Suggestions for controlling house price rises

cells

Universities or the local council should build to house the student population in dorms. Some 300k homes are rented by students in general housing. The locals plus the students would be better served by dorms close to university.

10 additional boroughs are needed in London (sufficient space exists within the M25) over the next 20 years.

Some 8-10 million new homes are needed over the next 20 years. However we are only likely to see around 3.5 milliom constructed which is goin to mean things will get worse not better

CLAPTON

cells wrote: »

Universities or the local council should build to house the student population in dorms. Some 300k homes are rented by students in general housing. The locals plus the students would be better served by dorms close to university.

10 additional boroughs are needed in London (sufficient space exists within the M25) over the next 20 years.

Some 8-10 million new homes are needed over the next 20 years. However we are only likely to see around 3.5 milliom constructed which is goin to mean things will get worse not better

a very good point about students accommodation that doesn't get aired frequently enough.
it isn't just the number of student in general housing but also the purpose build stuff is also uses space that could be used for 'ordinary housing' rather than what are effectively second homes

IveSeenTheLight

cells wrote: »

Universities or the local council should build to house the student population in dorms. Some 300k homes are rented by students in general housing. The locals plus the students would be better served by dorms close to university.

They are generally as I understand it for the first year students.
I don't believe there is sufficient all 4-6 years of further education

TickersPlaysPop

antrobus wrote: »

Clearly your reading of newspapers has been somewhat selective.

The key hindrance to growth is not absent credit but simply that businesses are reluctant to invest.

Roll up for Britain's £750bn corporate cash mountain
http://www.telegraph.co.uk/finance/comment/jeremy-warner/9172381/Roll-up-for-Britains-750bn-corporate-cash-mountain.html

Thanks for the link.

Could you please share with us your list of media sources that you consider to be a sufficiently broad coverage for a balanced and correct view of what is going on in our economy?

Also, the link you posted shows large corporations are the ones sitting on the cash mountain reluctant to invest in even their own operations.... small to medium companies are the ones producing the growth and are the ones needing investment.

Are you saying that the larger companies should invest in the smaller ones?

TickersPlaysPop

IveSeenTheLight wrote: »

That a short term view, but how about future generations who find there is significantly less opportunity to rent.

Consider that homes were 100% owned outright.

I believe you need to consider the impact of both markets, OO and Rental, in any proposed solution.

There's no point in helping one if it cripples the other

Taking things to an extreme doesn't help explain or understand this situation.

I think many people here wish to shift the balance and trend away from buy to let and towards owner occupiers. Also to do this in a positive and constructive way without making criminals of landlords, or forcing them to give up their property portfolio.

People currently renting and moving out of a rented flat or room to buy a small home will leave a space for new tenants behind them. So a measured shift of renters to owner occupiers will not cause a huge problem at all.

Please don't take this to extremes.

jamesmorgan

There are 3 distinct issues related to the housing market at the moment. Solutions to each of these issues will have impacts on the other issues, but we shouldn't lose sight of the fact that there are 3 different problems at play.

a) Low interest rates. This makes mortgages more affordable, which in turn increases HPI. Long term trend about 1/3 of salary is spent on housing costs. This is around the position today which indicates house prices are fairly valued based on affordability. As (when) interest rates start to rise, this will put a natural dampener on prices. This is just part of the normal interest rate cycle.

b) Increased capital requirements to secure a mortgage. This acts as a blocker for FTBs to enter the market. Even though they can afford a mortgage they can't secure one. This has forced many into renting where a landlord effectively secures a mortgage for them. Their housing costs remain similar but they forego any benefit from HPI. This issue doesn't really impact HPI, but it does create distortions in the market.

c) London population increase - the population of London is increasing by about 1 million every 10 years (recent trend and forecast for the next 20 years). This creates huge demand in London for housing with a corresponding rise in house prices. Whilst a massive house building program in London would ease this it will never keep pace with the population growth. Whilst there is much discussion about immigration being the major issue, much of the population increase is from the existing UK population. If we do nothing, this issue will gradually sort itself out. As London becomes unaffordable, the population increase will slow down as people/businesses start to move out of the city. the alternative is to convert London into the equivalent of Hong Kong - with a massive population density. House prices in London will still be very expensive, but will just about be affordable.

The situation in London is the most pressing issue and the one most complex to solve. In some ways if can be likened to locust swarms. The world is suffering huge population growth. As with all biological organisms, population growth puts pressure on resources. Where those resources are fixed (eg food in the case of locusts), the swarm will move to a new area, consume all the resources, and then move onto the next area. In theory, the locusts could be kept in one place by planting new crops, but the problem is they won't grow quickly enough to satisfy demand.

For humans, affordable housing is the fixed resource. People will move into London in great numbers until all the affordable housing is 'consumed' then they will move onto the next area. Building new houses is a bit like planting a new crop - it could work in theory, but in practice they can't be built quickly enough. Even if they could, it just develops into a positive feedback system (more affordable housing just encourages more people to move into London).

