Housing in the UK (1 Viewer)

[mrtrench]

This is not a party political rant, both main parties have had a go at this issue and failed. Further I am not a racist or against people migrating per se.

I read yesterday that house prices went up by nearly 10% again over the past 12 months: much faster than the rate of general inflation and wages. House prices have been too expensive in my opinion for years and this is a completely unsustainable situation: young people just cannot afford to buy their first home.

However when I look at the economic factors in play, it's only going to get worse:

1) Net immigration 300k per year (and has been high through various governments)
2) New houses being built at a rate of 118k in 2015. Even the target of 250k won't meet demand if net immigration continues at this pace. (ditto - both parties failed to address)
3) The squeeze on landlords is IMO going to make it worse. They will either sell up or hike rents in response to the tax changes. If they sell up then houses in multiple occupation will now just hold one family and so there is an even greater demand. (Tory Policy but it was also in the Labour manifesto)
4) Student loans mean that young people leaving University already have large debts at 21 - they're not going to be able to afford a mortgage (Labour policy but tuition fees hiked by Tories)
4) The bedroom tax is an attempt to address the issue but it's not enough and people need help to find alternative accommodation if they want to move as a result. (Tory policy)
5) Brown's credit bubble didn't help either (unsurprisingly) - you just put people into debt they cannot afford. (Labour policy)

I'm led to the conclusion that we either have to build many hundreds of thousands of houses soon or curb net immigration. Isn't it time a party thought about the time bomb and did something to address it?

 

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[wingy]

Daughter currently looking for 3bed in Stoke /Wyken
20k increase since Christmas, mental
Couldn't agree more with your points but I really think they don't want to handle it.
With each surge it becomes less likely to be solved as they don't want to decrease the asset.

 

[Captain Dart]

Take the land banks off the builders & build smaller houses. Don't think Dave or Boris will do that & Jeremy will probably pay over the odds. Basically were doomed.

 

[mrtrench]

Take the land banks off the builders & build smaller houses. Don't think Dave or Boris will do that & Jeremy will probably pay over the odds. Basically were doomed.

If you take the land off builders who's going to build the houses? There's already a control for the type of houses that are built - it's not enough.

 

[fernandopartridge]

This is not a party political rant, both main parties have had a go at this issue and failed. Further I am not a racist or against people migrating per se.

I read yesterday that house prices went up by nearly 10% again over the past 12 months: much faster than the rate of general inflation and wages. House prices have been too expensive in my opinion for years and this is a completely unsustainable situation: young people just cannot afford to buy their first home.

However when I look at the economic factors in play, it's only going to get worse:

1) Net immigration 300k per year (and has been high through various governments)
2) New houses being built at a rate of 118k in 2015. Even the target of 250k won't meet demand if net immigration continues at this pace. (ditto - both parties failed to address)
3) The squeeze on landlords is IMO going to make it worse. They will either sell up or hike rents in response to the tax changes. If they sell up then houses in multiple occupation will now just hold one family and so there is an even greater demand. (Tory Policy but it was also in the Labour manifesto)
4) Student loans mean that young people leaving University already have large debts at 21 - they're not going to be able to afford a mortgage (Labour policy but tuition fees hiked by Tories)
4) The bedroom tax is an attempt to address the issue but it's not enough and people need help to find alternative accommodation if they want to move as a result. (Tory policy)
5) Brown's credit bubble didn't help either (unsurprisingly) - you just put people into debt they cannot afford. (Labour policy)

I'm led to the conclusion that we either have to build many hundreds of thousands of houses soon or curb net immigration. Isn't it time a party thought about the time bomb and did something to address it?

Immigration isn't the only part of the story though, the continuing policy of allowing lenders to print money through issuing mortgages is a massive problem, but government policy and idiot people seem to believe that having a house with a high paper value is a good thing.

 

[fernandopartridge]

Daughter currently looking for 3bed in Stoke /Wyken
20k increase since Christmas, mental
Couldn't agree more with your points but I really think they don't want to handle it.
With each surge it becomes less likely to be solved as they don't want to decrease the asset.

I don't know enough about economic indicators, but does mortgage lending contribute to GDP?

 

[mrtrench]

I'm wondering if part of the solution may be to build more high end blocks of flats in urban areas. Here's the thinking: if you build low-end tower blocks they quickly become no go areas & you cannot force the under classes to behave (NB by under-class I don't mean to poor, I mean those people who won't behave well). If you look at the Barbican the architecture looks just like one of these sink blocks - but in reality because it's large flats in a great location it's very desirable. This causes people to move up the chain and frees up more of the smaller accommodation.

