Fancy finance or cheaper houses?

 

financial success

All so easy

I recently wrote a blog arguing that we could make more use of the  burgeoning financial education/wellbeing brigade to get youngsters saving for proper housing of their own. My thoughts focussed on finance but of course the Government want the yoof to accelerate savings through help to buy savings products, most especially the lifetime ISA.

 

Rather more interesting than my blog are the comments it has inspired, especially from Con Keating – who can be relied upon to take a contrarian and informed position. In case you missed his comment – here it is!


Not finance but the price of housing

The problem here is not finance, it is the price of housing. This will not go away unti we start building enough houses to meet demand – the shortage is over one million homes and demand is growing at around 250,000 a year. The roots of the issue are clear, the post-war planning laws, with the issue being compounded by the policy of selling council kousing – littleof the proceeds from those sales went back into new housing, and councils had built a fairly steady 120,000 or so a year – this in fact is remarkably close to the annual shortfall.

It is odd, but we still demonise the inner city council estate, even though the majority of that stock is now owned privately by members of the middle class. Increasingly, that “sink” problem is moving away from the inner to the outer city – and we see the same thing in France with the banlieu.

Solving the finance problem will just exacerbate the price issue. Is there a solution – well the answer is yes – build more houses, lots of them – step up production from the current 130,000 or so to closer to 300,000 (which is probably the upper feasible limit given labour constraints).

Will this happen – of course, not. Do you want to be the politician that tells house owner voters that he or she want to build sufficient housing to make sure their house does not increase in price and may even go down. If you can find a way to get elected with that agenda, you will solve the problem, and be one hell of a magician. By the way, I will vote for you, if allowed


Not housing but proper housing

“Dave C” who is becoming a regular, argues not just for more housing, but proper housing that people want to live in. I am hoping to go up to Leeds/Wakefield and see what Legal and General are doing with these pre-pack houses. We tried that after the war- it’s surprising how durable it has proven .Here’s Dave C….

And they need to make nicer quality, lower density housing too.

These new builds are horrible and purely profit maximised.

While the big builders are all motivated by huge margins consumers get terrible vfm.

There are a lot of new builds going up in Harrogate right now and they’re all horrible.

Gardens west or north facing. Roads a few feet off the front door. No trees. Apparently large designs, but they’re ‘mini’ houses. 4 bedrooms you can’t use with double beds and furniture!

The while system from top to bottom is all about greed and money.

It won’t change while people see a home as an investment and a spineless government perpetuate it.

UK gov should print their (our) own money at zirp, pay off the 1tn debt, and spend the saved ‘interest’ to bank vampires by building housing stock at zero interest rates for all.

Houses/homes are infrastructure, if you want a happy populace buying stuff and breeding and feeding a strong economy, they need cheap homes and low taxes/debts.

Which is one of the best posts I have ever had. Dave goes on to harangue me for supporting spurious Government initiatives ending with a magnificent tirade

These pseudo socialist government incentives that appear helpful, while actually only existing to support a failing ponzi, is a travesty.

Those taking them must be stupid. Those who dreamt them up are as corrupted as the types who run Wonga loans or ‘kneecap finance’


Nudge or kneecap?

As with pensions so with housing, the incremental improvements of “nudge” or wholesale reform with massive Governments intervention.

Do we really care about inter-generational unfairness? Do we care to take a 10-20% haircut on the equity in our property?

Do we really want to be self-sufficient in old-age or are we hanging in there hoping that auto-enrolment will get us there?

Or are we prepared for the kneecap, not of Wonga but of a brutal state that decides it will build 300.000 new houses a year and will introduce a new tax called compulsory savings?

You decide what kind of society you want and you vote for the one suits you. Right now I’d give the knee-cap solution one chance in a hundred, but I didn’t give Leicester City one chance in five thousand!

uk house prices

not so easy

About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
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4 Responses to Fancy finance or cheaper houses?

  1. Brian Gannon says:

    Dave is right. Housing built by private developers is designed by the profit motive. Not only are the houses built poor quality but they are also the wrong size. Thatcher sold the renters of today down the river by selling the council housing stock and pocketing the proceeds. She also played to the human instinct of greed and caused a seismic shift away from a culture of community to one of self acquisition. We are now in a society where excessive wealth is seen as success where disgusting amoral entrepreneurs are lauded for buying 4 yachts and screwing their companies out of dividends. Con Keating is right. We don’t want to make it easier to buy overpriced houses we need to build more. And we need one and two bed houses that are affordable. If that means my own overpriced house loses a couple of hundred thousand pounds i would accept that. I could then buy a different lower priced house when I retire? Houses used to be built for people to live in. Nowadays they are built for landlords and property developers to make money. Our children and lower earners generally can’t afford to buy and even worse can’t afford to rent. It’s a poor society with a poor set of values that places profit and efficiency over health housing and education.

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  2. nigel hawkes says:

    I don’t remember the tower blocks of the 1950s or 60s being particularly desirable or of very high quality. Give me a home built by a private developer.

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  3. Con Keating says:

    Give me a home built by a private developer – ok I will give you the latest wheeze – the redeveloped or converted office block – in Barnet you get a flat of 16 square meters – even though we have a minimum standard of 37 square meters. And as this is all central government policy, though the local council can object,they can’t stop it.
    It suits government – they report units but not their quality.
    When I was at school in the 50s and 60s the tower blocks and council housing generally was very attractive to its tenants. I was invited by one of my day-boy friends to come visit him at his new home one saturday – something that had never happened before. It was on the ninth floor of a tower block. His mother proudly showed me around, very proudly. It had its own toilet, and it was inside, and not shared. It had a bathroom, with hot water. It had central heating, even in the bedrooms. This was luxury; she thought she had died and gone to heaven. She said she was going to get a washing machine – a Rolls Razor – and was taking a morning office cleaning job to pay for it.

    The problem was that the lifts broke down and the community social structure did not extend to “living in the sky” and with that drugs and crime grew in prevalence, and councils continuingly underinvested in repair and maintenance, particularly their hedonic standard – so as time passed they became less and less desirable.I am not saying this was the fault of councils; it really wasn’t. Central government policy kept them short of funding and to achieve the targets of building to meet local demand and needs they also had to resort to building on the cheap.
    I will cite another instance from those school days of another day-boy who was leaving the school because his family were moving to Walthamstow, I think it was, outside of the catchment area and sensible travel arrangements – and the reason was that they had been offered a council house there, not a flat, with a garden!

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  4. Excellent Henry, and your correspondents are talking sense. Just as the last 30 years has seen one disaster after another in pensions legislation, the same could be said of housing. Short term-ism and political expediency have caused no end of problems. As Malcolm X said, those that do not learn from the mistakes of the past are condemned to repeat them.
    _______________________________________________________________________

    Instead of superfunds, let’s do an ‘Argentina’ and nationalise DB pensions and pay off the national debt. Then go ‘pay as you go’ for everyone but get it right and affordable from day 1 with some flexibility for longevity improvements, etc.
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    Too much is wasted and duplicated achieving a less than mediocre overall performance (in general, not just investment). I can’t see Turkeys voting for Christmas and George ‘6 jobs’ Osborne hasn’t got any diary time left to head up a commission on the whole thing so Henry and Con will have to!
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    Mortgages and pensions are great bedfellows by the way! 25 years paying for the mortgagee is well mirrored by a pensioners needs – see link for my 2012 article which touched on this:
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    https://link.springer.com/article/10.1057/pm.2012.24

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