North London Rent Girl Posted January 21, 2017 Share Posted January 21, 2017 (edited) Did quick search and didn't see this article on here. Was really depressed when I surveyed the board this morning and thought we could do with something, well, cheerful wrong word but at least good old Merryn getting the message out ... http://moneyweek.com/merryns-blog/how-to-solve-the-uks-housing-crisis/ Edited January 21, 2017 by North London Rent Girl Quote Link to comment Share on other sites More sharing options...
Neverwhere Posted January 21, 2017 Share Posted January 21, 2017 Nice article, thanks for posting. Quote Link to comment Share on other sites More sharing options...
crouch Posted January 21, 2017 Share Posted January 21, 2017 1 hour ago, North London Rent Girl said: Did quick search and didn't see this article on here. Was really depressed when I surveyed the board this morning and thought we could do with something, well, cheerful wrong word but at least good old Merryn getting the message out ... http://moneyweek.com/merryns-blog/how-to-solve-the-uks-housing-crisis/ MSW is quite right about this; the main factor in high house prices is availability of credit and low interest rates; there is no housing shortage (there may be in particular areas but that's benn the case for 20,000 years!). The main reason why there's talk of a housing crisis is to get the planning legislation relaxed so builders can build on more desirable sites and get higher prices; it has nothing to do with shortage. Quote Link to comment Share on other sites More sharing options...
The Young and the Nestless Posted January 21, 2017 Share Posted January 21, 2017 From the article: Quote If there is a shortage of housing in the UK, rents would be rising fast (that supply and demand thing again). Somewhat of an assumption though. If people's budgets are 'maxed-out' already they would tell the landlord they will be handing back the keys, and the landlord would think again etc. A few posts in the 'Anecdotals' forum would support this. And on the housing crisis - this is made up of multiple components: yes the new housing supply shortage is only one part, not the only important part as some people claim. Quote here’s a surprising number for you: 1.6%. That’s the rate at which rents rose across Great Britain in 2016 According to the ONS, Q3 2016 year-on-year wage growth was 1.5%. Ideally someone would do a statistical correlation, but anecdotally it looks like rents are already being limited by wages. Ultimately as landlord tax relief is reduced, then this is the friction point that would be expected. Quote Link to comment Share on other sites More sharing options...
Wayward Posted January 21, 2017 Share Posted January 21, 2017 Yes of course low interest rates and easy credit have fed the bubble but in parallel with that conditions of scarcity are needed for price rises. If there is more supply than demand and no competitive bidding between buyers...what mechanism then creates the upwards pressure...? Sellers would be competing with each other to lower prices rather than buyers bidding with each other to increase prices. To support the point....houses are not expensive in Hartlepool...why is that? The same credit conditions exist as in Surrey? The same interest rates as Berkshire? Why no bubble in house prices in Hartlepool???....because supply is greater than demand or at least more balanced. Therefore whilst campaigning against low interest rates and the cynical schemes introduced to support prices... I am also all in favour of increased supply...as should anyone with an interest in lower house prices. Quote Link to comment Share on other sites More sharing options...
ChewingGrass Posted January 21, 2017 Share Posted January 21, 2017 We have been here before:- 'Before 1834, the cost of looking after the poor was growing more expensive every year. This cost was paid for by the middle and upper classes in each town through their local taxes. There was a real suspicion amongst the middle and upper classes that they were paying the poor to be lazy and avoid work. After years of complaint, a new Poor Law was introduced in 1834. The new Poor Law was meant to reduce the cost of looking after the poor and impose a system which would be the same all over the country. Under the new Poor Law, parishes were grouped into unions and each union had to build a workhouse if they did not already have one. Except in special circumstances, poor people could now only get help if they were prepared to leave their homes and go into a workhouse.' http://www.nationalarchives.gov.uk/education/resources/1834-poor-law/ Obviously we can't call them workhouses anymore, I propose the term 'Social Communes' and rather than work the comrades merely have to look after the members other members of the commune, a communal form of social care. This will free up 8.67% of the existing housing stock for more efficient use and can be funded from savings in housing benefit, income support and the sale of elderly inmates (sorry comune members) houses especially those with no dependants who would end up in local authourity run care homes. Quote Link to comment Share on other sites More sharing options...
Democorruptcy Posted January 21, 2017 Share Posted January 21, 2017 19 minutes ago, ChewingGrass said: We have been here before:- 'Before 1834, the cost of looking after the poor was growing more expensive every year. This cost was paid for by the middle and upper classes in each town through their local taxes. There was a real suspicion amongst the middle and upper classes that they were paying the poor to be lazy and avoid work. After years of complaint, a new Poor Law was introduced in 1834. The new Poor Law was meant to reduce the cost of looking after the poor and impose a system which would be the same all over the country. Under the new Poor Law, parishes were grouped into unions and each union had to build a workhouse if they did not already have one. Except in special circumstances, poor people could now only get help if they were prepared to leave their homes and go into a workhouse.' http://www.nationalarchives.gov.uk/education/resources/1834-poor-law/ Obviously we can't call them workhouses anymore, I propose the term 'Social Communes' and rather than work the comrades merely have to look after the members other members of the commune, a communal form of social care. This will free up 8.67% of the existing housing stock for more efficient use and can be funded from savings in housing benefit, income support and the sale of elderly inmates (sorry comune members) houses especially those with no dependants who would end up in local authourity run care homes. So poor people into the workhouse while wealthier people avoid tax and have multiple holiday homes? Come the revolution.... Quote Link to comment Share on other sites More sharing options...
long time lurking Posted January 21, 2017 Share Posted January 21, 2017 (edited) 1 hour ago, Wayward said: Yes of course low interest rates and easy credit have fed the bubble but in parallel with that conditions of scarcity are needed for price rises. If there is more supply than demand and no competitive bidding between buyers...what mechanism then creates the upwards pressure...? Sellers would be competing with each other to lower prices rather than buyers bidding with each other to increase prices. To support the point....houses are not expensive in Hartlepool...why is that? The same credit conditions exist as in Surrey? The same interest rates as Berkshire? Why no bubble in house prices in Hartlepool???....because supply is greater than demand or at least more balanced. Therefore whilst campaigning against low interest rates and the cynical schemes introduced to support prices... I am also all in favour of increased supply...as should anyone with an interest in lower house prices. Nope see ROI+ Spain both over built a massive over supply whilst prices were rising ...the bust came when the credit crunch hit the lack of fiance caused the bust not the over supply ....i would concede that the bust was made worse because of the over supply on the last point yes more the better IMO Edited January 21, 2017 by long time lurking Quote Link to comment Share on other sites More sharing options...
nothernsoul Posted January 21, 2017 Share Posted January 21, 2017 Of course supply and demand is a major factor but the main one is borrowing. With tighter restictions on borrowing the two bed terrace in harlepool is 60 grand instead of a 100. In london the two bed house is 300 grand instead of 500. Quote Link to comment Share on other sites More sharing options...
ChewingGrass Posted January 21, 2017 Share Posted January 21, 2017 28 minutes ago, nothernsoul said: Of course supply and demand is a major factor but the main one is borrowing. With tighter restictions on borrowing the two bed terrace in harlepool is 60 grand instead of a 100. In london the two bed house is 300 grand instead of 500. With tighter restrictions on borrowing the banks are up shit-creek. Quote Link to comment Share on other sites More sharing options...
nothernsoul Posted January 21, 2017 Share Posted January 21, 2017 Spot on about main motivation for wanting relaxation of planning to build on desirable sites to maintain high prices. The housebuilders want their houses to be a veblen good. They can use htb to fix the price for their first time buyers homes, and by building limited numbers in already desireable areas use the inflated prices of nearby homes to fix the price there too. Quote Link to comment Share on other sites More sharing options...
