Thursday, May 21, 2015

Just a shortage of affordable houses

MoneyWeek: The UK doesnt have a housing shortage

That there is a chronic shortage of housing in this country has become a sacred shibboleth. Politicians make solemn pledges to build 200,000 more homes by some vague future date to offset this supposed shortage. But the market is still way off the volumes of previous decades.
Is there really a shortage of property in this country, and is this the main factor in ever increasing prices? Merryn doesnt seem to think so.

Posted by debtserf @ 12:46 PM (6106 views)
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15 Comments

1. Hedge Fund Guru said...

Not surprising really. If there really was a shortage of housing there would be a lot more homelessness. There hasn't been a big increase in that over the last 10-15 years or so. Only key things driving the British market (as well as many other markets eg Canada) easy credit, speculation and 'the lemmings' who say 'you cannot go wrong with property'.

Just as I can't walk on water and feed the five thousand with a loaf of bread, no market can defy the fundamental laws of economics forever. A substantial correction across most property markets is looming. In the UK the overshoot on the downside will be substantial because the balance sheet of the UK as a country is beyond weak. There are no magic levers (ZIRP, QE etc) that can be pulled to control, let alone address, the catastrophic economic contraction that will occur.

Time to start planning the market moves to profit from the situation. Every cloud has a silver lining.

Thursday, May 21, 2015 02:07PM Report Comment
 

2. mombers said...

From the comments:
"It is not the job of the state of self-appointed bureaucrats to tell people how many rooms in a home they are entitled to"
But this only applies to existing homeowners, not those wanting to 'concrete over the countryside' to have the same luxury of course. It's one rule for the land monopolists and another for the plebs, eh?

Thursday, May 21, 2015 05:56PM Report Comment
 

3. nickb said...

Is there a "shortage" or not? The question is, which publicly available evidence, excluding prices which can be high for other reasons, would decide it? We've been over this before and I for one don't think there is evidence of a shortage, since population per available dwelling seems not to have changed beyond an infra-marginal amount based on the available DCLG and ONS figures. But there are also interesting deeper questions of what constitutes a shortage - if people all suddenly decide they want to live alone, for example, does that imply a sudden shortage or should they lump it? The media, on the other hand, constantly regurgitate the most simplistic of shortage narratives, perhaps because the answer to a shortage is to build more and everyone loves building more: more lucre for banks, developers and landowners, with the promise of lower prices, so plenty of new stuff to advertise in the media. Cheered on by the associated VI in chief namely the HBF, for whom the answer to any problem in the housing market or any other domain is to Build More.

Thursday, May 21, 2015 09:19PM Report Comment
 

4. nickb said...

This comment is also right on the money IMHO:

Merryn,

I really would love a reply to a question: Why do you, and other journalists who write about the UK property market, always propose solutions that increase the demand side of the supply/demand equation? In your last paragraph, you say it is a shortage of finance that is the problem. No, that is precisely the opposite, the finance IS the problem. Rock bottom rates have meant repayments have come right down and therefore people bid up the asking price until repayments = what they would have been paying monthly, when rates were higher. So they are paying roughly the same per month, except low rates have caused the prices and therefore deposit requirements to soar. If rates were back up at 8%, prices would fall to what people could afford to pay monthly, and deposit requirements (in absolute cash terms) would fall. More young and FTBers could afford to buy.

I don't believe that so many finance journalists are ignorant of this fact, so I must assume that you have an interest in not wanting property prices to fall to levels that will make them affordable on reasonable deposits.

Thursday, May 21, 2015 09:31PM Report Comment
 

5. enuii said...

The big thing about cycling is that you have plenty time to nosy at folks houses as you cycle by. On a bike you notice things that you would miss in a car, plus you tend to use certain routes and rides on a regular basis. With regard to houses there a plenty of empty properties just sitting out of circulation for one reason or another, go further afield into rural areas and there are even houses that have been empty for that long that they are falling into disrepair whilst others in the hands of small time developers have been in the 'development' process for 5 years or more.

Undoubtedly there may be shortages in some areas of London but to apply this generally over the UK is a bit disingenuous.

