The excuses are typically a mix of
1) Too many immigrants
2) Lack of rent controls
3) Greedy developers
4) AirBNB
5) Empty houses
Depending on their political views.
They also leave out the biggest single problem: years of very low interest rates inflating prices, making it hard for people to afford deposits though. There is BoE research showing interest rates are the biggest factor in the earnings to house price ration.
"Immigrants" also leaves something out. Foreign investors and rich foreigners buying holiday homes/second (or third or fourth etc.) homes are a factor in some places (especially London) - in much the same way that people from London and other big cities push up prices in places like Cornwall.
Notoriously, many newbuild flats end up empty because not many people can afford the rent, and they're really just investment tokens anyway.
Property is like Bitcoin with bricks.
https://www.actiononemptyhomes.org/
London, where the main problem is (two people on minimum wage can buy a 3 bed house pretty much everywhere in the country outside the south east) has under 2.5% either empty, in use for short term lets like airbnb, or used for people who have a flat in London and a family home elsewhere.
https://static1.squarespace.com/static/6553693f7d629a133b6a4...
https://www.theguardian.com/society/ng-interactive/2023/jun/... take a look at this map - all the bits of Britain that are actually nice to live in are in "can't buy, can rent" or worse.
Prove me wrong, give me an example area?
Instinctively it feels like about 2/3rds of people live in "unaffordable to buy" areas. Worse it's probably the best paid 2/3rds of the country.
Urbanization has been failed. Supply of housing has not kept up with labour around in most urban areas.
Definitely so in London where you also get a lot of very large houses (big enough to be converted into multiple flats) being bought by the rich and super rich. Talk to someone in a business linked to luxury London housing and see how long phrases like "family office" take to come up.
Maybe in the UK, but in Canada we have the same problems (larger by the looks of it) and our government blocked foreign money with zero noticeable impact.
I think foreigners are a scapegoat for the cumulative impact of decades of bad government policy at all levels of government, including bad monetary policy.
Those numbers do not count the people who moved to the UK (mostly London) to avoid paying tax under "non-domiciled" exceptions which the government has promised to abolish next year. The main opposition party has endorsed this policy AFAIK so things should start changing from next year as far as those go.
From an economics perspective, lets assume there was no govt regulation at all. I am not sure if the problem would be fixed. There is a trite old sayings .. "they aren't making any more land" or "location-location-location". But this inelastic supply of land is nothing new. So why is this happening now?
Interest rates have been ultra low (versus historic norms) in the developed world for two decades. And prior to that they were on the decline.
Similarly, the developed world has largely not been building housing in line with population growth. For decades.
We are at the natural conclusion of decades of bad policy and we aren’t going to squeeze out of it in a few years. It will take decades of good policy to fix this and our leaders don’t seem programmed for maintaining good policy for more than a few years until there’s a hint of prosperity and then they fritter it away.
The problem here at least is that many homebuilders went bankrupt after the housing crash and the supply of skills and willingness to build homes decreased for a generation.
We desperately need a pro growth government next. Desperately.
The situation is even more extreme in places like Italy where the young are even less numerous compared to the old than in the UK.
It's the political equivalent to deflation. If every generation is smaller than the last, you end up with a gerontocracy and no-change society. To maintain pro-growth policies, you need a critical mass of young people who embrace change and want to grow. Otherwise you get stuck in a positive feedback loop of more and more power and money concentrated among the old which depresses the birthrate.
We can't have a situation where demand is outstripping supply to this extent and expect our economy to grow. We need workers able to live somewhere near where they work, we need them to not have a mortgage so high that they feel unsafe in moving jobs, starting a business or going freelance. We need folk with disposable income to spend on other sectors besides overheating the property market.
All this promotes growth in our economy, housebuilding also of course generates work for builders, electricians, trades, road designers, rail companies etc etc
In my experience, the people adopting these explanations are usually neutral or hostile to actual new housing, aside from their pet solution of punishing their chosen scapegoat.
The challenge is there's a grain of truth to all of these explanations. House prices and rents would go down if vacancies were outlawed. But these solutions that target scapegoats are probably insufficient to move the dial much. The vacancy rate in Ireland has gone down over the last decade while prices and rents have skyrocketed. AirBNBs are a small fraction of housing.
