Wednesday, September 12, 2007
At last the truth about the stupid planners
housing market an unbridled failure
About time, in the final analysis the truth will come out - planners/government artificially constrained the supply of land and encouraged the boom all the way. If, like me, you have ever had to deal the the imbeciles that are planners you'd know exactly what I mean. We are surrounded by land 87% is virgin untouched land.
Posted by jb100 @ 08:20 AM (1769 views)
26 thoughts on “At last the truth about the stupid planners”
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harold says:
“We are surrounded by land 87% is virgin untouched land.”
And long may it continue. The housing boom has little or nothing to do with land availability, but excess liquidity finding its way into assets such as UK property. Think about it: 15 years ago building land was also scarce and planning regulations still existed, but we in the middle of a housing slump. Why? Interest rates and relatively tight monetary policy. To believe the more-and-more-houses argument is simply to pander to the developers who, given half a chance, would turn the countryside into a car park – lovely! What we need is sound money, not a fiat currancy that can be inflated at will by criminal central banks intent on defrauding the middle classes of their wealth.
Rant over.
cyril says:
Indeed. The govts plan has nothing to do with housing the homeless and everything to do with GDP. Here are the main equations:
More houses = more economic activity = more revenue.
Rising house prices = more feelgood factor = more votes from floating voters in middle England .
Ah-so says:
I have no problem with some more houses, but do they need to be so ugly as the typical redbrick Barratt box that so blights our country? These gormless structures are almost proud of their ugliness and plainess, ruining the countryside. They remind me of shirtless, tattoed men who instantly ruin an English summer day.
Davethebox says:
I can’t help but think that this whole “miracle economy” is completely false and has been engineered. I think it will last just long enough for Crash Gordon and Liebour to win the next election while the sheeple still “feel good” about everything.
Am I being synical, or does eveyone else agree?
My observations:
1. Oil price goes up but the price of fuel at the pumps stays static or goes down.
2. The price of everything seems to be going up but still the “official” figures say inflation is static or going down.
3. Mortgage rates are going up but still the BOE keeps the “base rate” static.
uncle chris says:
And let’s hope that it remains untouched, otherwise you get the urban sprawl nightmare that you have in parts of the USA. I would rather see attempts to limit population growth than to see developers get a free hand on our beautiful countryside. There are thousands of empty new-builds as it is, which are totaly unaffordable to the people that need them. I don’t believe developers would bring down prices if they were allowed to build over the green-belt.
stillthinking says:
Locations with jobs are not surrounded by empty land. People need to work, and the travel time in London is already an hour and a half, are those people meant to live further out? The 13% land use figure, i.e. the land which we live on, rather than see on tv, must have taken a considerable whack from the 3/4 million additional people.
Why is it that nobody points out that immigration is an insane policy when we have insufficient free land, no matter what the cause of the unavailable land is. We are all waiting for the crash in order to purchase the most miserable property, and the only reason is that we are ignorant of how people live when they aren’t constrained by land issues. When people eventually wake up to the fact that they have considerable life ruining negative equity, they will be looking at their small property which has neighbours directly below, above, to the left and right, and no garden.
Get some jobs out of London would be a start.
Lives In A Cave says:
Two strong counter arguments:
1 – Just take a look at New Zealand. They are beginning to suffer a downturn in house prices but have more than enough land to build on… its nothing to do with land availability.
2 – house prices only delinked from CPI prices when the money flowed out more freely from banks and building societies; what caused this in the early eighties was more freedom for banks and the like to lend larger and larger sums.
QED
planning4acrash says:
I am a planner, sorry that my colleagues have not allowed development on the virgin countryside that surrounds you. I shall endeavour to demolish more trees for your sake.
Just think for a minute and realise that there has been a real estate boom in New Zealand, size of UK with 4million people and weaker planning regulation than UK, Same applies to USA. It is all about liquidity and developers have more extant permissions than they want to build houses.
inbreda says:
There is no argument for building on greenbelt.
There IS an argument for demolishing all of those god-awful bovis and wimpy style estates that are designed for cars and so everyone can have a bit of garden. They are very wasteful of space, have no character and no soul. Demolish them and build sensible housing.
