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Is it a fallacy that simply building more homes will in itself resolve the house pricing crisis?

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anon155742
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Re: Is it a fallacy that simply building more homes will in itself resolve the house pricing crisis?

#457790

Postby anon155742 » November 13th, 2021, 11:15 am

Nimrod103 wrote:Please can people be more careful with quotes. I did not make the quoted statement.


I apologise for that. I did not intend to imply that you did.

funduffer
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Re: Is it a fallacy that simply building more homes will in itself resolve the house pricing crisis?

#463232

Postby funduffer » December 5th, 2021, 11:46 am

anon155742 wrote:I quoted white British, not white, so the 10 million includes millions of white skinned migrants who would be considered the same race as myself.

The point was in relation to the upward pressure on house prices and increased demand brough about by inward migration.

If you want it from another angle, the foreign born population is estimated at 9,539,000
https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/internationalmigration/datasets/populationoftheunitedkingdombycountryofbirthandnationality

An increase of 10 million requires a lot of housing.


You are of course ignoring emigration. What matters to the demand for housing from the point of view of migration, is net migration into the country. That has been positive since about 1994, but near zero or slightly negative before then:

https://commonslibrary.parliament.uk/re ... s/sn06077/

There are lots of Brits living overseas, or have emigrated and are now citizens of overseas countries.

My brother was born overseas, whilst my father was working in Africa, so he will be one of those 9m you quote.

Net migration is just one factor in housing demand, and I am more inclined to believe the affordability of cheap credit is the main driver for house price inflation, rather than increased demand due higher net migration, although this will be a factor.

FD

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Re: Is it a fallacy that simply building more homes will in itself resolve the house pricing crisis?

#463302

Postby Lanark » December 5th, 2021, 4:15 pm

funduffer wrote:Net migration is just one factor in housing demand, and I am more inclined to believe the affordability of cheap credit is the main driver for house price inflation, rather than increased demand due higher net migration, although this will be a factor.

^^^^ THIS

House prices fell in 2008-2010, that wasnt because millions of people suddenly left the country overnight. In fact in 2009 Net migration to the UK rose to 196,000.

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Re: Is it a fallacy that simply building more homes will in itself resolve the house pricing crisis?

#463363

Postby servodude » December 5th, 2021, 10:59 pm

Lanark wrote:
funduffer wrote:Net migration is just one factor in housing demand, and I am more inclined to believe the affordability of cheap credit is the main driver for house price inflation, rather than increased demand due higher net migration, although this will be a factor.

^^^^ THIS

House prices fell in 2008-2010, that wasnt because millions of people suddenly left the country overnight. In fact in 2009 Net migration to the UK rose to 196,000.


That makes so much sense, and seems so patently obvious, that I suspect it will be ignored completely because it doesn't fit the narrative of housing supply and affordability being an acceptible justification to espouse odious misanthropy
- I'd rec the pair of you if I could here

- sd

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Re: Is it a fallacy that simply building more homes will in itself resolve the house pricing crisis?

#463364

Postby Lootman » December 5th, 2021, 11:03 pm

servodude wrote:
Lanark wrote:
funduffer wrote:Net migration is just one factor in housing demand, and I am more inclined to believe the affordability of cheap credit is the main driver for house price inflation, rather than increased demand due higher net migration, although this will be a factor.

^^^^ THIS

House prices fell in 2008-2010, that wasnt because millions of people suddenly left the country overnight. In fact in 2009 Net migration to the UK rose to 196,000.

That makes so much sense, and seems so patently obvious, that I suspect it will be ignored completely because it doesn't fit the narrative of housing supply and affordability being an acceptible justification to espouse odious misanthropy

Here is a wild and crazy thought. Just because something is not the only reason property prices go up and down, does not mean it is not a factor at all.

Shocking, I know.

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Re: Is it a fallacy that simply building more homes will in itself resolve the house pricing crisis?

#463403

Postby Nimrod103 » December 6th, 2021, 9:44 am

Lanark wrote:
funduffer wrote:Net migration is just one factor in housing demand, and I am more inclined to believe the affordability of cheap credit is the main driver for house price inflation, rather than increased demand due higher net migration, although this will be a factor.

^^^^ THIS

House prices fell in 2008-2010, that wasnt because millions of people suddenly left the country overnight. In fact in 2009 Net migration to the UK rose to 196,000.


Surely if house prices were responding mainly to the supply of cheap credit, they should have moved by the same amount across the whole country. This has clearly not been the case (https://www.cityam.com/what-175-years-o ... in-the-uk/ - see the section headed 'Regional variations in affordability' with the graph).

All regions took a major ramp up during the years of Brown's lax monetary policy 2000-2006. However, the graph clearly shows that in London and the SE (generally believed to be an area of immigrant concentration) prices have diverged strongly upwards relative to local salaries since the mid 1990s, while Scotland (generally believed to be an area of population stagnation) has flatlined since the financial crash.

It would be interesting to see the same graph extended to end of 2021.

