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http://www.telegraph.co.uk/comment/columnists/borisjohnson/8070153/The-Coalition-must-tackle-the-shortage-of-new-homes.html

Watch out, folks, we are about to be hit by a snowstorm of economic data. So put on your goggles and look out for the one big hurtling fact that really matters. The key point you need to remember during this week's spending announcements is that the population of the UK is set to rise by an incredible 10 million over the next 20 years. That is more than the population of Greater London crash-landing on a land mass half the size of France.

Not since industrialisation, not since medieval England recovered from the Black Death, has there been anything like it. Thanks very largely to Labour's deliberate failure to control immigration, and to higher birth rates, the Big Society is about to get very big indeed.

What jobs will we all do? Where will we all live? And what effect will that extra demand have on the cost of housing?

We already have huge waiting lists for social housing. On the private market the average age of a first-time buyer has now soared to 37 (at the height of the 1980s boom it was down to about 23) and we have desperate problems of overcrowding.

In 1998, about the time Labour let the brakes off immigration, the annual growth in population exceeded new housing supply for the first time, and since then the problem has been getting worse. One answer, I suppose, is to try to create cheaper housing by encouraging existing homes to become more affordable.

Recent pronouncements from the Coalition Government have suggested a new doctrine: that house prices should be flat, or flattish, while earnings rise to meet them. In other words, the British middle classes are being asked to wean themselves off house price inflation, and become more continental, with a higher proportion of rentals.

And a lot of people will say amen to that. Why do we pump all this money into unresponsive bricks and mortar, when we could be investing our capital in stocks and shares and thereby in the flesh-and-blood businesses that add to the GNP of Britain? They will point out – entirely correctly, that this national addiction to house price inflation has bred a kind of financial illiteracy, an apathy about any other investment except the roof over our heads.

And they will point out that it was the house price bubble – the demented practice of giving vast mortgages to people with no incomes and no assets – that led to the crash. Better a stagnant housing market, they will say, than another great boom and another great bust. Which is all very well, in theory.

In practice, it looks as if flattening off the housing market is both risky in the short term, and unachievable in the long term. The sad truth is that it is still psychologically essential to the British middle classes to have a sense that our principal asset is gently appreciating in value, or at least that it will over the long term.

For months now we as a nation have talked about cuts and nothing but cuts, with the morbid fascination of an Oprah Winfrey discussion of self-harm. We know we have to go through with the operation. But we don't know quite how extensive the slicing is going to be, and we have been kept so long in the waiting room while the surgeon counts his scalpels that the foreboding has been allowed to grow.

That is why it is so vital – as soon as the Comprehensive Spending Review is announced – that we stop droning on about cuts, and start talking about the reasons for these cuts. They are not about shrinking the state. They are about growth, growth, growth – creating the conditions for a sustained economic recovery, and an economic recovery is a function above all of confidence.

People will accept that higher-rate taxpayers should not receive child benefit – a point this column has been making for years. They can see that it is necessary to reform university finance. But if you tell them it is a matter of government policy that their house should effectively fall in value, then you will punch that confidence in the solar plexus – and you will make them less likely to invest, to take on new ventures and new staff.

We are already seeing renewed falls in property values in areas outside London, and the real wobbliness of the market may be concealed by the comparative lack of activity. There are normally about 1 million housing transactions a year in this country. That is now down to 600,000, and if the market falls much further there could be big knock-on effects for the whole system.

The notional assets of banks still depend on housing stocks whose value has yet to be tested, and if the housing market tanks, then the financial system tanks, too. People will be unable to get the mortgages to buy new homes, and developers will be unable to get the finance to build them, and the problem of supply will get even worse.

The last year of the Labour government was the worst for building new housing for 40 years. And when the economy takes off again, as it undoubtedly will, that shortage of new homes will combine with a growing population to produce the most almighty spike in prices – and young people will be less able than ever to buy a home. Which is why the best way to help those millions in search of an affordable home is not to try vainly to ensure that the present stock of housing becomes more affordable – ie falls in value – but to increase the supply of affordable homes.

