5 thoughts on “Cameron’s housing speech: terrible economics, but not even good politics”

  1. Posted 04/03/2015 at 08:59 | Permalink

    Kristian – It does not seem to me that your graph has any established relevance to the issue. It plots the number of new dwellings per 10,000 inhabitants, but if the population were stable and everyone was already well housed then it would not matter if zero new dwellings were completed. The number of new dwellings related to to the population rise (and perhaps trends in household size) would seem to be a far more relevant figure.

  2. Posted 04/03/2015 at 09:22 | Permalink

    HJ, the ideal measure would be the NET change in the number of dwellings per 10,000, but I couldn’t find that anywhere.

  3. Posted 04/03/2015 at 17:04 | Permalink

    It should be clear that once again we have attempts to grant favours to a narrow demographic, while encouraging the construction of slums of the future built to a price.

    I’m getting very hoarse, but I’ll say it yet again:

    Affordable homes are the homes we have at the affordable prices we used to pay for them.

    Our housing problem isn’t (yet, although it will be in future) about high levels of immigration, because net immigration is dominated by students and others who live at high density:
    https://a.disquscdn.com/uploads/mediaembed/images

    It is not really a shortage anyway – average occupancy remains stable – but is concerned instead with changes in ownership:
    https://a.disquscdn.com/uploads/mediaupload/tmp/a

    The big change in ownership tenure has been the rapid rise of the BTL sector, fuelled by pyramid bubble finance and Housing Landlord Benefit acting as a prop to rents. The finance actually comes from abroad via the banking system, so it sucks money out of the economy in interest and capital repayments to ultimate lenders.

    If you wish to reverse the trend, then
    a) you must be prepared to see house prices fall in real terms (and in nominal ones if we aren’t to wait a generation) – even if some of those who were foolish to overextend themselves at bubble prices get repossessed;
    b) there is a need to provide landlords with an exit route by offering a much lower rate of CGT on sales to owner-occupiers;
    c) LTVs for BTL mortgages need to be restricted (I’d suggest to 50%, as they used to be in the 1990s), reducing the power of gearing to outbid normal buyers;
    d) support for BTL rents via Housing Landlord Benefit needs to be wound down;
    e) those on high LTVs should be required to pay off capital at at least (2.5% minus Bank rate) p.a. until their LTV is reduced below 50%.

    The link between mortgage outstandings and house price ought to be clear:
    https://a.disquscdn.com/uploads/mediaupload/tmp/9

    Politicans have been far too afraid to tackle the bubble. Major won an election in 1992:
    https://a.disquscdn.com/uploads/mediaupload/tmp/7

  4. Posted 05/03/2015 at 19:11 | Permalink

    “The housing crisis tells us zilch about ‘our economic model’ (whatever that is) as a whole.”
    But it does, because rising house prices do not produce wealth, they merely transfer it. From producers to privileged non-producers. Those on the Right often mistake privilege for free markets and Capitalism. And when this inevitably leads to dysfunction they blame State regulation, like the GreenBelt, or Socialism.
    For arguments sake, lets assume Kristian is right, and that planning regulations raise the the cost of housing. It is present freeholders who benefit from these regulations, so why not give them the choice of keeping the benefit they get by paying for it? ie a Land Tax. If they do, everyone else pays less tax, and if they don’t we see an end to NIMBYISM. That’s how the property market should function to deliver affordable housing. But those on the Right don’t want functioning markets when it comes to housing. Even if it means building more terrible quality homes, that we don’t need, and where people don’t want to live. Saddling future generations with yet another burden caused by free market dogma.

  5. Posted 09/03/2015 at 11:32 | Permalink

    Any opinions on this: “Capital Economics picked up the story in a note out earlier this week. It notes that from 2004 to 2014, the number of households in the UK rose by an average of 170,000 a year, but the number of dwellings in the UK increased by some 200,000 a year. That suggests a rise in the number of “apparently surplus homes” to around 1.3 million.”

Comments are closed.