Tuesday 17 May 2016

House prices up 9% in year to March

One thing I really have against the Conservative Government is the crazy approach to housing in the UK.

- We allow in 300,000 immigrants a year and build at best 100,000 new units

- We have easy laws on renting and make that profitable (recently changed I accept) whilst making mortgages hard to get for new buyers

- There is plenty of land, but planning permission is granted in a very restrictive way

- when the Government did act, in the Budget, it has caused a huge spike in Buy to Let purchases that have led to this 9% price rise.

This 9% is a big number, £15,000 + - a huge amount for anyone wanting to buy a house.

Also, every time house prices rise it further locks in the unequal society of the rich over-60's vs the poor under 30's; evermore split as the latter have no savings or assets and the former see theirs rise tax free month in and month out.

It is a very sad state of affairs and I despair that no Government has the guts to make the changes. This current Government has made buying property more expensive and raised taxes, but this seems to have done little (unsurprisingly) to have fixed the underlying issues.

I would expect come 2020 Housing will be right up their with the NHS in terms of peoples' concerns about the state of the nation.


Electro-Kevin said...

The Government has no choice but to let EU citizens in.

What I keep trying to impress upon this site is that the important inflation (unavoidable housing costs) is impoverishing our young. It is EU driven.

I have seen it with my own eyes:

- train guard (one wage, family): nice, three bed semi within easy reach of London (1993)

- University educated professional (no kids): ex council flat, same area (2006)

- University educated ****** (hopefully): Mum and Dad's spare bedroom or rented room (2021) No hope of having grand kids.

The EU is making us poorer. It's not our prosperity that draws people here, but the fact that the EU is the slowest recovering economic block in the developed world and has been in decline virtually since we joined it.

DJK said...

Agree with all of this but there is something more going on as young people being priced out of housing is a (Western) worldwide phenomenon. The something else is presumably central bankers flooding the world with cheap money looking for an asset price to inflate.

Electro-Kevin said...

Putting money behind a 'safe' (government rigged) bet, more like.

Dick the Prick said...

The problem and also the blessing of this country is that planning is the only real power local government has and it's so wonderfully corrupt that everything takes ages. My local council - bless their socialist cotton socks - is just trashing every dumb ass ward which voted Tory with new housing. I do complain about but i'd fuck up Labour wards just out of principle too.

The problem isn't lack of housing - it's a problem with lack of housing in the right places. You can get a nice little starter home round here for £120k, wages seem pretty consistent with national averages, scenery is awesome and it takes less than half an hour to get to either Manchester or Leeds on trains which are every 15 minutes.

I don't want to necessarily be heretical but house price appreciation is mainly a southern or metropolitan problem. The people who are fucked by Tory housing policy are the people who probably wouldn't vote Tory anyway and I seriously do think there's shit loads of housing going on - building 3 and 4 bed detached matchboxes on my frikkin' old school grounds isn't perhaps the best accomodation strategy ever. OOOOhhhhh, bloody livid - the cheeky Labour twats - they only did it because the school was awesome and their parents had the bloody audacity to consistently vote Tory to stop the madness. They're gonna build down the gorge next - I mean - let's trun the village into a God damned car park and call it quits.

Anyway, yeah, you were saying....

Cheers CU :-)

MyEnglishName said...

Fuck Me!

I've only been ranting about this on here for the past 2 or 3 years and finally the penny is dropping.

Whats causing this 'inflation' in house prices is a combination of
QE - this lowers rates for those who over-borrowed on housing before 2008. They should have gone under and been repo'd but for lower rates. The Govt then took on the banks debts to prevent them from doing the same. Thus, anyone who over-borrowed basically gets a handout. (I personally know several people who could not afford their current home if rates went to even 5%.)

Combine this with very lax oversight of foreign funds and enforcement of money laundering regulation. What you get is a wall of money fleeing China etc... looking for a safe haven. They were directly advertised to (as condos in Dubai were advertised here) in an attempt to

BTL was pumped because of regs allowing early emptying of pension funds and the exclusion of BTL from regulatory (affordability) oversight. And at the same time more stringent checks for regular mortgages were introduced. Thus you have a system where pension money was moved to the housing market - via an unregulated product - where only existing homeowners could buy.

Basically everything was done to prop up the housing market.

The problem is that mortgages (First time/non-investment) are running below 50k per month - about 90k is needed to keep prices rising. With the BTL spigot turned off, and China tightening capital controls the magic fairy dust that has propped up the housing market is fast disappearing.
Unless..... we can get massive immigration going.... or at least not have it stop....

The housing market is poised for a freefall in the event of a Brexit.
Of course, anyone with any sense realises that this doesnt matter a damn unless you are selling or are highly leveraged in the most illiquid of markets.......

As I mentioned here many times an LVT would have prevented all this horseshit from occuring and balanced with commensurate reductions in income taxes would see the economy - with lower costs and higher wages - roar off into the good times, immigration or no.

But no. The fucking boomers shit in their pants and demanded that the next generation had to shit in their pants too.
Both the Tories and Labour took part in this fuck up too.
No one called a spade, a spade, gritted their teeth and rolled up their sleeves; everyone wants easy street.

