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RentingInSweden

Is There Really A Need For Extra Housing?

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At the moment im renting in Sweden which after months of looking on this site seems to be a good move.

What i really want to know is where is all the demand coming from? Why is there the need for all the extra housing that appears in the news? Is the UK population and especially that of cities really increasing that much?

My own feeling is that there isnt really this "need" and whats causing the increases is the low interest rates giving FTB more money to bid against each other and a fear of being left behind and a dash of greed on the top (wanting and thinking that they deserve better than parents, friends etc)

There is a hell of a lot wrong with Sweden but and housing prices have been increasing but there is a limit to the madness partly cause by taxes on profit of house sales and lots of plots of land for sale. Most towns and cities build the basic infrastructure (roads, electicity etc) and then sell of plots of land for about £20-30,000. You then get a pick of houses to chooce from, different designs prices etc for say £60-120,000. This really caps the house prices because you always have the option of building. If i could speak Swedish properly and understand all the laws then i could build a 3 or 4 bedroom house 40min commute from Stockholm centre easily for £160,000.

When i get back to the UK Im seriously thinking about buying a plot of land and importing a flat pack house. You may laugh but some of them are really good quality, its a fixed price and you know what your getting, plus no hassle with builders.

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At the moment im renting in Sweden which after months of looking on this site seems to be a good move.

What i really want to know is where is all the demand coming from? Why is there the need for all the extra housing that appears in the news? Is the UK population and especially that of cities really increasing that much?

The UK population is increasing to the tune of approximately 300,000 people per annum. While there is a contribution from births, the bulk is made up by immigration - almost entirely by adults in the 18-35 age range. It is important to stress the age demographics of immigrants - it is not the same as the UK population and thus the demands they create on the economy or the environment cannot be simply scaled as percentage of the population. These figures do not include illegal immigration as there are no reliable estimates of this but it is thought to be significant (i.e. in the thousands per annum) and similarly comprised of adults.

For comparison, the average population density of Sweden is 20 persons per square km whereas in the UK it is 244. Spend a moment thinking what life in Sweden would be like with that density (i.e. x12) and how much that plot of land would cost then.

There is also a significant shift to single person occupancy - 33% of all households will be single-person by 2011 according to government estimates (based on current level of 70% of new households being single occupancy). Any change in the law in regard to cohabitation rights could see this increase substantially.

All that said, there are still some 690,000 empty homes in Britain.

Further Information

Edit: Forgot to add empty homes.

Edited by ciderpunk

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We stopped releasing large blocks of land for development in the 70's, and boundaries were fixed at mid 1960's levels. We have been building well below household formation levels for over two decades, this "pent up" demand doesn't just disappear, it accumulates as the years go on. Now we have the added pressure of migration, and I'm not making a political point but simply stating that bothersome planning constraints have now become intolerable blockages to housing our populace, from wherever whence they came.

In reference to the flat pack homes, the cost of labour or raw materials are not driving the price of 'normal' homes, land inflation means that a building plot can now account for over 40% of the final price of a home. So the actual question is whether we have a shortage of land, and the answer is no, the vast majority of the country is entirely undeveloped, despite cries to the contrary in the popular press. However, we have a desperate shortage of buildable land with permission, hence the prices and resulting house prices.

Our betters need to decide whether they want high migration with the consequent cheap labour, low wage inflation and the resulting loss of some greenbelt land for new housing and infrastructure or whether they should preserve the country in aspic and simply pay existing people a sustainable wage. They sure as hell can't have their cake and eat it.

Edited by BuyingBear

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All that said, there are still some 690,000 empty homes in Britain.

This is understandable, second and third home owners are given council tax and general tax perks from the revenue, you can buy a second home and set it up as a fake holiday home business, the resultant loses can then be offset against your tax bill.

