Building houses doesn't lower prices

padington

http://www.cityam.com/217357/uk-house-prices-building-new-properties-doesnt-drive-down-prices-study-shows

I think it's actually an intreaging idea. I always suspected homes acted like roads do ( you build supply, you get more demand ).

There is a massive development starting soon near me and I fully expect it to put the price of my yard up. It will change a crap industrial estate into a thriving new zone linking Hornsey with Wood Green.

It also plays true to the idea that bigger the city becomes, the more efficient it becomes in a whole lot of ways. This in turn makes the space more attractive, which in turn increases the prices. If the 'more you build, cheaper prices become' idea was true, cities the world over would be cheaper than rural sparsely populated areas but that is clearly not the case.

So the high prices of cities are because of the high number of homes that are close to each other not contrary to the number. More you build, more of a happening dynamic you make. More people want to live there.

Could it be true that the bigger problem to the housing crises is that our soft power or cultural attraction is just too bloody alluring and that London is just too well built?

Hmmmmm .... where are they planning on building most of those homes ... ?

Another interesting natural fact is that if you don't want your garden to be plagued by wrens, don't build too many bird houses too close together , wrens find this too attractive. Intreagingly the male wrens act like buy to let landlords and try to occupy multiple bird boxes and then home multiple female suitors and whilst they are trying to find a suitor they fill the boxes up with twigs or leaves so other birds can't live in them and keep them empty.

Currently I'm loosing this very battle and my garden has turned into a buy to let empire. My bird boxes must be worth a ton in bird world and the blue tits are rather p!ssed off.

I wonder how many buy to let landlords own properties on the Orkney Islands ?

Should generation rent be campaigning for London to never host the World Cup, to end the James Bond series, move the monarchy to Paris or stop building houses ?

Or would limiting the ammount of houses people can own, be a more sensible solution ?

stator

If you build 300 homes when there is demand for 3000 it aint gonna affect prices

HAMISH_MCTAVISH

stator wrote: »

If you build 300 homes when there is demand for 3000 it aint gonna affect prices

Precisely.

Barratt the house builder funded the research and it looked at a number of small developments over the last 5 years.

It is notable that for most of those 5 years the UK has been building less than half the houses it needs, so within that context the results are hardly surprising.

martinsurrey

as already said, if we built 3,000,000 next year it would effect house prices, and that effect would be downwards.

But as we build under half of what we need, all they do is make some areas look better than others.

As a lot of large developments are brownfield, they turn areas with ugly industrial history into attractive estates with a supermarket, which pulls the surrounding area up (which is historically depressed by the old industrial).

Simple.

cells

It is not more houses that leads to higher house prices, it is more people that lead to higher house prices especially in existing areas.

The simplest way to think about it is if you look at London now, there are Zone 1 2 3 4 5

Lets double the number of people and the number of Homes. London is now clearly a physically bigger place taking up more built land area. If you segment it again into 5 zones you will see that what is zone 1 now, was zone 1 and 2 before. What is zone 2 now...was zone 2 and 3 before...etc

So in conclusion, more homes = downwards pressure, but the upwards pressure can still be more than downwards pressure

hpifever

Another Paddington special!

MARTYM8`

This is of course correct – look at Spain and Ireland. The houses and flats were being constructed like crazy right across both countries – even in rural areas – so did the prices even though there was no demand for many of them.

Prices of course did fall by 50% or so post 2008 in those countries (as they did in NI) – but that was because the banks stopped lending silly money to buy houses as they effectively went bust.

If banks are willing to lend silly amounts prices will go up – they will go down if they stop or curtail lending.

Are there really that many more people in the UK wanting homes than in 2009 – marginally. But what really explains the rapid price rises in the last 2-3 years – more cash and government subsidy thrown at the banks to lend out more cash on houses via FLS/Help to buy/QE etc.

RJP33

So what's net immigration at the moment - 300k? Unless we build that many houses the simple laws of supply and demand mean prices will rise, long term.

MARTYM8`

RJP33 wrote: »

So what's net immigration at the moment - 300k? Unless we build that many houses the simple laws of supply and demand mean prices will rise, long term.

Doesn’t that depend on how much income they earn and how much they are able to borrow to fund the cost of housing – and also how much housing benefit any government is willing to pay to keep rents high.

People on the minimum wage in London generally can’t afford to buy houses?

CLAPTON

MARTYM8` wrote: »

This is of course correct – look at Spain and Ireland. The houses and flats were being constructed like crazy right across both countries – even in rural areas – so did the prices even though there was no demand for many of them.

Prices of course did fall by 50% or so post 2008 in those countries (as they did in NI) – but that was because the banks stopped lending silly money to buy houses as they effectively went bust.

If banks are willing to lend silly amounts prices will go up – they will go down if they stop or curtail lending.

Are there really that many more people in the UK wanting homes than in 2009 – marginally. But what really explains the rapid price rises in the last 2-3 years – more cash and government subsidy thrown at the banks to lend out more cash on houses via FLS/Help to buy/QE etc.

in the last six years the population has risen by about 2 million

RJP33

MARTYM8` wrote: »

Doesn’t that depend on how much income they earn and how much they are able to borrow to fund the cost of housing – and also how much housing benefit any government is willing to pay to keep rents high.

People on the minimum wage in London generally can’t afford to buy houses?

They can't, but the demand for rental properties will also push up house prices as landlords extract more value from their property.