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As Safe As Houses Bbc R4 Admits

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Marcus Brigstocke on “As Safe as Houses”, BBC Radio 4, at about 10.50am on Sat 18 Feb. 2006 introduced on his show the guest Kate Baker who, she informed the listeners, may know her as “The Author of an Independent Review of Housing Supply and a Member of the Bank of England’s Monetary Policy Committee

Marcus: “House prices are so inflated that hole generations have no hope of getting that essential first foot on the ladder”

Kate: “What we’ve got is a real problem with affordability for people who want to come into the market and this has got much worse. There are two reasons for this. One is the fundamental under supply of houses particularly in the south east of England, which we have had over the past five years or so; the other thing is what’s happened to interest rates and particularly long term interest rates. Now what’s this to do with the housing market? Well the answer is that in some sense the asset role in housing is partly fixed by what people can get back on a rental and how that compares to what they can get back elsewhere, in gilts, whatever: if you get small amounts back on gilts, but you can get more back on housing, the price of houses has to rise to equalise those two returns.

In summary, she added, use, “Low long term rates have pushed up house prices”

Marcus: “How do we solve it?”

Kate: “Well one way to solve it is thinking about whether government should help people to get in that means pretty targeted moves in terms of subsidised housing the other point is we just to need to build more houses in England. We need to be building at a higher rate. At the moment building rates in England are about 150,000 a year. Looking ahead we expect the growth in households to be close to maybe 180,000, - 190,000, a year. When you allow for things like demolitions this means that we need to be building something close to the rate of 200,000 a year. That’s quite a big step.”

Marcus: “Isn’t it unbelievably expensive developing new housing?

Kate: “You can’t just say its unbelievably expensive ‘cos it depends where you’re doing it. It’s pretty expensive to build on tightly packed sites within a town because it’s just physically difficult to do it and often the land will need remediation if it’s been used for industry: but the cost of building the houses isn’t what’s changed over the last few years, what’s changed is the cost of buying land

Marcus: (Rhetorical question from Marcus), How do we get out of this. Knock it all down and start again. Not the houses, obviously, the housing market. But how do we do that?”

Kate: “How would you collapse it, well it’s straightforward you collapse it by collapsing the economy. My day jobs mostly devoted to not collapsing the economy so I don’t really want to go there.”

Marcus: “But you could do it if you really wanted to”

Reply. Laughter, with a slight nervous suggestion of the letter ‘y’; as opposed to the letter ‘n’

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Intriguing. It's almost as though the money supply issues are interwoven with a distraction: Number of new houses being built.

No mention of the idea that THERE IS NO HOUSING LADDER.

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I have a problem with ‘subsidised housing’, depending on what it actually means.

If it is narrowly targeted then very few will benefit, indeed the rest of us will be paying the subsidy. Opening it up to everyone will raise the price of property – pumping tax payers money into an inflated housing market is folly. For this reason I expect Gordon Brown to announce a new subsidisation initiative for FTB in his March budget.

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I have a problem with ‘subsidised housing’, depending on what it actually means.

If it is narrowly targeted then very few will benefit, indeed the rest of us will be paying the subsidy. Opening it up to everyone will raise the price of property – pumping tax payers money into an inflated housing market is folly. For this reason I expect Gordon Brown to announce a new subsidisation initiative for FTB in his March budget.

Don't understand.

Have you not just contradicted yourself?

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I'm not sure how many BTL landlords view guilts as an alternative investment and are driving prices up until the returns equalise. Guilts rates are low because pension companies are now more-or-less obligated to buy them, driving the price up and the yield down. As a consequence we get lower mortgage rates - and then higher house prices...

A survey I read a few weeks ago (probably not the most scientific) showed many investors thought property was the best investment last year when in fact it was shares: residential property did no better than a high interest savings account (depends which house price survey you believe):

http://www.myfinances.co.uk/investments/st...36;15150547.htm

So much for rational expectations, perfect knowledge and all the rest of the perfect competition, free market cant. (Why does she suggest house prices should rise rather than shares, where the returns are much higher I do not know. I think the Government and its advisers are looking for scapegoats: blame the builders when house prices have risen approx 11.6% per annum for the past 10 years, i.e. tripled, and the Government has done sweet FA about it.)

Whether these exceptional rate circumstances are sustainable, or will mortgage rates rise, is another matter. As I've posted before, I believe lenders are under-pricing risk, and should be raising rates rather than lowering them at this stage in the property cycle. Owing to competition they won't until it is too late and they get burnt.

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Don't understand.

Have you not just contradicted yourself?

Irony, and a cynical view of Gordon Brown's political priorities ie from his perspective high house prices = happy voters = No 10.

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Irony, and a cynical view of Gordon Brown's political priorities ie from his perspective high house prices = happy voters = No 10.

:lol: Okay, I see now! That was just a little too subtle for me.

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Letting loose 60 year old constraints would mean a 24% leap in occupied space from 8% to 10% of the land... wow, that's really going to fsck the countryside, I'm going back to my cave now. :angry:

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I'm not sure how many BTL landlords view guilts as an alternative investment and are driving prices up until the returns equalise.

