate that good and bad design doesn' t isn't necessarily hugely more expensive although granted it can be.

behr

[campervanman]

Looks like the Tories might not be the good news you were expecting for house prices after all:

http://news.bbc.co.uk/2/hi/uk/10198180.stm

"The previous government gave a green light for the destruction of the Green Belt across the country and we are determined to stop it. "

"It will no longer be possible to concrete over large swathes of the country without any regard to what local people want."

And guess what local people want.

Oh dear.

[non frog]

Thanks Senior Veteran,

nonfrog doesn't seem to understand the state of housing in the south east or he would realise that little 1000' semis could only sell for £350k a pop if there was a shortage! Perhaps he ought to come and take a look, the high price is a function of the supply demand balance. By building on green belt and there is plenty of it around london the problem could be solved. Also he doesn't seem to appreciate that good and bad design doesn' t isn't necessarily hugely more expensive although granted it can be.

behr

At risk of sounding angry or rude (I am not angry but if I am rude so be it) I can assure you the problem of a "lack of housing" is invented by those people that want to sell property. The inflated prices are paid by people that think they are going to make money on the property. London prime is being bought up by overseas buyers for financial reasons not to live in - I see today that the Russians are now hoovering up stuff.

If you build more property round London all that will happen is it will increase the pressure to build more. The new build is a confidence booster that encourages the idiots to buy into the dream. Short of a massive development program by the bankrupt UK state London's transport system is too poor to take much more anyway. I worked in Victoria for a number of years and every single morning the tube station was so overcrowded that no new passengers were allowed into the station and the crowds would cover half the bus station when I left the tube station to walk to the office at 8.45

People commute huge distances to work to overcome the inflated house prices, but again its a self defeating strategy. All those tens of thousands trying to get into areas where there are better salaries are spending an ever increasing portion of their wages on travel. This make it ever more attractive to pay over the odds and live closer. The upward pressure on housing is therefore relentless. Building new stuff just amplifies the effect.

Please also understand that developers build houses (and flats) with just one aim - to make money. Good design/bad design quality - whatever - the point is to make money. The blocks of flats built in city centres for BTL landlords were of such awesome prices that you have to wonder how stupid people are. (Very apparently). They dropped in value by over 50%, but the developers made their money. The developers that got in too late lost out. Some flats were were looking at on the South Coast (coincidently to the other poster in West Sussex) missed the boat and the developer has gone bankrupt. They have been empty for FOUR YEARS. Why? because the price is beyond stupid. The administrators cannot put the price down as the imbeciles that paid London prices for them bought on a scheme where you only pay 75% up front and the 25% is an interest free loan and the repayment variable on the current value. Selling them off cheaper will reduce the value and so the amount due from the existing buyers (they're about 70% sold as an estimate - the balance empty since 2007). No shortage there or some halfwit would snap them up.

There is no shortage of housing in the UK. What is problematical is the imbalance in opportunity for people to find decent jobs outside the M25. Building new residential property will not change this. More houses more people, more people, more jobs, more jobs more demand, more demand increased shortage. It is not possible to build our way out of this situation.

[Riedquat]

There is no shortage of housing in the UK. What is problematical is the imbalance in opportunity for people to find decent jobs outside the M25. Building new residential property will not change this. More houses more people, more people, more jobs, more jobs more demand, more demand increased shortage. It is not possible to build our way out of this situation.

I'd add "because it's not the cause", and then you've summed it up perfectly IMO. Cure the disease, not the symptoms please. Building is the latter, and with very unpleasant side-effects.

[Guest sillybear2]

ame='behr' date='30 May 2010 - 12:44 AM' timestamp='1275176682' post='2546054']

12 millions homes in 1% of the "green belt"? Are you sure? It looks too much to me. It is a bit late now, but tomorrow I will think about that.

Besides, do we need 12 million homes?

They wouldn't be very nice houses, there are 'only' currently 26m homes in the UK at the moment, and a good number of them are BTL boxes.

[PopGun]

I love these "we must build millions of homes everywhere" threads. The main contributers tend to be the very same posters who bemoan about the tackly souless identity kit McBarrats slave box housing estates that blight towns up and down the country.

[OnlyMe]

I love these "we must build millions of homes everywhere" threads. The main contributers tend to be the very same posters who bemoan about the tackly souless identity kit McBarrats slave box housing estates that blight towns up and down the country.

You miss the point.

