Landlords to blame for Britain's rising house prices

IveSeenTheLight

Graham_Devon wrote: »

Yes.

Just as I'd prefer right to buy were abolished. Instead of helping one family, that government owned home could help many over its lifetime.

Those cheap mortgage rates and deposit funds are coming out of contributions from all of us. Therefore, the benefits should be felt by more than just a handful of mortgage holders.

That's a fair point and very noble of you, however didn't you benefit from shared ownership.

Arguably this also should have been abolished and not allowed

stator

TheBlueHorse wrote: »

A load of them shouldn't be going to university. A load of rubbish universities have sprung up and going to them is utterly meaningless. They should do away with all universities other than the Russel Group - make it much harder to get in and fund the places for all. They can then have private universities if people are not good enough to get in and they can pay £30k a year to do David Beckham Studies.

Sorry but we all know what would happen then. Us poor commoners would never get into university as the places would be taken by all the toffs. Intelligence and ability wouldn't come into it.

CLAPTON

Graham_Devon wrote: »

Planning policy isn't the be all and end all. There is plenty of land with planning permission already.

But as a business, why would you intentionally hurt your own bottom line, your own shareholders etc by creating enough supply in order that the price of your goods drop?

The private housbuilders are simply NEVER going to build the supply we need to moderate or reduce house prices. It's like asking Tesco to sell all their food at cost price in order that we get a better deal on food.

Private builders have their place. However, we need state building in order to keep up with the demand. Private builders will never keep up with demand....they would be stupid to do so.

why do farmers produce enough food to reduce the price?
why to car manufacturers produce sufficient cars to reduce the price?
why do holiday destinations proliferate so reducing the price?
why do clothing suppliers produce so many cloths the price is low?
etc


the big difference is that the government artificially restrict supply of building land


of course land isn't being made any more but the shortage of land
for building is illustrated in the difference in price of agricultural land (round £10-20,000 an acre) and building land about £1 million per acre where I live.

there may well be evidence that land is hoarded by speculators, but builders make their money by building and not in land as is well documented in their published accounts

Graham_Devon

CLAPTON wrote: »

why do farmers produce enough food to reduce the price?

Because supply is plentiful and can be imported if required. Therefore they cut price to compete with others.

why to car manufacturers produce sufficient cars to reduce the price?

Because ongoing sales on the product have an impact here. Servicing, finance, sales attached to the car. Plus, again, the obvious competition aspect of other manufacturers.

Cars is actually a good example, as we've seen the direct impact of government stimulus in this area recently. Due to oversupply, new car prices fell off a cliff. A year or so later, you saw the value of a used car increase due to lower availability.

Then along comes the scrappage scheme. This pumps money into new car sales and car prices rise above that of where they were before the problem of oversupply. At the same time, finance terms worsened for the customer.

It now cost the customer buying the new car MORE than it did before the initial demand issues struck, simply due to the fact cars were easier to sell and the manufacturers didn't have to give a better finance offer or reduce the price to sell the car. So again, stimulus increased prices for the consumer.

why do holiday destinations proliferate so reducing the price?

Further sales down the line, a bit like Ryanairs cheap flights, but abundance of extras. Plus, again, competition from all the other players.

why do clothing suppliers produce so many cloths the price is low?

Competition, ease of imports etc.

the big difference is that the government artificially restrict supply of building land

I disagree. Brownfield sites are easy to get planning permission on, plus we already know the big builders have 3-400,000 plots with planning permission in existence.

The big difference is competition.

Introduce state built housing and you'll see private builders suddenly build on many more plots, reduce prices to compete etc. Either that, or they concentrate on the luxury end and try and make the same profits there.

CLAPTON

Graham_Devon wrote: »

Because supply is plentiful and can be imported if required. Therefore they cut price to compete with others.

Because ongoing sales on the product have an impact here. Servicing, finance, sales attached to the car. Plus, again, the obvious competition aspect of other manufacturers.

Further sales down the line, a bit like Ryanairs cheap flights, but abundance of extras. Plus, again, competition from all the other players.

Competition, ease of imports etc.

I disagree. Brownfield sites are easy to get planning permission on, plus we already know the big builders have 3-400,000 plots with planning permission in existence.

The big difference is competition.

Introduce state built housing and you'll see private builders suddenly build on many more plots, reduce prices to compete etc. Either that, or they concentrate on the luxury end and try and make the same profits there.

there are thousands of builders in the UK and so plenty of potential competition

what percentage of building is carried out by the big building firms such that you believe they have a cartel of supply and can control the price?

the big difference is the difference between the price of agricultural land and that with planning permission which is controlled by government.

if they are hoarding land and not building was so profitable, one would expect they would own half of the UK by now rather than just a few years worth of building land.

why don't small builders start up and make a fortune?

whilst the artificial shortage of land is the major factor the availability of finance for mortgages is a factor too.


and to add: your examples show the effects of government intervention : when government controlled the airline travels was ridiculously expensive; it was only when the government allowed the market to work that air travel became available to the masses.