 

[mrtrench]

Immigration isn't the only part of the story though, the continuing policy of allowing lenders to print money through issuing mortgages is a massive problem, but government policy and idiot people seem to believe that having a house with a high paper value is a good thing.

I don't understand this point. Issuing a mortgage isn't printing money. Banks have to fund mortgages: that's why they have savings accounts and the London inter-bank lending market exists (LIBOR). Further, reducing mortgage lending further would only put new buyers in greater difficulty.

 

[fernandopartridge]

I don't understand this point. Issuing a mortgage isn't printing money. Banks have to fund mortgages: that's why they have savings accounts and the London inter-bank lending market exists (LIBOR). Further, reducing mortgage lending further would only put new buyers in greater difficulty.

It is printing money. Banks are permitted to lend money out that doesn't really exist.

 

[mrtrench]

It is printing money. Banks are permitted to lend money out that doesn't really exist.

I'm sorry - you are wrong.

 

[jimmyhillsfanclub]

There isn't a housing shortage in the UK as a whole......its just that the houses are in the wrong place....or rather, the jobs are in the wrong place.

As a nation, we need to decentralise away from London & the SE.

We also need a national publicly funded house building project to replace the million + social/council houses sold off since Thatcher. These new social houses should then be used correctly, no sub-letting & no subsidised living for wealthy folks who happen to be in a council house.

Another step-change is the massive sense of entitlement the younger generation appear to have developed.....

When I bought my first house, a large 3 bed Victorian terrace, it was in a bit of shithole area (several tinned up houses in the street) & I had bars on all my back windows.

My first night in the house, my furniture consisted of a single mattress, a becks crate coffee table & a bean bag.....I got a couch the following week 2nd hand out of the local paper...

My wifes youngest cousins are just buying their first home & are whining cos they cannot afford the 3 bed semi in the leafy suburb of their choosing.......well boo hoo hoo.....I'd like to live in Buckingham palace, but I can't afford that.

People need to get real with regards expectations......and actually make some compromises.

Without checking, I'd guess that pretty much every major town & city outside London & the SE/M25 region has housing stock for sale at £100K or less......I certainly know all the major northern cities have housing available way cheaper than that!

If you cannot afford to save £5K & get a £95K mortgage....then you probably shouldn't be buying anyway.

 

[fernandopartridge]

I'm sorry - you are wrong.

I'm not.

http://positivemoney.org/how-money-works/how-banks-create-money/

Every new loan that a bank makes creates new money. While this is often hard to believe at first, it’s common knowledge to the people that manage the banking system. In March 2014, the Bank of England release a report called “Money Creation in the Modern Economy”, where they stated that:
“Commercial [i.e. high-street] banks create money, in the form of bank deposits, by making new loans. When a bank makes a loan, for example to someone taking out a mortgage to buy a house, it does not typically do so by giving them thousands of pounds worth of banknotes. Instead, it credits their bank account with a bank deposit of the size of the mortgage. At that moment, new money is created.”

 

[mrtrench]

I agree with almost everything you say & I agree that houses can be bought for £100k. But my concern is that even that is not affordable: Age 24, now earning, say, £27k and has £20k of student debt outstanding. £27k is a good salary for a young person and that's only just affordable - right on the limit.

 

[Terry Gibson's perm]

Mortgages are a money making machine with all the admin charges I have just renewed mine and got charged admin fees over 1k and that happens every two years, if you don't have a deal mortgage they hammer you on interest charges, when my last fixed rate ended it went from 725 per month to 950 so fixed it for two years back at 680. I heard on the radio this morning the government are selling off more housing to tenants so don't help themselves

 

[chiefdave]

I don't understand this point. Issuing a mortgage isn't printing money. Banks have to fund mortgages: that's why they have savings accounts and the London inter-bank lending market exists (LIBOR). Further, reducing mortgage lending further would only put new buyers in greater difficulty.

But for money to exist in the system it doesn't have to be physically printed. If you think about it when you get paid a number appears on your bank balance, you don't get handed a bunch of notes. It then goes out to pay various bills. Of course you could go to the bank and draw it all out in cash, that's what happened in Greece and the banks can't cope as that much actual cash money doesn't exist.

There is widespread misunderstanding of how new money is created. Where Does Money Come From? examines the workings of the UK monetary system and concludes that the most useful description is that new money is created by commercial banks when they extend or create credit, either through making loans or buying existing assets. In creating credit, banks simultaneously create deposits in our bank accounts, which, to all intents and purposes, is money.

Many people would be surprised to learn that even among bankers, economists, and policymakers, there is no common understanding of how new money is created. This is a problem for two main reasons. First, in the absence of this understanding, attempts at banking reform are more likely to fail. Second, the creation of new money and the allocation of purchasing power are a vital economic function and highly profitable. This is therefore a matter of significant public interest and not an obscure technocratic debate. Greater clarity and transparency about this could improve both the democratic legitimacy of the banking system and our economic prospects.