999house Posted January 21, 2017 Share Posted January 21, 2017 Build more houses? Nobody ever says that one. Quote Link to comment Share on other sites More sharing options...
nightowl Posted January 21, 2017 Share Posted January 21, 2017 The lack of houses now and 10 years ago etc means the peaks on price booms are higher than need be, and the troughs never as deep as they would have been ie With better housing supply: Troughs=sensible priced, booms=expensive With under supply of housing: Troughs=expensive, boom= mega expensive. What if planning permission was much more freely permitted (maybe linked to HPI), it would take the investment appeal out of property and dampen the booms- as why would someone borrow to invest in property if more supply then came available quickly? Even the realistic threat of increased supply would damp a boom down meaning very little green belt would be lost in practice. The example of Hartlepool vs Berkshire could also be rephrased: New car sales benefit from the very low IRs too, but because the supply can expand to take advantage of any excess demand of borrowed money, we don't see hyper inflation in new car prices. Quote Link to comment Share on other sites More sharing options...
Wayward Posted January 21, 2017 Share Posted January 21, 2017 3 hours ago, long time lurking said: Nope see ROI+ Spain both over built a massive over supply whilst prices were rising ...the bust came when the credit crunch hit the lack of fiance caused the bust not the over supply ....i would concede that the bust was made worse because of the over supply on the last point yes more the better IMO I would like to understand the dynamics at work in Spain when supply was plentiful but apparently buyers were needlessly bidding against each other. Quote Link to comment Share on other sites More sharing options...
long time lurking Posted January 21, 2017 Share Posted January 21, 2017 (edited) 17 minutes ago, Wayward said: I would like to understand the dynamics at work in Spain when supply was plentiful but apparently buyers were needlessly bidding against each other. Just look at the ROI today it`s happening all over again they are building or were IIRC in 2014 1.4 units per capita of population growth yet they have rising prices and this is on top of an already existing oversupply Basically it was all about the availability of credit ..my simplistic take on it is if the credit is available the vendor sets the price ,if credit is not available the buyer pays what they can afford which then sets the price ....you cant have what one cant afford , Edited January 21, 2017 by long time lurking Quote Link to comment Share on other sites More sharing options...
Wayward Posted January 22, 2017 Share Posted January 22, 2017 19 hours ago, long time lurking said: Just look at the ROI today it`s happening all over again they are building or were IIRC in 2014 1.4 units per capita of population growth yet they have rising prices and this is on top of an already existing oversupply Basically it was all about the availability of credit ..my simplistic take on it is if the credit is available the vendor sets the price ,if credit is not available the buyer pays what they can afford which then sets the price ....you cant have what one cant afford , 10 tired people wanting to get home . Their pockets are stuffed with money. 15 taxis are waiting. I just don't accept the price of the ride will be bid up by the prospective passengers, regardless of funds available. The drivers will bid the price down competing for customers. unless 5 taxis are faster and more comfortable and folks compete to ride in these 5 cabs and transactions are recorded. The other cabs are bangers and shunned, no transaction is recorded. The price of a ride is recorded as having increased following competitive bidding for the 5 cabs given these are the only transactions recorded. Quote Link to comment Share on other sites More sharing options...
long time lurking Posted January 22, 2017 Share Posted January 22, 2017 (edited) 5 hours ago, Wayward said: 10 tired people wanting to get home . Their pockets are stuffed with money. 15 taxis are waiting. I just don't accept the price of the ride will be bid up by the prospective passengers, regardless of funds available. The drivers will bid the price down competing for customers. unless 5 taxis are faster and more comfortable and folks compete to ride in these 5 cabs and transactions are recorded. The other cabs are bangers and shunned, no transaction is recorded. The price of a ride is recorded as having increased following competitive bidding for the 5 cabs given these are the only transactions recorded. ROI were building 1.4 units per head of capita growth in 2014ish on top of an oversupply yet they had rising prices the only thing that has changed since the last bust is credit availability The fact is both Spain and the ROI had rising prices whilst there was an over supply ...it only changed when the availability of credit changed ...make of that what you will but i don`t believe it was "coincidence" Turn your taxi analogy around 10 cabs 15 people each having very little money with each having slightly less than the other Whats the chances of the cabbies bumping up the price due to the supply and demand factor ? Edited January 22, 2017 by long time lurking Quote Link to comment Share on other sites More sharing options...
