Build more houses

Graham_Devon

This seems to be the answer to end all discusson at the moment. I say at the moment, as it seems to change throughout the year, but currently, it seems the in thing.

So, I ask those who state this a solution...

1. Who is going to build these houses? Afterall, the large builders we do have in the country at the moment are now swaying away from building FTB properties, as they simply can not sell them.

2. Who is going to be able to buy these houses? This relates to point 1, and the reason as to why builders are pulling out.

3. Why build more houses, when the current stock of new homes we do have, is, in many cases, unable to be sold on?

4. There seems to be a trend of stating that mortgage lending is at fault for people not being able to buy, and that prices have little to do with peoples ability to buy. Therefore, if there are mortgage problems, what is the point of building more houses which people can't get mortgages on? I ask because the same people who blame low mortgage lending, also state more houses should be built. Surely a contradictory point?

4. Is this whole "build more houses" a simple easy answer to questions, rather than a possible solution? It seems that way to me. Seems a bit like answering the peak oil question with "well find more".

Getting a bit bored of asking this in other threads and it being ignored, so thought I'd highlight it more with a seperate thread. Let's get to the bottom of whether buolding more houses is actually a possible solution (in terms of being do-able and profitable for builders to undertake it), or merely a soundbite.

Nikel

Im interested in self build. But wow, land is so pricey.

Linton

Graham_Devon wrote: »

This seems to be the answer to end all discusson at the moment. I say at the moment, as it seems to change throughout the year, but currently, it seems the in thing.

So, I ask those who state this a solution...

1. Who is going to build these houses? Afterall, the large builders we do have in the country at the moment are now swaying away from building FTB properties, as they simply can not sell them.

2. Who is going to be able to buy these houses? This relates to point 1, and the reason as to why builders are pulling out.

3. Why build more houses, when the current stock of new homes we do have, is, in many cases, unable to be sold on?

4. There seems to be a trend of stating that mortgage lending is at fault for people not being able to buy, and that prices have little to do with peoples ability to buy. Therefore, if there are mortgage problems, what is the point of building more houses which people can't get mortgages on? I ask because the same people who blame low mortgage lending, also state more houses should be built. Surely a contradictory point?

4. Is this whole "build more houses" a simple easy answer to questions, rather than a possible solution? It seems that way to me. Seems a bit like answering the peak oil question with "well find more".

Getting a bit bored of asking this in other threads and it being ignored, so thought I'd highlight it more with a seperate thread. Let's get to the bottom of whether buolding more houses is actually a possible solution (in terms of being do-able and profitable for builders to undertake it), or merely a soundbite.

Lets go through your points...

1) The large builders can build more houses. But they need loans so that they can pay the wages before they get the money from selling the houses. Any sort of loan is in short supply. Also they need planning permission in areas where people want to live. This is also in short supply.

FTBers are thin on the ground because they cant get mortgages. This may well be temporary, but it wont help encourage the building of FTBer houses either.

2) If credit becomes available both for the builders and the FTBers, and planning permission for FTBer houses is granted more FTBer houses can be built and bought by FTBers.

3) Temporary situation whilst credit is difficult.

4) Chicken and egg. The sudden collapse of credit jambed the whole system, it will take a while for easier credit to flow though and the market mechanisms to work.

4 again) Whilst there are (or would be if they could get mortgages) more people wanting houses than houses available there will be bidding wars which will keep the prices sufficiently high to price out the excess FTBers. If no more houses are built simple arithmetic means that either most FTBers wont get a look in or if Blink gets his way thousands (millions?) of people will be "cleansed" out of their homes so that FTBers can move in.

FTBers could help themselves - "round my way" there are plenty of victorian 2 bedroomed terraced houses going cheap. But I fear too many FTBers have delusions of grandeur and see themselves as 4 bedroomed detached sort of people.

Graham_Devon

Linton wrote: »

Lets go through your points...

1) The large builders can build more houses. But they need loans so that they can pay the wages before they get the money from selling the houses. Any sort of loan is in short supply. Also they need planning permission in areas where people want to live. This is also in short supply.

FTBers are thin on the ground because they cant get mortgages. This may well be temporary, but it wont help encourage the building of FTBer houses either.

2) If credit becomes available both for the builders and the FTBers, and planning permission for FTBer houses is granted more FTBer houses can be built and bought by FTBers.

3) Temporary situation whilst credit is difficult.

4) Chicken and egg. The sudden collapse of credit jambed the whole system, it will take a while for easier credit to flow though and the market mechanisms to work.

4 again) Whilst there are (or would be if they could get mortgages) more people wanting houses than houses available there will be bidding wars which will keep the prices sufficiently high to price out the excess FTBers. If no more houses are built simple arithmetic means that either most FTBers wont get a look in or if Blink gets his way thousands (millions?) of people will be "cleansed" out of their homes so that FTBers can move in.

FTBers could help themselves - "round my way" there are plenty of victorian 2 bedroomed terraced houses going cheap. But I fear too many FTBers have delusions of grandeur and see themselves as 4 bedroomed detached sort of people.

Thanks for a well thought out response.

The difficulty I do have with it, is that it all revolves are credit and "if" credit was easier again. Builders are also building, just the houses they can sell, so not sure it's all to do with builders not being able to gain money to build.

