Tuesday, April 26, 2022

Re-distribution could lower house prices while building will not...

 For somebody who is chastised for saying that increasing supply of houses will have little impact on prices it is of some relief to have this confirmed by authoritative research. Banking on Property: What is driving the housing affordability crisis and how to solve it- Positive Money March 2022


"Although these supply-side arguments may sound plausible, the available evidence indicates that they fail to explain why housing has become so unaffordable for many. In contrast to perceived wisdom, since the mid 1990s – the period that has seen the most rapid house price inflation – the English housing stock has grown by 168,000 units per year on average, while growth in the number of households has averaged 147,000 per year (Mulheirn, 2019). As a result, while there were 660,000 more dwellings than households in England in 1996, this surplus grew to over 1.1 million by 2018. Similar trends are apparent in Scotland, where a surplus of 74,000 in 1996 more than doubled to 169,000 by 2017, and in Wales, where the surplus increased from 56,000 to 92,000. Even over the past three years, when criticism of a perceived housing shortage has intensified, growth in the supply of housing has continued to outpace growth in the number of households in England." Those with the money are owning more space and denying it to those without.  This is in the form of second homes other forms of under-occupancy - although a couple living in a 4 bedroom house as is now commonplace should not influence the above figures that are simply based on households and dwelling units.

The report goes on,"If the primary driver of house prices is the balance between the new supply of housing and new household formation, then the increase in surplus housing stock would imply that house prices should have fallen relative to incomes. But as outlined in section 1, in reality house prices soared during this period.".  The scale of under-occupation might not affect housing numbers but probably has an affect on the price paid for a square foot of a house/flat to buy or rent. Demand is created by the wealthy for space, whether it is to be occupied or not.

And while I am/you are here, this podcast  about the bioregional construction economy is really thought provoking

and Inside Housing have reported that giving money to social housing providers has utterly failed to kick start a programme of energy refitting. There are profound problems with the supply of labour and materials that Government will have to intervene at every level. There are over 25million dwellings in all sectors to be refitted in the next ten years and we have only experience false starts.



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