The two biggest things you can do to reduce prices and rents is to build a lot by removing obstacles (whether private or public housing), and reduce incentives (tax and otherwise) for investors to buy and hold land.
Well, (1) isn't. It says demand outstrips supply, as the birth rate on its own would be a shrinking population in the UK. The obvious, low cost answer is to reduce demand. An 'x' in a box, saying no to immigration. Instead we have yes, and then thousands of pounds buying land, building houses, co2 emissions, loss of countryside, environmental destruction, loss of arable land and so on.
We could reduce immigration to pre 1997 levels, when the economy grew at similar rates to now. The arguments for mass immigration in the UK are unproven simply because stopping immigration and seeing the result hasn't been tried. You could argue that with 10x 1997 levels we should have a measurable increase in annual GDP better than pre-1997. We don't. With a shrinking population, Japan's economy has stagnated and contracted a little. But nothing catastrophic. Perhaps the pursuit of 'GDP' is simply the wrong thing to be concerned about.
House builders are happy with the current situation. They're pretty much a cartel, as they're solely responsible for the supply of new houses. They don't want to lose money on sites they've paid over the odds for. They don't want to be told to deliver more houses, if they could, as more supply would be competitive and prices would potentially drop, as would profit. Which is why they donate huge amounts to the national political parties, as well as locally as well to keep the status quo.
Near me there's several fields of Grade 1 land owned by Bellway and Redrow for the last 2 decades. 20 years. The land has permission. They've not yet built on it. Can't think why.
The fact is that the UK is creaking at the seams and the elephant in the room is too many people. Yet, for the NHS it's 'Tory underinvestment' (despite never having more money, and the highest ever staffing levels), and for all the potholes it is again... Tory underinvestment, despite vastly more traffic and no new roads. Similarly with pretty much everything else. Demand is people using the NHS. Demand is people using the roads. And yet somehow we've not raised silly amounts of extra tax from the extra people to pay for any of the extra stuff.
But it's always fashionable to blame the Tories (as they're mostly in power), rather than apply a bit more critical thought to the problem. Next 5 years at least, will be Labour, but it will still be the Tories' fault. And I'll place a small wager than net immigration to the UK will still be 200k per annum, so another 1mm people, but that will be ignored in favour of 'Tory underinvestment'. Every government casts a shadow on the next one, some shadows are longer than others. This one started in 1990, and got worse in 1997.
> honestly considers all the different factors that contribute to the housing crisis
It's not really a 'crisis', it's just, well, business as usual. I remember the same topic covered in the late 80s and early 90s. 'We're not building enough', 'there's a housing crisis'.
Sadly the UK housing market is so entwined in the economy, it will be decades for a correction to happen. Homeowners won't sell below purchase price. House builders won't sell without making a profit. Lack of house sales paralyses the economy. No labour mobility, loss of stamp duty and so on.
We cannot force prices down without causing problems in the economy - tradesmen, solicitors, estate agents, investors, and so on. There needs to be a multi-decade plan from 'the Government' to somehow reduce house prices. But that seems to be well above the level of ability of our politicians and political system.
Stamp duty is terrible, it stops movement. Replacing with increased property tax (say at 1/10th of stamp duty per year) would be far more sensible. Or we could just tax the land -- good look offshoring that.
What has happened to house prices since 2016 for example?
(I actually don't agree that legal immigration is bad, if folks want to come from wherever to buy our houses, work in our cities and so on that's actually great for our economy. However we do need to build new housing in line with that, not just pretend it's not happening)
Population of 18-65s and percent of total population
2008: 39.2m, 63.4%
2018: 40.9m, 61.6%
2028: 41.3m, 59.3%
2038: 41.3m, 57.2%
Given that tax relies heavily on taxing working people, and the number of working people, and that immigrants tend to be of working age, immigration is essential in stemming the retiree-centric population.
The other alternative would be to swing more of the economy to looking after non-workers (mainly the over 65s), but we won't tax those people despite the massive wealth they have.
The problem is the Tories were re-elected on the basis of 'leveling up' the regions but f-all has actually happened so the metaphorical well has been poisoned.