Again, I refer to peak oil. Isn't saying "if credit was easier" the same as saying "if oil was easier to find"? Or "if people could get more credit" the same as saying "well if people could find more oil there wouldn't be an issue".

I dunno, I'm just trying to seperate what's actually do-able and actually reasonably possible, rather than simply stating "build more houses" on every thread.

No ones going to build more houses and no bank is going to loan for housebuilding if they cannot shift the houses that are built. So at the moment, im my mind, it's not a solution. Yet it appears to be being banded around as a real solution.

Linton

There is no solution whilst credit is difficult, building anything requires upfront payment by someone.

Well actually there is a solution - it's what is happening now. If owner occupation isnt available people rent or stay with their parents/relations/friends. As such housing tends to be at higher density than owner occupation we have the demand fitting into the supply.

If the credit situation doesnt improve more and more people will rent. This will put up the cost of renting, which will make it worthwhile for BTLers to buy previously owner occupied houses.

leveller2911

Nikel wrote: »

Im interested in self build. But wow, land is so pricey.

Same here, Ive been looking for at least 10 years.If you go back 15 years plot prices were consistanly 30% of the total build cost but now they are 50%.

Graham_Devon

Linton wrote: »

If the credit situation doesnt improve more and more people will rent. This will put up the cost of renting, which will make it worthwhile for BTLers to buy previously owner occupied houses.

But we haven't built the houses for them to rent?

Loughton_Monkey

"Build More Houses"

I always think this is a meaningless statement without qualifying it into different segments. For example:

1. Build more houses for the benefit claimants and the poor.
2. Build more houses for FTB.
3. Build more houses for the 'established' [mid/up]market.

The first is (or should be) an issue purely for local and national government. Is it cheaper to throw up a few cheapo properties rather than pay all that expensive housing benefit only to benefit grasping BTL landlords? [It probably is].

The second and third are purely market issues. Builders will decide. They know how much they can buy land for, how many houses of different types they can squeeze into it, how much they will cost to build, how much it will cost them to finance the development, and if there is a healthy market for them and at what price.

[Let the builders decide. They probably know what they are doing].

Linton

Graham_Devon wrote: »

But we haven't built the houses for them to rent?

Like I said, the cost of renting will go up and it will become worthwhile for BTLers or people who already own large houses to convert them from owner occupation to flats or shared rental. Though eventually of course every house will be full!

Hopefully, well before that's a problem credit will have eased.

Linton

Loughton_Monkey wrote: »

"Build More Houses"

I always think this is a meaningless statement without qualifying it into different segments. For example:

1. Build more houses for the benefit claimants and the poor.
2. Build more houses for FTB.
3. Build more houses for the 'established' [mid/up]market.

The first is (or should be) an issue purely for local and national government. Is it cheaper to throw up a few cheapo properties rather than pay all that expensive housing benefit only to benefit grasping BTL landlords? [It probably is].

The second and third are purely market issues. Builders will decide. They know how much they can buy land for, how many houses of different types they can squeeze into it, how much they will cost to build, how much it will cost them to finance the development, and if there is a healthy market for them and at what price.

[Let the builders decide. They probably know what they are doing].

Surely in the ideal world you would do all of these. Though I suppose in the ideal world the poor would form part of the main market.

I agree that it's best to let the builders decide on what to build, though of course the government could nudge them in a socially desirable direction (whatever that is) with appropriate tax tweaks and planning restrictions.

HAMISH_MCTAVISH

Graham_Devon wrote: »

The difficulty I do have with it, is that it all revolves are credit and "if" credit was easier again.

Not "if" but "when"....

There is no "new paradigm" here... when the returns overcome the perceived risk after a few years of stability, when the banks have paid back the SLS and rebuilt their balance sheets, etc, then investment capital will flow to housing just like it does to any other asset class.

The lack of lending is a very temporary factor, that will be overcome.

Again, I refer to peak oil. Isn't saying "if credit was easier" the same as saying "if oil was easier to find"? Or "if people could get more credit" the same as saying "well if people could find more oil there wouldn't be an issue".

No, the difference is clear.

The oil may or may not exist, and it may or may not be extractable.

The money most certainly exists. There is a giant pool of liquidity sloshing around the globe looking for returns. Witness the global commodity bubble at the moment, as just one example.

Other countries have managed to maintain mortgage funding without any difficulty, by taking a more aggressive and interventionist approach.

It's entirely possible for us to do the same.

I dunno, I'm just trying to seperate what's actually do-able and actually reasonably possible, rather than simply stating "build more houses" on every thread.

I dunno, sounds to me more like you're trying desperately to regurgitate the same old discredited bear memes over and over again.

If you want cheaper houses, build more of them. It's that simple.

There is no other solution to overcome the imbalance between supply and demand on anything other than a very temporary basis.

Now it seems you don't like that fact and want to argue against it, probably because you understand the implications..... ie, that house prices won't be falling significantly unless you build a few million houses pretty quickly, and the chances of that happening are pretty slim.

No ones going to build more houses and no bank is going to loan for housebuilding if they cannot shift the houses that are built. So at the moment, im my mind, it's not a solution. Yet it appears to be being banded around as a real solution.

The better the availability of mortgage funding, then the more houses will be built. As you point out, builders will not build what they cannot sell.

Until then, the market continues to maintain itself on lower volumes, whilst the shortage of housing in this country grows.

Meaning an even bigger boom is inevitably building up......

It's pretty simple really Graham.:money: