Property Week Article - supply won't solve the housing crisis

[Wayward]

https://www.propertyweek.com/comment/why-boosting-supply-wont-solve-the-housing-crisis/5096504.article

Article with view often expressed here but I think we rarely see these views coming from the belly of the beast - ie article in the Property Week.  It makes interesting reading.

I admit that I have often argued that increasing supply will help, it must help.  How can we become better housed as a nation without boosting supply (putting to one side falling population or redistribution)?  My experience of the housing market here in Hampshire is one of desperate shortage for both those looking to buy and rent with competitive bidding in both sectors.

Extract..

"Financial factors were responsible for the house price boom and – whether through rising market interest rates, a financial shock or tighter regulation – they’re most likely to be its undoing. We can debate how to raise housing supply until the cows come home. But for a real solution to unaffordable houses and the intergenerational inequality they create, it’s time to look elsewhere."

 

Also I like...

“Teach a parrot the terms ‘supply and demand’ and you’ve got an economist,” said Thomas Carlyle...

...how many BTL investors cling to this tenet of economic theory as if it is all they need to know !!!

 

Author...

Ian Mulheirn is director of consulting at Oxford Economics

 

[b_real]

Quote

Relative to household incomes, average rents have been falling, at least since good-quality data started to be collected in 2005.

I wonder what data he's using? This certainly isn't the case in my experience. 

Agree with the general message in the article tho.

[Mapatasy]

Noticed an increasing number of articles within the same vein recently... the mood is certainly changing.

Regarding the 'supply' debate the question really has to be - how many families and individuals do you see sleeping on the streets in the UK due to 'lack of available homes'?

The answer is none.

There is always a home to RENT.

[zugzwang]

24 minutes ago, Mapatasy said:

Noticed an increasing number of articles within the same vein recently... the mood is certainly changing.

Regarding the 'supply' debate the question really has to be - how many families and individuals do you see sleeping on the streets in the UK due to 'lack of available homes'?

The answer is none.

There is always a home to RENT.

********. There's an unparalleled epidemic of homelessness on UK streets, meanwhile household formation has been suppressed for years as millions of 21-34 year olds have had no choice but to live with their parents being unable to either rent or buy.

The free market twits and rentier scum who seek to deny this infamy are doing so only to perpetuate the current open-door immigration policy indefinitely into the future.

Tory boy/bankster. The terms are interchangeable.

[Uncle_Kenny]

1 hour ago, Mapatasy said:

Noticed an increasing number of articles within the same vein recently... the mood is certainly changing.

Regarding the 'supply' debate the question really has to be - how many families and individuals do you see sleeping on the streets in the UK due to 'lack of available homes'?

The answer is none.

There is always a home to RENT.

Take a look at my thread in the anecdotal section about being camping by the road. Lots of replies confirming this is the case.

[maverick73]

This is not a supply issue, its an affordability issue, but the westminster clowns will attempt to fool lemmings via social media. Either salaries go up or prices come down... ?

[Mapatasy]

2 hours ago, zugzwang said:

********. There's an unparalleled epidemic of homelessness on UK streets, meanwhile household formation has been suppressed for years as millions of 21-34 year olds have had no choice but to live with their parents being unable to either rent or buy.

The free market twits and rentier scum who seek to deny this infamy are doing so only to perpetuate the current open-door immigration policy indefinitely into the future.

Tory boy/bankster. The terms are interchangeable.

Yes, couldnt agree more?  Am in complete support of the OP.

Please re-read my comment.

What does the following mean?

2 hours ago, zugzwang said:

********. ...

 

[mrtickle]

9 minutes ago, Mapatasy said:

What does the following mean?

 

It means there was a swear-word - or a completely innocent word that the forum thought that grown adults should not be allowed to read - and it was replaced against his will after the time he typed it and pressed "submit reply" by the forum software.

[Mapatasy]

4 minutes ago, mrtickle said:

It means there was a swear-word - or a completely innocent word that the forum thought that grown adults should not be allowed to read - and it was replaced against his will after the time he typed it and pressed "submit reply" by the forum software.

****** me thats annoying.

[mrtickle]

35 minutes ago, Mapatasy said:

****** me thats annoying.

I **.

[BorrowToLeech]

4 hours ago, zugzwang said:

********. There's an unparalleled epidemic of homelessness on UK streets, meanwhile household formation has been suppressed for years as millions of 21-34 year olds have had no choice but to live with their parents being unable to either rent or buy.

The free market twits and rentier scum who seek to deny this infamy are doing so only to perpetuate the current open-door immigration policy indefinitely into the future.

Tory boy/bankster. The terms are interchangeable.

And yet the average number of people living in each house has fallen, prices fell when building stopped and rose like mad during the construction boom, and rents have essentially been static, when adjusted for inflation.

Moreover, more people than ever own multiple houses.  Funny kind of shortage that.

You aren’t opposing the free market rhetoric, you are buying into it. 

The housing shortage lie exists precisely to shift blame from the market and from landlords and to place it onto the planning system.  

The planning system is shit, but It isn’t the primary cause of the housing crisis. Blaming it is just an excuse for the failure of the ‘free market’ designed to let landlords and banks off the hook.

