Sunday, January 28, 2018

Off message for the dinner party classes

Why building more homes will not solve Britain’s housing crisis

Interesting take on the problem from the Guardian, although I can imagine that this won't be well received by a section of their readership. It's provoked some debate in the comments section though.

Posted by crash bandicoot @ 09:51 PM (3915 views)
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11 thoughts on “Off message for the dinner party classes

  • Generally a good article with some interesting stats. However, it seems silly to suggest a property speculation tax rather than a straightforward land (site) value tax which would cover more of the problem and could substitute for distortionary taxes on income and (productive) capital.

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  • tenyearstogetmymoneyback says:

    Of course increasing supply will depress prices.

    However, I think a very effective move would be to tax / legislate Buy to Let mortgages out of existence.
    There was a time when wanting two mortgages would have meant a Bridging Loan at an extortionate interest rate.

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  • @2 do you have any evidence? In the long term it’s clear that places with the highest supply – cities – are much more expensive than those with the least – rural areas. Also see evidence of prices rising fastest in Tower Hamlets, which had the most homes built. Sure, building can reduce prices but a lot of the time it increases them as it generates more demand than the incremental supply.

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  • tenyearstogetmymoneyback says:

    Mombers

    Evidence – Only the normal rules of supply and demand.
    It is noticeable that after plenty of homes were being built in the 1970s prices were quite reasonable in the early 1980s.

    Maybe the rules I ignored are “Location, Location, Location”

    Maybe property developers will naturally want to build in the places where they expect prices to rise the quickest.

    Sometimes they get it wrong. Does anyone know what the situation is in Ireland where it was claimed supply exceeded demand for quite a few years ?

    During the 1970s one of the main subjects we studied in Geography was “New Towns” in particular Milton Keynes, and all the supposed advantages.
    Whatever happened to that idea ? Maybe it should be revived rather than cramming more and more homes into our city centres.

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  • Milton Keynes was a brilliant concept despite the
    Mickey taking one of the criteria was no property higher than a tree line now look at the flat roof high rise flats built how is that progress?

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  • @4/5 MK has had faster growth than average:

    This doesn’t fit with a supply-demand argument unless the building creates more demand than the new supply. This is evidenced in abundance simply by looking at where supply is high – cities – vs rural. Ireland, Spain, the US housing busts all can be attributed to a supply-demand imbalance for sure. But it’s very similar to building roads. Often, building more roads makes traffic worse as demand outstrips new supply. On the other hand of course roads are build where no incremental demand will be induced. Similar to speculative building sprees, you can get white elephant ‘bridges to nowhere’, etc

    The 70s – most of the housing built was public so not for sale (until later sadly :-(). This sucked a lot of demand out of the private sector, in fact the private rental sector shrivelled to 10% from 90% at the beginning of the century. There were also rent controls, mortgage controls, etc which dampened demand.

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  • Guardian article

    Whoops, my dodgy html appears to have made the whole of my comment a link!

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  • The article states the problem succinctly. PST or LVT – either would help stop the speculation govt policy intentionally fuels (I read that a BoE official admitted interest rate policy in 2008 had the deliberate intention of supporting house prices). With the number of flats being built in London – they appear to everywhere – supply looks to be rising quickly. But if money going into housing rises as quickly we end up with a lot of expensive and empty places. A crazy way to run a country.

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  • It won’t change a thing if they re all frigging sold offshore.

    Onshore Brits can’t compete with the al-Sauds, Russian crooks or Chinese tycoons desperate to keep their cash out of reach of Xi.

    Nor should they be expected to.

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  • Also, building 2m Wimpy homes will not increase the supply of well-built homes in organically-developed, vibrant neighbourhoods with good infrastructure all that much 😉

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  • @10 lol. Part of it I’m sure is if sh1tty little homes are built in an area, the bigger older ones suddenly look a lot nicer

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