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It’s the housing costs, stupid? – politicalbetting.com
It’s the housing costs, stupid? – politicalbetting.com
% of Britons who are paying more for housing now than they were 12 months agoAll Britons: 34%18-24 year olds: 41%25-49 year olds: 43%50-64 year olds: 31%65+ year olds: 18%https://t.co/n8r40E4AVV pic.twitter.com/5hEdjSVPfw
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Thanks for the header, @TSE , which has half a point - but is not one I find very convincing, other than that electors may find it comforting to tell themselves fairy stories.
"A generation of none home owners" is a wild exaggeration - a home ownership rate over 70% only existed for a handful of years (depending on whose numbers you take) in the noughties afaics.
It is now at 65% plus, which is hardly a collapse.
Is there an element of yet another mainly London problem being imagined as applying to the whole country?
Similarly interest rises as purely an artefact if Liz Truss. They are far more nearly a UK version of a pan-European trend as interest rates increase a little to closer to a normal figure.
But, as we know on PB, many people vote on the basis of fictional information.
So there may well be a political effect, not helped by the current Government's tendency to be a) incompetent, b) desperate, c) thinking that doing random knee jerks whilst burning down their achievements will help.
If the Govt had addressed sigifnificant questions more directly, I think their chance would be better - but as it is imo they are toast.
The salient effect of immediate political impact is the rise in housing costs.
When TSE talks of a 'generation of non home owners' he's looking to the future.
A better critique of the header would be to note that Thatcher herself bears some responsibility for the problem, as she prevented the proceeds being reinvested in housing stock. And fir the next couple of decades, the Treasury continued to use proceeds of council housing sales to finance current spending.
Home ownership rate has increased every year since 2015, when it was 63%, except for a recent downtick. Also in 2022 afaics house sales fell by about 200k from 1.2M to 1M.
That followed affordability becoming more difficult in 2021 - average price to average earnings price (note that does not necessarily apply to FTBs who do not usually buy an "average" house). But in 2022 affordability improved again, and snapped back.
New builds are at their highest numbers for at least 15 years, usually with "home owners only" selling policies. Note that recent abolition of housing targets will not help here.
Also in mid-2023 house prices are down by about 6-7% in real terms over 12 months.
So I'd say the previous trend will reassert itself by 2024, or at latest 2025-6, and home ownership will continue gradually to increase year by year. Unfortunate timing for Mr Sunak, but that's what he does.
The results in the header? I'm not convinced it is that close to reality, or perhaps reflects energy costs more than is in the question.
Subject to "Events, Dear Boy", of course.
Abolish leasehold - you'll never get people to buy flats until you do.
Stop propping up the market with stamp duty holidays, "help to buy" etc which only inflates the market.
Servicing the cost of putting a roof over your head destroys disposable income, destroys investment, sucks all the money out of the economy and gives it over to rent-seeking parasites, instead of being invested in productive capital.
It really is that simple.
https://en.wikipedia.org/wiki/1982_Lebanon_War
I think Mr Starmer has quite a lot of that about right, but it will take longer than he hopes. It always does. His goals seem reasonably modest, which will help. I predict that little will seem to be achieved in 1-2 years, but more than expected in 5-7 years. He needs 2 terms.
I also note from the 2021-22 English Housing Survey:
1.83 The overall rate of under-occupation in England in 2021-22 was 39% with around 9.3 million households living in under-occupied homes (i.e. with two or more spare bedrooms), Annex Table 1.25.
1.84 Under-occupation was much more prevalent among owner occupiers than in the rented sectors. Over half (53%) of owner occupied households (8.3 million households) were under-occupied in 2021-22 compared with 15% of private rented (684,000) and 10% of social rented (408,000) households.
