Coalition Government want lower house prices

des_cartes

http://www.bbc.co.uk/news/mobile/uk-12104094

Mr Shapps said it was "horrendous" that house price growth had outstripped earnings since the 1990s.
"This government absolutely supports peoples' aspiration to own a home," he said.
"But we also believe that (property) should be primarily thought of as a place to be your home."
The MP for Welwyn Hatfield told the paper he wanted people to look to investments that are supposed to offer security in old age, rather than rely on housing.
'Basic need'
He described the rise in prices between 1997 and 2007 as a "crazy period", which had left many younger people struggling to buy a home.
"I think it is horrendous that a first-time buyer would need to be 36 on average if they do not have the support of mum and dad," he told the paper.
"The main thing everyone requires for their subsistence is a roof over their head and when that basic human need becomes too expensive for average citizens to afford, something is out of kilter.
"I think the answer is house-price stability."
He spoke of a "rational" market in which house prices fell in real terms, by increasing by less than earnings.


Anyone still believing that house prices can only go up better start thinking again. The only way is DOWN.:money:

halight

Morniong mate.

How i read that is he wonts people buying houses as a place to live. Not buying for for renting out and useing the HPI in the house as an investment for old age.
Which in the main i do agree with.

He says that HPI between 1997 and 2007 was a crazy period. well it was, there was no way that the prices could keep going up at the same pace.

but moving on to what they are going to do about it, well i dont think a lot. if they crash house prices then all the banks will again be going bust, they will not cope with the right offs.
pluss there would be a hell of a lot of voters doing there best to kick them all out of office.

I would say that they may make it a lot harder for people to get BTL, that should stop people buying more than one house when they can not relly afford to do it with cash.
I would say that house prices over the next 5 years will remain flat. That will alow wages to try and play cach up.

Generali

It's worth noting that the speech was long on wishes and short on policies. It could almost have been one of those middle class socialist rants about how the 'rich' should be subsidising those who are merely very well off.

Wheezy_2

Grant Shapps, 2011: "I think the answer is house-price stability."
Gordon Brown, 1997: "I will not allow house prices to get out of control"

http://www.bbc.co.uk/politics97/budget97/live/housing.shtml

des_cartes wrote: »

Anyone still believing that house prices can only go up better start thinking again.

Anyone still believing a politician better start thinking again.

julieq

It's posturing. There's only one solution, which is to build more homes. And government policy is also to give residents more control over home building in their areas, which will inevitably mean that less homes will be built because of Nimbyism.

Given the massive shortfall between household creation and home building, there's only one place the cost of accomodation can go. This statement is also feeding the myth that investment in property is a driver of prices. All evidence says that that isn't true. It's purely a supply and demand issue. The only reason we're seeing modest falls now is because of mortgage rationing, and that's also contrary to government policy in today's statement, as they claim to want general home ownership - impossible unless people can get mortgages.

Over 5-10 years, expect the following to happen:

1) Shift towards urban living in larger blocks of flats. It's easier to get planning permission for brownfield developments and anyone doing that will want to maximise the return (=high density). If you look at the other places where building is constrained and prices are high (Japan, Hong Kong, New York are good examples) that is the model that's used.
2) Conversion of 3 and 4 bedroom houses into flats
3) Shift from freehold to leasehold tenure, probably on a 50 year basis on all properties (including those traditionally freehold). Gives some degree of flexibility and security of tenure over rental, and allows property to be retained by the owners and passed on.
4) Freehold out of the reach of anyone not already on the ladder, and a split between property owning and non-property owning classes (i.e. the historical norm).

It's not a particularly appealing future, but if you want to get it changed, don't sit around and hope for a price crash, lobby your MP for release of greenfield sites for building and an easier planning process for homebuilders.

shortchanged_2

Mr Shapps is showing a very un tory like attitude there.

Something is not there to make money!!!!! Heaven forbid. Whatever happened to profit, profit, profit.

markharding557

1) Shift towards urban living in larger blocks of flats. It's easier to get planning permission for brownfield developments and anyone doing that will want to maximise the return (=high density). If you look at the other places where building is constrained and prices are high (Japan, Hong Kong, New York are good examples) that is the model that's used.
2) Conversion of 3 and 4 bedroom houses into flats
2) Shift from freehold to leasehold tenure, probably on a 50 year basis on all properties (including those traditionally freehold). Gives some degree of flexibility and security of tenure over rental, and allows property to be retained by the owners and passed on.
3) Freehold out of the reach of anyone not already on the ladder, and a split between property owning and non-property owning classes (i.e. the historical norm).

The above would be a common sense way of dealing with the housing shortage but building on greenbelt isn't because as time goes on farmland will be needed more not less as resources become scarce.
The government will never take measures to make that happen because they are too obsessed with free market economics and allowing free markets to do whatever they are going to do without any direction from them.

Linton

The policy is to restrict the rise in house prices to below wage inflation.

Do they have any idea how they are going to do it?

Possible options:
- State driven increase in house building.
Doesnt sound like a Conservative policy. Where do they get the money from? Then there is the little problem of their other policy of local control of planning conditions.

- Government control of prices.
Again seems a little unlikely. Also unlikely to succeed as rich buyers would circumvent this by wheezes such as offering to pay over the odds for carpets, curtains etc.

- Government restrictions on lending.
Interesting one. Could well be a case of being careful what you wish for. What it would do is simply shift the ability to buy even more towards those people with earned capital or inherited wealth. Those without wealthy parents or too young to have accumulated a large deposit will have to rent. It won't let more FTBers buy a house - there won't be any more houses to be bought. There may be even fewer if building houses is seen to be a less profitable activity.

Again state direction to overrule the lenders' ability to manage their own businesses seems contrary to Conservative philosophy.


Any ideas anyone?

Linton

halight wrote: »

1) I would say that they may make it a lot harder for people to get BTL, that should stop people buying more than one house when they can not relly afford to do it with cash.

2) I would say that house prices over the next 5 years will remain flat. That will alow wages to try and play cach up.

1) How?

2) Why should house prices remain constant over the next 5 years if wage inflation above living cost inflation gives potential buyers more money to spend on housing?

A policy of wage inflation less than living cost inflation seems unlikely - the government would lose the next election.

markharding557

A policy of wage inflation less than living cost inflation

This is already reality for many people

Generali

Linton wrote: »

Possible options:
- State driven increase in house building.

Why a state driven increase in house building? These guys can build you a house in Australia for $1600/m^2 or roughly £1,000 per square metre so say £100,000 for a 100 sq metre house. I see no reason why UK builders would be less efficient than Aussie ones.

The current average sized new build house is 76 square metres so that would be a pretty decent sized house. The rest of the cost of the house is in the land.

As it is so ridiculously hard to get planning permission in the UK, the private sector is unable to build the houses people want to buy and so are able, on the odd occasion that they force through planning, can sell a crap house at an eye-watering price.

Free up the land in the South of England (ie the area where the jobs are) and builders will build the houses. The market will take care of price discovery.