To think that just building houses isn't going to solve any problems

[SEmyarse]

So there's a huge housing shortage in the country, and there are loads of plans for building that seem to be taking yonks to come through.

Eventually, a small development has been almost completed near me, of about 30 houses. I'm a delivery driver, so have witnessed people moving in, and have delivered a lot of their new house goods to them.

There's quite a mix of housing. I think there are only 2 social houses, but maybe some of the flats are too. I can never get an answer at the flats, so have to leave a card and liaise redelivery. I keep discovering that these people all seem to have children at the same school as my kids, despite it being 4 miles away, and so I meet them there with deliveries. They've not been able to get their children into their local school, because it is jammed full of kids from my village who's parents ship them there because it's smaller. I often have to give deliveries to childminders, by agreement because these people are working silly hours to get a mortgage.

I know quite well one of the ladies who's been given a social house. She can't drive due to epilepsy, so has been housed in this village so she can care for her elderly mother. She has 5 children, and again can't get them in the school so has to bus them to our village every day, which is costing a fortune.

The next area of housing that was finished was the large executive homes at the back, with 4/5 bedrooms. Apart from one family, I think they have all been moved into by elderly couples. Now of course, if they've worked for the money, they have every right to spend it on what they like. At least that's what I used to think. But is it really right that people can sit on resources when others desperately need them? Should children all be growing up in cramped accommodation even though their parents are working like dogs? They have no outside space at all, and while I'm sure the elderly people enjoy their gardens very much, is it really right at the expense of children playing? I've already seen a lone child on a bike shouted at for riding on their bit of road, and told to play near their house. He wasn't causing any bother.

The last bit that now seems to be ready, is a couple of terraces of decent sized houses with integral garages. I knocked at one yesterday, and met a bloke. I commented that someone was eventually moving in, and he told me he wasn't moving in he'd bought up all 6 to rent out. So yet more overpriced rentals for all the local people who can't afford to buy them.

I don't think this development has made even the slightest dent into our local housing problems.

[Suzannewithaplan]

Contrarian, I can see the case for CGT on PPR, but no govt would do that (well obviously they might in the future at some point) there'd surely be a massive outcry, we all feel we have a right to the untaxed profit from our hardworking houses.

[Boaty]

I'm always amused at the term 'affordable housing' because for the largest part of the populace that is the opposite.

Average wage is a mathematical statistic. Real average wage is a lot lower IMHO. Most people I know working full time earn between 12k and 20k. Most jobs advertised are 12-18k that don't require high level qualifications. and some that do require them too

I am lucky enough to live in council housing, I would love to be able to have my own home but it will never happen. Near me average house price is in the region of £298,680 (according to Rightmove). I earn 14k.

[Suzannewithaplan]

Given that there is a massive housing shortage, how is it that we don't have mass homelessness?
Or am I missing something?

[Nataleejah]

We really do have mass homelessness.

As for taxpayers -- we do fund war in Afghanistan, nuclear weapons and other shit that nobody needs.

[angelos02]

mass homelessness
Where? I've not witnessed this.

[Suzannewithaplan]

I gotta say neither have I

[traininthedistance]

We have lots of housing - it's just not efficiently ( or arguably fairly) owned and used. (I'm always grimly amused at how it's usually the same people who tell the young to "lower their expectations" and live in single rooms/hovels who normally also support the right of elderly people to continue living in massive houses they can't afford to pay the council tax on - clearly it's only some sections of the population who should have their expectations lowered!

Consider house prices and rents. In a normal market these normally have a rough correlation/relationship, a bit like the price to earnings ratio of shares. Rents traditionally reflected the monthly cost of a mortgage at traditional levels (eg. 3-3.5 x income), plus a bit more for maintenance, wear and tear etc. - so renting was usually slightly more expensive per month than the equivalent mortgage (but not that much more).