Thursday, May 21, 2015 09:36PM Report Comment
 

6. Markweston said...

@nickb

That was my comment (I'm now banned on the hpc forum for some reason though).

Friday, May 22, 2015 09:41AM Report Comment
 

7. letthemfall said...

The question whether there is a genuine shortage - number of people vs accommodation - has become moot. It's not really the point. The point is that loads of people think housing is a dead cert, and one way to deal with that would be lots of building in places like the SE. Eventually this might end up like Ireland with a lot of ghost estates, but at least it would deal with the mad explosion of stupid prices. But of course the nimbys will go into overdrive if this were to happen, as they already are round my way.

Friday, May 22, 2015 12:54PM Report Comment
 

8. debtserf said...

"The point is that loads of people think housing is a dead cert".

If enough people believe it, it becomes a self fulfilling - for a while....until it doesnt!

Friday, May 22, 2015 02:07PM Report Comment
 

9. pete green said...

There is more than enough food in the world but we have fat people and people starving, and lots of food making biofuels, If people could monopolise air they would charge you all the wages you make for access to it. We have more than enough land for housing, its just artificially limited. The best solution is to use that land efficiently - plan what land should be used for housing and ensure no one can monopolise it. As ever the most efficient way to achieve this is the Land Value Tax and a proper planning system.

Friday, May 22, 2015 04:36PM Report Comment
 

10. happy mondays said...

A shortage of affordable housing is our problem! House prices are crazy & have been for 10yrs plus some.. Its funny how the system wants you to look after yourself & prepare yourself financially for older age, but to put a roof over ones head drains away most peoples chance of functioning in that way. Its a bit Fuc@ed up.

Friday, May 22, 2015 05:32PM Report Comment
 

11. nickb said...

@5
Let the punishment fit the crime. If the cause of high prices in certain areas is not too few dwellings, but credit conditions inflating the land value, then it seems a mistake to me to call for building as the solution. Ghost estates when a bubble bursts are a waste of land and other resources, and yes, detrimental to nature. @7 LVT would help, for sure, But no chance under the Cons, I would have thought, given their landowner contingent.
N

Sunday, May 24, 2015 12:13PM Report Comment
 

12. mark said...

when you are asking if there is a shortage

we have been looking around our area and noticed an awful lot of empty houses, no idea why, they are not on market nor are they up for rental, so this begs the question why are these houses sat empty

if you take a drive around Liverpool there are streets and street of boarded up houses all bought under compulsory purchase several years ago and have sat boarded up and empty for maybe 7-8 years - explain that one, I remember reading somewhere the count was around 17,000 empty properties owned by the councils in and around Liverpool - enough to house 1 family or 2 -3 flatmates in each

Sunday, May 24, 2015 01:05PM Report Comment
 

13. letthemfall said...

Indeed nickb, it would be a waste. But there is no rationality to this anymore. Economies do not work on logic as we have seen. So the irrational choice may be the most effective. At least useless houses can be demolished and the land restored to good use. Not that I think this is going to happen, but it is more likely to happen than LVT or any other sensible regulatory scheme.

Sunday, May 24, 2015 01:33PM Report Comment
 

14. clockslinger said...

I think I've been banned from posting on the other bit of this website for some directly tounge in cheek anti tory s#it I posted years ago ( as a result of a complaint by some conservative advocate of "freedom", no doubt) and I certianly can't be bothered to seek readmission. Still it would be unfair not to tell you now HPCers, without a snooze making discusssion about immigration, LVT, generational inequality or BTL that "there is not a shortage of houses" and refer anyone who can be arzed to read this which, mutatis mutandis, tells you what IS the cause of asset price inflation (but if you haven't already twiged it, well really you're a moron, FFS, 'specially when even moneyweak get intersted.)
http://www.zerohedge.com/nebut ws/2015-05-30,/something-smells-fish,

Saturday, May 30, 2015 09:32PM Report Comment
 

15. clockslinger said...

http://www.zerohedge.com/news/2015-05-30/something-smells-fishy

Saturday, May 30, 2015 09:34PM Report Comment
 

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