Land speculator dressed as house builder bids up price of artificially scare land - ensuring only shitty little boxes can be built on land. Land speculator builds shitty little boxes with minimal design and materials and drip feeds these onto the market for maximum price they can get ensuring that the price covers their massively overpriced land purchase in the first place - locks out compeition, ensures that shitty little boxes are the only choice and keeps the value of all the other overpriced land they are keeping off the market elevated.

Release land above and beyond these shitty little box builders to purchase and block from others' use and you break the cycle.

Edited June 1, 2010 by OnlyMe

[PopGun]

You miss the point.

Land speculator dressed as house builder bids up price of artificially scare land - ensuring only shitty little boxes can be built on land. Land speculator builds shitty little boxes with minimal design and materials and drip feeds these onto the market for maximum price they can get ensuring that the price covers their massively overpriced land purchase in the first place - locks out compeition, ensures that shitty little boxes are the only choice and keeps the value of all the other overpriced land they are keeping off the market elevated.

Release land above and beyond these shitty little box builders to purchase and block from others' use and you break the cycle.

I don't disagree with that. I think freeing up carefully chosen plots of land for small independent blocks of housing is a great idea.

What I do disagree with, is this continual idiotic notion on this site that there's a housing shortage. It's utter nonsense. VMR hit the nails on the head on the very first page of this thread. It’s ar5ehole BTL prowperdee portfolio hoarders that are the main cause of housing unavailability.

The widening of any motorway will only serve to increase congestion further. Anyone who thinks covering the country with tarmac will result in decreasing house prices, are deluded.

I won't even bother going into the long term demographic implications.

Starve the beast, don’t feed it.

[abharrisson]

Build more houses in Britain and end the Recession

We all want lower house prices for our children as well as ourselves and there is no reason other than political excuses for us not having them. The Green Belt is simply a 60 year old law that has prevented 90% of Britain from being built on. This has artificially forced up house prices. If we reduced this 90% stock of 'virgin' land to 80% there would be a plentiful supply of land, in fact double the existing space for housing. This would make houses much much cheaper! Land designated Green Belt is currently worth only about £3000/acre and could be compulsorily purchased at this price. An acre supports up to 10-20 houses depending on size, in other words a land price of £150-300 per house.

It only costs about £70 per square foot to build a decent house taking into account economies of scale. So the average new 1000 sq foot 3 bedroom house only costs around £70,000 to build so add the above £150 and we are there. The stupidly high jacked up prices in outer London and other places are simply artificially maintained by years of outdated government policy which only benefits banks and property speculators. This is why all around london the price of a 1000 sq foot house costs a ridiculous £350,000. We are all paying banks huge amounts of interest and taking on debt when there is no need at all. We are paying up to 5 times the build cost for a place to live for no good reason.

If enough of us do something the law will be changed and we will be able to build on just a little bit of The Green Belt around our cities. There will ultimately be twice as many homes and yet we can maintain 80% of our land as virgin undeveloped land - this means we will all be able to buy our own houses without paying exhorbitant fees and interest to the bankers.

I have posted this here because I think you are concerned folk who might be able to help, if you want to become more directly involved please contact me jph1@buildmorehomes.org.uk

I'd agree with the view that says if we build more homes the activity will help the economy and the more homes we have the less pressure on house prices.... I saw a fact though in your post that I disagree with.. you say green belt is valued circa £3,000 an acre... I would have thought bare land value would have been at least double that, possibly more depending on the parcel in question.

[non frog]

I'd agree with the view that says if we build more homes the activity will help the economy ...

How so? More debt. Just what we need.

[abharrisson]

How so? More debt. Just what we need.

Yes of course it will lead to more borrowing and more borrowing won't damage the economy in that sense ( eg a homeowner using debt in an affordbale way to buy a home)....... I was surprised you couldn't see that the labour involved in building, the materials being purchased, the soft furnishings etc post purchase etc etc would all help the economy.... becasuse they will ... which is the point I was making.

Pre-judging all debt as bad for the economy and to be avoided isn't a healthy or correct position to adopt.

[munro]

Yes of course it will lead to more borrowing and more borrowing won't damage the economy in that sense ( eg a homeowner using debt in an affordbale way to buy a home)....... I was surprised you couldn't see that the labour involved in building, the materials being purchased, the soft furnishings etc post purchase etc etc would all help the economy.... becasuse they will ... which is the point I was making.

