Wednesday, July 6, 2011

Why high house prices are bad for the future of the country

Why A House Price Crash Would Be A 'Good' Thing

Hi chaps, I've been a regular on this site for years and posted the odd article and read an awful lot of comments although never been quite brave enough to leave my own. Anyway, I'm not a regular writer but I got the opportunity to blog for Huffington Post UK for its launch today and hope you appreciate the sentiments of this blog - part personal, part hard facts. You regulars have been an inspiration. I'm still holding off buying but it's getting more difficult to wait and wait and wait...

Posted by melinda rogers @ 10:18 AM (2161 views)
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15 thoughts on “Why high house prices are bad for the future of the country

  • @Melinda

    Good work! It’s nice to see a media voice questioning the accepted wisdom about rising house prices – particularly the point that we are forced to spend more and more cash on a roof over our heads which crowds out other economic activity and investments.

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  • Nice article Melinda – and a very sound platform for the Huffington post UK.

    There really is a need to stop finding reasons not to build houses, and there are a several myths and issues about housing that should be debated:

    – There is a vast amount of previously developed (or otherwise despoiled) land that could be developed for housing, but is ruled out for various reasons. There should be a general presumption that if land has been previously developed, the onus should be on the local planning authority to provide a compelling reason for residential refusal. Pointing to a district plan, or to the fact that the land concerned is within a green belt envelope, should not on its own be sufficient.

    – Too much land is now ruled out on the grounds of flood risk, including large areas that have no recorded history of flooding. Flood risk assessment should include an indication of maximum possible flood depth. Where this is less than 25cm, development with elevated floor slabs should be permitted.

    – Big developers are not better at building houses than small ones. Self build should be given a boost, and there should be incentives to sell land in small parcels, so that small construction companies get a fair chance.

    – All aspects of the building regulations and the health and safety culture should be reveiwed, to ensure that good cost benefit is achieved. The actual cost of building houses has risen enormously in recent years, and much of the increase has been driven by regulations of doubtful worth.

    – Only about one acre in 20 in the UK is currently developed for housing, and only about one acre in 400 is needed to meet the shortfall.

    – Reviving the construction industry is a proven route to reviving the economy.

    – Build, baby, build!

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  • Uncle Tom, a nice list of facts there which few would argue with. How about the one in the article which says there a million empty residential properties in the country already? Should we not first try to get people into these? And how would you stop your new houses being snapped up by BTL’ers?

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  • mick rupert says:

    Many congratulations Melinda. It’s a topical subject, you’ve made clear your personal interest, and taken a strongly contrarian view before making clear all the true benefits of a genuine “correction” in the price of property in the UK.

    You say you’re “not a regular writer”, but to get a gig writing for the Huffington Post, on its launch day in the UK – on such a contentious issue to boot! – is admirable.

    You’ve got a fan here and I wish you well in your writing career. Hopefully you will post here as well! 🙂

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  • @Timmy T
    The empty houses thing is a red herring. Should I be able to take ownership of your car if you do not use it every day? How about your pension and investments, do you need those today, tomorrow,..

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  • i remember the 90`s says:

    Excellent article ,folk who don`t understand the injustice of high house prices would have a better handle on it if they did.

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  • tt,

    There will always be some empty properties, and I’m a little skeptical about the 1m figure; however, I do think more could be done to bring them back into use – a punitive rate of council tax would be my preferred route.

    BTLers don’t make money out of empty houses (not any more, at least) and if there are more properties to let than there are prospective tenants, the rents will fall, thereby helping those renting; so I wouldn’t worry too much on that score.

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  • Well the above posters have covered most of the housing points above so I won’t repeat them.

    What I was pleased to see and find refreshing was the fact you clearly stated your own position Mellinda, I wish politicians and other vested interests had to do the same.

    With regard to the family thing Mellinda get on with it now, the house thing will sort itself out. I managed to produce a family in rented ( and am now looking to buy something modest as I think I’ve found the right thing). But I’m still bearish on house prices.
    At least renting you’ll have access to your savings while you’re concentrating on your family, that way you won’t have to work too hard during their important first five years.

    When the right house comes up at the right price you’ll know. Make sure you get something you can easily extend to add some extra value as a cushion.

    In the mean time get in with what’s really important, you can buy a house anytime but you can’t turn the clock back.

    Good Luck.

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  • Why are you spamming us with this pish?

    Just kidding, good article. Saw Ariana de Huff on breakfast this morning, she’s an eloquent interviewee.

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  • ontheotherhand says:

    Nice article. In follow ups you might want to mention banks and their incentives as well. Also make it clear that when the price of anything else like food or football tickets goes up there are media groans, although there are winners and losers there too. Your personal situation is interesting. Both men and women work today, couples get together later, we work harder, and yet all the extra cash has just gone on bidding up house prices. The extra productivity has given us fewer choices.

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  • little professor says:

    Good stuff, nice to see a counterweight to the usual house price cheerleading in a (relatively) mainstream media outlet.

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  • mark wadsworth says:

    UT: “I do think more could be done to bring [empty homes] back into use – a punitive rate of council tax would be my preferred route.”

    That’s half way there but misses the point of the article – the deliberate inter-generational unfairness embedded in Home-Owner-Ism, which is exacerbated by the fact that young people do all the work and pay all the income tax and have to rent, and older people do less or none of the work, pay less income tax (in fact they collect pensions) and own all the land.

    How about tweaking the whole tax system so that young people pay less income tax and baby boomers and pensioners pay more in LVT? There must be a stage at which we say that the tax burden – and land ownership – is fairly shared between young and old, and whatever it is, we are nowhere near and heading firmly in the wrong direction anyway.

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  • prices will be allowed to fall once the banks/investment houses/a politician near you have offloaded their mortgage risk

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  • Fishbone Glover says:

    Nice article Melinda. You lose points for mentioning the housing ‘ladder’ (it’s a pyramid if anything), but overall the points raised are valid and need to be brought to the attention of a wider audience. Here’s hoping!

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  • Ha! The pish comment made me laugh. Thank you for the mostly kind words!

    I know there’s so much more to write about and it’s amazing how limiting an 800 word count is. Expect more blogs sometime soonish…

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