That is what we have done in London, and that is why housing minister Grant Shapps is right to bring forward his new homes bonus, to give communities an incentive to champion new housing.

The Coalition has done well to get to grips with immigration. But we need to cope with the demographic changes that are now inevitable, and that means investing in houses and other vital infrastructure. Otherwise house prices may continue to slide in the recession, but spike more viciously than ever in the recovery.

He is not arguing against lower house prices, but is simply saying that with projected immigration house prices will spike if we don't build more homes. What's wrong with that?

Edited by LiveAndLetBuy

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http://www.telegraph.co.uk/comment/columnists/borisjohnson/8070153/The-Coalition-must-tackle-the-shortage-of-new-homes.html

He is not arguing against lower house prices, but is simply saying that with projected immigration house prices will spike if we don't build more homes. What's wrong with that?

+1 Why people got so hot under the collar about the spin from the Standard, I don't know. This bit did make me laugh though:

"Which is why the best way to help those millions in search of an affordable home is not to try vainly to ensure that the present stock of housing becomes more affordable – ie falls in value – but to increase the supply of affordable homes"

Come again?

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http://www.telegraph.co.uk/comment/columnists/borisjohnson/8070153/The-Coalition-must-tackle-the-shortage-of-new-homes.html

He is not arguing against lower house prices, but is simply saying that with projected immigration house prices will spike if we don't build more homes. What's wrong with that?

What needs to happen is that the existing stock corrects in price *and* new housing stock be built in order to _keep_ it _all_ affordable.

I doubt he could get away with stating the former, though he does allude to it in his reference to the "sad truth".

More homes is a great idea, but I get suspicious when he's talking about "affordable homes".

Does he mean by this "shared equity" (or, it's "affordable" because you're not buying the whole of it, and it's pretty sh1te anyway) or some such other con?

I'd like to be clear on exactly what he means by stating "affordable homes" rather than "homes".

Generally, when I hear "affordable" come from a politicians mouth in reference to housing then it turns out there's a big big catch somewhere.

Still, better than nothing I suppose.

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I think the population will drop over the next 20 years.

If immigration continues at the same pace as the last 10 years, there will be serious social unrest and people will vote for whoever will stop the tide. We can't go on being a bottomless bucket of welfare for anyone jumping off the boat, along with the kids they immediately start popping out apace and then neglect to teach even the English language, never mind a basic respect for the (remaining) prevailing culture.

Once enough of the country looks like Blackburn, the whole thing will collapse. Wealth generators will just give up and/or disappear. Where will house prices be then?

But at least the lefties will have got to rub our noses in it. Always a silver lining.

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+1 Why people got so hot under the collar about the spin from the Standard, I don't know. This bit did make me laugh though:

"Which is why the best way to help those millions in search of an affordable home is not to try vainly to ensure that the present stock of housing becomes more affordable – ie falls in value – but to increase the supply of affordable homes"

Come again?

I think what he might mean is "Don't try to force the prices down by market-manipulation - build more housing stock and let that do the job for you."

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http://www.telegraph...-new-homes.html

He is not arguing against lower house prices, but is simply saying that with projected immigration house prices will spike if we don't build more homes. What's wrong with that?

half the problem is that he fails to understand that we don't have an undersupply of note - but we do have grannies living in empty 4 bed houses getting state handouts, we do have a failure of the marklet but not quite the way he implies

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http://www.telegraph.co.uk/comment/columnists/borisjohnson/8070153/The-Coalition-must-tackle-the-shortage-of-new-homes.html

He is not arguing against lower house prices, but is simply saying that with projected immigration house prices will spike if we don't build more homes. What's wrong with that?

Well he shouldn't accept the projections. He's in power FFS. He should be managing immigration so that those projections don't come through

But the tories have abdicated responsibility to the EU. And these immigration projectionse suit Bojo's banker and corporatist mates just fine.

traitor

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"And when the economy takes off again, as it undoubtedly will..."

What, in the UK?

I don't think so, Boris.

