Jump to content
House Price Crash Forum
Sign in to follow this  
Biriani

A Conspiracy That Raises House Prices

Recommended Posts

Interesting article in today's FT - don't know if it's been posted yet. Martin Wolf rails against planning regulations.

http://news.ft.com/cms/s/b7c6d4c4-2b95-11d...000e2511c8.html

Some excerpts:

“The real price of housing has more than doubled over the past decade. Yet this socially destructive development is, for many, an occasion for self-congratulation.”

Two superb recent pamphlets from a new think-tank, Policy Exchange, explain just how absurd and unnecessary this is.* The UK pats itself on the back for having a more flexible and market-oriented economy than Germany. Yet in one of the most important markets in any country – that for land – the UK suffers under a system of quasi-Stalinist planning, while Germany has a relatively flexible and decentralised regime.

“The British will trot out a long list of hoary myths: Britain, they will say, is a country with limited space, particularly in the overcrowded south; they will insist that the UK has enough houses already; they will declare that agricultural land needs to be preserved; they will suggest that building houses on the green fields of England is bad for the environment; finally, they will argue that building should be on “brown-field” sites instead.”

“All this is nonsense…. Only 8 per cent of the total land in the UK is urban, while the proportion under agriculture is 78 per cent, the highest in the old European Union….”

“What lies behind the artificial scarcity of building land is, instead, a conspiracy of vested interests, above all of existing homeowners. Moreover, by now the high price of land is built into the British economy: people have borrowed against inflated values; they assume they can live in retirement off the wealth in their houses and they are fiercely resistant to policies that might eliminate the scarcity.”

“Yet putting the price of housing beyond the means of a large proportion of young people is not merely economically inefficient but socially destructive. A way

must be found to relax planning restrictions without destroying the solvency of large parts of the population. That can be done. It will be the subject of a column two weeks from now.”

Edited by Biriani

Share this post


Link to post
Share on other sites
Interesting article in today's FT - don't know if it's been posted yet. Martin Wolf rails against planning regulations.

http://news.ft.com/cms/s/b7c6d4c4-2b95-11d...000e2511c8.html

Some excerpts:

“The real price of housing has more than doubled over the past decade. Yet this socially destructive development is, for many, an occasion for self-congratulation.”

Two superb recent pamphlets from a new think-tank, Policy Exchange, explain just how absurd and unnecessary this is.* The UK pats itself on the back for having a more flexible and market-oriented economy than Germany. Yet in one of the most important markets in any country – that for land – the UK suffers under a system of quasi-Stalinist planning, while Germany has a relatively flexible and decentralised regime.

“The British will trot out a long list of hoary myths: Britain, they will say, is a country with limited space, particularly in the overcrowded south; they will insist that the UK has enough houses already; they will declare that agricultural land needs to be preserved; they will suggest that building houses on the green fields of England is bad for the environment; finally, they will argue that building should be on “brown-field” sites instead.”

“All this is nonsense…. Only 8 per cent of the total land in the UK is urban, while the proportion under agriculture is 78 per cent, the highest in the old European Union….”

“What lies behind the artificial scarcity of building land is, instead, a conspiracy of vested interests, above all of existing homeowners. Moreover, by now the high price of land is built into the British economy: people have borrowed against inflated values; they assume they can live in retirement off the wealth in their houses and they are fiercely resistant to policies that might eliminate the scarcity.”

“Yet putting the price of housing beyond the means of a large proportion of young people is not merely economically inefficient but socially destructive. A way

must be found to relax planning restrictions without destroying the solvency of large parts of the population. That can be done. It will be the subject of a column two weeks from now.”

That is f*cking dynamite........at last the truth arrives in media town!

:):):):)

Edited by Smell the Fear

Share this post


Link to post
Share on other sites
A way

must be found to relax planning restrictions without destroying the solvency of large parts of the population.

Why?

We should strike a blow for freedom. Relax the restrictions AND destroy the solvency of large parts of the population. That's the ticket.

Share this post


Link to post
Share on other sites
Why?

We should strike a blow for freedom. Relax the restrictions AND destroy the solvency of large parts of the population. That's the ticket.

I agree. They are participants in a pyramid scheme, which has reached the point where those at the top are slowly realising that there is no one below to bail them out.

If anyone should bail them out, it is the VIs. They can split their losses 50/50.

It did occur to me a few days ago that if prices drop by 30% only a small proportion of the population would actually be affected - i.e those who purchased recently with high loan to value.

Can anyone estimate how much they would need to be reimbursed to keep them out of negative equity?

Share this post


Link to post
Share on other sites

“Yet putting the price of housing beyond the means of a large proportion of young people is not merely economically inefficient but socially destructive."