Well now, regardless of the Brexit result, your establishment and government are about to tear themselves apart. I only hope theres enough left behind from these greedy, short-sighted, self-serving morons for the next generation to build a country.

God save England from the English!

Electro-Kevin said...

Dick - 'planning'.

OK. So the Government grants local governments a complete free-for-all. Say we have enough builders to cope with what is, let's face it, un-plannable demand.

Why would the Government do that ?

Why would the government crash the housing market, trash the banks and destroy a good deal of their revenues from stamp duty, inheritance, professional transactions and equity release ?

The demand side crisis is all adding blocks of wet sand to the pyramid.

CityUnslicker said...

My english name - with you until LVT is the solution. communism is not the answer. A nice bit of shumpterian collpase will do the trick.

Dick the Prick - I doubt the whole trade thing is very importnant in the round of Brexit. The pound collapsing will bring some much needed inflation in the short term and people overall will get a decent boost I feel.

Shame it wont happen, Project Fear will win out!

Electro-Kevin said...

CU - The broadcast media anti-Brexit bias has been shocking. The BBC and No 10 leaflet must surely qualify for a re-run before the count has even started.

I recommend Dan Hannan's Why Vote Leave and Brexit the Movie on YouTube (if not mentioned before.) I know I don't put a good case but these people most certainly do.

My2ndEnglishName said...

@Dick - re - "copy n' paste that shit" most sensible thing I've heard in a while.

@EK - no leave it to the market. Govt auction off land in parcels to private individuals (with services costed). Each plot same-ish size. Give guidelines on height, width, distance from boundary etc... and let the great British public have their artistic and cultural way.
Do not let any BTL arseholes or large corps get involved. Specify the houses must only be owner-occupier - no rentals.

Set the people free and allow them to build their own houses.

This way we can allocate land for 2-bed, 3-bed, 5-bed or whatever is actually required.

@CU - I'm all for the collapse of corrupted limbs of state but we must protect the poor and vulnerable. Going Mad Max is a bit to far. 'Controlled Demolition' is more my thing. ;)

Electro-Kevin said...

Build it and they will come, My 2nd.

It will not solve any of today's problems. Can these individuals build schools, provide teachers...

L fairfax said...

Part of the problem is the benefits system. I know people who have got off a plane and been given a flat in central London.
Ignoring the immigration issue
Why should people who don't work be given housing in the South East? If they were forced to relocate prices would be a lot cheaper.

andrew said...

On house prices and general population shifts:

BQ may be able to correct me but I think there has been a drift of people and money from north to south of England for about the last 200 years.

The impact of immigrants is marginal and most of them are not placed in London / Roseland but elsewhere.

There do seem to be positive economic benefits to living in big cities - if they made a 'loss' you wouldn't want to live there.

Restricting the comment to London and other cities:

However it has got to the point where as EK says, people with capital (usually over 45 home owners) are able to use their money to buy more housing as historically it has made more money than the building soc and 'safe as houses' is a very English thing to say.

The trouble is that this has pushed up the price of housing so young people (the same peoples children) cannot afford a home.

And now the core point:

There is a generic choice here between
(a) passing a part of your massively unfairly over-valued house on to your children as they cannot afford a house in any other way
(b) changing the planning regs so that house prices will tend to fall making all older people relatively worse off and all the younger relatively better.

As others have noted once you have a home, you tend to opt for (a) - just ask Ed Millibands dad.

So my prediction is in the true (not those pretenders DC and BJ - and after the bananas comment on bananas who can take him seriously anymore) conservative tradition

*Not much will change*

Steven_L said...

I'd love to be a fly on the wall on the room in HMT where they actually come up with all these crank schemes to bugger around with the housing market. I've heard they usually plot the really unpopular stuff about 10 years before they can actually convince the incumbents to do it.

Personally I'd much rather load up on good quality blue chips like BMW and Daimler yielding 10%+ than pokey new-build flats yielding 5%. But that's just me.

Landlords in Aberdeen are currently finding out what rent-deflation looks like. All it would take is the political will to build social housing for rent again on a large scale and landlords throughout the UK will suffer the same.

If CU is right, and cheaper housing becomes a vote winner, landlords will get royally shafted. Housing is always the no1 tool for gerrymandering.

Electro-Kevin said...

Not when the 'conmy depends on house price inflation, Steven.

andrew said...


Personally I'd much rather load up on good quality blue chips like BMW and Daimler yielding 10%+ than pokey new-build flats yielding 5%. But that's just me.

Not just you ...

Anonymous said...

CityUnslicker: "The pound collapsing will bring some much needed inflation in the short term"

Jumping Jesus on a pogo stick!!

'Much needed inflation'? you gotta be 'avin us on?

Since 1913 we have had over 9000% inflation. If that ain't enough for you, then perhaps you'd like a dose of hyper inflation.

And where do you get the idea the pound will collapse on BREXIT? No longer being obliged to support Greece, Italy, and Spain by the back door, we'll do very well. Now the Euro, that's a different matter. And, yeah! that back door.

A City type, ah! that explains it.