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?

@RhinoskinhaveI I fear your hyperbole isn't too far off! Look at cities in places like Japan. Especially if we continue building and building on green spaces, because landlords are buying up properties or slicing up houses into flats/shared accommodation.

@RhinoskinhaveI, well, Japan did have intergenerational mortgages for a while ie mortgage terms of 50 years + payable by descendants. So, unfortunately and terrifyingly, there is no limit once the market is fucked.

Interestingly I listened to a Radio 4 programme a little while back. The discussion was about housing and that home ownership is a very recent development. Historically, people rented their homes. Owning was a luxury out of reach for most. Home ownership only grew with the rise in available credit.
Just some food for thought.

I know of at least 7 villages within 25 miles of me have had their schools close in the last 20 years because there are insufficient or no children in the villages. At least 2 of the villages now have no full time residents, they are entirely owned by holiday home owners or as second homes. My DH used to have a f/t job working in one of the villages, however the commute was only viable by car, so he was reliant on lifts (we don't own a car, can't afford it). It winter the roads are not passable, sometimes for weeks. There isn't a shop or post office or any amenities in the village, & the place DH worked has now closed also. Average house prices in the village surpass £500k but there are no jobs for approximately 15 miles, except cleaning, possibly. All the remaining residents are pretty elderly & needing airlifting to hospital in winter is not uncommon.

I suspect there may be a housing crash in a few decades, when lots of the baby boom generation, who could afford to buy (not that I'm saying they all could) either die or have to sell their homes to fund care. The market may then be flooded. Obviously it will then be too late for my generation to afford to buy, but hopefully a younger generation may be able to.

Or, perhaps, a better way will be found, than endlessly increasing house prices while allowing average wages at the lower end of the jobs marget to stagnate. While propping up employers by topping up pitifully low wages with benefits, thus effectively subsidising the income of big business shareholder at the expense of the individual at the bottom.

There are lots of houses in Japan. You’re right that in cities like Tokyo people live in very small properties. This is related to population density though, and is partly cultural.

@RhinoskinhaveI riding it out in a small place works in theory, but in practice if you buy a 1 bed flat for £200k in your 20s, and the market collapses, where are you going to raise your family? You'll be stuck in negative equity, and with policies moving the way they are, unable to afford to rent out the flat and move to a bigger place.
You have to think about finding that middle ground of affordability Vs practically in the face of a market drop.

The type of house is also a factor that needs to be taken into account. Empty one bed flats are no use to a family of five. 4 bed houses are almost certainly financially out of reach of young single first time buyers. The available supply has to meet the needs of the demand. The main change in demographics has been a decline in household size and a rise in single person households so an area might have over supply of one type of houses but the chronic shortage of another type so there can be a supply crisis of one/two bed flats small houses while there are three/four bed houses sitting empty.

@Ylvamoon agree that we'll probably come to look at the high rates of owner occupancy we saw in the 70s and 80s as anomaly. If we are returning to a rentier economy though we need to put measures in place to allow people to have secure homes and affordable rent because just in purely money handed over in housing benefit £10 billion a year going to landlords is neither sustainable nor justifiable.

The thing is if your son can afford a 4 bed with a gym and hot tub etc what’s the problem with him buying it? If she can only afford a 1 bed than he can’t want all he likes 🤣

@Ylvamoon - I have no issues with renting in principle. It's unscrupulous LLs I get cross with. (Obviously there are nightmare tenants as well). However, this matters to me particularly at the moment, as we've just got our boiler fixed after 8 weeks of it not working properly - some periods of hot water but no or inadequate heating, & several days of neither, so we couldn't shower, wash the dishes or even our hands easily. We had to have hot water bottles at night, a flask of hot water in the bathroom for washing hands, boil the kettle 3 times just to get half a sinkfull of hot water to wash up... etc, etc. And they are evicting us to sell the property anyway so it really feels like they don't care.

OTOH, the letting agent has only inspected us 3 times in over a decade... we could have been growing pot or dumping tyres in the spare room, anything & they probably wouldn't have spotted it. I have worked in property management though, & seen plenty of nasty houses after tenants have trashed them, so I'm well aware of what can happen & how much it can cost to sort out.

@Passthecherrycoke Yep! That is what is happening. Developers are making money, communities all over the place are losing out, populations being displaced over and over again.

And, as my locale shows, little thought is given to the sustainability of the local area. Those who move in don't work here, don't shop here, may not have their kids educated here. Everyone who moves here is far better off than the lcoal population.