It is socially destructive and is causing havoc to the economy.

Share this post


Link to post
Share on other sites
“Yet putting the price of housing beyond the means of a large proportion of young people is not merely economically inefficient but socially destructive."

It is socially destructive and is causing havoc to the economy.

Yes, that's what he said..... :P

edit: where are the FTBs? They should be all over this. At last someone is pointing out the truth of what is happening.

P.s. I regard myself as a FTB, even though I sold to rent. I am spending my STR fund on education, so I will be broke by the time I have an income to buy again. :)

Edited by Smell the Fear

Share this post


Link to post
Share on other sites

Reminds me of an answer I gave last week somewhere else :-

> The difficulty in pricing property is that land does not have a

> manufacturing cost. What people are willing to pay could be anything

> according to animal spirits. While cars for example will settle at

> around manufacturing cost.

The manufacturing process for land is the planning system. There's actually plenty of land about, they make it sound like the whole country is developed or concreted over and even the countryside has been devoured by motorways, this simply isn't true, the majority of land has minimal utilisation, you just can't build on it of course.

The planning system is the equivalent of De Beers artificially limiting supply in the face of actual abundance.

Share this post


Link to post
Share on other sites
Reminds me of an answer I gave last week somewhere else :-

The manufacturing process for land is the planning system. There's actually plenty of land about, they make it sound like the whole country is developed or concreted over and even the countryside has been devoured by motorways, this simply isn't true, the majority of land has minimal utilisation, you just can't build on it of course.

The planning system is the equivalent of De Beers artificially limiting supply in the face of actual abundance.

Nice analogy. Consider this: would you borrow £200k from the bank to buy diamonds? It would be crazy given that the source of their value can easily be modified.

Share this post


Link to post
Share on other sites
Yes, that's what he said.....  :P

edit: where are the FTBs? They should be all over this. At last someone is pointing out the truth of what is happening.

P.s. I regard myself as a FTB, even though I sold to rent. I am spending my STR fund on education, so I will be broke by the time I have an income to buy again. :)

The reason that FTB's are not all over this is because if it is true it mean that we are not in the grips of a bubble by a restriction in supply. That means that the 'bubble' won't pop and we are all f*cked because no government has the will or the balls to address this.

I must admit I think it is partly true but do think that the current market is a bubble. House prices have doubled to trebled in 8 years don't tell me that this is a rational response by buyers who are adjusting to the limited supply within the market. Doesn't add up either the market was wrong for 50 years and has corrected itself in the last decade or we are in a bubble.

Share this post


Link to post
Share on other sites

I disagree with this article.

It is implying that high house prices are chiefly a result of insufficient supply, when the problem has in fact been one of excess speculative demand.

Share this post


Link to post
Share on other sites
I disagree with this article.

It is implying that high house prices are chiefly a result of insufficient supply, when the problem has in fact been one of excess speculative demand.

I hear what you are saying. It is true however that supply does play some part in prices (and a large part in prices historically).

If we could build where we like (even within reason) the price of land would plummet. The cost of a house would be only a few grand over the cost of construction in most places (higher in others for reasons of desirability).

The truth is multifactorial. You could argue that the restrictions of planning have created the conditions for the current bubble by giving the impression that there is a lack of housing. This is a bull's argument and promotes speculation.

That aside, the fact that it acknowledges the effects of high prices is something to cheer about. It highlights the enormous negative social and economic consequences. This alone is reason to celebrate, as it is normally ignored. We are normally told that we will have to get used to living in tiny cubes ffs. :angry:

Share this post


Link to post
Share on other sites
I hear what you are saying. It is true however that supply does play some part in prices (and a large part in prices historically).

Yes, but the tripling of house prices in the past 10 years is entirely due to speculative demand, fuelled by overly lax lending. The population hasn't changed much in terms of numbers, age or marital status in that time.

If we could build where we like (even within reason) the price of land would plummet. The cost of a house would be only a few grand over the cost of construction in most places (higher in others for reasons of desirability).

But if we could build where we liked, the country would become a building site whenever an upcycle occured, then a concrete wasteland in the downcycle. We'd also need a lot more infrastructure to serve the newly urbanised areas.

The truth is multifactorial. You could argue that the restrictions of planning have created the conditions for the current bubble by giving the impression that there is a lack of housing. This is a bull's argument and promotes speculation.

You'll always get speculation whenever there's a whiff of easy money in the air and there's no regulation in place to prevent it.

