The Telegraph : Village Green Preservation Society…

[Riedquat]

The way I look at it is that human beings right to shelter supercedes some rich guys privilege to have nice views. We've got a net of 250,000 immigrants moving to Britain each year, and millions of young adult Brits who don't even have a home.

This means we must build baby build. Which also means hundreds of thousands of high paying jobs for our boys.

Actually it means we should stop importing people. And let's lose this "rich guys" whinging please. There are more people living outside towns and cities who aren't rich than who are.

[Authoritarian]

And I have explained why that was rather silly of you, relying solely on an extremely uncharitable reading of what was being said. As I have pointed out, you would have to assume that the other poster was entirely divorced from reality to think that they didn't understand that land demand would vary by location.

Since the poster is not in fact entirely deranged, you are knocking down a straw man of your own making. Just because someone hasn't entirely excluded ambiguity from their argument doesn't mean it is big or clever to "explain" how an entirely idiotic interpretation of it is wrong.

As I said, we all understand that an acre of Knightsbridge is in more demand than an acre of wilderness.

Still want to "expain" that one for us all over again? Or do you have any interest in actually engaging with people?

I don't know what the other poster may or may not have been thinking, I can only go on what he actually said and I quote verbatim "The cost of land is down to the supply... of credit." This statement shows a deep misunderstanding of elementary economics and by defending him - strangely, by pretending you're psychic and qualified to speak for him - you're also betraying your own ignorance.

The supply and cost of credit certainly influences the exchange price of land, but the overriding factor is the location.

Wrong. The credit boom was an example of vast credit creation that was not driven by a boom in incomes. Have you been asleep for the last decade? Credit growth is sometimes and partially driven by income growth.

Nope, incomes rose in real terms over the last decade because certain fixed living costs became cheaper. The most visible of these being interest rates but there were others too. This facilitated greater credit creation which eventually fed it's way into the housing market.

On the other hand I am saying that you lack reading comprehension and intelligent analysis of a debate, at least on this evidence.

Another insult? Time to put on your big boy pants, you're spoiling the atmos.

Your point is off the point. The point is about variation over time in aggregate land prices and you keep wittering on about variation by location.

Even worse, your point is nonsense on its own terms. Equal credit is available for Warren Buffet to buy in Tottenham than in Kensington. The credit available is almost entirely determined by the following two factors:

1. The credit worthiness of the borrower as (subjectively) assessed by lendors.

2. The prevailing credit market conditions.

Now the location of the land assets purchased may indirectly affect factor 1. Yet here you are claiming that this indirect effect on one of two important factors is what determines credit availability!

Your point such as it is doesn't make sense as Warren Buffet being one of the richest men in the world doesn't need credit to buy a house in London. Even if he did they'd be able to secure the credit upon his other assets rather than the house meaning that the information was worthless.

As a rule banks will only grant credit to tune of the market price of the house, they're not going to lend Bob the plumber £200k for a house in Wales valued at £70k, so once again we return to my point that location dicates credit creation.

I suppose we could the Manchester United example as an approximation, the Glaziers took out a mortgage to buy the club and the valuation was determined by the club's revenue stream, in terms of housing this would be called the rent. Bankers wouldn't have lent Warren Buffet twice the amount of credit to outbid the Glaziers (not without additional security which doesn't count) because he'd never have been able to service the mortgage with the ticket sales and licensing deals etc.

Hope this helps.

Edited September 11, 2011 by Authoritarian

[davidg]

I don't know what the other poster may or may not have been thinking, I can only go on what he actually said and I quote verbatim "The cost of land is down to the supply... of credit."

I think the other poster spotted you for what you are.

[Authoritarian]

I think the other poster spotted you for what you are.

Don't worry, your boyfriend has done a fantastic job of defending your honour

Edited September 11, 2011 by Authoritarian

[VacantPossession]

Making a mess in a mess doesn't involve making anything much worse which is probably why it's more accepted, but it can be too easily used as a good excuse for not bothering to make an effort (can sling up any cheap badly-designed rubbish, take the money, and run). Developing in ghastly places should be encouraged simply to make them less ghastly if nothing else.