1.85 The overall proportion of under-occupied households among owner occupiers in England increased between 2011-12 and 2021-22 from 49% (7.0 million households) to 53% (8.3 million households). No change was seen among renters over the same time period,
https://www.gov.uk/government/statistics/english-housing-survey-2021-to-2022-headline-report/english-housing-survey-2021-to-2022-headline-report
So I'd seek to promote lodgers more, and eg encourage people with Pieds a Terre flats to take a weekday lodging rather than taking up a whole flat, for example.
https://www.ft.com/content/df25ccc7-5dcf-446e-8a07-332ad5612f09
Everywhere else in the world, the value of flats has broadly kept up with the value of housing. Except the UK. Grenfell exposed the flaws in the leasehold system, left tons of people with unmanageable bills, "waking watch" (i.e. pay nine grand a year for someone to sit in reception on their phone "just in case" of a fire) etc.
Build new towns, not just expand existing towns, and don’t let the developer run rings around the council with regard to the infrostructure aspects.
Find innovative ways to construct houses, and make sure they’re mortgageable, just as we did after WWII. While they’re there, sort out leasehold.
Incentivise people to trade down once their kids have flown the nest, to leave larger houses for growing families.
Plan for the future by looking at household population changes, such as the increase in single living and divorce, as well as managing immigration rates to the availability of housing.
Finally, limit short-term letting to actual short-term letting, one month a year maximum. It’s fine for people to rent out their house when they’re on holiday, or to get out of town and make some money when there’s a sporting event on - but not to run an unlicensed B&B bringing antisocial behaviour while pricing locals out of their own town.
The answer is the bank of mum and dad, of which I am a beneficiary. Parents with no mortgages and capital to burn. Catastrophic intergenerational inequality as a result.
The critical housing shortages occur in our cities and hurt the young renting there. This means they cannot save up for deposit to buy their their own flat or move out of the city unless they were lucky like me.
A few more low density estates in the middle of nowhere aren't going to help. We don't live in a perfect, UK-wide, frictionless housing market. They won't even scratch inner city rents.
We have some of the lowest rates of flat living anywhere in Europe, despite being so densely populated. Build more, and turf out the BTL and STL landlords who have taken advantage of the constraint on supply.
Burn-Murdoch (for it is he) admits he cannot tell whether it is an influence of leasehold or the Grenfell Overhang.
I can't tell - but I don't see how making them all condominiums (or equivalent) would make a difference to the Grenfell overhang - the expenses would be far more dependent on the owners themselves.
The numbers we need to discern that are prices of leasehold flats vs prices of freehold (or shared freehold) owned flats.
Do you know - asking a more fundamental question - whether self-management via owning the freehold would actually save any money? Is leasehold abolition still tenable if management costs for the owners increase (did they increase in Scotland)?
(This has been shrunk - rightclick to enlarge)
I think the UK will go the same way on large, high rise blocks... compliance costs will make the buildings worthless.
I think that flats can still be ok to live in though, if you stick to low rise buildings with minimal common parts.
Bluntly speaking for the last 15 years debt has been mispriced. It is good and healthy that we are moving back to proper pricing. It may be bumpy and I am sure it will be painful for people who overextended themselves (although bank regulation is likely to have helped with affordability testing)
I am sure that the government will cop some blame for that - they are the people on duty - but it was not Truss’s fault
We have to go back 4 decades to this atrocity to find one on a bigger scale than the Hamas atrocities of last weekend.
https://en.wikipedia.org/wiki/Sabra_and_Shatila_massacre
Report by travel companies reveals that it is often quicker to walk into the city centre than take the bus
https://www.telegraph.co.uk/news/2023/10/14/oxford-council-ltn-delay-to-buses-traffic-report/ (£££)
Why is that?
Which is the point really. In Cardiff or Edinburgh or indeed Oxford or Birmingham 20mph zones and LTNs probably make little change in practice. It's the rural roads with lots of villages strung along them in ribbons where it would cause an issue. These are of course very numerous in Wales.