It's quite simple, fundamentally the market sets interest rates by determining the price of gilts, the higher they're bid the lower the return, return on gilts and bonds work on the inverse to their price. Which means if you have one sector returning yields greater than gilts you can play the carry trade... borrow the cheap money and invest it in the outperforming sector and then sit on the spread, the margin may only be 2% for example so you gear the investment so you're sitting the leveraged return.

TTRTR is essentially just doing highly leveraged arbitrage, he might never have bought a gilt in his life, but their price determines whether his business model stacks up... or not.

Edited by BuyingBear

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Just been looking at how many houses have come onto the market with Rightmove in the last 14 days within a 15 mile radius of where we live and couldn't believe it. 970. 970 in 14 days! And that is not including Dacre Son & Hartley, Beadnall Copley and Hunters to name a few of some of the biggest Agents in the area.

It seems that Kate Baker could find plenty of houses up here in the Old Powerhouse of England - and a few over 800,000.00 pounds too.

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High land prices will throttle investment, business startup and innovation.

The economty is going to be knackered by it. Kate and Co. have been prattling about this for ages and have done absolutely nothing to sort the problem out, in fact quite the reverse - pointless asking them about it, pointless paying money for reviews. They daren;t do what is necessary becuase they have run the economy so badly that it is almost totally dependent on high house prices to give people a feelgood fator to keep spending.

Either way (boom or bust) emigration for a generation seems to be the best bet, these people will do nothing for you.

Edited by OnlyMe

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High land prices will throttle investment, business startup and innovation.

The economty is going to be knackered by it. Kate and Co. have been prattling about this for ages and have done absolutely nothing to sort the problem out, in fact quite the reverse

Indeed, even Heir Braun pointed out our 25% efficiency gap compared to the US when it comes to retail, apparently this is due to the high cost of land and development in the UK, plus the fact our transport infrastructure is a bit crap.

Nice of him to point this out on Mr Marr's programme, nothing will be done about it of course, not to mention his imposition of new red tape.

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Marcus: “House prices are so inflated that hole generations have no hope of getting that essential first foot on the ladder”

Kate: “What we’ve got is a real problem with affordability for people who want to come into the market and this has got much worse.

[...]

In summary, she added, use, “Low long term rates have pushed up house prices”

Yes, low rates have pushed up prices, because totally lax lending controls allow reckless borrowers (landlords or homebuyers) to outbid everyone else. The result, a huge speculative boom. This has been a very profitable business for the banks.

Many European countries have far lower interest rates than the UK but have had little house price inflation because they have proper lending controls.

Why hasn't Kate Barker, a member of the BoE monetary policy committee mentioned this?

Perhaps it's because

From 1999 to 2001, Kate Barker was a non-executive director of the Yorkshire Building Society.

My source for this information

Why do we have someone with such deep ties to the mortgage lending industry advising the Government on housing policy?

AAAARRGHHH!

frugalista

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.

.

.

.

.

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Marcus Brigstocke on “As Safe as Houses”, BBC Radio 4, at about 10.50am on Sat 18 Feb. 2006 introduced on his show the guest Kate Baker who, she informed the listeners, may know her as “The Author of an Independent Review of Housing Supply and a Member of the Bank of England’s Monetary Policy Committee

Marcus: “House prices are so inflated that hole generations have no hope of getting that essential first foot on the ladder”

Kate: “What we’ve got is a real problem with affordability for people who want to come into the market and this has got much worse. There are two reasons for this. One is the fundamental under supply of houses particularly in the south east of England, which we have had over the past five years or so; the other thing is what’s happened to interest rates and particularly long term interest rates. Now what’s this to do with the housing market? Well the answer is that in some sense the asset role in housing is partly fixed by what people can get back on a rental and how that compares to what they can get back elsewhere, in gilts, whatever: if you get small amounts back on gilts, but you can get more back on housing, the price of houses has to rise to equalise those two returns.

In summary, she added, use, “Low long term rates have pushed up house prices”

Marcus: “How do we solve it?”

Kate: “Well one way to solve it is thinking about whether government should help people to get in that means pretty targeted moves in terms of subsidised housing the other point is we just to need to build more houses in England. We need to be building at a higher rate. At the moment building rates in England are about 150,000 a year. Looking ahead we expect the growth in households to be close to maybe 180,000, - 190,000, a year. When you allow for things like demolitions this means that we need to be building something close to the rate of 200,000 a year. That’s quite a big step.”

Marcus: “Isn’t it unbelievably expensive developing new housing?

Kate: “You can’t just say its unbelievably expensive ‘cos it depends where you’re doing it. It’s pretty expensive to build on tightly packed sites within a town because it’s just physically difficult to do it and often the land will need remediation if it’s been used for industry: but the cost of building the houses isn’t what’s changed over the last few years, what’s changed is the cost of buying land

Marcus: (Rhetorical question from Marcus), How do we get out of this. Knock it all down and start again. Not the houses, obviously, the housing market. But how do we do that?”

