The economy, the housing market, and the truth

[lil-minx92]

They own the land that as planning permission to build houses and its the land value that increases, it doesn't actually cost any more to build an house now than it did 10 years ago, but they sell for double the price.

 

This is not correct. It costs a lot more now to build a house due to increased requirements in building regulations and all the eco standards.

 

A handful of large house builders construct the majority of new houses. If they arent building, not many houses get built especially since many of the smaller local developers went bust when the market collapsed.

 

The big companies prefer to 'drip feed' new houses on to the market to maintain prices.

 

The price of land is dictated by the price of houses, not the other way around, but the effect is multiplied by the fact the government restricts the supply of land using planning law.

 

The simple way to increase the rate of house building is to release more land for development, which is sold on the basis it is developed within a strict timescale (so the big companies dont just land bank it). There is no shortage of land in the UK suitable for building on, but for polictical reasons it is kept back.

 

Maybe the govt should introduce a tax on land that has planning permission for housing development, but remains undeveloped- to encourage the land bankers to either sell it or develop it.

[angos]

This is not correct. It costs a lot more now to build a house due to increased requirements in building regulations and all the eco standards.

 

No it doesn't the cost of materials have been deflationary and labour costs have also gone down as immigration increased.

 

 

A handful of large house builders construct the majority of new houses. If they arent building, not many houses get built especially since many of the smaller local developers went bust when the market collapsed.

 

The big companies prefer to 'drip feed' new houses on to the market to maintain prices.

I agree

 

The price of land is dictated by the price of houses, not the other way around, but the effect is multiplied by the fact the government restricts the supply of land using planning law.

 

Not worth arguing about but I disagree.

 

The simple way to increase the rate of house building is to release more land for development, which is sold on the basis it is developed within a strict timescale (so the big companies dont just land bank it). There is no shortage of land in the UK suitable for building on, but for polictical reasons it is kept back.

 

Maybe the govt should introduce a tax on land that has planning permission for housing development, but remains undeveloped- to encourage the land bankers to either sell it or develop it.

 

We don't have enough land to grow the food we need now, so what happens when more of our farmland as houses on it.

[Ms Macbeth]

I don't believe there is an overall shortage of housing across the UK. Anyone with enough money can find something to buy or rent. Its mainly social housing that is in short supply especially in London and the South East. Its never going to be built in large quantities again, certainly not by councils.

 

http://www.thebureauinvestigates.com/2013/05/20/voices-from-the-frontline-of-the-housing-crisis/

 

I don't think there is a 'one size fits all' answer.

[lil-minx92]

No it doesn't the cost of materials have been deflationary and labour costs have also gone down as immigration increased.

 

 

I agree

 

 

 

Not worth arguing about but I disagree.

 

 

 

We don't have enough land to grow the food we need now, so what happens when more of our farmland as houses on it.

 

Which bit do you disagree with??

 

Furthermore I also suspect a lot of the large house builders are technically bust, which is why they don’t develop the land in their land banks.

Its a similar situation to the pub-co's (pub co’s are property companies that own pubs and lease them out to individuals or pub management companies etc).

The large pub co’s borrowed fortunes from the banks in the pre-recession years and bought thousands of pubs which are now worth a fraction of the price. If they sold them all off today they would not even get close to paying off their debt to the banks. In theory they are bust. In reality they keep trading.

The pub co’s don’t want to go bust (or rather their share-holders and well paid executives don’t want their pub co to go bust), and the banks don’t want the pub co to go bust because that will crystallise a huge loss.

So, some creative accounting is in order. The pubs’ values are kept artificially high in the accounts to make it look like everything is in order, whilst the pub co’s slowly sell off their assets (usually the crappier pubs in their portfolio) to bring some cash in to pay their loan re-payments off (it’s like a home owner selling off their house brick by brick to keep up with mortgage). Every time it becomes apparent that they cant keep up with their repayments (because they are having to virtually give the pubs away) and really ought to be calling in the administrators, they have a chat with their banker who, conscious he doesn’t want the bank to be saddled with a huge loss on his watch (it will affect his bonus after all), agrees to restructure their loan to make it more manageable.

Eventually it will all cave in, but the game is to put it off as long as possible.

The house builders bought expensive land back in the day. This sits on the accounts at inflated prices. They cant afford to develop much of this land they paid high prices for because it’s real value would become apparent. This land has to stay on the accounts to make the company look solvent.

To service their debt they drip feed houses onto the market and develop sites they have bought cheaply since land prices dropped which are actually profitable. The once expensive land in their land banks will remain un-developed until house prices recover, or they are forced to do something by law.

[tinfoilhat]

There isn't a political will to get house prices down. Why would there be? Hands up all home owners (the vast majority of the country) who want thousands knocking off the value of their house? Won't be many people voting for that.

[Obelix]

Me please! I can buy a larger house cheaper then and I'm not daft enough to use it as a piggy bank.

[Anna B]

I think we should be doing a lot more to bring disused houses back into use. There are loads of them and they would go a long way to ending the housing crisis.

 

Any new building should be done on brownfield sites. There's lots of that available too.

 

I also think it makes no sense to have flats standing empty when there are people without homes. Why don't the councils buy them and rent them out themselves, rather than leaving it to private Landlords?

[Ela James]

a BIG THANK you to everyone for the comments, to angus, altus, WallBuilder, Cyclone, erebus, Obelix, lil-minx92, Ms Macbeth, tinfoilhat and Anna B

 

I am no expert but the impression I get after reading and re-reading the above there seems to be a monopoly over who can buy a house, when, where, and how … and in the main it has very little to do with supply & demand

 

To say that building many houses in a short space of time would devalue the houses of many owners makes sense but doesn’t solve the problem does it?

And to say that we have enough houses as it is and don’t need to build more I think is against what I know … but even if it is true, what do you say to “ Government has an unrivalled opportunity to create jobs, provide tens of thousands of homes and help the economy” end Quote by Mike Jones, from Local Government Association

 

Personally, I think there are other factors that are having effects on the market to make it the way it is ( ie: unhealthy and unlike many European countries ). I very much doubt it would continue as it has been simply because the forces controlling the market, especially from outside UK would make it impossible to continue

[truman]

I am no expert but the impression I get after reading and re-reading the above there seems to be a monopoly over who can buy a house,

 

Who is in this monopoly?

[bullerboY]

Just been out around CortonWood area today and there are thousands of new built properties up there so some one must be buying them.My son is a plasterer and there is not enough hours in a day for him he is having to turn it down and he is mainly in the Derby area so just where is the money coming from.Depression?what depression.