Why? Those areas have some houses already after all. Then it becomes a consideration of how much different the number of houses makes, no matter how well designed they are. Much as I'm not keen on the trend for villages to slowly grow into small towns, or new villages to appear, if you're going to build them it'll have the least impact if it's spread as evenly as possible, including some in the most attractive parts. Probably best to add in proportion to the existing size. Not actually needing any would be massively better still but I can't see the cretins running the UK doing anything at all about that, alas (or about second home ownership). Even I wouldn't want to say a big, round flat zero to any new houses whatsoever under any circumstance in national parks.

I think we broadly agree. I mentioned "national parkland" in order to assuage any opinion that I was enouraging mindless development in these places. I've already expressed that a reasonably distribution of new housing over a wide area is not that damaging. It is the concentration of BAD development that causes resentment. Many existing villages are no more than ghost hamlets that have no real centre, no community and are just placenames for isolated housing which not only stopped expanding years ago but which also has the heart of itself stripped out. Local authorities are paranoid about regeneration, let alone "development" of these locations, as though they are only interested in them being a quaint chocolate box museum.

[VacantPossession]

The high price of houses is a demand side problem, not a supply side one.

The issue is that consumers are demanding more housing than is desirable as they believe it is am investment. Hence house prices get driven ever upwards in a speculative bubble.

Using supply side measures to solve the problem will not solve high house prices. Instead it adds fuel to the fire like in Spain and Ireland. The only plus point with increasing supply would be is that when the bust comes the falls are much greater. However, this benefit comes at the cost of concreting over the countryside not a price worth paying IMO.

Some of the comments on this thread about Telegraph reading homeowners are born out of jealousy. If you really understood the economics of the situation you would pity then as their pad in the country rather than being a tidy investment is actually an overpriced pile of bricks.

Wading through your poorly expressed English is hard enough, but added to that you apply pseudo-economic precepts to mask a simple point: Property in rural locations is dominated by money, not any other factor, except where an historical rights to tenancy or land exist, but those are now quite rare. Your "jealousy" argument is shallow. That's like saying slum residents in the worst areas of Glasgow have no right to better conditions because they are just jealous.

Desiring better housing conditions for all, and specifically a fair share of a decent location is not a jealousy issue, it is an issue of fairness. That is why I made efforts to emphasise that URBAN conditions are even more urgent to face than fair distribution of rural habitats.

Edited September 11, 2011 by VacantPossession

[rxe]

Three thoughts.

Firstly, the price of a house is only partially determined by its physical characteristics (size, condition etc)- it is far more determined by location. A nice 5 bedroom house in (say) rural Yorkshire that is worth a few hundred K, would be worth about 2 million in central London. If a lot of the price is location based, then if you jack up supply it has to be where people want to live: in urban areas and close to good rail/road links. The problem here is that most of this has been built already. So you'll still have high prices in the sort of areas that people want to live in.

Secondly, Ireland has a very lax planning policy - and the result is pretty hideous. That is irrelevant: the real point is that they have had a housing bubble every bit as big as ours (bigger probably), and house prices are only falling there because they are more visibly screwed than we are. Limitless supply didn't change much there.

Thirdly, the idea that "land is cheap" is suspect. Sure, land in some part of the country is dirt cheap. Getting back to location, "amenity land" in decent areas of Berkshire runs to £40K an acre. This is land with no planning permission, no prospect of planning permission, and just good for ponies. In this area, there is a simple scarcity of land.

[jaspers]

Three thoughts.

Firstly, the price of a house is only partially determined by its physical characteristics (size, condition etc)- it is far more determined by location. A nice 5 bedroom house in (say) rural Yorkshire that is worth a few hundred K, would be worth about 2 million in central London. If a lot of the price is location based, then if you jack up supply it has to be where people want to live: in urban areas and close to good rail/road links. The problem here is that most of this has been built already. So you'll still have high prices in the sort of areas that people want to live in.