7 hours ago, Wayward said:

My experience of the housing market here in Hampshire is one of desperate shortage for both those looking to buy and rent with competitive bidding in both sectors.

You aren’t experiencing a shortage of houses, you are experiencing a shortage of houses on the market. 

Thats not the same. Increasingly, people don’t sell, they just rent it out innit. At the same time, more people than ever are trying to buy because they want to become landlords. 

None of this means building should stop, it just means that people should stop drinking the housing industry kool-aid.

Edited May 11, 2018 by BuyToLeech

[dugsbody]

13 hours ago, Uncle_Kenny said:

Take a look at my thread in the anecdotal section about being camping by the road. Lots of replies confirming this is the case.

Could you offer any evidence besides anecdote? I'm genuinely curious to see the stats. Which area do you live in (or if you don't want to reveal, pick an area nearby that you're familiar with) and we can check the rental offerings on rightmove.

[zugzwang]

10 hours ago, BuyToLeech said:

And yet the average number of people living in each house has fallen, prices fell when building stopped and rose like mad during the construction boom, and rents have essentially been static, when adjusted for inflation.

Moreover, more people than ever own multiple houses.  Funny kind of shortage that.

You aren’t opposing the free market rhetoric, you are buying into it. 

The housing shortage lie exists precisely to shift blame from the market and from landlords and to place it onto the planning system.  

The planning system is shit, but It isn’t the primary cause of the housing crisis. Blaming it is just an excuse for the failure of the ‘free market’ designed to let landlords and banks off the hook.

You aren’t experiencing a shortage of houses, you are experiencing a shortage of houses on the market. 

Thats not the same. Increasingly, people don’t sell, they just rent it out innit. At the same time, more people than ever are trying to buy because they want to become landlords. 

None of this means building should stop, it just means that people should stop drinking the housing industry kool-aid.

We've had this argument before BTL, so not much point in going over the same ground again. The average number of people per household is unchanged at 2.4 but only because of a huge rise in single-parent families and lone pensioner households. UK tenants forked over £51.7bn in rents during 2017, an increase of £1.8bn on the previous year and more than double comparable figure from 2007.

https://www.theguardian.com/money/2018/feb/12/uk-tenants-paid-record-50bn-in-rents-in-2017

 

[BorrowToLeech]

1 hour ago, zugzwang said:

We've had this argument before BTL, so not much point in going over the same ground again. The average number of people per household is unchanged at 2.4 but only because of a huge rise in single-parent families and lone pensioner households. UK tenants forked over £51.7bn in rents during 2017, an increase of £1.8bn on the previous year and more than double comparable figure from 2007.

https://www.theguardian.com/money/2018/feb/12/uk-tenants-paid-record-50bn-in-rents-in-2017

 

More people are renting, richer older people are being forced into renting, plus at least 30% of general inflation.  All the headline figure tells us is that landlords are an increasing drain on the economy.

To see if individual rents for equivalent houses have changed, you need to account for these factors.

The ONS rent index goes back to 2011 and shows that rents have increased about 16% since then.

All other prices have increased by 20% over the same period.  

In real terms, rents have fallen.

House prices have increased by 35%.

The relationship between the up front cost of a house and the monthly cost is determined by interest rates.

 

[goldbug9999]

19 hours ago, Mapatasy said:

Regarding the 'supply' debate the question really has to be - how many families and individuals do you see sleeping on the streets in the UK due to 'lack of available homes'?

The answer is none.

Specious argument, the UK has a very low square footage per person and its getting worse. The lower this metric gets the worse our standard of living becomes.

[goldbug9999]

1 hour ago, BuyToLeech said:

In real terms, rents have fallen.

Yet again your using nonsense inflation arguments, this fallacy that if something increase in price slower rate than everything else then by some bizarre twist of logic that makes it "cheaper in real terms" .

No ... something is only cheaper in terms if it rises at  a rate less than wages increase.

[TJHooker]

37 minutes ago, goldbug9999 said:

Yet again your using nonsense inflation arguments, this fallacy that if something increase in price slower rate than everything else then by some bizarre twist of logic that makes it "cheaper in real terms" .

No ... something is only cheaper in terms if it rises at  a rate less than wages increase.

Wonder why so many dont get this basic fact.

[zugzwang]

On 12/05/2018 at 12:05, goldbug9999 said:

Specious argument, the UK has a very low square footage per person and its getting worse. The lower this metric gets the worse our standard of living becomes.

Unless your a landlord or a banker.

[BorrowToLeech]

On 12/05/2018 at 12:09, goldbug9999 said:

Yet again your using nonsense inflation arguments, this fallacy that if something increase in price slower rate than everything else then by some bizarre twist of logic that makes it "cheaper in real terms" .

No ... something is only cheaper in terms if it rises at  a rate less than wages increase.

What? No.

‘Real’ means inflation adjusted in this context. It’s a definition, don’t blame me for it. 

The inflation part of price rises isn’t caused by shortages or by hoarding, it’s caused by inflation.  

