AIBU to think that the UK housing crisis is not caused by supply and demand?

[Goodnightseamer]

It's often trotted out as a reason but there are 29 million houses in the UK. There are slightly fewer than 28 million households. That's over a million houses more than there are households. So there are plenty of houses. Houses are unaffordable due to speculative investment, not under supply. AIBU?

I do wish that they would ban the practice of building of high rise flats to sell to people from abroad as investments where noone ever lives in the flat.

When you look at the average wage vs the average cost of a home, it doesn’t stack. And it should, it most areas it should.

I don’t think there is expectation issue per say (or not with what I see) But I do think there’s a need issue where families are in rentals in areas where kids are settled at school, parents in jobs, who haven’t been able to get on the ladder to change up. So having two kids and buying a one bed flat with one parking space seems a crazy thing to do. Had they been able to do it 5-10 years ago they would change up to a 2 / 3 bed as the family grew.

Doo err uppers are also almost as expensive as ready to go houses, first time buyers often get out priced by developers or buy to let as they can normally extend them / knock down due to the additional potential.

@Miaowing I think that’s a weak argument. I bought a doer- upper, it was all that was in my budget. The competition to own it was fierce from builders who wanted to do it up and sell at profit, but I was able to pay more than them (because I need a home, Not a return)

I have spent £70k doing up the house. This was a mixture of cash and remortgaging at a later date.

Do you think it’s common for people to have that sort of money available to do their fixer upper? I’m afraid people like yourself have this rose tinted view from the 90s when you were young and time rich and the whole country was DIY mad. Manual labour and materials were cheaper and more readily available. Times have changed.

If I had a bigger deposit, I could’ve spent £50k more on my house from day 1 and bought a house that didn’t need doing up. It would’ve been cheaper. It’s nearly always cheaper to buy a house that someone else has spent money doing up rather than doing it yourself

@Kpo58 there are such a small number of flats owned by overseas investors and not lived in its barely worth worrying about.

Demand for purchased(?) housing is not simply a count of house holds. House purchases are funded by wages and credit, the age mix and type of household, geographic spread of employment and quality of life factors, regulation of credit markets of course it is not a simple arithmetic of no. households (which is anyway impacted by housing availability) vs no. houses, but I don't think anyone means that when they say its supply vs demand.

hinge we’re not talking just ‘poorly’ paid people. If the average house price is £300k then a household needs to be earning twice the national average salary.

I’d call this a crisis if ‘normal’ people can’t live in large parts of the country or live in increasingly insecure or unsuitable accommodation, If nothing else think of the impact on the next generation.

Inadequately and insecurely in the case of many private sector tenants, but housed nonetheless

Surely living in overcrowded, inadequate and insecure slum housing is what people are talking about when they talk about a housing crisis?

Nobody thinks there are fifteen million street homeless. It’s people with three kids in a tiny room in a damp b&b, or six adults sharing a two-bed flat.

Here is a bit of supply logic:
New build housing estate (one of many springing up here) ... with a massive billboard: 2 bed homes from 269k.

1. the average job pays just over min wage, the majority of local, settled people are unable to afford it.
2. we are just outside the commuter belt for a big city, with good transport links = just over 1hour. Conclusion: we have a housing crisis in my area, as it's more profitable to attract and house "new people" with money than sell cheaper and house the local population...

Ylvamoon, can I ask how much you think it costs to build a new house? I’m interested in how much people think, bearing in mind your latest post

Costs a house builder, I mean

You’re logic doesn’t take into consideration how many properties are bought as second homes or by overseas investors and not lived in on a permanent basis.

It also doesn’t look at how many people are in shared accommodation or still at home with parents.

@RicStar then why do government committees set up specifically to look at the problem, why do the BBC, why do the mainstream press continually say "we need to build more houses"? I am agreeing with you that it's more complex than that but that is mainly what we hear as a solution. When in fact we have been consistently building more homes than there are households throughout the country for the last 20 years but prices have rocketed in that time.

@Sashkin I agree that this is the reality of the crisis but it's not due to supply and demand but rather a wholesale change in occupancy tenure driven by shifts in property purchase patterns.

“wholesale change in occupancy tenure driven by shifts in property purchase patterns.”

What do you mean by this?

50Passthecherrycoke as a "private" person, you can build a house for around 150k plus land.
So I think a developer building over 30-60 homes per stage can easily half the cost.

My point is not about the actual cost of building but the fact, that there isn't affordable housing for the local community. New building land here is actually farm land. Again, who can afford to buy a field with planning permission for 100's of houses? Because it's not sold per plot... once again, the local population is unable to house themselves adequately.

Sorry I wasn’t really thinking of someone building their own home. I was thinking of your example of new builds. I have worked for house builders for a long time, and the most recent company I worked for the average cost of building a house was £210k. Other companies it’s varied between 190-240k. This is obviously just an average.

So if you build a house for £210k and sell it for £269k that’s obviously approx £50k profit.

How can we, as a country expect private companies to provide housing at cost, or even at lower profit margins? They are a commercial venture and have a responsibility to their stakeholders to maximise profit.

@Miaowing Now it seems even first time buyers want a house move in ready - or at worst only a bit of redecoration - semi detached with a garage and garden - and sitting on the floor with tv on an orange box is gone.

I think you’ll find the age of first time buyers has gone up massively. Often people are late 30s or 40s and are only just at the stage where they can afford even a do-er uppper. Often the people who are buying are professional couples both working very long hours. They do not have the time to come home at 8pm every night and start doing 3 hours of DIY just to make it habitable. But neither do they have the spare cash to get trades in to get it done quicker.