Secondly, Ireland has a very lax planning policy - and the result is pretty hideous. That is irrelevant: the real point is that they have had a housing bubble every bit as big as ours (bigger probably), and house prices are only falling there because they are more visibly screwed than we are. Limitless supply didn't change much there.

Thirdly, the idea that "land is cheap" is suspect. Sure, land in some part of the country is dirt cheap. Getting back to location, "amenity land" in decent areas of Berkshire runs to £40K an acre. This is land with no planning permission, no prospect of planning permission, and just good for ponies. In this area, there is a simple scarcity of land.

Your points about Ireland highlight the need for increase supply to run with decreased demand (LTV no greater than 70%. , 2.5x joint income max , no IO, no non-verifiable mortgages) for credit. Make the mortgage Market dull, non-"innovative", as it was pre Tony Barber.

Obviously will never happen in the UK. Your ability to purchase a house would become dependent on your skills,ability and income, rather than your access to cheap, and fraudulently available credit.

[jammo]

Excellent post

I think a nice looking house could be built on green belt land and can enhance the landscape. Millions of people visit places like bourton on the water no one thinks the houses should be pulled down to bring the area back to it's original beauty.

This is very important. House builders simply need to stop vomitting up ugly houses - and not just in those places that are scenic to begin with. A lot of houses are unnecessarily ugly IMHO.

[Chuffy Chuffnell]

Some NIMBY nonsense from my part of England...

http://www.shropshirestar.com/news/2011/09/12/letter-fears-for-the-shropshire-countryside/

[Dorkins]

Ireland has a very lax planning policy - and the result is pretty hideous. That is irrelevant: the real point is that they have had a housing bubble every bit as big as ours (bigger probably), and house prices are only falling there because they are more visibly screwed than we are. Limitless supply didn't change much there.

...yet, but the correction is not yet over. Ireland has a huge oversupply of housing now. Their market bottom is going to be very, very low.

[Si1]

Three thoughts.

Firstly, the price of a house is only partially determined by its physical characteristics (size, condition etc)- it is far more determined by location. A nice 5 bedroom house in (say) rural Yorkshire that is worth a few hundred K, would be worth about 2 million in central London. If a lot of the price is location based, then if you jack up supply it has to be where people want to live: in urban areas and close to good rail/road links. The problem here is that most of this has been built already. So you'll still have high prices in the sort of areas that people want to live in.

Secondly, Ireland has a very lax planning policy - and the result is pretty hideous. That is irrelevant: the real point is that they have had a housing bubble every bit as big as ours (bigger probably), and house prices are only falling there because they are more visibly screwed than we are. Limitless supply didn't change much there.

Thirdly, the idea that "land is cheap" is suspect. Sure, land in some part of the country is dirt cheap. Getting back to location, "amenity land" in decent areas of Berkshire runs to £40K an acre. This is land with no planning permission, no prospect of planning permission, and just good for ponies. In this area, there is a simple scarcity of land.

what a vapid post

(1) is a mix of the obvious and the downright stupid

(2) is absurd - Ireland has so many differing variables that pointing a finger at over-supply in isolation is deeply misinforming

(3) that price comes to approx £1000 per housing plot on passably efficient house building - this is small, this land really is stil cheap; it is scarcity of planning consent that then pushes up the price in an environment of limited planning permission

[rxe]

Can't really bothered to get into this but:

(1) is a mix of the obvious and the downright stupid

Good to see some proper analysis here.

It is obvious, so obvious that I'm surprised you don't see the problem. How will building outside London (for example) materially alter house prices in London? If the only factor was supply, you can buy a perfectly good 3 bed house in Maidenhead for a few hundred K and then commute into work in London. So why don't all the people in London do that? Why on earth are they paying £1m for the same house, 32 miles away? The problem with this mantra is that to materially alter the market, you're going to have to build a lot of houses. I have no idea how many are needed, but at a guess 5% of the current stock to start altering prices significantly. That's a lot of houses, and that is a lot of people who will have to move to somewhere less convenient than they are competing for now.

