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Government Prepares Multi-Billion Pound Housing Stimulus

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Free market tories....what a f**king joke.

I wish I'd voted for Gordon Brown now

I did because he was guaranteed to cause a massive crash.

The housing crisis is the PRICE. Building is a distraction sold to confuse the public. Without a substantial reduction in housing the crisis will deepen and that will have unpleasant ramifications.

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Ok, you all can go ahead and slate me for falling into a wishful thinking trap here, but I think a careful reading of the article shows the Government is aiming for a big, quick bump in supply and it won't just be a case of handouts for developers. Here's the reasons why:

Good points. The report sounded like there will be a major push for house building using modular construction. Such new supply would certainly mop up a large amount of FTB demand and make BTL even more of a risk as potential tenants reduce. Early days but sounds at least more positive than Osborne's evil HTB policies.

Article here on modular construction in the Telegraph:

http://www.telegraph.co.uk/property/uk/how-a-home-made-in-seven-days-could-help-solve-the-housing-crisi/

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Worth a read. Couple of things to pick up on:

1) Pocket Living is using modular methods to create apartments for sale, using standardised designs. It is currently finishing a scheme in Lambeth, south London, where flats are sold to first-time buyers at a 20pc discount from market value.

Not a million miles away from the Starter Homes idea ... interesting that Pocket plans for the 20pc discount to stay after the buyer moves on, so avoiding the windfall effect for the first buyer.

2) L&G’s £55m, 500,000-sq-ft site, due to open later this month near Leeds, is fully computerised and automated, and can produce 3,000 homes a year for its build-to-rent schemes. The factory does not require the same level of skill as Elements. “It is much more akin to the manufacture of cars on a production line,” says James Lidgate, head of housing at L&G.

L&G's corporate affairs chief (basically their interface with the political world) John Godfrey was last month appointed as one of Theresa May's special advisers (source: https://www.moneymarketing.co.uk/issues/21-july-2016/theresa-may-appoints-lgs-godfrey-no-10-team/)

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"A little further south, Lewisham Council is finishing off PLACE/Ladywell, a Rogers Stirk Harbour + Partners-designed modular block of 24 homes, providing temporary accommodation for families on the council’s waiting list... The council says it will save £140,000 a year simply through not paying to house these families in low quality B&B accommodation"

http://www.citymetric.com/fabric/could-modular-housing-solve-londons-housing-crisis-2304

With 9.3 billion going to private landlords I would have thought there will be ever greater push for such schemes going forth^.

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Good points. The report sounded like there will be a major push for house building using modular construction. Such new supply would certainly mop up a large amount of FTB demand and make BTL even more of a risk as potential tenants reduce. Early days but sounds at least more positive than Osborne's evil HTB policies.

Article here on modular construction in the Telegraph:

http://www.telegraph.co.uk/property/uk/how-a-home-made-in-seven-days-could-help-solve-the-housing-crisi/

That article mentions that Berkeley Homes has switched to modular methods for its Kidbrooke Village development in SE3.

Part of this development uses a design that Berkeley has named 'Urban House' and has been trying to patent (with little success so far I believe). The company wants 'urban' to become a generic name along with detached, semi-detached, terraced and apartment. The design allows greater housing density than terraced.

BerkeleyUrbanHouse.jpg

http://www.berkeleygroup.co.uk/media/pdf/o/k/berkeley-kidbrooke-village-urban-houses-brochure.pdf

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"A little further south, Lewisham Council is finishing off PLACE/Ladywell, a Rogers Stirk Harbour + Partners-designed modular block of 24 homes, providing temporary accommodation for families on the councils waiting list... The council says it will save £140,000 a year simply through not paying to house these families in low quality B&B accommodation"

http://www.citymetric.com/fabric/could-modular-housing-solve-londons-housing-crisis-2304

With 9.3 billion going to private landlords I would have thought there will be ever greater push for such schemes going forth^.

A vast majority of landlords in London want absolutely nothing to do with HB

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Boom times for staircase manufacturers. And with no gardens at ground level where does the rain run off?

It could be a boom time for many building suppliers if the government goes for a big housing and infrastructure boost.

You and I both thought such a policy was likely when we discussed it a few weeks ago, but the markets have been surprisingly slow to pick up on this. Building supplies companies had been in the doldrums for most of the year due to the slump in construction, but after the Brexit vote they were absolutely hammered.

As this sort of news seeps into investors' consciousness the share prices have been picking up (especially today), but a number of them still look pretty cheap with P/Es below 10 and dividend yields 5%+ (and very little net debt).

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It could be a boom time for many building suppliers if the government goes for a big housing and infrastructure boost.

You and I both thought such a policy was likely when we discussed it a few weeks ago, but the markets have been surprisingly slow to pick up on this. Building supplies companies had been in the doldrums for most of the year due to the slump in construction, but after the Brexit vote they were absolutely hammered.

