Suggestions for controlling house price rises

wotsthat

TickersPlaysPop wrote: »

Maybe open new properties to owner occupiers only for 6mths and then opening it for buy to let ? And let local councils decide to what degree this is needed in their area.

As long as the houses get built it doesn't much matter.

Getting local councils more, instead of less, involved in housing decisions will add more complexity and cost.

IveSeenTheLight

TickersPlaysPop wrote: »

As I said, consider the fact that we might never see a correction in the market... where will that leave us?

Consider what may cause a "correction" or more precisely a reduction in price by what I believe you are inferring.

A "correction" is a situation where the price "corrects" to the long term market demand and does not reference affordability.

Essentially the market corrects to the amount of supply and balances the amount of demand that can afford the level of supply.

This does not mean it will become cheaper or more affordable to all, it simply means that unless there is a sufficient increase in supply OR a significant decrease in demand.

If demand is artificially constrained through price, it will continue to limit the affordability. The problem is, without increasing the supply, that constraint (correction) is unsustainable and prices will revert as and when people can afford.

Of course, if this also increases HPI along with Rents it is natural to become a better investment opportunity.

IveSeenTheLight

TickersPlaysPop wrote: »

Please do not say "build more houses"!

As somebody posted here... there is no way house building will ramp up quickly enough to stem the increase in property prices... it will fuel the boom?!

Sorry, but you need property builds to be sufficient to outstrip the demand (both OO and Rental) before you can address affordability.

If you don;t, the problem will only get worse.

The government can help in a number of ways to promote homebuilding, firstly by addressing the stamp duty levels.

IveSeenTheLight

TickersPlaysPop wrote: »

Maybe open new properties to owner occupiers only for 6mths and then opening it for buy to let ? And let local councils decide to what degree this is needed in their area.

As shown earlier, there is an excess of 14 million OO properties whilst only 2 million Rental Properties.

As well as a shortage of OO properties, there is also a dire shortage of OO properties.

Arguably, due to the dissimilar quantities, the benefit in increasing Rental Properties ahead of OO properties is that it will affect rents quicker and drive competition greater than for OO homes.

Should there be sufficient increase in Rental homes that reduces the rents burden sufficiently, it would help those renting to afford / save more and also potentially drive down the value of properties as people find it more economical to rent.

Once this has occurred, there could be a considered expansion of private homes.

I know this may sound gross to many, but consider what 1Million extra Rental homes would do to the Rental market as opposed to an additional 1 Million OO homes

One increases the percentage by 50%, the other only 7.14%

CLAPTON

IveSeenTheLight wrote: »

As shown earlier, there is an excess of 14 million OO properties whilst only 2 million Rental Properties.

As well as a shortage of OO properties, there is also a dire shortage of OO properties.

Arguably, due to the dissimilar quantities, the benefit in increasing Rental Properties ahead of OO properties is that it will affect rents quicker and drive competition greater than for OO homes.

Should there be sufficient increase in Rental homes that reduces the rents burden sufficiently, it would help those renting to afford / save more and also potentially drive down the value of properties as people find it more economical to rent.

Once this has occurred, there could be a considered expansion of private homes.

I know this may sound gross to many, but consider what 1Million extra Rental homes would do to the Rental market as opposed to an additional 1 Million OO homes

One increases the percentage by 50%, the other only 7.14%

I think you are ignoring the interaction between OO homes and rental homes. In general they are the same properties; only the ownership is different.

If homes were built exclusively for rental purposes that were sufficient to affect the price of renting then that would also affect the profits of landlords. That in turn would affect the price landlords would be willing to pay for property or the willingness for LLs to sell their existing stock.

The overall effect (other things being equal ) would be a drop in the price of renting and the cost of OO property.

The only realistic solution to a housing shortage is to build more properties : whether they go for rent or OO should be left to the market.

jamesmorgan

IveSeenTheLight wrote: »

Sorry, but you need property builds to be sufficient to outstrip the demand (both OO and Rental) before you can address affordability.

If you don;t, the problem will only get worse.

I don't disagree that affordability won't come down without house building, however, it doesn't necessarily follow that more house building will lead to better affordability. In a closed system (eg UK population fixed) it should do, however, within the EU we are in a completely open system. There will be many reasons why people immigrate to the UK from the EU, but one of the factors will be affordability of housing. Put simply, if we build more houses, the most likely outcome will be that more people will move to the UK and the unaffordability balance will be unchanged.

Going back to my locust analogy, if a farmer has problems with his crop getting destroyed by a plague of locusts he could try to plant more crops to adjust the balance. Of course, this is simply likely to encourage more locusts. A better solution is to try to adjust population control before planting more crops. Population control is the only real sustainable answer, but we recognise that it is very difficult to achieve and most governments haven't got the stomach for it.

Of course this is a global issue - in the UK we are only seeing a small set of consequences of the problem. It will get much worse though.

IveSeenTheLight

CLAPTON wrote: »

I think you are ignoring the interaction between OO homes and rental homes. In general they are the same properties; only the ownership is different.