 

[mrtrench]

I'm not.

http://positivemoney.org/how-money-works/how-banks-create-money/

I was going to say that the video was bollocks and then I read the BoE paper. Would you believe that I have worked in Finance for 25 years & didn't know that? The importance of capital ratio now makes more sense to me. Thank you.

So, yes I agree, that permitting banks to lend more and reducing their capital would indeed cause house price inflation.

 

[chiefdave]

I agree with almost everything you say & I agree that houses can be bought for £100k. But my concern is that even that is not affordable: Age 24, now earning, say, £27k and has £20k of student debt outstanding. £27k is a good salary for a young person and that's only just affordable - right on the limit.

Slightly different topic but I was reading earlier this week that for the first time in history for the average worker to be able to afford to retire they now need to keep working and paying into a pension past the average life expectancy.

 

[tommydazzle]

The time bomb that no politician ever talks about is what will happen at retirement for all those stuck in rented homes. Previous generations of working class folk have managed to pay off mortgages and their meagre state pensions are eaten up with normal living expenses but at least no rent. Imagine this new situation where huge numbers of people are still renting and trying to survive. The answer is increasing poverty or increasing state help.

 

[Nick]

I heard something where a guy had paid over 100k in rent on a house worth 78k because he couldn't get a mortgage. There was something on the news that the average age of a first time buyer is about 38!

I was quite lucky and bought a repossessed house, the downside was the cost of improvements.

This guy had re mortgaged over and over again with the value going up and up. No idea how he managed to get in such a mess.

I had the option of renting in a nicer area or buying in a not so nice area with a house that needed work, we went with buying with a decent deposit so it was costing less per month than rent would anyway.

 

[chiefdave]

Ignoring immigration or any political issue its quite simple. If you are adding x amount to the population every year but are not creating x in new housing then you've got a problem. Simple supply and demand will push prices up.

There's more than one area that needs to be addressed.

We need to go on a huge social housing building project. This is actually a great time to do this as it creates employment and puts money into the economy. We need to stop selling off social housing (apparently 80% of housing stock sold of under Thatchers right to buy is now buy to let owned by private landlords, often with councils footing the bill for rent). We need to stop selling social housing off.

Then you need to build new houses for those who don't fall under social housing. To do that you have to stop developers sitting on land for years without building anything.

You also need to scale back buy to let. Its artificially pushing prices up and meaning private landlords can dictate high rental costs. Which in turn mean people can't save to ever buy their own place.

I would be tempted to look at rent control. It could be easily rolled out in the UK as every property has a council tax band which it could be tied to. If you push rents down then buy to let becomes less attractive releasing housing stock back into the market.

 

[Nick]

The time bomb that no politician ever talks about is what will happen at retirement for all those stuck in rented homes. Previous generations of working class folk have managed to pay off mortgages and their meagre state pensions are eaten up with normal living expenses but at least no rent. Imagine this new situation where huge numbers of people are still renting and trying to survive. The answer is increasing poverty or increasing state help.

Never thought of that, if you have somebody paying 600 - 700 a month rent when they get to retirement age and then have a state pension (I did a quick google so might be wrong) of 231.90 per week for a married couple. That's £927.60 a month, take the rent out there's £200 left, take out council tax, heating, home insurance and you have a problem. How do you eat?

Then do that for a single person which is 115.95 a week and 463.8 a month, you have people getting kicked out of their homes.

 

[chiefdave]

As a nation, we need to decentralise away from London & the SE.

Absolutely this. For example we've had years of banging on about a new runway in London, why is nobody saying forget that and expand Birmingham airport? Same with HS2, every time it is talked about it is how it will be quicker to get to London, why not the reverse?

 

[fernandopartridge]

Absolutely this. For example we've had years of banging on about a new runway in London, why is nobody saying forget that and expand Birmingham airport? Same with HS2, every time it is talked about it is how it will be quicker to get to London, why not the reverse?

Yes, every scheme is treating symptoms, HS2, Crossrail, Crossrail 2, Heathrow T4, Heathrow 3rd runway. All central government money poured towards London. The first step to decentralisation is to move parliament out of London and with it the civil service. It would save a fortune in the end.

 

[Captain Dart]

Slightly different topic but I was reading earlier this week that for the first time in history for the average worker to be able to afford to retire they now need to keep working and paying into a pension past the average life expectancy.

Not true, you just have to go back in history far enough. What's more the average pension for a post war factory worker retiring up to the mid 80's (even semi-skilled) wasn't impressive, white collar workers were generally OK though.