Also, as increasing amounts of housing stock are allocated to Buy-To-Let speculation rather than owner occupation, the occupancy ratio falls quite dramatically, a well functioning rental market requires voids and some over supply to provide general liquidity. If you assume an average of two weeks of voids per property per annum (which is quite conservative) that's equivalent to 1 in 26 owner occupied homes being permanently vacated, interestingly this 4% of homes in any given street roughly matches what is considered the full employment number in the labour market. (lower figures would result in higher labour/rent inflation)

Edited by BuyingBear

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Thanks for the links. Interesting reading. The Swedish population density is a bit misleading since most of the population lives within 200km of Stockholm and there are huge areas of land in the north without anyone, but i get your point of population density.

Im just a bit skeptical that the influx of immigrants to the UK could push the house prices up by that much. They cant all be russian tycoons or high flyers in the city. If most of them are from the new EU states in the 18-35 range do they really earn enough to push up the house prices?

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They cant all be russian tycoons or high flyers in the city. If most of them are from the new EU states in the 18-35 range do they really earn enough to push up the house prices?

Most are renting not buying, as a landlord if you can rent a larger house out to 10 Poles you can justify higher rents and therefore higher house prices (as the former now helps set the latter) than a 'normal' settled couple. Also, we have a well established shortage of housing in this country (but not for the want of land), added demand simply adds to the intensity and prices can go hyperbolic if supply falls short. Consider this, if you have 10 barrels of oil and 10 customers you have perfect price equilibrium, if you have 10 barrels and 11 customers and each still wants a barrels... what happens to the price?

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Guess I better wait until the UK economy goes tits up and all the Poles etc head off somewhere else in search of jobs. Then there will be a spare barrel to buy at a knockdown price :rolleyes:

For what its worth interest rates are going up here, following the EU and the US, and house prices are cooling off. Britain has a pretty big economy but i think its going to have to go with the flow

P.S I dont have anything against Poles... in fact whenever i visit London its always seems full of aussies. Maybe that because of the pubs and because i dont need a plumber <_<

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Guess I better wait until the UK economy goes tits up and all the Poles etc head off somewhere else in search of jobs. Then there will be a spare barrel to buy at a knockdown price :rolleyes:

Maybe, but even a poor jobs market in the UK at the minimum wage level is more attractive than back home, assuming other EU-15 countries still deny entry. I don't care if they're Poles, Aussies or Munchkins, these people need to be housed and housed decently, that requires more buildable land.

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Thanks for the links. Interesting reading. The Swedish population density is a bit misleading since most of the population lives within 200km of Stockholm and there are huge areas of land in the north without anyone, but i get your point of population density.

That's true but bear in mind that Scotland has similar sparse areas too. Their density is roughly 65 persons/km^2 which is closer to, but still three times, that of Sweden.

Im just a bit skeptical that the influx of immigrants to the UK could push the house prices up by that much. They cant all be russian tycoons or high flyers in the city. If most of them are from the new EU states in the 18-35 range do they really earn enough to push up the house prices?

Immigration alone has not increased house prices - my post was addressing your questions on population. However, immigrants only need to rent to increase demand, they don't need to buy as they are sustaining a BTL market.

There are many factors for the current bubble all of which are more than adequately described in these fora but here's a quick summary; increased money supply from lenders, lower interest rates, second homes, sustained low rates of new-builds, increased popularity of BTL, reluctance to invest in stocks or elsewhere, restricted land supply, personal and institutional investment (domestic and foreign), increased population and switch to single occupancy. How these quantifiably contribute to the demand/supply curve is the core debate.

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Housebuilding is the lowest its been since the 1920's, you may think a lot is going on but given our total population and growth there isn't. During the mid 60s, 70's and early 80s councils housing represent at least 50% of ALL new builds.

Barely anything now and what council stock we did have has been eroded somewhat by the right to buy. We did something like 160,000 new builds last year compared to 400,000 during the good times. Combine this will slow and poor planning and the immigation influx and you have a shortage.

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here is also a significant shift to single person occupancy - 33% of all households will be single-person by 2011 according to government estimates

That is a government statistic, and from all accounts is dodgy, I am yet to be convinced about it's validity (come to think about it any government statistic) :lol:

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That is a government statistic, and from all accounts is dodgy, I am yet to be convinced about it's validity (come to think about it any government statistic) :lol:

ONS officials have only received wage rises in line with inflation, that's partly why the data they produce is so sh!t ;)

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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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