If prices only rise in line with inflation, there’s nothing to explain, no debate, and no need for this thread. 

Edited May 13, 2018 by BuyToLeech

[zugzwang]

On 12/05/2018 at 10:34, BuyToLeech said:

More people are renting, richer older people are being forced into renting, plus at least 30% of general inflation.  All the headline figure tells us is that landlords are an increasing drain on the economy.

To see if individual rents for equivalent houses have changed, you need to account for these factors.

The ONS rent index goes back to 2011 and shows that rents have increased about 16% since then.

All other prices have increased by 20% over the same period.  

In real terms, rents have fallen.

House prices have increased by 35%.

The relationship between the up front cost of a house and the monthly cost is determined by interest rates.

 

Rents haven't fallen with respect to earnings, they've just risen marginally slower than the cost of everything else. Nor does the national average reflect the extreme iniquities experienced locally in London and the South East. The subdivision of existing housing stock - as Grenfell established, often illegal - into ever smaller units explains the difference between rents and prices.

What's needed is greater supply, especially of public sector housing, to accommodate the runaway demand created by uncontrolled immigration. Had that happened after 2008 then rents and prices would have carried on falling in nominal terms as they did from 2008-10 and a virtuous circle of declining land values and higher volumes of private sector housebuilding would have been the result. Only right wing nimbys like Ian Mulheirn (sponsored by the Centre for Policy Studies) dispute this proposition. Corbyn and McDonnell have promised to introduce a large-scale, general needs social housing program at the earliest opportunity.

[BorrowToLeech]

9 hours ago, zugzwang said:

Rents haven't fallen with respect to earnings, they've just risen marginally slower than the cost of everything else.

Earnings rose 13% over the same period.  So each year rents have outperformed wages by less than 0.5%.  

There’s no evidence that subdivision is significant, and that would not explain the disparity between prices and rents - subdivision would also keep prices down.

Also, I’ll say it again, inflation adjusted comparisons are absolutely the correct comparisons to make because any rises equal to inflation is fully explained by a general fall in the value of money.

If rents rise in line with the price of everything from chocolate bars to snooker cues, that’s clearly got nothing to do with the housing market.

10 hours ago, zugzwang said:

public sector housing

Building public sector housing is a good policy, and probably would help, if done properly.

Housing on government owned land has all kinds of beneficial effects, but mostly it undercuts landlords.  This isn’t a supply and demand effect, this is simply government setting non-market rents, as they should.

This does not mean the housing crisis was caused by a shortage of buildings.

The housing crisis was caused by an excess of demand, coming mostly from landlords and speculators armed with free money from the banks.

[PopGun]

On ‎11‎/‎05‎/‎2018 at 22:31, BuyToLeech said:

And yet the average number of people living in each house has fallen, prices fell when building stopped and rose like mad during the construction boom, and rents have essentially been static, when adjusted for inflation.

Moreover, more people than ever own multiple houses.  Funny kind of shortage that.

You aren’t opposing the free market rhetoric, you are buying into it. 

The housing shortage lie exists precisely to shift blame from the market and from landlords and to place it onto the planning system.  

The planning system is shit, but It isn’t the primary cause of the housing crisis. Blaming it is just an excuse for the failure of the ‘free market’ designed to let landlords and banks off the hook.

You aren’t experiencing a shortage of houses, you are experiencing a shortage of houses on the market. 

Thats not the same. Increasingly, people don’t sell, they just rent it out innit. At the same time, more people than ever are trying to buy because they want to become landlords. 

None of this means building should stop, it just means that people should stop drinking the housing industry kool-aid.

Brilliant again BtL

[zugzwang]

11 hours ago, BuyToLeech said:

Earnings rose 13% over the same period.  So each year rents have outperformed wages by less than 0.5%.  

There’s no evidence that subdivision is significant, and that would not explain the disparity between prices and rents - subdivision would also keep prices down.

Also, I’ll say it again, inflation adjusted comparisons are absolutely the correct comparisons to make because any rises equal to inflation is fully explained by a general fall in the value of money.

If rents rise in line with the price of everything from chocolate bars to snooker cues, that’s clearly got nothing to do with the housing market.

Building public sector housing is a good policy, and probably would help, if done properly.

Housing on government owned land has all kinds of beneficial effects, but mostly it undercuts landlords.  This isn’t a supply and demand effect, this is simply government setting non-market rents, as they should.

This does not mean the housing crisis was caused by a shortage of buildings.

The housing crisis was caused by an excess of demand, coming mostly from landlords and speculators armed with free money from the banks.

Subdivision is shrinkflation for houses. Hard to quantify, perhaps, but there's evidence for it everywhere. In the growth of HMOs and student property investments, the advent of Build to Rent and the proliferation of garage conversions. Average living room sizes are 1/3 smaller today than their 1970s equivalents, de facto shrinkage. A mechanism for maintaining perpetual hpi against the constraints of affordability.

 

[dugsbody]

What is the average rent vs the average salary. So, rent as a % of salary averaged nationwide (we can cherry pick certain areas but that doesn't reveal much). How does it look when viewed as a historical graph?

Then plot it against the house price vs average salary as a historical graph.