And here Drakeford has not so much not thought through the implications as not thought about them at all. Cheerily cutting speed limits in residential areas with a load of patronising drivel and refusing to build more new by-passes is absolutely asking for chaos.
It's even worse because he's also defending illegal boy racers on their high speed motorbikes against the police. What a hypocrite.
It’s not just direct housing costs that have gone up; my household and building insurance has increased by about 30% this year. And no, I have not made a claim!
That is what the Israeli government found in its enquiry, and why Ariel Sharon resigned as Defence Minister
This is borne out by the poll highlighted. Whilst inflation is going up at 10% this is only reflected in higher housing costs for half of the respondents.
It may not be a case that the narrative of 'skyrocketing house prices and rents' is universally accurate.
My own view is that the era of house price inflation driving the economy is largely over, we are a year or so in to a long period of deflation, people just haven't realised it yet.
Very interesting interview with Haras Rafiq (trustee of an organisation called Muslims Against Antisemitism) about Hamas being inspired by an Islamist (rather than Islamic) ideology / theology, and having roots in the Muslim Brotherhood, on the BBC R4 Sunday programme. Also notes that Israeli Muslims were killed in the pogrom.
A different viewpoint.
Starts at 29:15.
https://www.bbc.co.uk/sounds/play/m001rgr6
Most people who don’t have an instinctive bias against the Israelis blame Hobeika.
(Sharon resigned as defence minister but remained in the cabinet, IIRC)
https://www.constructionnews.co.uk/buildings/lg-dismantles-bristol-modular-homes-due-to-foundation-problems-28-07-2023/
https://www.insidehousing.co.uk/news/legal--general-to-cease-production-of-new-homes-at-modular-factory-81335#:~:text=L&G blamed its modular business,redundant in its modular business.
Hence - like an expiring leasehold - they have diminishing resale value which means that they aren’t a great security for a loan.
I’ve no idea if that is accurate or not, but it’s that perception which is the issue.
The IDF had ordered the militia to clear out the fighters of the Palestine Liberation Organization (PLO) from Sabra and Shatila as part of a larger Israeli maneuver into western Beirut.
If accurate, Foxy’s description seems balanced, not biased, though I agree it would have been helpful to clarify the Lebanese forces’ role.
https://www.insidehousing.co.uk/news/northern-housing-association-partners-with-modular-house-builder-83491
This is the sort of innovation we need though, it massively speeds up housebuilding, at least if they do the foundations properly!
It is hard to think of any measure at all where ordinary people are better off now than they were in 2015.
The combination of inflation, with its knock on in fuel and housing costs, difficulty in seeing Doctors and getting medical treatment, the state of the environment, the state of our roads, the removal for many of rights to work abroad that they valued.
I honestly cannot think of a single meaningful measure in ordinary people’s lives that the Conservatives have improved.
That is why they will be reamed at the GE.
Probably necessary long term, but will wipe out the paper wealth that a lot of people were planning to retire on, or inherit
Two other things to note. One is that fixed rate mortgages mean that the effect is sweeping over the economy gradually, and has a fair way to go yet. The other, going back to the header, is that the older you are, the more likely that it will affect you in a token way, or no way at all.
And once you have a paid off a mortgage, with the massively reduced financial pressure that results, why would you want to downsize or take in a lodger? Empty nesters wasting rooms is reasonably rational for them.
The cycle of killing can last decades, or even generations. Hamas have no intent to stop the cycle; even if they were to push Israel into the sea, they will continue after the 'wrong' sort of Muslims. Because it is not about religion; it is about money and power.
That does not excuse Israel, either. Their campaign/policy of settlement gives Hamas and those who hate Israel an excuse (not that many need an excuse for that).
The cycle needs breaking. That is more in Israel's hands than Hamas's, though.
Then National Rail decided they were going to close the only road into Oxford from the West for months on end (a closure that has, perhaps inevitably, turned into an /18 month/ closure of a major city road) & the council decided to delay the bus gates so that the road network wouldn’t completely fall apart from the displaced traffic.
