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crouch

The "housing crisis"

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Yes good article. It took a while for people to cotton on here that this isn’t a simplistic supply and demand issue:

Build more houses innit.. (households to dwellings are decreasing)

It’s those horrible planners fault (er land banking..)

More single people increasing demand and hence prices (nope dual incomes have bidded up prices)

etc - GCSE and armchair economics has a lot to answer for imo.

Now the realisation is slowly creeping into the mainstream: Multiple home ownership and rampaging credit expansion are the main HPI culprits.

Sure houses need building, but only the right kind and not before the main issues are addressed. Hence why the madness continues.

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1 hour ago, crouch said:

I can't believe it's not butter!  After despairing over Guardian articles for so long, we have a star, although not written in house.

Well written and based on a good analysis.  Amazed the Guardian has changed it's tune and dared to slay the sacred cow of "it's about supply innit" and expose that as largely a self serving mantra.  Sure, there is no single cause but the hitherto lack of attention to others has been unhelpful. 

Even a number of the comments were varied and good.  Like:  "Similarly, in Ireland more than 90,000 homes were built in a country of just 4 million people in 2006, and yet prices continued rising – by a whopping 11% that year...then in 2007/8 dropped by 60% when the bank crisis happened and the bubble burst".

Is the Guardian growing up at last?

Shame the author is apparently a Keynsian (also advises the Labour Party) but then yeh:  "Pettifor is a member of the Green New Deal Group......Financial deregulation has facilitated the creation of almost limitless credit. With this credit boom have come irresponsible and often fraudulent patterns of lending, creating inflated bubbles in assets such as property, and powering environmentally unsustainable consumption."

It's about credit innit!

Edited by Fence

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There’s another problem. Consumer spending makes up two-thirds of the British economy, and it is driven by the rising property prices that feed public confidence in the economy.

******s sake, kill one lie and another pops up immediately to replace it. 

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58 minutes ago, BuyToLeech said:

******s sake, kill one lie and another pops up immediately to replace it. 

Eh?  House prices must create a bit of a feel good factor, although it's odd the article talks about credit in regard house prices but is silent about non-housing credit causing excess consumption.  We are, sadly, a consumption led economy fueled by credit/debt.  But then the focus of the article is on housing, not credit overall.  Or am I not understanding your point?

Edited by Fence

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4 hours ago, Fence said:

Eh?  House prices must create a bit of a feel good factor, although it's odd the article talks about credit in regard house prices but is silent about non-housing credit causing excess consumption.  We are, sadly, a consumption led economy fueled by credit/debt.  But then the focus of the article is on housing, not credit overall.  Or am I not understanding your point?

No, it’s nonsense. Correlation is not causation.

Debt drives both house prices and consumer spending along with other factors such as rising wages, and growth in general.

But rising house prices are, at best, a zero-sum game.

Furthermore, any short-term problems caused by falling houses prices are just as much of a problem for advocates of increased building.

If a building programme worked it would also lower house prices by definition. Otherwise, it hasn’t worked.

 No-one ever feels the need to mention the terrible consumer spending crunch that a successful house building programme would apparently cause.

Ending the crisis means reducing the costs of accommodation. The only question is how best to do that?

Is building more houses the cheapest, most effective, way of lowering housing costs?  Probably not, no.

Edited by BuyToLeech

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5 hours ago, TonyJ said:

Couldn't agree with you more. For ages Money Week magazine (edited by Merryn Somerset Webb) has been saying that the housing crisis is largely down to loose credit policies. And guess what the government's cure for the problem is? Yes, even more credit, by way of HTB. Even the FTB stamp duty exemptions will add to credit, since asking prices will no doubt increase to absorb the stamp duty savings, and required funds can then be spread over the life of a mortgage rather than paid upfront.

You couldn’t make it up.

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7 hours ago, BuyToLeech said:

Ending the crisis means reducing the costs of accommodation. The only question is how best to do that?

Is building more houses the cheapest, most effective, way of lowering housing costs?  Probably not, no.

Local Authority built housing rented to local working people, gives an alternative option to taking on massive debts.

Housing benefit capped at 1 week@min wage per adult perm month.

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7 hours ago, BuyToLeech said:

 No-one ever feels the need to mention the terrible consumer spending crunch that a successful house building programme would apparently cause.

To my mind, it needs about a million extra homes, and they might cost £100,000 each, excluding land.  That's a hundred billion quid shoveled into the pockets of brickies and brick factory workers, and they'll be down the pub, waving their wad at you.

It'd be a policy that'd cause wage inflation, so I'll give a shout-out to the 'deflationary collapse and reflation' thread on here.

I'd say the game is to raise wages to a level that matches house prices, and a massive housebuilding programme is part of that.

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23 hours ago, PopGun said:

Yes good article. It took a while for people to cotton on here that this isn’t a simplistic supply and demand issue:

Build more houses innit.. (households to dwellings are decreasing)

 

How can the ratio of households to dwelling decrease?