Now people borrow to buy a house (so prices are a function of wages + available credit); but they can't normally borrow to rent a house (so rents are a function of wages, since you can't get credit to pay rent). During the boom, very quickly price levels rose massively above equivalent rents, suggesting that it was the credit availability that was driving price increases (and as we know, average real wages were stagnating, so the price increases were not being driven by either nominal or real wage increases, as they were in the 70s and early 80s). When the financial crisis hit, we discovered just exactly how massively lax he banks had been with credit expansion. It was this massive credit expansion that fundamentally drove the first ten years of the bubble; and during that time equivalent rents barely moved. The prices to rents ratio was showing that it cost much less to rent somewhere than to service a mortgage on the equivalent property - a sign that the market was massively out of kilter with wage levels.

Since the bank lending and credit markets herons to a halt in 2008, rents have started rising (in my area, for example, by more than a third between 2008 and now, after relatively static rents for the previous decade). This is down to several factors: rents are where landlords and agents started getting income from when the buying market stagnated; more and more young people who can't buy need to rent; there has been relatively high general inflation since 2008. (But, a lot of the rent rises are pretty shameful profiteering by agents and landlords whose capital appreciation has ground to a halt). So now the price-earnings ratio of prices-rents has changed again, but this still doesn't make either rents or prices affordable in relation to wages - all it has done is push rents up to levels where wages can only just bear them (and as a response many people have started to "consume less housing" as it were - by renting rooms when they would have rented flats; by renting at levels of 50% of net income or more (and further depressing their consumer spending). Once people are spending on excess of 50% of average wages on average rents, the market soon reaches a ceiling threshold for rents where people just can't pay much more - if they can't increase their wages. IMO that is starting to happen in some areas.

What's sad about that is that many people can't see how damaging that is. The more than people (especially young people) spend on rents/mortgages, the less they can soend in other parts of the economy (thus further depressing the wider economy); and they less there is available to spend on, eg. productive investment, education and training, pensions and savings, and so on; high housing costs also massively decrease labour market flexibility and mitigate against long-term investment in skills or infrastructure. The more money that is sucked into housing, the worse the long-term effects on he economy, since instead of investing in growth and the future, more and more income is sucked back into unproductive assets.

We've essentially spent the last decade busy selling the sane houses to each other at ever-increasing prices, and by doing so have been putting into place long term constraints on our future disposable income (very long term indeed, since of course mortgages can be and often are up to 30 years now). We've hobbled not only out future potential for productive growth, but we've caused massive imbalances which are going to be nasty when they unwind and start going into reverse. At some point the current boomer generation will start to need an increased tax take to pay for it's enormous pensions, healthcare and social care burden - BUT they will already have hobbled the possibility of having that by the fact that the younger generations have already had large income constraints put in at an earlier stage to afford housing (and tertiary education as well, of course). Just when the older generation need us to have a growing economy and to be paying more tax, the legacy of this housing crisis will have already scuppered that. They will start trying to sell housing instead to fund the shortfall - but neither will the younger generation be able to afford inflated prices. When the unwind comes, the short-termism of the way we have treated housing and the young will rebound on the older generation - they will be trying to sell assets to impoverished younger generations that can't buy them to fund the care and pensions that taxing the young can't fund either, because no-one can earn enough to support the behemoth that the UK housing bubble has become.

[traininthedistance]

Sorry for loads of typos - on phone and autocorrect has gone crazy!

[traininthedistance]

NB and you could use the prices/rents ratio during the first ten years of the boom to see that there was not a real housing shortage, since it was credit that was driving price increases, not number of buyers. More recently rising rents may well reflect a slight shortage of available housing, since planning and building constraints did have a marginal effect on the housing boom (though credit expansion was the main driver), BUT it's more likely that recent rent rises are a symptom of approaching market failure rather than genuine shortage.

[Suzannewithaplan]

So the boomers Train, general considered to be a blessed cohort, are actually f*cked?

They have, over the long term, shot themselves in the foot?

[Suzannewithaplan]

And the rhetoric about housing shortages is just that, rhetoric?

[Scarletohello]

Great thread!

I just wanted to share this example of the craziness of the current situation. I have a friend who is 40 and lives in a one bed flat in Bethnal Green, London. He is emigrating to Australia so has decided to buy his flat. He can buy it for £75k, so massively discounted but has been informed by the local estate agents that he will probably be able to rent it out for £350.00 a week!

I don't blame the guy, but it's just wrong!