The net result has been traffic gridlock.
Then, to make things even worse, the Highways Agency decided that the A34 junction on the west side of Oxford needed emergency repairs, which have been going on for months & have regularly turned the A34 into a car park, displacing even more traffic to other routes into Oxford.
It’s been a complete shitshow & the LTNs are at best a minor part sadly. Oxford needs a complete transport rethink, given the absolute limits on the available road capacity, but the capital just isn’t there to do the things that would make a measurable difference, regardless of whether it’s road, rail, trams or busways.
There are houses in my RightMove/Zoopla saved lists that have been to auction 3 times and not sold. Houses that have been reduced month after month and still for sale. Estate agents are phoning me every day with houses that have just come on to market or been reduced. I think there is still further to fall, so probably won't make any firm offers until the new year.
Scaling down House of Lords reform and so it goes on. Might as well vote Tory or Lib Dem.
Talk about the triumph of hope over experience.
The only planning the DfE ever do is for their boozy parties.
Another Labour Government that fails to deliver radical change will kill the party. My reading of 2024 is that the state of the country is much closer to 1945 than to 1997, but the best Starmer can offer is a thin gruel version of 1997. It’s a recipe for wipeout in 2029. If the country wants Conservatism it will always vote Tory. When it doesn’t it wants something different. Is this really too hard to compute?
This idea that all spare rooms should be occupied is a no go for most due to both the above reason and also because most people prefer not to share a home and bathroom with a random stranger that answered an advert unless they have no choice because they need the money
I think we should remember this is different in different areas.
Unclear how many would take it, anyway, if they haven't already been drawn by the cashback inherent in downsizing. I know somebody who now lives alone in what was once the family five bedroom house -- but when the kids and grandkids are back for Christmas or Easter the house is full. I'm not sure they'd be very keen to give that up.
There are lots of opportunities like this if you can hunt them out.
France which has the same population as us has 13 million extra houses. Even if we built a million houses a year over the next decade (which we won't), we'd still be in a deficit. We need serious reform. Help to buy done right does not inflate the market, it is what people demand in "affordable housing".
The original help to buy scheme has been abolished already, what exists now unless I'm mistaken is help to buy shared equity, which is a completely different scheme. The new estates near me the "affordable housing" homes are on this scheme, are built to the same quality and standard as other houses (rather than being shitty flats amidst an estate of houses), or a shitty affordable sink estate, but are sold first directly to either housing associations or pension etc firms like Legal & General. Then under the Help to Buy Shared Equity scheme someone can buy a share (eg 25%) of the home and then rent the rest at defined rates just like with housing associations etc
I have a relative who got on this scheme in a new build in Central London, he's only 25 but now has a home of his own in London, which is remarkable. Not a chance he'd have done that without Help to Buy. He rents the rest of his home, the rent is set in contract indefinitely to go up by CPI not negotiations or whatever a landlord demands. Whenever he's able to afford to do so, he can buy make 'ladder' payments to buy a higher percentage share of the home, eg 1% per annum or buying a block of 5% or even all of it. Once he achieves 100% then its his outright.
Schemes to make quality homes affordable is better than building utter shite to be "affordable".
The other issue which we hit when we moved in 2009 is that people hold fire selling in a falling market so the range and quality of what comes on the market shrinks markedly. That said we'll be looking for a plot, re-build or a major 'doer-upper', most likely from a deceased estate and the inheritors do like to get their hands on the dosh so such properties continue to be sold.
Now we have Rishi’s new plan for drivers & the whipsaw back and forth of uk transport policy continues. It’s not surprising we can never get anything done - our government seems to be unable to commit to any policy for a period longer than about three years.
Excellent thread @TSE and you're right. Starmer seems to be onto this one and if they succeed then Labour will be in power for a generation.
There are (I quoted the text in another post) 9.3 million dwellings with 2 or more spare bedrooms.