According to Wikipedia

Quote

For statistical purposes in the United Kingdom, a household is defined as "one person or a group of people who have the accommodation as their only or main residence and for a group, either share at least one meal a day or share the living accommodation, that is, a living room or sitting room".[3]

https://en.wikipedia.org/wiki/Household#Postwar_housing_conditions_in_the_United_Kingdom

 

So if due to HPI a group of 5 friends who would have bought 5 flats 20 years ago share a house they are one household, even though they could have been 5 (and would have before Blair).

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8 minutes ago, iamnumerate said:

How can the ratio of households to dwelling decrease?

According to Wikipedia

https://en.wikipedia.org/wiki/Household#Postwar_housing_conditions_in_the_United_Kingdom

 

So if due to HPI a group of 5 friends who would have bought 5 flats 20 years ago share a house they are one household, even though they could have been 5 (and would have before Blair).

The 3.5+ million young people (aged 20 to 34) still living at home with their parents indicates that household formation has been suppressed for many years on an unprecedented scale.

https://www.independent.co.uk/news/uk/home-news/young-adults-live-parents-at-home-property-buy-homeowners-housing-market-a8043891.html

Edited by zugzwang

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1 minute ago, zugzwang said:

The 3.5+ million young people (aged 20 to 34) still living at home with their parents indicates that household formation has been suppressed for many years on an unprecedented scale.

Precisely, according to the UK house defnition, if my neighbours* house burnt down and I let him and his family live in my spare room - the ratio would not have changed.  Although we would have a housing crisis.

 

*In real life he is a loony so I wouldn't.

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8 minutes ago, zugzwang said:

The 3.5+ million young people (aged 20 to 34) still living at home with their parents indicates that household formation has been suppressed for many years on an unprecedented scale.

https://www.independent.co.uk/news/uk/home-news/young-adults-live-parents-at-home-property-buy-homeowners-housing-market-a8043891.html

And yet average household size has shrunk.   This distribution is all ******ed up, but there’s no shortage of housing. 

Edited by BuyToLeech

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8 minutes ago, iamnumerate said:

Precisely, according to the UK house defnition, if my neighbours* house burnt down and I let him and his family live in my spare room - the ratio would not have changed.  Although we would have a housing crisis.

 

*In real life he is a loony so I wouldn't.

Average houshold size would have doubled.  In real life it has shrunk. 

Edited by BuyToLeech

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19 minutes ago, iamnumerate said:

How can the ratio of households to dwelling decrease?

An increase in empty housing, also things like prisons and army bases don’t count, as I understand it.  

I agree that it’s maybe not the right measure, number of housholds is approximately equal to the number of houses, but it’s the forecast increase in this number that is typically used to justify the shortage myth. 

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3 minutes ago, BuyToLeech said:

Average houshold size would have doubled.  In real life it has shrunk. 

True but the ratio would have stayed constant - hence it is a useless figure.

I am not even sure if the average size is that useful, if people live longer after their children leave home then that would decrease, but it could hide overcrowding for young families.

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11 hours ago, HowMuch! said:

Local Authority built housing rented to local working people, gives an alternative option to taking on massive debts.

Housing benefit capped at 1 week@min wage per adult perm month.

Yes, but this would still lower house prices. 

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11 hours ago, Bricks n' mortar said:

To my mind, it needs about a million extra homes, and they might cost £100,000 each, excluding land.  That's a hundred billion quid shoveled into the pockets of brickies and brick factory workers, and they'll be down the pub, waving their wad at you.

It'd be a policy that'd cause wage inflation, so I'll give a shout-out to the 'deflationary collapse and reflation' thread on here.

I'd say the game is to raise wages to a level that matches house prices, and a massive housebuilding programme is part of that.

Your mind is wrong, the facts say so.

If you want to chuck money at the economy, invest in something people do need - like nursing homes, for example.

If you can fix the housing for crisis for no cost, and you can, why spend 100 000 000 000 pounds?  

That’s insane.  

Spend it on literally anything else, and you’ll get the same stimulus effect.

 

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11 minutes ago, iamnumerate said:

True but the ratio would have stayed constant - hence it is a useless figure.

I am not even sure if the average size is that useful, if people live longer after their children leave home then that would decrease, but it could hide overcrowding for young families.

Average houshold size would have doubled.

I don’t understand the ratio you’re referring to?

I think average houshold size (number of people per house or number of houses per person) is the right measure. 

It definitely does hide overcrowding, which is a real problem, but it shows you precisely why we have overcrowding. It’s the distribution of houses that is the problem.

Edited by BuyToLeech

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1 minute ago, thewig said:

The scumbags are spending all their money on shiny condoms and avocado I phones 

Yep. So selfish of them. Mind you, the avocado sacrifice would be to accumulate enough for a deposit within only 8/10 years. Nobody spoke about children. Ever. 

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  • 406 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% +
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      • Even
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      • up 5%



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