CLAPTON

jamesmorgan wrote: »

There are 3 distinct issues related to the housing market at the moment. Solutions to each of these issues will have impacts on the other issues, but we shouldn't lose sight of the fact that there are 3 different problems at play.

a) Low interest rates. This makes mortgages more affordable, which in turn increases HPI. Long term trend about 1/3 of salary is spent on housing costs. This is around the position today which indicates house prices are fairly valued based on affordability. As (when) interest rates start to rise, this will put a natural dampener on prices. This is just part of the normal interest rate cycle.

b) Increased capital requirements to secure a mortgage. This acts as a blocker for FTBs to enter the market. Even though they can afford a mortgage they can't secure one. This has forced many into renting where a landlord effectively secures a mortgage for them. Their housing costs remain similar but they forego any benefit from HPI. This issue doesn't really impact HPI, but it does create distortions in the market.

c) London population increase - the population of London is increasing by about 1 million every 10 years (recent trend and forecast for the next 20 years). This creates huge demand in London for housing with a corresponding rise in house prices. Whilst a massive house building program in London would ease this it will never keep pace with the population growth. Whilst there is much discussion about immigration being the major issue, much of the population increase is from the existing UK population. If we do nothing, this issue will gradually sort itself out. As London becomes unaffordable, the population increase will slow down as people/businesses start to move out of the city. the alternative is to convert London into the equivalent of Hong Kong - with a massive population density. House prices in London will still be very expensive, but will just about be affordable.

The situation in London is the most pressing issue and the one most complex to solve. In some ways if can be likened to locust swarms. The world is suffering huge population growth. As with all biological organisms, population growth puts pressure on resources. Where those resources are fixed (eg food in the case of locusts), the swarm will move to a new area, consume all the resources, and then move onto the next area. In theory, the locusts could be kept in one place by planting new crops, but the problem is they won't grow quickly enough to satisfy demand.

For humans, affordable housing is the fixed resource. People will move into London in great numbers until all the affordable housing is 'consumed' then they will move onto the next area. Building new houses is a bit like planting a new crop - it could work in theory, but in practice they can't be built quickly enough. Even if they could, it just develops into a positive feedback system (more affordable housing just encourages more people to move into London).

the population of London is largely driven by job availability.

at 1 million per 10 years is 100,000 per annum
lets say 2 people per property so the demand is for 50,000 new builds each year


the current rate is round 20,000 per year

it doesn't seem impossible to build at twice that rate given the wish to do so and we build up where appropriate.

jamesmorgan

CLAPTON wrote: »

the population of London is largely driven by job availability.

at 1 million per 10 years is 100,000 per annum
lets say 2 people per property so the demand is for 50,000 new builds each year


the current rate is round 20,000 per year

it doesn't seem impossible to build at twice that rate given the wish to do so and we build up where appropriate.

It may be possible - and we shouldn't underestimate the task of building a city the size of Birmingham inside London every 10 years. However, the bigger question may be whether this is the type of London we want to create.

antrobus

TickersPlaysPop wrote: »

Thanks for the link.

Could you please share with us your list of media sources that you consider to be a sufficiently broad coverage for a balanced and correct view of what is going on in our economy?....

What an odd question. What makes you think that my list of "media sources" would be any different from anyone else's?

TickersPlaysPop wrote: »

...Also, the link you posted shows large corporations are the ones sitting on the cash mountain reluctant to invest in even their own operations.... small to medium companies are the ones producing the growth and are the ones needing investment.

Are you saying that the larger companies should invest in the smaller ones?

No, the link says that "UK corporates have cash sitting on their balance sheets of £754bn, or around a half of annual GDP." That's because that's what the statistics say. Or to be more precise UK non-financial companies held that amount of cash back in 2011. Perhaps it's more now. Or less. But the number doesn't say anything about the size of the companies.

Or as that DT article out it;

Most of this balance sheet strength is among larger corporates, but it is essentially the same story in the SME sector.

IveSeenTheLight

TickersPlaysPop wrote: »

Taking things to an extreme doesn't help explain or understand this situation.

I think many people here wish to shift the balance and trend away from buy to let and towards owner occupiers. Also to do this in a positive and constructive way without making criminals of landlords, or forcing them to give up their property portfolio.

People currently renting and moving out of a rented flat or room to buy a small home will leave a space for new tenants behind them. So a measured shift of renters to owner occupiers will not cause a huge problem at all.

Please don't take this to extremes.

Hi TickersPlaysPop.

I have tried on many occasions to invoke a balanced approach when looking at the balance between rental supply and owner occupancy, much to no avail.

In my opinion there is a shortage of BOTH rental properties and owner occupancy properties to meet both demands.

To improve one, you impact the other, UNLESS you resolve the root cause, shich is the shortage of supply..

The simple fact is that BTL is a fraction of the overall ownership of property and statistically can be shown to have only PARTIALLY filled the gap created by the RTB sell off of council houses.

Taking property out of the minority percentage to help the greater percentage supply has a magnified geared effect on the rental market in comparison with the benefit it provides to the owner occupancy market.

I agree, it is unrealistic to take to extremes, however if it helps to open somes eyes to the problem and the solutions they are presenting then it cannot be a harmful thing in debate.

Unless of course it's because you cannot argue against the points being made.

You may indeed find this graph interesting where you can see the dramatic drop in social housing and the only small increase comparatively in private renting



It may be easy to get caught up in the hype of lambasting BTL LL's without actually understanding the statistics.

BTL is part of the solution to provide rental properties given the mass reduction in social housing.

The ROOT CAUSE is a dire lack of properties on both sides and instead of canvassing for a reduction in BTL (which would indeed grossly impact the rental market), you should be directing your focus onto the ROOT CAUSE which is the shortage of all properties to meet the desire and effective need.