Often they are buying a house so they can start a family (or already have a baby and are trying to get out of a one bed rented flat). Imagine sleeping on a mattress with baby, with no working boiler or kitchen, and also holding down a professional job FT to try and pay for the mortgage on that shit hole.

It’s a sad state of affairs. We bought our 3 bed semi when we were 30 for £140k (with a large deposit after moving up north from London where we had sold a flat and made £75k profit on it in 3 years). Our house up north needed all sorts doing to it but we had that spare cash from the sale of our flat in London.

We had moved from London to start a family as prices were already unaffordable on our income there and we couldn’t afford even a bigger flat never mind a house, with a baby. I would have had to put the baby in FT childcare from 8-6 and we had no family to help. Up north I could be a SAHM for 3 years or so, we had a bigger house, and family to help. We didn’t have any disposable income after having kids but that’s life. We had a house and I was able to be a fT parent for a while. We worked on the house gradually over the years after fixing major stuff when we moved in. It wasn’t just about decor.

Now our house up northhas more than doubled in value. We would not be able to buy it now if we were doing all that again. I have no idea where we would live. Probably a small flat, or teeny gritty old terrrace in a rough area.

Times are very different indeed from the 90s.

I actually looked what the house over the road went for the year before we moved back up north. Exactly same style of house. It went for £60k! £60k for a 3 bed semi in a nice area, and just one year later they had doubled in value. It’s shocking. This is an ordinary street really.

I think I see what you're getting at here, OP.
I don't doubt that it's largely because if you bought at the right time, you were able to profit massively from being a landlord. I know people with multiple properties, who no longer have to work, because they bought following the crash.

This has led to an increase in house prices as there are simply less available to buy per area, especially cheaper houses were landlords tend to buy properties and let them out. It's no longer a case of for every house purchased, there is another for sale. A lot of the time near me, terraced houses, which the cheapest in our nice area, are bought and then let out to students/house share to increase profits.
This stops first time buyers getting on the property ladder in my local area, because the houses for sale start at a much higher price, because landlords have snapped up most of the 'entry level' properties.

I sometimes wonder if we woke up tomorrow and all private landlords/second home owners had to put their properties up for sale, would the housing crisis vanish, poof!

I mean that there are far fewer owner occupiers than 35 years ago due to speculative behaviour increasing prices and vastly more private sector tenants which, given that renting privately is largely unregulated both in terms of cost and quality, means that more people are inadequately and insecurely housed.

Is it houses or all housing?

I thought the problem was that loads of stock and new build were flats but what's needed is family homes.

I live on outskirts of London and most of what goes up round here is flats. Also mostly crap quality and tiny but that's another issue.

Of cause it's much more complex than just supply and demand, over supply of cheap credit and government policies which incentivized people to invest in property.... Those are the chief reasons for the current bubble... sitting waiting to pop

I get what you mean OP, and others with similar issues to me.

I live rurally. Near the M5 but in a highly socio economically deprived area. Our local housing plan has just been published and it makes no sense at all!

Number of households = X
Number of houses available = X + Y
Number of houses urgently required acording to the government = Z

And then they look at the geography. 5 market towns and about 4 large villages. All bar 1 has a natural boundary that cannot be encroached upon. The 5th, where I live, has been designated as the area to make up the shortfall.

Yes, the shortfall that we do not have.. .and 20 year growth predictions from local university is Y and about 10% of Z

What we do have is a land grab. Our small market town has had the surounding greenfields designated building plots, thousands (literally) of houses have been given the go ahead.

But the local infrastructure is not going to be improved, mainly because it physically cannot be. So currently we are almost locked in by floods and road closures for water works to feed the additional houses. Yes, again, literally. It has taken me 2 hours to drive 7 miles on 4 of the last 6 days and I have no other route out to work!

A couple of years ago they 'improved' some local roundabouts to ease congestion. But did not widen the single carriage connecting road that causes the bottleneck of traffic. Now they are adding thousands of cares to that road network with no addtional improvements being planned.

Why?

We have enough houses for the current local population and almost enough for the 20 year projected growth. So who are these additional, usually large, 4+ bedroom 'executive' homes being built for? Locals can't even afford to live in, buy or rent, the 'affordable homes' that each development has to have by law - I know this as I work with letting agents and have met many of the new tenants!

We are building houses for people who are relocating from the South East, as far as I can tell! Many of the complexes are for over 55s, so we are also supplying a bucolic lifestyle for the well heeled older population

So farming land is being stripped, local people are finding it hard to live here, work is disappearing with the land and our quaint market town is dying a slow death. The new builds we already have form a cordon around town... most people shop as they come home from work, have Tesco deliveries, and very rarely set foot in town! So only those of us who live inside the bypass shop here and everyone else shops in the nearest larger towns and cities.

And nobody can put together a coherent answer to the questions Why? and how the hell will we all travel, get to work, find school, GP places?

So no, supply and demand does not explain the 'housing crisis'. Shifting populations, mobile populations, ageing populations do. And that leaves local populations in cheaper areas at distinct disadvantage.

And yes, I am locally politically active on this matter.

This is why in December, I'll be voting labour...
It's a sad state of affairs that it has got to this point, I worry for the next generation. It's bad enough for the 20-somethings now. Working professional jobs and unable to live in a property of there own, it's ridiculous when you think about it.

What will happen when the generation in landlords die? Property will pass on to their children, and we will find ourselves back in Victorian Britain once again, the class system thriving

Labour didn’t build houses either

Out of interest, following on from @RhinoskinhaveI
Do we think the bubble will ever pop? Will a crash hit the UK again?

This state of affairs is bad for everyone, we have a situation where educated middle-class professionals can't afford a middle class standard of living, people who feel ready to settle down and start families can't afford a family home.

Will the bubble Pop? that's what bubbles do.... Isn't it?