It is a weird and very disenfranchising experience! For many locals it is disturbing. They have been here for generations, hundreds of years in many cases. Places are naamed after them, family members etc. The local area is very insular and is now being drowned in wealthy families moving in and ignoring the local businesses and community.

Just round the corner from me is a new development where the new residents are setting up a U3A, WI and other groups. They had no idea that they are duplicating some already existing and very active groups. When approached and asked if they would like to join in with the local groups woman actauilly exclaimed "god no!"

U3A responded that all groups have different profiles and it is not unusual to have similar groups set up quite close to each other - though they may not have meant within a mile in such a rural area!

There are insufficient or no children in the villages
This is how populations implode and die, we are so focused on the dangers of overpopulation and overcrowding that we forget about the dangers of the opposite scenario.
The reason the human race has achieved so much is because of the huge numbers of people in close proximity working together trading sharing ideas.

Gingham yes of course you're right, I was just thinking about it from my own perspective, I'm middle aged children have flown the nest, it suits me to live in a small cheap property.

A flaw in your calculation is assuming that the number of households is not being affected by the lack of supply. How many 20 something's are still living with their parents that a desperately saving for a deposit? How many separated couples still under the same roof because they can't afford to move out?

What is clear though, is that is is a supply and demand issue in that is supply increased, prices would fall. You can see this in the micro economy (when a new development has lots of properties available, they sell for less) and the macro- if thousands of new houses were popping up overnight prices would fall nationally.

58Goodnightseamer & 05AwdBovril
For the rental market to work properly, we need better laws to protect tenants and landlords.
At the money it's a lot of short tenancy (private sector), and a impossible long winded way to get rid of non paying tenants. All the while, next to no protection for long term, regular paying tenants.

It's foreign money pouring into the British property market because the cost of investing in British property is so low. It's like a free bank account.

There was a comparison done between a similar sized property in Manhattan and in central London. The US property attracted $14k a year in property taxes; the British property less than £4k pa.

Even the Met Police have said that most of the money pouring into London property from abroad is criminal proceeds, and has grossly inflated the market to the detriment of British citizens

This, then, impacts the rest of the country as people who would have once lived in the capital for most of their adult life then move to other cities and suburbs after selling their London flats, pushing up prices in the regions. Which then displaces the traditional people who would have lived in the regions et al.

The answer to this is in the tax system. More council tax bands and high council tax for properties over £1 million. But look what happened when Miliband ventured the idea of a mansion tax...

There's also the issue of property owned by nebulous entities registered in tax shelters, where no one knows exactly who owns the property in question.

I remember when Osborne became chancellor, and he was horrified at how many London properties were exempt from council tax because they were owned by offshire businesses. He closed that loophole, but more should have been done.

Basically, it's the global rich using British property as cheap bank accounts that has caused the housing crisis. Someone with a will of iron needs to come along and shut the practices down, and weather all the blowback that these entities will throw at Britain in return.

I think it would help if, as a culture, we could come to see access to adequate housing as a basic right in the same way that we see access to education and healthcare.
I think a modern advanced country like ours should recognise that unless people have have access to decent homes they can't be expected to do their best and contribute to society.
We wouldn't expect people to be able to get good job and earn a living if they didn't have access to education, or if they could be bankrupted by a medical emergency.

The problem is housing is treated as a commodity/investment which facilitates the poor the fund the rich.

There would be less demand if everyone didn't want to by one as an investment.

Interest rates been so low play a big part as money in the bank loses value, and cheap loans make buying properties to rent profitable.

A lot of these posts are a couple of years outdated- London is no longer as attractive to foreign investors, primarily due to new money laundering regulations, higher taxes and static/ reducing property prices, as well as lower rental yields. Additional taxation on RTB has meant fewer people entering this market and many selling up.

I used to do a lot of work with Russian and Chinese investors, they’ve almost completely disappeared —duetothemoneylaunderingmeasures—

Government has tightened legislation such that being a landlord is no longer such an attractive option... I think that's the case isn't it?

Plus this notion of property as a 'ladder' to climb. You can't just buy what you need and down/up size accordingly, you reply on your house making gains to climb the next rung into a realistic home.

in fact one might even say that the government has arranged things so that landlords are the ones who have to take the hit when the bubble bursts....?

I agree the property ladder metaphor steers us into unhelpful ways of thinking about housing
And of course in a game where there are ladders there are also snakes

They have rhino. The tories are strongly in favour of home ownership and their policies do reflect this, even though many people won’t see that in their day to day life