As this sort of news seeps into investors' consciousness the share prices have been picking up (especially today), but a number of them still look pretty cheap with P/Es below 10 and dividend yields 5%+ (and very little net debt).

True. If you mean developers they're tempting but part of me wonders how vulnerable they are to land values tanking. Or do you mean other types of company in the supply chain?

Edited by Patient London FTB

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True. If you mean developers they're tempting but part of me wonders how vulnerable they are to land values tanking. Or do you mean other types of company in the supply chain?

No, I don't mean the housebuilders. They're also looking very cheap, but the risk is that a loosening of planning law or any other policies that encourage a significant increase in housing supply may damage the value of the developers' land banks.

I'm specifically referring to building suppliers, i.e. manufacturers of windows, doors, piping systems, roofing materials etc.

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Just as an aside, below is a capture from Berkeley's promo brochure for the Kidbrooke Village development I mentioned above.

Personally I don't believe highlighting this comparison is a smart move by the company, but beauty is in the eye of the beholder I suppose.

Kilbrooke_Blackheath.jpg

Edited by FreeTrader

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That article mentions that Berkeley Homes has switched to modular methods for its Kidbrooke Village development in SE3.

Part of this development uses a design that Berkeley has named 'Urban House' and has been trying to patent (with little success so far I believe). The company wants 'urban' to become a generic name along with detached, semi-detached, terraced and apartment. The design allows greater housing density than terraced.

BerkeleyUrbanHouse.jpg

http://www.berkeleygroup.co.uk/media/pdf/o/k/berkeley-kidbrooke-village-urban-houses-brochure.pdf

Awesome. Chicken coup housing.

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As we saw in Vancouver recently these bubbles are so extreme all it takes is one half decent policy by the government and prices come tumbling down in hours. If this is a genuine supply side injection then it may well cause a stampede for the exit by the private BTLers.

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As we saw in Vancouver recently these bubbles are so extreme all it takes is one half decent policy by the government and prices come tumbling down in hours. If this is a genuine supply side injection then it may well cause a stampede for the exit by the private BTLers.

Indeed, maybe the brexit vote really has given the establishment a wake up call.

Things have been getting a bit silly housing cost wise.

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New govt looks at cost of housing and concludes that lack of supply is the problem...

Facepalm moment

The bankers must be overjoyed

It is a large part of the problem though, isn't it?

One of the main reasons people feel compelled to borrow to the max in some parts of the country is because of the pressure to secure a home in competition with many others.

But yeah, it would be nice if they tightened up lending too :/

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Ronald Reagan once famously said that the most dangerous nine words in the English language were..

"We're from the government and we're here to help"

The last thing the housing market needs is more state intervention. It's previous and current government meddling which has got us to this sorry pass.

Proper and meaningful rolling back of the planning laws so that there is a presumption towards residential development to make it easier to self-build. Straight away , there will be a free market in land on which to build and the price will probably settle somewhere nearer the £5000.00/acre for scarcely useful agricultural land and £1,000,000.00/acre for land with a government permit to develop. All the costs of installing services being met by whoever is building the house which will deter anything other than new stately homes in remote areas. (These are already being built anyway under the old PPS7 permits)

There are plenty of small parcels of land around towns and villages which will be barely viable as agricultural assets (even less so once CAP subsidies are whittled away), why shouldn't the average family have the option of dealing directly with a local landowner and buying a third of an acre on which to build without having to have the local authority involved?

The current planning system and the way it allows new housing provision to be dominated by a few, volume housebuilders, has given us the smallest and most expensive (and some might add, crappiest) new houses in Europe. We can do much better if we had a government with the courage to take on the vested interests who will be affected by such changes.

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It is a large part of the problem though, isn't it?

One of the main reasons people feel compelled to borrow to the max in some parts of the country is because of the pressure to secure a home in competition with many others.

But yeah, it would be nice if they tightened up lending too :/

No.

It's a very tiny, although growing, part of the problem is some regions.

The competitive pressure on home buyers comes from landlords. More and more people have 2 or 3 or 4 homes, so more and more people have none.

There's your shortage.

Edited by BuyToLeech

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It is a large part of the problem though, isn't it?

One of the main reasons people feel compelled to borrow to the max in some parts of the country is because of the pressure to secure a home in competition with many others.

But yeah, it would be nice if they tightened up lending too :/

Maybe, if you are genuinely seeing people with nowhere else to live other than the house they want to buy then fair enough, but I think the very deliberate ten year plus brainwashing program about how much an average dwelling should cost is also to blame. However many people seem to be awakening which is a good thing IMO.

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No.

It's a very tiny, although growing, part of the problem is some regions.

The competitive pressure on home buyers comes from landlords. More and more people have 2 or 3 or 4 homes, so more and more people have none.

There's your shortage.

Boom

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Land supply is fixed, you can't have a supply side stimulus.

Any extra money will just bid up the cost of development land, and that will push up the cost of houses.

If there are planning reforms, that would be a different story.

Land with building permission is not fixed.

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  • 399 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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