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Re: Is it a fallacy that simply building more homes will in itself resolve the house pricing crisis?

#463405

Postby ursaminortaur » December 6th, 2021, 9:55 am

Nimrod103 wrote:
Lanark wrote:
funduffer wrote:Net migration is just one factor in housing demand, and I am more inclined to believe the affordability of cheap credit is the main driver for house price inflation, rather than increased demand due higher net migration, although this will be a factor.

^^^^ THIS

House prices fell in 2008-2010, that wasnt because millions of people suddenly left the country overnight. In fact in 2009 Net migration to the UK rose to 196,000.


Surely if house prices were responding mainly to the supply of cheap credit, they should have moved by the same amount across the whole country. This has clearly not been the case (https://www.cityam.com/what-175-years-o ... in-the-uk/ - see the section headed 'Regional variations in affordability' with the graph).

All regions took a major ramp up during the years of Brown's lax monetary policy 2000-2006. However, the graph clearly shows that in London and the SE (generally believed to be an area of immigrant concentration) prices have diverged strongly upwards relative to local salaries since the mid 1990s, while Scotland (generally believed to be an area of population stagnation) has flatlined since the financial crash.

It would be interesting to see the same graph extended to end of 2021.


Immigrants tend to go to places where their relatives and others from the countries they came from have already settled which isn't just in the London and the SE - there are many places in the North with large immigrant populations. London and the SE though do attract people from all over the UK as well as immigrants - lots of companies established themselves there as they were closer to the continent which made exporting easier and of course London is the seat of UK government.

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Re: Is it a fallacy that simply building more homes will in itself resolve the house pricing crisis?

#463566

Postby Lanark » December 6th, 2021, 5:10 pm

Nimrod103 wrote:Surely if house prices were responding mainly to the supply of cheap credit, they should have moved by the same amount across the whole country. This has clearly not been the case (https://www.cityam.com/what-175-years-o ... in-the-uk/ - see the section headed 'Regional variations in affordability' with the graph).


Im not sure the differences in regional affordability have really changed all that much, if you compare London and Scotland in 1989 London is just over double, now look at 2019 it is about the same.

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Re: Is it a fallacy that simply building more homes will in itself resolve the house pricing crisis?

#463623

Postby Avantegarde » December 6th, 2021, 7:30 pm

In response to the original question, the answer is Yes and No. Building more homes in the right places for the right people would certainly improve matters. Especially if the government let local authorities build more homes (indeed, told local authoriti0es to do this and provided the cash) for people to rent at genuinely affordable rental levels. The astronomic level of house prices is not just due to a vast supply of cheap money from mortgage lenders or a big rise in the general population. It also reflects the (deliberate) reduction of council housing which has forced millions of people to rent at extortionate prices in the private sector, often from tax-subsidised buy-to-let landlords. A big supply of cheap council housing (several million new homes) would take all the steam out of the private rental market and that would flow into far fewer people being more or less forced to buy a home.

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Re: Is it a fallacy that simply building more homes will in itself resolve the house pricing crisis?

#463626

Postby Lootman » December 6th, 2021, 7:39 pm

Avantegarde wrote:A big supply of cheap council housing (several million new homes) would take all the steam out of the private rental market and that would flow into far fewer people being more or less forced to buy a home.

But those millions of new council homes would not be "cheap". They would be as expensive to build as market-rate new homes. So they would only be "cheap" if they were subsidised.

Which leads to the question: Who is paying that subsidy?

You are basically arguing to go back to the policies we had and rejected over 40 years ago.

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Re: Is it a fallacy that simply building more homes will in itself resolve the house pricing crisis?

#463628

Postby Lanark » December 6th, 2021, 7:51 pm

Lootman wrote:
Avantegarde wrote:A big supply of cheap council housing (several million new homes) would take all the steam out of the private rental market and that would flow into far fewer people being more or less forced to buy a home.

But those millions of new council homes would not be "cheap". They would be as expensive to build as market-rate new homes. So they would only be "cheap" if they were subsidised.

Which leads to the question: Who is paying that subsidy?

You are basically arguing to go back to the policies we had and rejected over 40 years ago.

90% of the cost of new housing is getting the land with planning permission, that's something the government has full control of.

Right now there are lot of NIMBY interests which will vote against new building, but if current trends continue then by 2040 the majority of households will be renting so the votes may go the other way.

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Re: Is it a fallacy that simply building more homes will in itself resolve the house pricing crisis?

#463630

Postby Lootman » December 6th, 2021, 7:56 pm

Lanark wrote:
Lootman wrote:
Avantegarde wrote:A big supply of cheap council housing (several million new homes) would take all the steam out of the private rental market and that would flow into far fewer people being more or less forced to buy a home.

But those millions of new council homes would not be "cheap". They would be as expensive to build as market-rate new homes. So they would only be "cheap" if they were subsidised.

Which leads to the question: Who is paying that subsidy?

You are basically arguing to go back to the policies we had and rejected over 40 years ago.

90% of the cost of new housing is getting the land with planning permission, that's something the government has full control of.