Give the developers access to greenbelt? Insanity!
voiceofreason says:
I agree with planning4acrash @5.
I don’t understand why someone as intelligent as Roger Bootle still doesn’t get this insight. See his latest press release:
“House price boom ‘causing misery’ “ http://news.bbc.co.uk/1/hi/business/6990357.stm
I just finished reading his book “Money for Nothing”. In which he says (and I agree) that the real cause of the housing asset bubble is low IRs used to prevent deflation following the dotcom bust. And that these IRs could have been raised sooner (preventing the bubble) had Asia (China, Japan, etc) done more consumer spending, thereby reducing the tendancy towards deflation caused by insufficient demand for products. And in the news today …
“China shoppers to boost growth”. http://news.bbc.co.uk/1/hi/business/6990550.stm
and Yuan hits new high versus dollar. http://news.bbc.co.uk/1/hi/business/6915190.stm
That is exactly what we need for our economy in order to stop relying on house price bubbles to prevent deflation and recession.
I work in the consumer electronics industry where we see deflation in the price we get for our products month on month (approx 2% a month).
planning4acrash says:
Inbreda, some Greenbelt could be developed, but you are right about most of it. By the way, Victorian terraces, perfect for families are between 200 and 400 dwellings/hectare, whilst most of the Bovis estates are around 25. Its not for gardens, but useless landscaping, wasteful cul-de-sacs and masses of parking. The efficient grid system was popular throughout the middle ages, in georgian times, in victorian times, but we now with the car don’t need high density so that people can walk into town and be close to services.
Chilli says:
The government gave planning permission for 180 000 new properties last year, and yet, in this time of increasing house prices, the property developers didn’t come close to actually producing that target.
Why?
Because during the last housing recession, property developers built houses only to have them drop in value before they could sell them. This is what the developers have been afraid of for the last few years. Housing was starting to look expensive back in 2004. They are also in the happy position that if they don’t build houses on the land they have bought, the land values go up as a result of a reduced supply of available housing. So the developers make money even when they don’t build houses.
This would not work in a free market system. This is because not all the housing developers would act in unison. Some would sense an opportunity to supply a dire need and supply housing to the market. If this were the case, the housing target would definately be met, if not exceeded.
The problems in the UK are:
There are too few property developers. This allows them to act as a cartel, but without overt communication, which prevents their identification as a cartel.
The risks involved to small time operators are too great.
All the land earmarked for development has already been purchased by existing developers.
Roger Bootle is absolutely right. I totally agree with him, without reservation.
I think you will find that if this country relaxed legislation:
Small time property developers would produce more housing, thereby supplying homes to the masses, making the dream of truly owning your own home a reality. Those houses would be of greater quality as houses would reach a more affordable price, and home buyers would start choosing the type of housing they want. These families would not spend an entire life time paying off their mortgages, which means more equity transfer to the common people than to the banks. Grass roots equity would prevent insane borrowing in the system, which means the economy would be less susceptible to a shorting money supply, which means a more stable exchange rate, and more stable jobs and industries. If you think I’m overdoing this point, consider what the average household spends on their mortgage. It is the largest expense for the vast majority of us in our lifetimes.
Most of the development would actually happen on brown-field sites. The reason is that the lines of communication already exist in these areas. Terraced housing would be converted into flats, More people in neighbourhoods would mean more revenue for the councils, which mean better roads, better health services, better trains lines. Before you complain about flats, consider that most of us live in rooms that we share in terraced housing in london with other people. I grew up in flats, they can be very nice. Flats are abundant in other large cities. Good cities. Why not here?
It’s taken the entire history of the human race to occupy 13% of the available land in the UK. If you relaxed legislation, the other 87% would not disappear in a fortnight.
Finally, everyone wants a beautiful countryside. Even those of us that don’t actually life in the country. When we all don’t have massive debt, do you really think we all won’t want to pay for a beautiful countryside?