[traininthedistance]

I think they have been a blessed cohort, but I think many may experience a sharp economic comedown in late retirement. However I think the generations coming behind will have it worse, because the fallout/rebalancing will affect them negatively too, and they won't ever have enjoyed the good bits the boomers did have :(

[SATSmadness]

train

It depends where one lives as to whether they truly see the effect on housing price/availability of migration to the UK.

Where my parents live houses are being snapped up by BTL landlords who convert every possible room to a bedroom and let many migrants live in one house to maximise rental return. This has pushed up the average modest terraced house (ideal first home purchase material) price thereby pricing out the locals. It isn't currently massively inflating all rental prices as some landlords want to rent to families/couples who will take care of the home and not to migrant workers using it as a doss-house but it is putting rents up slightly as managing agents look at average prices across housing stock and advise landlords accordingly.

One needs need to live in an area experiencing a recent substantial influx of migrants to see what is happening. Mary Beardsley made the same mistake and lost credibility on Question Time saying she had "read report on the matter". The locals all knew what a farce that report was and why.

Other than this point I totally agree with what you say regarding the financial market driving the churn in property at ever increasing prices, just for their own financial, transaction generated, gain.

[Sicaq]

Suzanne, we may not have masses of people on the streets but, in London at least, we have the situation where people have to pay hundreds of £ per month to share a room (not even a flat, a room) with strangers:

www.spareroom.co.uk/flatshare/flatshare_detail.pl?flatshare_id=3255842&search_id=167579120&city_id=&flatshare_type=offered&search_results=%2Fflatshare%2F%3Fsearch_id%3D167579120%26mode%3Dlist%26&

[TruffleOil]

^Sicaq, that is Notting Hill though. Worth pointing out. A comparable amount in Shepherds Bush would get you a room to yourself.

[Sicaq]

Not really, Truffle - I live in Shepherd's Bush and I had trouble finding a room to myself for less than £600.

[126sticks]

Several people now have several houses, whilst others have none.

More built will mean that the several with more than one, will have some more.

Unless there is a crash. Which could happen easily imo.
But the government of the time may try to prop it all up in some way.

[MoreBeta]

Catkins "If foreign investors want to buy gold bars and store them in a UK bank I don't care. But it's unacceptable (morally and socially) for huge chunks of property in a city with a housing shortage problem to be off-limits in this way."

You may be even closer to the truth than you realise. Let me tell you a true story a tradesman told me a few weeks ago.

The tradesman works in London but also up where I live way outside London.

He told he went to a house to do some work in London and there were literally gold bars stored in it. No sign of occupation at all. It had a house keeper and literally a gold bar used as a 'doorstop' behind very door. There were a lot of doors. It was a big house. The owner was from Far East or Middle East.

A 400 Troy ounce gold bar is worth $500,000. Lets say 20 rooms. That is $10 million.

There is no doubt London property, art, wine, classic cars, stamps, gold is being used as a vehicle for getting money out of various unstable developing countries by people who fear their wealth may be seized and that is pushing even quite ordinary property up in value in London and squeezing out people who want to live there who work there.

There is a place in London called Bishop's Avenue in NW London also know colloquially as Billionaire's Row. Hardly anyone lives there. Many houses are derelict and never lived in. All owned by foreign billionaires. Simply to hoard money in the UK.

I know senior Directors in investment banks on huge bonuses who cant afford to live in central London now. It is madness.

[angelos02]

I see demographics of areas changing massively. Where I grew up, it was a very average street populated by teachers and nurses etc. My DF's neighbour has just moved out and 2 surgical consultants have moved in!

[stubbornstains]

Wow, I knew Bishop's Avenue in the early 90s- it was a bit that way then. I used to know some people who had squatted one of the houses- went to a couple of wild parties there IIRC!

....except that in those days it was known as Millionaire's Row.....

[TruffleOil]

I think there are several millionaire/billionaire's row. There's one right next to Kensington Palace.

[balenciaga]

applauds train for brill post as usual

[126sticks]

What I am seeing a lot of is the 55 - 65 year olds helping out the ones in their 20s.
So it is coming out from them one way or another. Not sure though whether as loans or gifts.