Kate: “How would you collapse it, well it’s straightforward you collapse it by collapsing the economy. My day jobs mostly devoted to not collapsing the economy so I don’t really want to go there.”

Marcus: “But you could do it if you really wanted to”

Reply. Laughter, with a slight nervous suggestion of the letter ‘y’; as opposed to the letter ‘n’

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Stretches.... yawns.. feels the build up of wrath..

"In the last Five years ago we have developed a shortage of housing"

Really... have we...

One day everyone woke up and a whole bunch of people had appeared from nowhere..

the next day everyone woke up and realised.. that all of these houses had disapeared.`

and if anyone can describe the building of house in the last five years as anything but frantic I would love to hear a better description..

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Stretches.... yawns.. feels the build up of wrath..

"In the last Five years ago we have developed a shortage of housing"

Really... have we...

One day everyone woke up and a whole bunch of people had appeared from nowhere..

the next day everyone woke up and realised.. that all of these houses had disapeared.`

and if anyone can describe the building of house in the last five years as anything but frantic I would love to hear a better description..

Yeah, now that is what is bothering me. Where are all these extra people? The birth rate is down, immigration is only just outpacing emigration, the population is ageing and some of them are actually dying (more than the birth rate) and yet we need 180K houses a year for the next 10 years. Thats 1.8 million extra houses? Who is going to live in them? If their is a shortage, a lot of houses have obviously somehow mysteriously disappeared. How do you disappear a house? I think that the void rates in the private sector should be looked at more closely and they should start doing compulsory purchase.

Or maybe this is just about keeping the building industry ticking over ;)

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Yeah, now that is what is bothering me. Where are all these extra people? The birth rate is down, immigration is only just outpacing emigration, the population is ageing and some of them are actually dying (more than the birth rate) and yet we need 180K houses a year for the next 10 years. Thats 1.8 million extra houses? Who is going to live in them? If their is a shortage, a lot of houses have obviously somehow mysteriously disappeared. How do you disappear a house? I think that the void rates in the private sector should be looked at more closely and they should start doing compulsory purchase.

Or maybe this is just about keeping the building industry ticking over ;)

Spot on... When was the last time you rented and were shown to a house with people already living in it?

No, you are shown round a big old list of empty properties.

None of your friends are struggling to find a place to live..

and there are more single person households?

Really? Where...?

I no of two friends who live alone..

Everyone else is :

shareing and having a ball..

living with a partner..

Raising a family..

What do you see out there in this area of massive housing shortage..??

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Thats 1.8 million extra houses? Who is going to live in them? If their is a shortage, a lot of houses have obviously somehow mysteriously disappeared. How do you disappear a house? I think that the void rates in the private sector should be looked at more closely and they should start doing compulsory purchase.

Or maybe this is just about keeping the building industry ticking over ;)

It doesn't explain everything, not least the central bank induced bubble, but generally in this country the rate of building is below annual household formation levels, this is partly because entire sections of our establishment are still living in 1947 when it comes to land allocation, they have turned 90% of Britain into a living museum, we build far less houses than we've traditionally done during the past half century.

Raw land is very cheap, building materials and labour aren't exactly expensive, the real problem has been the creation of artificial scarcity via the planning laws. This issue has been well and truly hijacked by a bunch of tired reactionaries, the amount of land set aside for greenbelt is ever expanding and greater than ever. In recent years more land has been set aside for greenbelt than it has for new housing, yet the only thing you will hear about is the fact it's "under threat" as if it were some rare species about to be condemned to extinction, in actual fact greenbelt has been breeding like rabbits.

So there is a real shortage, this doesn't explain the bubble, that's well and truly a monetary phenomenon. But when you add in second homes, holiday homes, speculative demand, the fact that over half of new building starts are for unwanted innercity flats on contaminated land, supply is undoubtedly a factor, but there has been an undersupply for many decades so this doesn't explain the last five years.

When you hear people talk about "preserving the countryside" they actually mean preserving the inflated value of their own home by killing off new supply. Unfortunately most of the younger more naive tree huggers are too dim to look at the numbers for themselves, land that already constitutes 94% of the country generally shouldn't be considered to be under threat.

Personally I'm campaigning to bulldoze NIMBY homes as they were most certainly built before there were any real planning laws and therefore they have destroyed valuable countryside, but of course, "that's entirely different".

CPRE led the way in curtailing ribbon development in its early years. It was a leading influence on the Government-appointed Urban Task Force, chaired by Lord Rogers. The task force's report in 1999 laid the foundations for an urban renaissance and a change in planning policies which demanded an end to low density new housing development and a much stronger focus by developers and local councils on developing derelict 'brownfield' sites instead of greenfield sites.

That explains why no decent houses are built in modern Britain and especially the changes that have taken place over the last 5 years, the focus has been placed on innercity rabbit hutches. So I wouldn't blame the building industry, they'll be the first to get rid of this selfish nonsense when given a chance.

Edited by BuyingBear

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  • 301 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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