When they talk about "the UK" - they mean Laaadun and the Sarf east.

The rest is their playground for grouse shoots @ weekends

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Well he shouldn't accept the projections. He's in power FFS. He should be managing immigration so that those projections don't come through

But the tories have abdicated responsibility to the EU. And these immigration projectionse suit Bojo's banker and corporatist mates just fine.

traitor

AFAIK the Mayor of London has little say in the UK's immigration policy. He can (and I suspect has) criticise it, but he has never been a member of the UK government and hence can't do much about it.

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When they talk about "the UK" - they mean Laaadun and the Sarf east.

The rest is their playground for grouse shoots @ weekends

Of course he means London - it's the area he has been elected to represent. I don't like how London-centric the UK is either, but that's up to central government to fix.

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half the problem is that he fails to understand that we don't have an undersupply of note - but we do have grannies living in empty 4 bed houses getting state handouts, we do have a failure of the marklet but not quite the way he implies

I agree it's not an under supply problem on a national scale. But in London I suspect it is, or at least it will be if the population rises by the projected 10 million. As I mentioned on another reply, a solution could be to make the UK less London centric by encouraging industry in other parts of the UK. Real industry that is, i.e. not financial services and not government non-jobs.

I think a good way of doing this would be to allow different zones of the UK to have their own currency, but it'll never catch on.

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He is not arguing against lower house prices, but is simply saying that with projected immigration house prices will spike if we don't build more homes. What's wrong with that?

House prices will not spike, more will just have to live in ever more crowded conditions, the only homes they can build are high rise flats that the low paid still will not be able to purchase at todays prices or even at tomorrows real term reductions. ;)

Edited by winkie

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House prices will not spike, more will just have to live in ever more crowded conditions, the only homes they can build are high rise flats that the low paid still will not be able to purchase at todays prices or even at tomorrows real term reductions. ;)

Good point. I've heard people argue that we don't have a housing shortage because those who don't own a house can usually find somewhere to rent instead. However that doesn't explain how most people are living in smaller houses than say 20 years ago, regardless of whether they own their house or rent their house. I think there is a housing shortage, and it will get worse if the projections are correct, but that doesn't necesarily mean we'll have higher house prices, since those are mainly influenced by the availability of credit.

Maybe the solution is to have better designed houses that exploit the available space better?

Or maybe we should just trash our currency so it's not worth anyone's while coming here to work? Oh, hang on a minute...

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+1 Why people got so hot under the collar about the spin from the Standard, I don't know. This bit did make me laugh though:

"Which is why the best way to help those millions in search of an affordable home is not to try vainly to ensure that the present stock of housing becomes more affordable – ie falls in value – but to increase the supply of affordable homes"

Come again?

Yes, that was the strangest part. Coming from Boris?! He knows economics enough and is too intelligent to say that!

Unless...

Boris is concerned with his re-lection. OK, that much we know.

Read his wording there: "the best way to help those millions in search of an affordable home is not to try vainly to ensure that the present stock of housing becomes more affordable – ie falls in value – but to increase the supply of affordable homes"

Possible translation: Lets not devalue our (middle classes) houses. Let's just build more council estates for the poor.

His political circle squared. :)

Could be?

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Good point. I've heard people argue that we don't have a housing shortage because those who don't own a house can usually find somewhere to rent instead. However that doesn't explain how most people are living in smaller houses than say 20 years ago, regardless of whether they own their house or rent their house. I think there is a housing shortage, and it will get worse if the projections are correct, but that doesn't necesarily mean we'll have higher house prices, since those are mainly influenced by the availability of credit.

Maybe the solution is to have better designed houses that exploit the available space better?

Or maybe we should just trash our currency so it's not worth anyone's while coming here to work? Oh, hang on a minute...

Take a typical large Victorian/Edwardian terrace home in a affluent London suburb the chances are it has been divided up into separate units flats/bedsits by the owner to get the maximum rental yield or divided into small converted flats and sold on......a four bed ends up becoming a six or eight bed.

From the outside you couldn't tell. ;)

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  • 150 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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