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Deep-Rooted Vested Interests Are To Blame For Our Housing Crisis

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The UK housing affordability crisis is a serious concern. A recent poll by Ipsos Mori found that 15% now mention housing as among the most important issues facing Britain, up from 5% in 2010.
The crisis is particularly acute in London and the South East, where housing is most unaffordable. In 2014, a year after the introduction of the governments Help-to-Buy in scheme, the price of the average dwelling in London increased by almost 26% to £400,404. Thats £82,190 or to really get a sense of what this means £9.38 every hour of the day and the night.
While many London homeowners and private landlords may be delighted to make more money from their houses than they do from their jobs, housing has become ever more unaffordable for young would-be-buyers, which is probably why, according to the same survey, 26% of Londoners think housing is an important issue, much higher than the national average.
Still, government figures show that the rate of home ownership peaked at above 69% nationally in 2002 but has fallen steadily to almost 63% in 2013, largely because fewer young people are buying homes. Other statistics show that in 1991, 67% of 25-34 year olds were homeowners but, by 2011, this had declined to 43%.

In a recent report, I showed that there is strong evidence that the planning system, as well as strong demand in some areas, is the main cause of this affordability crisis. Our planning system restricts urban areas with the use of green belts, with development control by local authorities and strict controls on height. There is also a lack of tax incentives at local level and a preponderance of not in my backyard behaviour, facilitated by the planning regime. This is largely why house building has been in decline or, some might say, in free fall since the late 1960s. We build about a third of the homes each year today than we did in the late 1960s.
In short, the planning system does not allow the supply of homes to rise no matter how high prices rise, which essentially suggests that demand-focused policies proposed by the various parties are attacking symptoms but not causes of the problem. [more at link]

http://spatial-economics.blogspot.co.uk/2015/06/deep-rooted-vested-interests-are-to.html

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I think it's a bit much to blame the planning system for the "affordability crisis" - clearly availability of credit is the driving factor - but it's definitely needlessly restrictive, almost punitive, in its attitude to self-builders.

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The people that control this country want asset and especially land prices to be high. It benefits them.

House building, banking, laws, planning consent. Doesn't matter - the people in power will manipulate all of these as much as possible to benefit themselves.

It will all collapse one day of course. Who knows when though.

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Giving people easy cheap money debt that is rapidly losing value to use on buying rising assets that will only end up losing value when growth stagnates, costs rise and easy becomes hard..... ;)

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Hence we have ZIRP QE and HTB

Ban those and #bringbackcapitalism

Sure, but - while I don't think it's to blame for the housing crisis - a less interventionary planning system wouldn't go amiss either.

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