Ireland is totally relevant. They opened the supply tap and prices went though the roof. I'm not claiming that this was causative, but the notion "open up supply and prices will come down" did not happen there.

[PopGun]

FFS not this again.

More smart ar5ed idiots on this thread playing into the speculator's hands.

People are losing jobs, banks aren't lending. So who the fook at this moment of time would be able to benefit from this proposed glut of new housing? Need a clue?

Maybe if 'nimbys' had more say as to what type of housing was being built in their village and the number, they'd be more receptive. Who wouldn’t want to object to another sprawling third rate 4 bed executive McBarratt estate springing up on their doorstep without the adequate infrastructure?

There's town in East Yorkshire called Brough. If you want a perfect example of how over building can systematically ruin a localised area, then come and visit here or any of the numerous other over expanded monstrosities already built up and down the county.

I’m sorry, but not everyone can have a nice big house in the country with a 50% discount. So wake up from the wet dream and deal with it. You’d all be better served channelling your energies into the real perpetrators of the housing crisis. I.e. the BTL property investment speculators, property hoarders and slumlords who own three streets in Macclesfield each, along with their reckless spiv credit lenders on the back of a compromised, corrupt and flawed economic system.

I won't hold my breath.

[PopGun]

Obviously will never happen in the UK. Your ability to purchase a house would become dependent on your skills,ability and income, rather than your access to cheap, and fraudulently available credit.

So much for better more affordable housing for all then.

[Dorkins]

There's town in East Yorkshire called Brough. If you want a perfect example of how over building can systematically ruin a localised area, then come and visit here or any of the numerous other over expanded monstrosities already built up and down the county.

Maybe it gets worse for the people who already lived there, as the place gets busier and less cosy. There may be compensations though, as a larger town can support a wider range of businesses.

But what about the people who voluntarily moved from where they were before? Don't they have a say? Get yourself to any of the Essex overspill towns and ask old people there how they felt when they moved out of the London slums to a much nicer environment. Or are people trapped in failed urban areas just supposed to sit there and put up with it?

Heavy industry is gone, and the Victorian monstrosity that was a London of 9m people deserves to die. If the repopulation of the countryside means its current inhabitants have to shove over a bit, tough.

Edited September 12, 2011 by Dorkins

[Traktion]

Your points about Ireland highlight the need for increase supply to run with decreased demand (LTV no greater than 70%. , 2.5x joint income max , no IO, no non-verifiable mortgages) for credit. Make the mortgage Market dull, non-"innovative", as it was pre Tony Barber.

Obviously will never happen in the UK. Your ability to purchase a house would become dependent on your skills,ability and income, rather than your access to cheap, and fraudulently available credit.

That's just treating the symptoms which come from the disconnect between what people consider depositing savings and lending money to the bank.

If people don't agree to lend the bank their money, but instead just want somewhere safe to keep it, then the amount of credit the banks can extend to others is limited. Thus credit would be restricted by market forces, rather by government meddling.

Why is this important? Because if you just prevent one category of items of the market from bubbling, another will sprout forth instead. The problem needs tackling at the root*.

EDIT: Arguably, fiat money as at the heart of the problem too, but if we stop socialising the risks, it's a good step forward.

Edited September 12, 2011 by Traktion

[Si1]

There's town in East Yorkshire called Brough. If you want a perfect example of how over building can systematically ruin a localised area, then come and visit here or any of the numerous other over expanded monstrosities already built up and down the county.

it is precisely the draconian limiting planning laws that have encouraged this kind of development - as it is only large builders with one size fits all architecture that have the financial muscle to cope with the planning laws

loosening planning laws will permit smaller more considered developments to take place, precisely the kind of building that created the attractive landscape that you seem to hanker for

[nmarks]

it's the brains, not the buildings, that made Britain, and modern greenfield sites seem to suit research institutions rather well...

in fact, whereas currently these former research sites are urbanm when they were built they were commonly surrounded by green fields for that very reason

You need buildings to do research in and in this case the net result is a reduction in their numbers - in favour of something that has brought the country to its knees: property speculation.

