Thursday, Dec 10, 2015

Is it house building on money supply that pushes up the monoply

Tory Home: Further evidence that building more houses is not enough to make them more affordable

It is a fascinating question but what is the real driver of house prices? Supply-demand or money supply. Well of course it is both but I guess its far more about money supply....

Posted by pete green @ 11:25 PM (4392 views)
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1. judgandury said...

Idiot article from the spiritual home of NIMBYISM. I've always been taken aback by our LVTers readiness to jump into bed with the NIMBY block. The very large NIMBY contingent of the Tory party are naturally always keen to divert attention from the need to build more houses. When I first started showing everyone here the dire supply and population data several years ago, the biggest resistance I met was from the LVT crew who furiously argued that we didn't need any more houses. They even went so far as to deny any significant population change. The arguments they used at the time were very similar to the brain dead arguments used here by the Tory blue rinse brigade.

So why are the arguments put forward in this Home of Nimbyism article idiotic? Because as proof of premise, they cite the following countries where they had a building boom but still had high prices.

Before the financial crisis there were building booms in America, Ireland, Spain and even Britain, to some extent. However, houses did not become more affordable quite the opposite.

Even a lobotomised chimp would look at the above and quickly realise that America, Ireland and Spain only had high prices temporarily before an almighty crash. Their house prices at their peak never got as high as UK prices did at their bottom. Everyone here knows this but these three countries built more houses than they needed (or certainly enough), so their house prices inevitably returned to the ground after a relatively short bubble.

The imbecile Tory author suggests that even Britain had a building boom to some extent. What a moron. The Barker report of 2004 set out house building targets that were widely agreed upon. To date, we have built 1.1 million less homes than the 3 million calculated by the Barker report. A deficit of 1.1 million homes since 2004 and this Tory fool says that we had a building boom to some extent.

I am grateful for this article because it is a perfect way of showing exactly why I am irritated by our LVT crew. I have absolutely nothing against LVT as a concept but I do have a lot against the wrong headedness of our little LVT crew. We have very real suffering caused by a terrible housing shortage. People are cramped, poor and feeling hopeless as a consequence of our shortfall of over a million houses. And yet this little crew never stop trying to divert attention from what we need to do. Its truly revealing that they are in sync with a brain dead Tory NIMBY article.

I have an intimate working knowledge of our housing crisis and I am telling you all that it is far too dire for any allowances to be made for this sort of nonsense. Did you know that at current building rates we will have an EXTRA MILLION added to our housing shortage EVERY 7 YEARS. So no apologies for my contempt for this article or anyone who supports its effectively evil intent.

Friday, December 11, 2015 07:59AM Report Comment
 

2. mombers said...

@1 I'm surprised that you have "absolutely nothing against LVT as a concept" - you've comprehensively dismantled it as not even working if it could be implemented, no? It is politically impossible, but then again so is building an extra million homes every 7 years or whatever your target is (still no answer on the thread where I've asked for these figures...) Maybe in a few generations things will change and we can finally build enough houses and hope that it's done in a way that doesn't push up the price of existing homes...

Friday, December 11, 2015 09:38AM Report Comment
 

3. judgandury said...

mombers, why surprised? Yes, I've comprehensively dismantled it as "not even working if it could be implemented" IN THE UK, but that doesn't mean I don't wish that we could tax the corporations a fair amount.

"It is politically impossible, but then again so is building an extra million homes ..."

You have to think about what you are saying. Yes, LVT is a political and economic impossibility in the UK but you cannot make the same binary comments about house building. Building more houses, than we are currently, is clearly not a political impossibility because all the main parties made it a major plank of their GE manifesto and the voters didn't complain. The government has just committed 7 billion to building houses and is putting through a new act that will radically liberalise planning law. Again the electorate and opposition didn't bat an eyelid and the press were favourable. So now that the notion of political impossibility has been put to bed, lets consider the significance of each and every house that is built over and above the recent build rates. Every single house that increases the recent build rates improves things in a small way, so please don't sneer at the efforts made. Cheer them on instead or better still join the effort. Stop putting yourself on the wrong side of what needs to be done to alleviate the suffering.

"we can finally build enough houses and hope that it's done in a way that doesn't push up the price of existing homes"

Just stop. I am all out of contempt for now but please do yourself a favour and stop being an unwitting NIMBY stooge. We need more physical stock period. Stop suggesting the fantasy existence of pernicious road blocks.

You lot have to be more self concious about the views you put forward on this subject. A few Google sessions with a confirmation bias mindset does not put you on the same level as the foremost housing research units in the country. I'm sure it all sounds grand when you talk amongst yourself but the last few days should have given you a rude awakening as to what happens when you step outside your group. There are layers of 'respected' voices on the subject. A journalist might be 'respected' in the context of his job but no one in the big bad corporate/political world gives two hoots about what they say. The people who matter are only concerned with the 'doing' or not of things and not impractical 'perfect world' concepts.

OK, so I'll draw a deep breath and give you some numbers in good faith. Please bear in mind that it takes effort to distil everything down to bite size chunks. I am also conscious that people don't always want too much data and at times I'm sure I give more than people want.

Friday, December 11, 2015 11:54AM Report Comment
 

4. mombers said...