James says:
planning4acrash – as an aside, Victorian terraces are also a damn sight more aesthetically pleasing!
holding out says:
What about reclaiming land from some of the soon be redundant enormous retail parks. If a depression relieves us of their presence – then lets have it.
Davros says:
Build more houses and we’ll have more houses for Buy to Letters to buy.
Take away buy to let and we have no lack of supply.
talking rot says:
I will never see eye to eye with @Planningforacrash on the current UK planning system but he has raised a good point here. Victorian Terraces are an extremely efficient, family-friendly form of housing which supports social structures. Placed close to town shops (not out of town malls) and services, they can be a very economical and environmentally friendly way to live. Compare the old streets in Devizes with the modern developments in Swindon!
Makes me wonder by fat-boy Prescott wanted to knock them all down in order to build more cookie-cutter soulless Bovis boxes really. Just shows what a bunch of muppets we have running the place.
Will we ever have a politician with sufficient nous, skills and bravery to ressurect Churchill’s Land Tax?
denzil says:
>>planners/government artificially constrained the supply of land and encouraged the boom all the way
It’s nothing to do with supply and demand, absolutely nothing I tell you.
High levels of migrants entering the UK are sharing houses often 4000 sharing a single room so there is no demand pressure there.
Though supply and demand is not the only issue, throwing cheap credit into the mix has created explosive house price inflation
mrmickey says:
denzil if the chavs move in the country this could provide additional sport for the hunting and fishing set.
shipbuilder says:
It seems obvious to me that giving free reign for developers to do as they like would be the death knell for the UK as we know it. Tourists visit here because of the character of the place, the countryside and the history. Developers have no interest in anything other than a quick profit – how will this lead to better quality and more attractive housing? The idea that a free market would lead to just the right amount of attractive housing in the right areas is pure fantasy – planning permission as it is here in Northern Ireland is allowing individual houses (with about an acre of ground each) in leafy Avenues to be knocked down and turned into apartments or 2-3 smaller houses, simply becuase it’s a good area. When the market ‘adjusts’ to stop this, it’s too late and the damage is done. How on earth would relaxing planning acheive anything but more identical boxes as we have at the moment? Where is the incentive to do anything else?
Chilli says:
shipbuilder
A developer who replaces a nice house with some crummy apartments must be certain that there will be buyers for those crummy apartments.
If there is available housing for everyone, then no one will want to buy. What they will buy is a nice house.
If there is a shortage of land, then developers will built more densely. However, if house prices are reasonable, even the densely built houses will be built with sense and a desire to meet the demands of purchases, as long as purchases have choice.
Purchases don’t have a choice today. The idea that the free market cannot cure this problem is dead wrong. The only time when the free market fails, is when cartels and the like start to develop and competition dies.
Its the government’s responsibility to make sure this doesn’t happen. Yet in this case, they are doing the exact opposite.
dugmug says:
I would like to say that I think there are a lot of good, sensible points in what Chilli has said (although I don’t agree with all of it).
The fundemental issue here is affordability. Hypothetical country with only 25 new households wanting to buy (wanting to move out of mum and dad’s house, wanting to move out of other shared accomodation, wanting to move in from another country, wanting to move out of rented, etc). But there’s only 1 empty house for sale and the owner is asking £1,000,000. None of the 25 people can raise £1,000,000. House will be unsold. As far as any commodity is concerned, “demand” is the number of people who can “afford” to buy, not the number of people who want to buy, even for “necessities” (look at how many people would like enough food to eat in Africa compared with how many actually get it). Would ferrari decide how many cars to make just on the basis of how many people would like to own a ferrari? I think not.
Owners of houses will obviously try to sell for the highest price they can get – who wouldn’t! But when the banks will only lend 3.5 times salary and when interest rates prohibit borrowing more than this anyway, house prices will be effectively capped regardless of nominal demand. When banks relax lending criteria simply because rates are a bit lower for a while (how stupid – rates were never going to stay static for 25 years or more; dumbasses), people can borrow more so sellers will charge more providing there is still enough demand around. Eventually enough people will borrow more than they can really afford (coupled with the inevitable rise in interest rates or increase in unemployment or credit tightening or whatever – some event will always happen, things never remain static) that a critical mass is reached and the overshoot upwards is “corrected”.
