Sunday, June 05, 2011
A property owning democracy
Andrew Rawnsley has a thought-provoking article on the dream of a property owning democracy in this morning's Observer:
The moment when an idea achieves universal consensus is often precisely when the concept starts to eat itself. The steep rise in values made British homes very pricey relative to income. Then came the financial bust and much tighter rationing of mortgages. A slew of surveys and reports has recently confirmed just how tough it has become to get a foot through the door. The average age of a first-time buyer fell to around 25 when Mrs T was in her pomp; it has now climbed to 37; the National Housing Federation forecasts that it could soon rise to 43. The postwar trend of more owning and less renting is sharply reversing. It may be a little premature to pronounce the death of the property-owning democracy. It is fair to say that it is having extreme difficulties with breathing.
He points out that the difficulty of getting into the property market is having a marked impact on social mobility and may have far-reaching consequences for the state due an increasingly aging population:
Fewer people owning their homes means fewer people with money in property when they become elderly to support their retirement and care. They will be losers when young and losers again when old. Our already highly unequal society will become even more dramatically divided by the widening wealth gap between home-owners and the rest. This will entrench the privileges of the baby-boomers, who got into property while it was still affordable, over younger generations who find that the ladder has now been pulled up beyond reach.
The most politocally acceptable way of dealing with this problem is to increase the supply of homes so as to drive prices down:
Britain needs to build more houses. In just one year, 1953, Harold Macmillan presided over the construction of 300,000 new homes. He understood that a property-owning democracy could not be realised unless there were enough properties. This basic requirement eluded his successors, whether they were Conservative or Labour. The social housing sold off by Mrs Thatcher was never replaced. House building in the last year of Gordon Brown fell to a postwar low. We are currently building around 100,000 homes a year when new household formation is running at about 250,000. So long as demand continues to be so much greater than supply, the prospects for the young – and a lot of the not so young – will become ever bleaker.
Politicians still talk about a property-owning democracy, but it is just piffle and wind unless they do the necessary to make it a property-building one.
This is particularly important in Wales where the Government's own research says that an estimated 284,000 additional homes are required in Wales between 2006 and 2026. 183,000 of these are in the market sector and 101,000 in the non-market sector. These estimates average 14,200 dwellings a year - 9,200 in the market sector and 5,100 in the non-market sector. In addition, there is a current backlog of unmet housing need which is estimated at 9,500 households.
Unless we start to hit these targets then the property-owning democracy will be a thing of the past.
The moment when an idea achieves universal consensus is often precisely when the concept starts to eat itself. The steep rise in values made British homes very pricey relative to income. Then came the financial bust and much tighter rationing of mortgages. A slew of surveys and reports has recently confirmed just how tough it has become to get a foot through the door. The average age of a first-time buyer fell to around 25 when Mrs T was in her pomp; it has now climbed to 37; the National Housing Federation forecasts that it could soon rise to 43. The postwar trend of more owning and less renting is sharply reversing. It may be a little premature to pronounce the death of the property-owning democracy. It is fair to say that it is having extreme difficulties with breathing.
He points out that the difficulty of getting into the property market is having a marked impact on social mobility and may have far-reaching consequences for the state due an increasingly aging population:
Fewer people owning their homes means fewer people with money in property when they become elderly to support their retirement and care. They will be losers when young and losers again when old. Our already highly unequal society will become even more dramatically divided by the widening wealth gap between home-owners and the rest. This will entrench the privileges of the baby-boomers, who got into property while it was still affordable, over younger generations who find that the ladder has now been pulled up beyond reach.
The most politocally acceptable way of dealing with this problem is to increase the supply of homes so as to drive prices down:
Britain needs to build more houses. In just one year, 1953, Harold Macmillan presided over the construction of 300,000 new homes. He understood that a property-owning democracy could not be realised unless there were enough properties. This basic requirement eluded his successors, whether they were Conservative or Labour. The social housing sold off by Mrs Thatcher was never replaced. House building in the last year of Gordon Brown fell to a postwar low. We are currently building around 100,000 homes a year when new household formation is running at about 250,000. So long as demand continues to be so much greater than supply, the prospects for the young – and a lot of the not so young – will become ever bleaker.
Politicians still talk about a property-owning democracy, but it is just piffle and wind unless they do the necessary to make it a property-building one.
This is particularly important in Wales where the Government's own research says that an estimated 284,000 additional homes are required in Wales between 2006 and 2026. 183,000 of these are in the market sector and 101,000 in the non-market sector. These estimates average 14,200 dwellings a year - 9,200 in the market sector and 5,100 in the non-market sector. In addition, there is a current backlog of unmet housing need which is estimated at 9,500 households.