5-10% of dwellings with 2 or more spare bedrooms having one lodger each is 465k to 930k new living spaces for singles.
That is enough to make quite a difference. Personally I have 3 spare bedrooms, and I'll be looking at a lodger as soon as my parent's estate is finally resolved.
How to encourage? Well - the rent a room tax income threshold before tax is applied has been frozen since 2015, for one.
"But but but that helps old home owners". Yes, however it helps deal with housing pressure, and especially the decades long trend to smaller households.
Similar comments could apply to excessive regulation applied small HMOs (think "Friends" and 2-4 people), which are little different to family homes. Again - an option for reducing demand pressure.
Mr Starmer will need to apply all kinds of measures, many of which are imo obvious and have not been applied by the current Govt.
There's also a large potential increase in windfall and small development sites, which are currently stuck, which might only make a 5-10% difference. But 5-10% extra is 11-23k dwellings per annum.
The major problem is sellers coming on to the market with unrealistic expectations and estate agents desperate to sign them up. There's something like 7 houses for sale to every one that sells and the median price is around 260k, I think. The top end houses skew the figures so the average asking price is well over 300k. You can't trust the industry house price index thingies, because they all lag by at least 6 months, and all have inaccurate quirks like only including newly listed asking prices or only sales completed with a mortgage.
Mortgage valuation surveys are downgrading house prices so buyers are getting mortgage offers revised or revoked. Mortgage arrears are on the rise. The RICS expect prices to fall for at least the next year. It's carnage out there, and going to get a lot worse before it settles.
Bomb proofing should have extended to his stupid comments on planning .
One can hope that Labour will have a few surprises in their manifesto and we know parties always like to pull out something closer to the time .
My enthusiasm for the current Labour Party is flatlining . I will however be willing to walk over broken glass to get to the polling station to vote to remove the Tories .
"Labour seem to be going to allow building anywhere - it's crazy."
"We'll we do need more houses."
"Yes but they should put them where there are already houses, not new sites."
Then later, when we mentioned we are looking to downsize because our garden is far too big for us now:
"Can't you sell of half your garden for a couple of houses?"
Er no, building in our village is absolutely verboten by our wonderful Local NIMBY Plan.
And its funny, I've been saying for many years we need a house price correction, now we have a minor one and more people able to afford their own homes. Remarkable that, isn't it.
The problem for years is that those who are renting could afford mortgage repayments, but they were their landlords mortgage repayments rather than their own. Not being able to afford a deposit was the biggest barrier. As house prices come down and wages go up, then the deposit becomes a smaller problem even if the mortgage repayments goes up it only goes up to what rent was anyway.
Five or six years later our other children, both in their thirties, had married and both had become fathers! Hosting everyone is impossible!
Fortunately one of our children had a similar house to that which we sold!
Of course things have moved on further now!
Costs going down is a good thing, not a bad thing.
Costs going up is a bad thing, not a good thing.
Regarding voting, since I live in the 13th safest Tory seat I fear my vote will once again be a wasted one.
Lots of people who are wedded to fantasy house prices won't, though, and the poor feckers who have massively increased mortgage payments and who have to sell won't agree either.
I must say that the discussions in PB had a considerable effect on my thinking and were very helpful.
And that mentality has been encouraged by the Bank of England, even though the Treasury doesn't levy CGT on primary homes quite rightly as it recognises that housing is a cost not an asset there.
We need to smash the mentality of houses being an asset and the first step of that reform needs to be with the Bank of England which should include house prices directly into the basket of goods for inflation.
Unless you are, or you know, someone who is paying 21st Century house prices, it must be hard to comprehend how bonkers things are.
I can give you a slightly interesting story around current unpredictably.
My parent had a very nice 2 bed bungalow in their estate, which was a conversion of my dad's former architectural studio which we were left with in 1975 when the person who bought the family house did not want the studio (converted cattle shed) at the end of the garden.