I most certainly am not and you will find I have commented on this response as correct for the immediate but ignore the future rental needs.

My G-I-L bought a count house under RTB.
She went into a home and sold the property to another OO.

Thing is, were is the next generation of Social renters going to access property from a reducing supply.

We have already seen Social Housing reduce from circa 5.5 Million to 4 million, in the same period where population has increased by 7.5 Million.

By your thoughts, where will people rent in the future?

CLAPTON wrote: »

If homes were built exclusively for rental purposes that were sufficient to affect the price of renting then that would also affect the profits of landlords. That in turn would affect the price landlords would be willing to pay for property or the willingness for LLs to sell their existing stock.

The overall effect (other things being equal ) would be a drop in the price of renting and the cost of OO property.

I agree, which is why I articulated that the reduction in rents would impact more quickly than the increase in OO properties.

Keeping rental properties static in an increasing population scenario will just lead to increased unaffordability and limit OO to the more wealthy of society.

CLAPTON wrote: »

The only realistic solution to a housing shortage is to build more properties : whether they go for rent or OO should be left to the market.

I agree, more properties are needed, I simply believe that with fewer rental properties as a percentage, each additional property would have more impact on rents, and property affordability.

IveSeenTheLight

jamesmorgan wrote: »

I don't disagree that affordability won't come down without house building, however, it doesn't necessarily follow that more house building will lead to better affordability. In a closed system (eg UK population fixed) it should do, however, within the EU we are in a completely open system. There will be many reasons why people immigrate to the UK from the EU, but one of the factors will be affordability of housing.

Imagine a scenario where population increases without additional building?

jamesmorgan wrote: »

Put simply, if we build more houses, the most likely outcome will be that more people will move to the UK and the unaffordability balance will be unchanged.

Again, imagine a scenario where increased population without additional homes?

jamesmorgan wrote: »

Going back to my locust analogy, if a farmer has problems with his crop getting destroyed by a plague of locusts he could try to plant more crops to adjust the balance. Of course, this is simply likely to encourage more locusts. A better solution is to try to adjust population control before planting more crops. Population control is the only real sustainable answer, but we recognise that it is very difficult to achieve and most governments haven't got the stomach for it.

Hate the analogy, but get your point.
The thing is there are economic factors into why an increased population helps to grow the economy.

Also consider that population increase is not solely down to immigration.

jamesmorgan wrote: »

Of course this is a global issue - in the UK we are only seeing a small set of consequences of the problem. It will get much worse though.

Euthanasia then??????

CLAPTON

IveSeenTheLight wrote: »

I most certainly am not and you will find I have commented on this response as correct for the immediate but ignore the future rental needs.

My G-I-L bought a count house under RTB.
She went into a home and sold the property to another OO.

Thing is, were is the next generation of Social renters going to access property from a reducing supply.

We have already seen Social Housing reduce from circa 5.5 Million to 4 million, in the same period where population has increased by 7.5 Million.

By your thoughts, where will people rent in the future?



I agree, which is why I articulated that the reduction in rents would impact more quickly than the increase in OO properties.

Keeping rental properties static in an increasing population scenario will just lead to increased unaffordability and limit OO to the more wealthy of society.



I agree, more properties are needed, I simply believe that with fewer rental properties as a percentage, each additional property would have more impact on rents, and property affordability.

we have a housing shortage
in general any property can be either for rent or OO
they is no sensible difference

if we had a temporary excess of OO and a rental shortage then the normal workings of the market would resolve the matter by landlords buying 'OO' property and renting it out.

similarly if there was a temporary excess of rental property then the opposite would happen


the next generation of housing for poor people is provided (as in most countries in Europe) by the private sector (via Housing Benefit). We don't need 'special' housing for them with a mark on the door.


the issue we have is an overall shortage of housing and not a shortage or OO or letting housing which are interchangeable.

jamesmorgan

IveSeenTheLight wrote: »

Hate the analogy, but get your point.
The thing is there are economic factors into why an increased population helps to grow the economy.

Also consider that population increase is not solely down to immigration.

GDP is closely correlated with size of population, however, a larger population doesn't necessarily increase GDP/head (ie the economy may be larger but we are not necessarily better off as individuals). There are some issues with the ways that pensions are paid that require a continually increasing population, but this system is unsustainable and needs to be fixed at some point.

I agree that much of population increase comes from natural causes. If there is a lack of affordable accommodation, it is likely that average family sizes will decrease (as families can't afford to move to larger properties). Having a broad policy of not building enough houses will eventually lead to a dampener on population increase. This is much more preferable to other options (war, disease, and as you say ultimately euthanasia).

I recognise that my previous post could be read as very anti-immigration. I am actually pro controlled immigration. However, if we have an open door policy on immigration (via the EU) then we need to provide some back door controls. Letting accommodation costs rise is one way of achieving this.

Broadly we have 2 choices. Either we try to match population growth by building new houses, recognising that this approach never reaches equilibrium (ie it won't stop at 100 million in the UK, or 1 billion etc), or we try to use the pain of high house prices to slow down population growth. I don't believe there is an easy option.