Nice . . .

Edited September 12, 2011 by nmarks

[mirage]

The supply and cost of credit certainly influences the exchange price of land, but the overriding factor is the location.

So you actually do want to explain again that Knightsbridge is more expensive than Scottish bog.

Thanks, I think we are beginning to understand this illuminating and counter-intuitive point. Without your incisive analysis we would be lost. Certainly, as you have pointed out, we have betrayed a deep misunderstanding of the land market.

Just for old times sake though, could you run it by us one more time. And make sure you again ignore any actual point being made, because after all you are not psychic, you can only go on what is being said.

So I'll be quite clear: what we are saying is that the price of any acre of land in the UK is uniform, identical, the same between different locations.

Do you see any problem with that point? It still seems entirely reasonable to me, despite your most patient and intelligent efforts.

All land does cost the same, doesn't it?

Edited September 12, 2011 by mirage

[mirage]

Nope, incomes rose in real terms over the last decade because certain fixed living costs became cheaper. The most visible of these being interest rates but there were others too. This facilitated greater credit creation which eventually fed it's way into the housing market.

You have no idea of the facts. The US had a vast credit-land price boom without real incomes increasing (they decreased).

You obviously did miss that.

Actually, I think there were some threads on here about it if you look back.

[Si1]

You need buildings to do research in and in this case the net result is a reduction in their numbers - in favour of something that has brought the country to its knees: property speculation.

Nice . . .

nah, universities have been building new facilities for decades, nice shiny new ones, look at Warwick uni, lancaster, various other

[Authoritarian]

You have no idea of the facts. The US had a vast credit-land price boom without real incomes increasing (they decreased).

You obviously did miss that.

Actually, I think there were some threads on here about it if you look back.

Why are you talking about the U.S again?

I didn't miss the historically low interest rates (hint, think what impact that will have on the cost of borrowing) or the importation of ultra-cheap Chinese goods, both of which helped facilitate a rise in real wages.

Once house prices started to rise banks were given the green light to expand the credit base, it's pretty simple really.

[Authoritarian]

So you actually do want to explain again that Knightsbridge is more expensive than Scottish bog.

Thanks, I think we are beginning to understand this illuminating and counter-intuitive point. Without your incisive analysis we would be lost. Certainly, as you have pointed out, we have betrayed a deep misunderstanding of the land market.

Just for old times sake though, could you run it by us one more time. And make sure you again ignore any actual point being made, because after all you are not psychic, you can only go on what is being said.

So I'll be quite clear: what we are saying is that the price of any acre of land in the UK is uniform, identical, the same between different locations.

Do you see any problem with that point? It still seems entirely reasonable to me, despite your most patient and intelligent efforts.

All land does cost the same, doesn't it?

I can't even tell where you're being sarky and where you're not, I think that says more about your confused ideology than it does my ability to read between the lines.

Just to clarify then, the production cost of every square inch of land is identical; £0, but it's market price will vary according to location. This has absolutely nothing to do with credit, it's about the ability of land as a factor to cream off any production surpluses that the local area affords. This mechanism raises the exchange price and allows the banking system to grant credit against the new revenue stream.

Edited September 12, 2011 by Authoritarian

[Authoritarian]

That's just treating the symptoms which come from the disconnect between what people consider depositing savings and lending money to the bank.

If people don't agree to lend the bank their money, but instead just want somewhere safe to keep it, then the amount of credit the banks can extend to others is limited. Thus credit would be restricted by market forces, rather by government meddling.

Why is this important? Because if you just prevent one category of items of the market from bubbling, another will sprout forth instead. The problem needs tackling at the root*.

EDIT: Arguably, fiat money as at the heart of the problem too, but if we stop socialising the risks, it's a good step forward.

The banking system has been corrupted by the realtors, attempting to bypass it doesn't get to the root of the problem.