If you built loads of houses at the bottom of a crash, to the extent of oversupply, and/or legislated that credit conditions could not be relaxed again a few years down the line, then maybe you could moderate these house price swings. Neither of these will happen, so discussions on how to “solve” the problem are probably moot.
denzil says:
mrmickey said:
>>denzil if the chavs move in the country this could provide additional sport for the hunting and fishing set.
Excellent idea! When I go to bag some grise I’ll bag myself a couple of chavs. The dogs would turn their noses up but if I mix the chav with some chum they would probably force them down if hungry enough.
The flaw in your idea is that all that white chav garb would make hunting them too easy. I can just imagine those peaked white baseball caps glinting in the sun.
On a more serious note your average chav male of the species does not create any housing demand because he sleeps in the exhaust of his vauxhall nova for warmth. I know this because my daughter bought one and there was a pair of pants, 3 kfc boxes, couple of spliff butts and a sleeping bag in the exhaust. I was so naive to think they had big shiny exhausts just for the noise. The chavez are just so misunderstood innit.
Jb100 says:
I agree with lots of you that yes there is lots of cheap money to inflate the bubble but nonetheless here’s why Chilli/Bootle and me might be absolutely right – cheap money and mania are not the only factors.
1) In the south east demand exceeds supply as evidenced in many sources including this forum, there simply is not enough houses to go around until you choke off demand by raising prices to a ridiculous level making houses unaffordable by most – higher rates will not solve the underlying problem that Bootle is talking about.
2) I am a small developer and I can tell you that the local planners (hertsmere) are very very difficult indeed, when they refuse a scheme it can take 1-2 years to have a proper appeal. They act as a determined force preventing slowing and using totally subjective measures of what is acceptable.
3) releasing SOME greenbelt does not mean total destruction of our countryside just a little relaxation and additional room to build.
4) poor house quality is often a result of planners who determine how many windows, their placement size, structure of roofline, overall look – just see what happens when anyone trys to build a piece of modern architecture or new house design – the planners (often not even UK citizens) simply object.
5) did you know that a lot of planners are very envious of small developers because they make profits in the good times that often seem to large.
I posted this because so many (just look at the comments above) seem to express the view that demonstrates buildophobia and NIMBYism. If we released just a little more greenbelt made planning easier the bubble would not have got quite so large.
the behr
dbnazz1 says:
A number of factors at play here. Planning is a real problem and as much as I don’t like to give an incompetent government credit, I feel they now realise this and this is why they are
looking at some degree of central control over planning.
Also there is the issue that there has been mass migration to the Uk on a scale never seen in such a small time span. This has certainly pushed up demand at a time when it is fair to say that supply of housing has not been that great, however this fact never really gets much mention on this site. Maybe this is because some people feel that the migration discussion is not ‘politically correct’ , however you can’t ignore facts that net migration pushes up demand.
The increase in money supply has been great, and the government and BoE have spoke a lot over the last few years about inflation, but I fear that money supply has been pretty much left to its own devices, and this has had a major effect. Banks have in effect been recycling funds by the use of securitizing loans and this has greatly fueled the supply of credit.
inbreda says:
nimbyism job100?
What makes you think I live in greenbelt?
I don’t even live in england, so I quite easily sidestep the nimbyism accusation.
Given the number of buy-to-leave-empty-in-the-hope-of-capital-appreciations I don’t think building a few more houses would have any effect at all.
Sounds like you don’t just want to make disgustingly large profits, subsidised by tax payers, but you also want the government to make it easier for you.
Sounds like vested interest to me.
voiceofreason says:
Here is a good website laying out some of the facts about Migration to the UK. Whether they are biased or not depends on your P.O.V.
http://www.migrationwatchuk.org.uk/
The subject has “come in from the PC cold” over the last 2 years. But the main politicos are still steering well clear if they can avoid it. Frank Field (bless him) accepted.
His angle is the lack our housing provision for his less well off constituents.