Hmm, are you seriously suggesting that the government should pass laws that devalue private property so that the government can then buy it artificially cheaply?

You don't see any problem with such market manipulation?

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Re: Is it a fallacy that simply building more homes will in itself resolve the house pricing crisis?

#463635

Postby scrumpyjack » December 6th, 2021, 8:06 pm

The government has been a huge influence in causing house prices to rise (Help to buy, high % mortgages, low interest rates etc plus increasing population via immigration), and is terrified of anything that causes a drop in house prices because of fears of problems in the banking system, negative equity etc etc. Also a lot of tax is raised as a result of high house prices (stamp duty, IHT etc). So no government is going to do anything that causes house prices to collapse.

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Re: Is it a fallacy that simply building more homes will in itself resolve the house pricing crisis?

#463636

Postby Lootman » December 6th, 2021, 8:12 pm

scrumpyjack wrote:The government has been a huge influence in causing house prices to rise (Help to buy, high % mortgages, low interest rates etc plus increasing population via immigration), and is terrified of anything that causes a drop in house prices because of fears of problems in the banking system, negative equity etc etc. Also a lot of tax is raised as a result of high house prices (stamp duty, IHT etc). So no government is going to do anything that causes house prices to collapse.

Indeed. The home-ownership rate is over 60%. Homeowners vote more than renters. Therefore politicians must give the majority of voters what they want. And if that is the gradual inflation of property values then so be it.

Germany loves to tout its renter system but the reality is that doesn't work for Brits. We want our asset price appreciation! They work hard. We get just as rich by sitting on our backsides.

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Re: Is it a fallacy that simply building more homes will in itself resolve the house pricing crisis?

#463669

Postby Avantegarde » December 6th, 2021, 10:21 pm

Lootman wrote:
Avantegarde wrote:A big supply of cheap council housing (several million new homes) would take all the steam out of the private rental market and that would flow into far fewer people being more or less forced to buy a home.

But those millions of new council homes would not be "cheap". They would be as expensive to build as market-rate new homes. So they would only be "cheap" if they were subsidised.

Which leads to the question: Who is paying that subsidy?

You are basically arguing to go back to the policies we had and rejected over 40 years ago.


The economics would be simple. The govt would borrow long term and very cheaply by issuing bonds. The money would be used to train and employ people, to buy land, and to build houses. The rental income would pay off the borrowing (capital and interest) after, say, 25 years (just like a mortgage). I recall Margaret Thatcher "justifying" the privatisation of council homes by claiming that their cost had often been paid for many times over by the tenants' rents. If it was true then it will be true now. Meanwhile, the state would still have a still-usable asset in the form of homes and a steady income stream. So, the debt would be paid back, people on low incomes would have cheap homes to rent, and other people would have (other things being equal) cheaper homes to buy.

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Re: Is it a fallacy that simply building more homes will in itself resolve the house pricing crisis?

#463671

Postby Nimrod103 » December 6th, 2021, 10:33 pm

Lanark wrote:
Lootman wrote:
Avantegarde wrote:A big supply of cheap council housing (several million new homes) would take all the steam out of the private rental market and that would flow into far fewer people being more or less forced to buy a home.

But those millions of new council homes would not be "cheap". They would be as expensive to build as market-rate new homes. So they would only be "cheap" if they were subsidised.

Which leads to the question: Who is paying that subsidy?

You are basically arguing to go back to the policies we had and rejected over 40 years ago.

90% of the cost of new housing is getting the land with planning permission, that's something the government has full control of.

Right now there are lot of NIMBY interests which will vote against new building, but if current trends continue then by 2040 the majority of households will be renting so the votes may go the other way.


I thought current trend was for BTL landlords to sell up because of high taxes, so that the number of dwellings for rent will decline. So I don't know how the majority of households will need or be able to rent by 2040.

You are right that UK land is very expensive, which is why we should not be wasting it by building low density housing over it. Particulary in places without infrastructure, and distant from main roads and railways. Energy efficient flats only in future.

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Re: Is it a fallacy that simply building more homes will in itself resolve the house pricing crisis?

#463732

Postby dealtn » December 7th, 2021, 8:55 am

Lanark wrote:90% of the cost of new housing is getting the land with planning permission, that's something the government has full control of.

Right now there are lot of NIMBY interests which will vote against new building, but if current trends continue then by 2040 the majority of households will be renting so the votes may go the other way.


You think the materials, labour etc on a new house for sale at say £300k is about £30k?

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Re: Is it a fallacy that simply building more homes will in itself resolve the house pricing crisis?

#463784

Postby Lanark » December 7th, 2021, 11:11 am

dealtn wrote:
Lanark wrote:90% of the cost of new housing is getting the land with planning permission, that's something the government has full control of.

Right now there are lot of NIMBY interests which will vote against new building, but if current trends continue then by 2040 the majority of households will be renting so the votes may go the other way.


You think the materials, labour etc on a new house for sale at say £300k is about £30k?

OK so about 50%. still a big chunk


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