 

[Liquid Gold]

Not true, you just have to go back in history far enough. What's more the average pension for a post war factory worker retiring up to the mid 80's (even semi-skilled) wasn't impressive, white collar workers were generally OK though.

The problem we have in this country is elections being won on abstract notions of the economy doing well. If house prices rise then charlatan politicians can claim to be doing a good job to get their pieces of silver.

 

[Sick Boy]

There isn't a housing shortage in the UK as a whole......its just that the houses are in the wrong place....or rather, the jobs are in the wrong place.

As a nation, we need to decentralise away from London & the SE.

We also need a national publicly funded house building project to replace the million + social/council houses sold off since Thatcher. These new social houses should then be used correctly, no sub-letting & no subsidised living for wealthy folks who happen to be in a council house.

Another step-change is the massive sense of entitlement the younger generation appear to have developed.....

When I bought my first house, a large 3 bed Victorian terrace, it was in a bit of shithole area (several tinned up houses in the street) & I had bars on all my back windows.

My first night in the house, my furniture consisted of a single mattress, a becks crate coffee table & a bean bag.....I got a couch the following week 2nd hand out of the local paper...

My wifes youngest cousins are just buying their first home & are whining cos they cannot afford the 3 bed semi in the leafy suburb of their choosing.......well boo hoo hoo.....I'd like to live in Buckingham palace, but I can't afford that.

People need to get real with regards expectations......and actually make some compromises.

Without checking, I'd guess that pretty much every major town & city outside London & the SE/M25 region has housing stock for sale at £100K or less......I certainly know all the major northern cities have housing available way cheaper than that!

If you cannot afford to save £5K & get a £95K mortgage....then you probably shouldn't be buying anyway.

I live on the south coast and a 2 bed terraced house in a decent area would set you back around 300K; it really is a different world to the North and the Midlands.

It is difficult for those on low income to get on the property ladde, but the problem lies in society, rather than being due to a shortage or migration.

 

[Sick Boy]

Never thought of that, if you have somebody paying 600 - 700 a month rent when they get to retirement age and then have a state pension (I did a quick google so might be wrong) of 231.90 per week for a married couple. That's £927.60 a month, take the rent out there's £200 left, take out council tax, heating, home insurance and you have a problem. How do you eat?

Then do that for a single person which is 115.95 a week and 463.8 a month, you have people getting kicked out of their homes.

Yes indeed; it is incredibly concerning and is an issue that won't be addressed at all, or if it is, it'll be to late. Britain is becoming a country for the rich and elite more and more, with an ever growing focus on London and the south.

 

[wingy]

Yes indeed; it is incredibly concerning and is an issue that won't be addressed at all, or if it is, it'll be to late. Britain is becoming a country for the rich and elite more and more, with an ever growing focus on London and the south.

It's becoming like a Principality.
With Gideon federalising the UK specifically England.
It begs the question why the need for Parliament with all devolvement.
I can almost see London having a separate tax system to the rest of us one day.

 

[oakey]

The Norman conquerors still own 2/5 of the land they stole 950 years ago.
http://www.theguardian.com/commentisfree/2012/dec/17/high-house-prices-inequality-normans
http://www.todayifoundout.com/index.php/2014/10/last-1000-years-families-owned-england/

Perhaps it's time we peasants took our land back.
A century ago there was no state pension. Your options were private savings, rely on relatives, handouts from the parish council (for which you literally had to apply cap in hand) or the workhouse where you might survive a few months before dying of illness or exhaustion.

 

[NorthernWisdom]

Take the land banks off the builders & build smaller houses.

Yeah, every development around where I come from seems to be 'exclusive four bed'. All very well... bu how the hell am I ever supposed to be able to live there?!?

 

[skybluejelly]

Yeah, every development around where I come from seems to be 'exclusive four bed'. All very well... bu how the hell am I ever supposed to be able to live there?!?

Work harder ... There are 24 hours in a day you can work at least 18 of them

 

[Marty]

I've bought my first house about 18 months ago. I have a lodger as I can't afford to live on my own. I earn more then the national average too. House prices are crazy. Something needs to be done. In the time I've had my place the house value has gone up about 40k.

If this trend continues I can't see how my kids will ever be able to afford their own place.

 

[Otis]

We bought our house 5 years ago. The value has gone up £38,000 in that time.

Our house now must be worth at least £38,000.

 

[Johnnythespider]

House price inflation is frightening, particularly for first time buyers, but it is worsened by the fact that salary increases have stalled over the last 8 years, with many not having a pay rise in that time

Sent from my SM-G925F using Tapatalk

 

[NorthernWisdom]

What'll stop house price increases is if interest rates go up, of course.

Lots of poor people struggling to pay mortgages, if that happens!