Pre-judging all debt as bad for the economy and to be avoided isn't a healthy or correct position to adopt.

What you are effectively saying is that any activity is good so long as it leads to more economic activity, and that somehow "not all debt is bad". Well let's carry that one through. We'll employ everyone, so long as they are doing something - building houses, making sofas, painting decorating, plumbing, etc etc. Forget whether there is any real demand, we just want people to be doing something so they can get paid - albeit out of debt - so that we can "keep everything going". Where this money comes from, God only knows. Perhaps we'll just print it as that will keep even more people employed.

Soon we'll end up with sofa mountains and gluts of all this stuff, so it will be worthless. People will be burning money in their new wood-burning stoves as it'll be cheaper than fuel. Only we'll lose any grip on the concept of "cheap" as it will no longer be possible to make any sense of the concepts of "money" and "value".

This is the economics of the mad house. Are we back to the "debt is good when it's investment" and "debt is bad when it's consumption" line peddled by the snake-oil salesman from Inside Track? What happens to the notion of "affordable debt" when it's backed by an asset whose price is rigged by a Ponzi scam and money printing? Truly the lunatics have taken over the asylum. Talking to a friend in the public sector recently, he said that at the rate they'd been creating non-jobs in the last few years, they'd become a charity - give us your stupid, dim no-hopers, and we will give them jobs, because verily I say unto ye, only thus will the economy prosper.

[behr]

I'd agree with the view that says if we build more homes the activity will help the economy and the more homes we have the less pressure on house prices.... I saw a fact though in your post that I disagree with.. you say green belt is valued circa £3,000 an acre... I would have thought bare land value would have been at least double that, possibly more depending on the parcel in question.

possibly but that would be splitting hairs when you think there could be 10 houses per acre, so 300 or £600 per plot makes little difference to the principle of selling land off in a controlled way and barring speculation by imposing strict resale conditions.

[non frog]

...... I was surprised you couldn't see that the labour involved in building, the materials being purchased, the soft furnishings etc post purchase etc etc would all help the economy.... becasuse they will ... which is the point I was making....

My apologies. I thought you meant the UK economy. You are quite correct all the builders will help the Polish economy and all the soft furnishings will help the Chinese, the wood for the windows will help the South Americans to destroy their forests - a vital part of their economy. Sorry for my confusion.

[behr]

There is no shortage of housing in the UK. What is problematical is the imbalance in opportunity for people to find decent jobs outside the M25. Building new residential property will not change this. More houses more people, more people, more jobs, more jobs more demand, more demand increased shortage. It is not possible to build our way out of this situation.

So I am not sure what you are saying here. Is there a shortage of decent housing in the south east or not? If not then show me where your figures come from puhleeese!

no one pays £350k for a crappy little 50's semi that has barely 1000 sq. ft. unless they have too - buytolet or not. I really would like to see how you guys who claim there is no shortage arrive at that conclusion. Where are your numbers coming from?

furthermore it is daft to claim that local demand is wrong becuase of employment conditions. Either houses are wanted, needed and bid up by the laws of supply and demand or they ain't. Economics 101.

behr

www.buildmorehomes.org.uk

[behr]

There is no shortage of housing in the UK. What is problematical is the imbalance in opportunity for people to find decent jobs outside the M25. Building new residential property will not change this. More houses more people, more people, more jobs, more jobs more demand, more demand increased shortage. It is not possible to build our way out of this situation.

So I am not sure what you are saying here. Is there a shortage of decent housing in the south east or not? If not then show me where your figures come from puhleeese!

no one pays £350k for a crappy little 50's semi that has barely 1000 sq. ft. unless they have too - buytolet or not. I really would like to see how you guys who claim there is no shortage arrive at that conclusion. Where are your numbers coming from?

furthermore it is daft to claim that local demand is wrong becuase of employment conditions. Either houses are wanted, needed and bid up by the laws of supply and demand or they ain't. Economics 101.

behr

www.buildmorehomes.org.uk

[munro]

So I am not sure what you are saying here. Is there a shortage of decent housing in the south east or not? If not then show me where your figures come from puhleeese!

no one pays £350k for a crappy little 50's semi that has barely 1000 sq. ft. unless they have too - buytolet or not. I really would like to see how you guys who claim there is no shortage arrive at that conclusion. Where are your numbers coming from?

furthermore it is daft to claim that local demand is wrong becuase of employment conditions. Either houses are wanted, needed and bid up by the laws of supply and demand or they ain't. Economics 101.

behr

www.buildmorehomes.org.uk

No-one pays £350k for a house unless they have access to that sort of money, which in the vast majority of cases, means credit. So there's obviously an over-supply of credit. Cut the supply of credit and the price of housing comes down. Since the premise of your entire argument is based on supply and demand, if you could get over the obsession with applying this only to housing and apply it to credit you might see that there is another way.