I'm not against building - I'm signed up for planning alerts in my area and I put in a supporting comment for each and every one. If I had more time I'd put in a supporting comment for every building project in the country. I also lobby my MP - she's a NIMBY of note, it's like talking to a brick wall. Anyway, don't get me wrong, we need to build if we're going to just accept the very inefficient use of our current housing stock. And the market is screaming for building to be done, distorting the market with our planning rules is producing all of the expected effects, like the black market that I had the unpleasant experience of.

Don't worry about information overload - I just need the three numbers requested in the previous post.

Friday, December 11, 2015 01:03PM Report Comment
 

5. judgandury said...

Amount of houses that need to be built each year to satisfy demand (EXCLUDING BACKLOG): 254,000

How is this number arrived at?

Each of the district councils is obliged to produce a yearly statement that shows how many houses they need to build each year. Many of them use out of date Regional Spatial Plans as a calculation basis, so these are discarded. The ones that are accepted have had their local plans and statements accepted by the PINS Inspectorate and use approved calculation methodology (eg 'Liverpool and/or 'Sedgefield' methodology) that has stood the test of high court challenges. In order to calculate the data missing from the councils with outdated plans, we compare the unconstrained household formation data for each of the legitimate councils to the their NPPF compliant statement outputs. This gives us an average percentage by which to reduce the unconstrained data for each of the councils without up to date plans (in a perfect world we would use unconstrained data but there are always constraints in the real world and fortunately we have enough data from compliant local plans to be able to reliably extrapolate from them the % by which to constrain the national totals.

Current backlog: 1.1 million units

How is this arrived at? Barker cross checked with 5 year plan data. Barker didn't anticipate the rate of population change but we'll leave that alone for these purposes

So the above two numbers quantify our predicament. We now know that if we build less than 254,000 units per year, then we are adding to the 1.1 million backlog shortage. Until the research was done there was no reliable data on the subject.

*Please don't confuse national figures within regional figures. There are some regions with enough housing but the above numbers are national averages.

Annual housebuilding target: 315,000 units

How is this arrived at? The above number represents a consensus of what could feasibly be built per annum. The 315,000 number is far from fanciful because we have built far more in the past with less technology. The entities that are party to this consensus are the government, housing associations, national builders and the big research units. The money and planing law is now being put in place to eventually achieve an annual rate of 315,000 units pa. If the money is not forthcoming we will fail.

When is it anticipated that we will reach the annual housebuilding target: 2019

Friday, December 11, 2015 01:21PM Report Comment
 

6. mombers said...

For reference, my three questions were:

*What level you want to push prices and/or rents down to
*How many homes need to be built every year to achieve this
*How long it will take

Sorry if I wasn't clear but what I'm really after is what level of house prices and/or rents you think is a good target. There are countries with similar incomes, population densities, etc that have much lower rents and prices, it would be worth looking at what we can adopt from them. I'd really like to see us fall down the league tables of private rents and prices - more money to enjoy life with. If you don't have a price and/or rent target, just a number of homes one, that's fine of course - having really high rents and prices but a little more home per capita is better than the status quo.

But based on the number of houses target above, we've got 315k homes p.a., which could be achieved by 2019, by which time the backlog will start to be whittled down. The 1.1 million backlog will grow until we get to 254k but let's stick with 1.1m. The backlog will start to go down by 61k per year, so should be cleared in 18 years, i.e. 2037. Really bad luck for most people born between 1980 and 2037.

It'll be interesting to see how we get on - any annual shortfall will mean the backlog will grow and that date will be pushed out further and further.

Friday, December 11, 2015 01:46PM Report Comment
 

7. judgandury said...

mombers, I put in that effort for you and you didn't even say thanks. All I get is; but I wanted more. Come on, seriously?

Regarding your question: "What level you want to push prices and/or rents down to"

We do not focus on that. Our primary concern is the provision of physical units such that everyone is comfortably housed. Dignity and quality of life is the desired effect of our research and lobbying.

We do have a lot of incidental research on the effect of supply on prices but it is not something I have personally worked on. Political bias is strictly verboten (spectacularly breached by me above) and price targeting is off message. If you are asking me as an individual? From the stuff I've seen, I think prices would generally be about 70% lower when an optimum stock level is reached.

Friday, December 11, 2015 02:04PM Report Comment
 

8. Janch said...

J&J Do your figures take account of all the empty properties around? I mean perfectly habitable second homes left empty for a large proportion of the time not those left empty as they badly need doing up before they are habitable. Second homes are everywhere not only in holiday areas. There are empty flats in London (Buy to leave) but even where I live in a smallish market town in the middle of southern England there are empty houses (newbuild) maybe bought as BTL (I don't know) but they could be used to house people. Maybe councils should increase council tax substantially for empty property and maybe then they would be brought back into use (sold to someone who would live in them or rent them out at least) and the housing shortfall you describe could be alleviated to a degree by this method.

Friday, December 11, 2015 02:11PM Report Comment
 

9. mombers said...

Sorry jaj, thank you so very much!!!!!! You really are very grumpy I have to say. Let me know where to send a thank you card and a box of chocolates. I've been very patient I think in trying to get you to answer very specific questions.

Let's see how things pan out...

Friday, December 11, 2015 03:26PM Report Comment
 

10. judgandury said...

Not half as patient as I've had to be. I'm still not convinced you had a genuine interest in the information.

Friday, December 11, 2015 03:36PM Report Comment
 

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