Fella

stator wrote: »

ps how on earth could any young person be grateful for a government which gives them a huge debt burden just for going to university that will take their entire working life to pay off.

Because the alternative is a goverment which racks up insane levels of national debt that those same students spend their entire working life trying to pay off.

Would you like a Government that spent more or less? Bearing in mind it's today's university students who'll have to pay it back.

IronWolf

CLAPTON wrote: »

there are thousands of builders in the UK and so plenty of potential competition

what percentage of building is carried out by the big building firms such that you believe they have a cartel of supply and can control the price?

the big difference is the difference between the price of agricultural land and that with planning permission which is controlled by government.

if they are hoarding land and not building was so profitable, one would expect they would own half of the UK by now rather than just a few years worth of building land.

why don't small builders start up and make a fortune?

whilst the artificial shortage of land is the major factor the availability of finance for mortgages is a factor too.


and to add: your examples show the effects of government intervention : when government controlled the airline travels was ridiculously expensive; it was only when the government allowed the market to work that air travel became available to the masses.

Have to agree with Clapton on this. I can't see why companies would hoard land and not build, it goes against what we see in every other industry, companies generally grow as big as they can, which would mean building as many houses as they can. Most CEOs would be handsomely rewarded if they suddenly doubled their house building and increased profits, even for just one year.

stator

Fella wrote: »

Because the alternative is a goverment which racks up insane levels of national debt that those same students spend their entire working life trying to pay off.

No, it's not. There are countless ways to raise revenue. Raise taxes. Cut spending on old people. The choice is endless

Graham_Devon

IronWolf wrote: »

Have to agree with Clapton on this. I can't see why companies would hoard land and not build, it goes against what we see in every other industry, companies generally grow as big as they can, which would mean building as many houses as they can. Most CEOs would be handsomely rewarded if they suddenly doubled their house building and increased profits, even for just one year.

Imagine you had an asset.

Say that asset is plywood.

You also have all the tools to make lovely wardrobes.

However, plywood itself is increasing in price. It's increasing faster than the price of lovely wardrobes.

So you look at your plywood and think "maybe I should invest instead in more plywood, it's making more than I could making lovely wardrobes".

You then ask yourself...why am I spending money on buying the tools and hiring the people to make lovely warddrobes when my plywood sitting there doing nothing is increasing at a faster rate than my lovely wardrobes are?

And then it hits home....hang on, if I buy more plywood, I'll have even more plywood and others will have less plywood. My plywood will go up even faster....

http://www.telegraph.co.uk/news/earth/hands-off-our-land/9522902/House-builders-sitting-on-400000-undeveloped-plots-of-land-with-planning-permission.html

Loughton_Monkey

Graham_Devon wrote: »

Imagine you had an asset.

Say that asset is plywood.

You also have all the tools to make lovely wardrobes.

However, plywood itself is increasing in price. It's increasing faster than the price of lovely wardrobes.

So you look at your plywood and think "maybe I should invest instead in more plywood, it's making more than I could making lovely wardrobes".

You then ask yourself...why am I spending money on buying the tools and hiring the people to make lovely warddrobes when my plywood sitting there doing nothing is increasing at a faster rate than my lovely wardrobes are?

And then it hits home....hang on, if I buy more plywood, I'll have even more plywood and others will have less plywood. My plywood will go up even faster....

Your plywood must come from somewhere. Perhaps the builders' merchant? He's making 20% gross by selling it to you unless he's a muppet. Yes, the cost of buying more plywood is going up, but that doesn't mean you could 'liquidate' your old plywood stock and make a profit.

Land doesn't work quite the same, does it?

The only realistic way you can gain from hoarding your plywood is by waiting for the price of wardrobes to go up. Either it does, in which case you'd be stupid not to add value by turning the wood into wardrobes and making a profit.

If wardrobes don't go up, then you're rather stuck. Try to offload your plywood for as near as you can to what you paid, or just sit there and take the hit of all your money being tied up.

The most likely scenario is that you line up a couple of customers willing to pay a profitable price to have built-in wardrobes all round..... and then some little 'jobsworth' from the Building Regs department comes round and says you can't build with 5/8ths plywood any more. Must be 3/4 inch. If you screw them to the walls, then there's a new £50 tax per screw. Customers don't want free-standing. And by the way, there's a poor family down the road who wants a wardrobe, and you're going to have to build one for them at cost of materials only.