Is there a shortage of decent housing? Of course there is. Because we're all entitled to a four-bed detached in a big garden. Because dammit, we're worth it. Of course we should all be able to live like landed gentry.

All this amounts to is a thinly-disguised bout of special pleading, that you and a few others should be effectively given a chunk of pristine farmland where you want it. Forget the manifest unfairness of this to other people, now and in the future. You need to be more honest about this or your plans will get ripped apart when they are subject to any sort of public scrutiny. Why should green belt be sacrificed to more suburban sprawl for the personal benefit of people like you? And don't start on with the "hedged about by covenants" stuff, as this never works. What will happen if such schemes ever get off the ground is that people with money will buy them up to hang onto them and then leave them to their kids.

If you are serious about affordable housing start a campaign for one house per adult, abolition of stamp duty, land value tax, an end to tax breaks for BTLers, regulation for landlords and letting agents, caps on housing benefits, decent long-term rental contracts and proper rent controls/tribunals. You will be laughed out of bed by the media when they realise that what you really want is a cheap bit of green belt for you and yours.

[non frog]

... Is there a shortage of decent housing in the south east or not? ...

Absolutely not. There are thousands of lovely properties in the South East. Many are for sale and some are empty, ready for immediate possession.

[PopGun]

snip...

Is there a shortage of decent housing? Of course there is. Because we're all entitled to a four-bed detached in a big garden. Because dammit, we're worth it. Of course we should all be able to live like landed gentry.

snip

This is the real gist of it. I do feel sorry for those who've been genuinely priced out, or simply refuse to pay the current prices (as a matter of principle). Yet there's plenty on this site who claim to be earning massive salaries, with well over £100k sat in banks or investment vehicles, moaning to death just because they feel entitled to a cheap 5 bed house in Surrey.

[non frog]

I noticed this news article this morning and thought this is why we should have a moratorium on new build in the London area. We need fewer, not more, properties in the area and subsequently less pressure on the resources. Clearly some of the employment opportunities that attract people inside the M25 need to go elsewhere in the UK to help people that live there. This kind of "intervention" in the jobs market is rather unfashionable post Thatcher, but I hope that we see that change now that the Thatcher experiment has failed so badly. I am heartened by the current government's apparent abandonment of the failed policies, something that sadly Blair lacked the guts to do.

http://www.guardian.co.uk/environment/2010/jun/02/thames-water-desalination-plant

[edit] this article is also relevant and might be of interest if anyone is still bothered [/edit]

http://www.investorschronicle.co.uk/MarketsAndSectors/Sectors/article/20100601/94791a60-6d5b-11df-a290-00144f2af8e8/Get-off-my-land.jsp

Edited June 2, 2010 by non frog

[Guest_James Toney_*]

build more, yeah right

[Guest sillybear2]

I noticed this news article this morning and thought this is why we should have a moratorium on new build in the London area. We need fewer, not more, properties in the area and subsequently less pressure on the resources. Clearly some of the employment opportunities that attract people inside the M25 need to go elsewhere in the UK to help people that live there.

London is the home of our head of state, Parliament, the ever expanding central ministries of state, our judicial centre (libel for example can only be heard at the High Court), the home of our financial centre and company HQ's and also our media hub, the broadcast industry has been centralised and moved within the M25. Then add in the sporting venues and special events like the Olympics, and transport hubs like Heathrow and the Eurostar.

Given all that it's no surprise the South East is overheating, in Germany the allies deliberately dispersed the power centres and apparatus of state, so if a single region deliberately monopolizes and jealously hoards the major function of state the people in that area can hardly complain when housing becomes unaffordable (or unavailable!), or when transport becomes overloaded, or when a rainy island is forced to build Saudi style desalination plants.

What's high speed rail actually for? It appears to be a way of externalising Heathrow's unwanted third (and fourth!) runways to Birmingham or Manchester.

Edited June 2, 2010 by sillybear2