onlyme2 Posted January 22, 2017 Share Posted January 22, 2017 5 hours ago, Wayward said: 10 tired people wanting to get home . Their pockets are stuffed with money. 15 taxis are waiting. I just don't accept the price of the ride will be bid up by the prospective passengers, regardless of funds available. The drivers will bid the price down competing for customers. unless 5 taxis are faster and more comfortable and folks compete to ride in these 5 cabs and transactions are recorded. The other cabs are bangers and shunned, no transaction is recorded. The price of a ride is recorded as having increased following competitive bidding for the 5 cabs given these are the only transactions recorded. Actually this is the Uber model - elastic pricing, leading to higher taxi fares in NYC apparently, presumably this happens where all/most taxis are using the Uber system and Uber itself knows how much prices can be ratcheted up to get maximum out of the fare rate x volume calc at all times. Quote Link to comment Share on other sites More sharing options...
PropertyMania Posted January 23, 2017 Share Posted January 23, 2017 On 21/01/2017 at 2:08 PM, Wayward said: To support the point....houses are not expensive in Hartlepool...why is that? The same credit conditions exist as in Surrey? The same interest rates as Berkshire? Why no bubble in house prices in Hartlepool???....because supply is greater than demand or at least more balanced. The real interest rate in Hartlepool is much higher than in Surrey. If the South East had its own currency, the base rate might be 3-4%. Quote Link to comment Share on other sites More sharing options...
999house Posted January 23, 2017 Share Posted January 23, 2017 Theres no jobs in Hartlepool. Lots of jobs in Surrey. Hence demand and price growth. If someone suddenly struck gold or oil in Hartlepool. Prices would rise as workers flood in. Quote Link to comment Share on other sites More sharing options...
Blod Posted January 23, 2017 Share Posted January 23, 2017 Supply and demand is used by those wishing excuse the 'Housing Crisis'. I've not heard a single article on the crisis where the interviewees citing lack of choice. It is always the prices. The elephant in the room is cheap credit. Even the BOE admit this stating that is rates rise it will negatively affect the housing market. Quote Link to comment Share on other sites More sharing options...
iamnumerate Posted January 23, 2017 Share Posted January 23, 2017 I can believe anyone can say that rents are not high. I bought a flat in 2001 - when prices were already high, my mortgage was £450 pcm. Now in the same part of London house shares are going for £650pcm per room. Quote Link to comment Share on other sites More sharing options...
iamnumerate Posted January 23, 2017 Share Posted January 23, 2017 On 21/01/2017 at 6:11 PM, Wayward said: I would like to understand the dynamics at work in Spain when supply was plentiful but apparently buyers were needlessly bidding against each other. I would guess it was speculators. Quote Link to comment Share on other sites More sharing options...
iamnumerate Posted January 23, 2017 Share Posted January 23, 2017 1 hour ago, Blod said: Supply and demand is used by those wishing excuse the 'Housing Crisis'. I've not heard a single article on the crisis where the interviewees citing lack of choice. It is always the prices. The elephant in the room is cheap credit. Even the BOE admit this stating that is rates rise it will negatively affect the housing market. I don't think it can be just cheap credit - Spain has incredibly cheap credit at the moment and prices are very low. Alternately imagine if a nasty flu strain killed 1 million pensioners next winter but no one working ,would prices stay the same if all else were equal? (I wouldn't want that to happen btw). Quote Link to comment Share on other sites More sharing options...
Blod Posted January 23, 2017 Share Posted January 23, 2017 1 hour ago, iamnumerate said: I don't think it can be just cheap credit - Spain has incredibly cheap credit at the moment and prices are very low. If you'd see prices drop to more affordable levels why would you feel obliged to pay over the odds even if credit were cheap. The low relative cost of credit acts as oxygen to feed the fire of house price inflation. Can you find any interview where the complaint was lack of choice, I can't. Quote Link to comment Share on other sites More sharing options...
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