So they just put up a fence across the garden and kept it. An advantage of living in a corner property. It has had a couple of grandparents living in it as their final dwelling, and was there for my parent for a similar reason, or to rent out to pay care costs.
Probate valuation several years ago was X. Since then the recommended price has gone up by about 13% and back down again, buyers offering, pulling out, and back in again.
We completed last month within 1k of the probate value with a seller who first expressed interest 18 months ago.
I have another tory friend, male this time, 40. He's a card carrying party member, lives down here. He's deeply critical of his parents' generation on precisely this point. His argument is that by sheer good fortune they oversaw the greatest rise in housing value that this country has ever known, and will ever know. When they berate the (woke) younger generations, and claim that by contrast they earned their asset fortunes through hard work, it's largely bollocks. They got it mainly by luck and now have what he calls an appalling sense of entitlement.
That's all from my tory friend and I can't disagree with him. He's actually rather embittered about it.
The IDF told the Lebanese Forces to clear out the PLO. They did not order them to massacre civilians.
Foxy chose to state the Israelis were responsible (he only clarified the “indirectly” when challenged).
They should have intervened when they heard the rumours. I haven’t seen the original intelligence reports, so can’t assess whether that was deliberate vs the intelligence being poor quality (“fog of war”). But the Israeli government commission held they bore part of the blame and Sharon was forced (unwillingly) to resign as Defence Secretary.
Foxy has a bit of a blind spot when it comes to apportioning blame between the Israelis and their enemies.
Tip: sorting out social care properly required substantial taxation of unearned wealth.
I put in a planning proposal to build 1 x family home for us and 2 x affordable homes (because I believe in such things). All on the lane. As I say, edge of village so not wild green field.
It was turned down 8-5 or something like that. I probably could have fought on. But this is the kind of NIMBYism that is blighting everything. Ridiculous short-sightedness.
Typically in a mortgage product you pay off the interest in the early years and only pay down the principal at the end of the life of the mortgage.
However the value of the security declines every year (to zero in year 30 - possibly to 10% of original value in year 25) with the result that the LTV metrics and the risk to the bank increase rather than decrease during the term.
Hence mortgages become very expensive
The equivalent is asking them to lend against as short term leasehold without a right to enfranchise. Effectively they deem it as being asked to pre-fund someone’s rent without adequate security
Buy houses, rent apartments.
I'm surprised it's that low. Though that arguably itself says things about pressure on those demographic groups.
Even if adults with independent children are included, it is still under 40%.
https://www.statista.com/statistics/286481/england-buying-with-mortgage-ownership-by-household-type/
“I attended today’s protest as an observer. It was 15% white leftists. 15% normalish looking Muslims. The remaining 70% were a mixture of Islamists and diaspora youth with Turkish, Pakistan etc flags - a bit like a Palestine themed identity forming event. Thread follows”
https://x.com/hardtimeshere11/status/1713305689529999695?s=46&t=bulOICNH15U6kB0MwE6Lfw
And there’s nothing to stop you making offers below asking that anticipate future price erosion
People should be able to afford a home at the start of their career, and before they have children, not the end of their lives only.
As for BTLs getting replaced by owner occupiers currently - good! - but its little and late for people who have been paying their BTL landlords mortgage for years as they couldn't get a deposit for one of their own due to insanely price rises.
Finally your "holding out" for more is precisely the problem. There needs to be excess supply all the time, so those who "hold out" simply find nobody is interested. Buyers should be in a position to say yes I could afford 7x, but why should I pay it if someone else is only asking for 3x as a healthy market rate.
Perhaps remove the PPR relief from main residences but allow a rollover for new main residence purchase within, say, 36 months.
Use the funds to reduce stamp duty (and perhaps focus it on those downsizing)
You have to admire the chutzpah, if nothing else.
(Starmer's purge of the Corbynites is looking more and more like a masterstroke)