That aside, the fact that it acknowledges the effects of high prices is something to cheer about. It highlights the enormous negative social and economic consequences. This alone is reason to celebrate, as it is normally ignored. We are normally told that we will have to get used to living in tiny cubes ffs. :angry:

Agreed! :)

Share this post


Link to post
Share on other sites
“All this is nonsense…. Only 8 per cent of the total land in the UK is urban, while the proportion under agriculture is 78 per cent, the highest in the old European Union….”

But you can't call it nonsense. Why would a developer want to build out in the middle of the countryside, away from towns, and have to pay for the whole infrastructure to allow commuters to get to their place of employment? Guy from FT's effectively saying that we've got loads of room - there's plenty of fields to build on. That's totally impractical.

The tight planning laws are society's defence against profit-hungry builders wanting to destroy inner-city parks, fields on the outskirts of towns, sports pitches and other open spaces.

I'd rather rent in a city with parks and greenspace, than own a rabbit hutch in a high-rise estate, with nothing but concrete to look out over.

Let's keep a sense of perspective.

Share this post


Link to post
Share on other sites

There is certainly no shortage of land. If you could buy one acre at agricultural prices (say £3,000 an acre) then each family could build a house for £75-250k and live in an absolute palace.

However the ridiculous (IMHO) restrictions on property development mean that an acre of building land is worth £1-2m i.e. 30-60 times the agricultural value - this has got to be crazy. It's a restriction on trade - can we complain to the EU about UK planning laws?

Share this post


Link to post
Share on other sites
There is certainly no shortage of land. If you could buy one acre at agricultural prices (say £3,000 an acre) then each family could build a house for £75-250k and live in an absolute palace.

However the ridiculous (IMHO) restrictions on property development mean that an acre of building land is worth £1-2m i.e. 30-60 times the agricultural value - this has got to be crazy. It's a restriction on trade - can we complain to the EU about UK planning laws?

Then every muppet would buy a big field and put a house on it. Where would food come from if we lived on the fields?

Share this post


Link to post
Share on other sites
I disagree with this article.

It is implying that high house prices are chiefly a result of insufficient supply, when the problem has in fact been one of excess speculative demand.

I think that is a smart comment.

Share this post


Link to post
Share on other sites

A stupid article and piece of research.

'Hey, let's not blame insane lending and speculative greed. We're the FT and we make our money commentating on the global-casino-debt-fulled pryamid economies. We're the FT, let's use childish terms like 'Quasi-Stalinist' to deflect the blame away from our pave-the-earth-for-a-buck chums...'

Now only a few late-coming retards are BTLing, there's page upon page of similar property on rightmove where a couple of years ago there was very little. Three years ago, I remember when we equired about three flats in an estate agents window only to be told, 'They went yesterday to the same investor'. Those times are well and truly gone.

When people stop hoovering up people's potnetial homes in the hope of an effort-free killing, and McBuilders build only BTL-toy 1 bed hutches instead of homes singles, couples and families actually want to live in, seems there's an instant glut. Some shortage!

Once we've matched the supply to real-world salaries, only then can we seriously start to look at how well the current planning system functions.

Share this post


Link to post
Share on other sites
A stupid article and piece of research.

'Hey, let's not blame insane lending and speculative greed. We're the FT and we make our money commentating on the global-casino-debt-fulled pryamid economies. We're the FT, let's use childish terms like 'Quasi-Stalinist' to deflect the blame away from our pave-the-earth-for-a-buck chums...'

Now only a few late-coming retards are BTLing, there's page upon page of similar property on rightmove where a couple of years ago there was very little. Three years ago, I remember when we equired about three flats in an estate agents window only to be told, 'They went yesterday to the same investor'. Those times are well and truly gone.

When people stop hoovering up people's potnetial homes in the hope of an effort-free killing, and McBuilders build only BTL-toy 1 bed hutches instead of homes singles, couples and families actually want to live in, seems there's an instant glut. Some shortage!

Once we've matched the supply to real-world salaries, only then can we seriously start to look at how well the current planning system functions.

If it does something to raise the issues of social and economic destruction caused by HPI, it can't be all bad.

Personally, I would be happy for a few hundred acres of greenbelt to be mutilated if it resulted in the realisation that there is truly not much excess demand for property. This would inevitably lead to a more rapid crash in prices.

If we have to learn the hard way, so be it.

Share this post


Link to post
Share on other sites
Personally, I would be happy for a few hundred acres of greenbelt to be mutilated if it resulted in the realisation that there is truly not much excess demand for property. This would inevitably lead to a more rapid crash in prices.

If we have to learn the hard way, so be it.

Nah, I disagree. Speculative demand will come and go, but once the green belt's gone it's gone forever :(

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 333 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.