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Tired of Waiting

Barratt Shareholder Admits: Planning Restrictions Push House Prices Up

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Barratt shareholder admits: in areas with stronger planning restrictions house prices are higher.

(Though he thinks high house prices are a good thing! - for him, of course, not for the country! The b@stard! :angry: )

In a letter to the FT:

(...) we are large shareholder in Barratt Developments.

(...)

Tightly supplied housing markets, of which the UK is a prime example, have been protected from significant house price falls.

(...)

Take the US: house price falls in areas such as Las Vegas have exceeded 50 per cent and yet prices around Boston have fallen much less. It is no coincidence that the former experienced a supply glut and yet Boston’s stringent planning laws constrained housing supply. The interest rates available to finance properties in both those locations have been the same.

The UK in 2011 probably is not an environment for significantly rising house prices, but so long as the undersupply of new houses continues to lag behind household formation we think that a material and lasting fall in UK house prices is unlikely.

Tristan Chapple,

Phoenix Asset Management Partners,

LINK: "Oversupply has been common factor in house price crashes"

Of course he is wrong when he says prices will not fall. Coz planning restrictions (supply) is not the only factor. Demand is falling off a cliff now, and next. But if we also had less planning restrictions, particularly here in the south, prices would fall much more, and we would also have better housing.

Edited by Tired of Waiting

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More to do with the 50,000+ plots Barratt's holds in its landbank. Planning has zero to do with house prices when all the thousands of acres that are ready for building are slowly drip fed out to keep prices high.

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I don't think anyone denies that restricted planning pushes up prices.

What they disagree over is whether the popluation as a whole likes the non price benefits that they get from it being that that way.

tim

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More to do with the 50,000+ plots Barratt's holds in its landbank.

With planning consent? Here in the south?

Do you have a link?

Planning has zero to do with house prices when all the thousands of acres that are ready for building are slowly drip fed out to keep prices high.

You are assuming that all builders in the country are organised as a cartel. I think there are too many builders for this to be practical. Besides, anybody could have a house built, including you and me, we just had to buy a plot, hire an architect and builder. A cartel in this sector is impossible without a planning system in effect creating it.

But if you try to do a Rightmove search for building plots... They don't even have this function! In any other country estate agents do sell plots regularly! Not in Britain though. This is just crazy.

In the area of the country I am more familiar with, West Sussex, near the south coast, building plots are extremely rare, and I am quite sure it will be the same problem from Kent to Cornwall.

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In a market where 70% of transactions are finance based, then finance is the Only driver of significance.

If it were not so, there would be no slowing of the market, nor a shortage of finance.

We have both.

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Speaking of Barratts, it's been argued that Shapps' new (nicked off Labour but not as much as a profligate waste of public money) FTB scheme has helped push up Barratts' shares further:

'The shares of housebuilder Barratt Developments rose strongly yesterday – up almost 7% and fuelling criticism that the Firstbuy Direct scheme is a ‘Barratt bonanza’.

http://www.estateagenttoday.co.uk/news_features/New-first-time-buyer-scheme-could-make-things-worse

Edited by Sibley's Love Child

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In a market where 70% of transactions are finance based, then finance is the Only driver of significance.

If it were not so, there would be no slowing of the market, nor a shortage of finance.

We have both.

Finance is the strongest short-term factor affecting house prices. But planning is the strongest long-term factor.

Finance is a faster, and more unstable factor. But the size and quality of the housing stock is a more permanent, structural factor, though much slower to errr "build up", naturally.

Suppose you allow a 10% increase in the housing stock in the next 4 or 5 years, future house prices would then fluctuate and oscillate around a lower average than they would if you don't increase the housing supply.

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  • 309 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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