Unless we start to hit these targets then the property-owning democracy will be a thing of the past.
Comments:
<< Home
"There's too much mistaking house price inflation for economic wellbeing"
So prices need to come down. Slowly over a long period so that everyone needing to sell a house takes a relatively small hit.
So prices need to come down. Slowly over a long period so that everyone needing to sell a house takes a relatively small hit.
# posted by 
: 11:23 AM
: 11:23 AM
"This is particularly important in Wales where the Government's own research says that an estimated 284,000 additional homes are required in Wales between 2006 and 2026. 183,000 of these are in the market sector and 101,000 in the non-market sector. These estimates average 14,200 dwellings a year - 9,200 in the market sector and 5,100 in the non-market sector. In addition, there is a current backlog of unmet housing need which is estimated at 9,500 households."
Which government's own research? Where are all these additional households going to come from? The boomer generation is retiring. There should be less households in future.
Why is there a shortage of housing? There cannot be. I personally know 2 individuals in west Wales who have BTL portfolios of over 100 properties each. Then there are absolutely thousands of empety properties along with thousands of second homes. If politicians wanted to tackle this problem they could do so easily like to allwoing BTL investors write off their interest payments as a loss against tax.
Which government's own research? Where are all these additional households going to come from? The boomer generation is retiring. There should be less households in future.
Why is there a shortage of housing? There cannot be. I personally know 2 individuals in west Wales who have BTL portfolios of over 100 properties each. Then there are absolutely thousands of empety properties along with thousands of second homes. If politicians wanted to tackle this problem they could do so easily like to allwoing BTL investors write off their interest payments as a loss against tax.
# posted by : 3:24 PM
: 3:24 PM
Well the research was commissioned by the Welsh Government, it is on their website, it is evidence-based and projects demand up until 2026 on properly formulated population and household trends. If you want to challenge it then you need a bit more than anecdotal speculation.
I also think it is a bit more complex than the single solution you offer though you are right about bringing empty properties back into use.
I also think it is a bit more complex than the single solution you offer though you are right about bringing empty properties back into use.
Can you please link to their evidence-based research?
Are you not aware of the BTL phenomenom? There is nothing anecdotal about it.
Are you not aware of the BTL phenomenom? There is nothing anecdotal about it.
# posted by : 3:38 PM
: 3:38 PM
http://wales.gov.uk/docs/desh/research/100707housingdemandandneeden.pdf
Yes I am aware of Buy to Let and I agree that it can form part of ther solution if the UK Government was prepared to relax regulations and make it more attractive. It is not a solution available to the Welsh Government though.
The anecdotal evidence I was referring to was your reference to the 2 individuals and their property portfolios and the availability of second homes for BTL. I suggest that there would need to be a more systematic study of ownership, condition, location and type before you could promote this as a solution.
Yes I am aware of Buy to Let and I agree that it can form part of ther solution if the UK Government was prepared to relax regulations and make it more attractive. It is not a solution available to the Welsh Government though.
The anecdotal evidence I was referring to was your reference to the 2 individuals and their property portfolios and the availability of second homes for BTL. I suggest that there would need to be a more systematic study of ownership, condition, location and type before you could promote this as a solution.
"The anecdotal evidence I was referring to was your reference to the 2 individuals and their property portfolios and the availability of second homes for BTL."
Well I know of these two individuals because they have been in the media talking about their portfolios. One appeared on the programme 'Secret Millionaire'. There are many more with smaller portfolios. There's a well publicized couple in England who have over 700 properties.
You say that the Welsh government has no to change the taxation rules on BTL in Wales but I do believe your party is in power in London is it not?
I'm not sure if you misunderstood me earlier or did I incorrectly read a sentence of yours but I view BTL as a problem and not as a solution.
Thanks for providing the link.
PS Housing is one of the great problems facing the UK. It brought down Northen Rock for example. They are far too expensive with people over extending themselves to get on the property ladder. Too many people are getting rich quick through tax breaks for the BTL brigade. A country cannot become wealthy by flogging expensive houses to each other but this is the route that many entrepreneurs take. Germany.....whose entrepreneurs make things do not have the housing problems that the UK has.
Well I know of these two individuals because they have been in the media talking about their portfolios. One appeared on the programme 'Secret Millionaire'. There are many more with smaller portfolios. There's a well publicized couple in England who have over 700 properties.
You say that the Welsh government has no to change the taxation rules on BTL in Wales but I do believe your party is in power in London is it not?
I'm not sure if you misunderstood me earlier or did I incorrectly read a sentence of yours but I view BTL as a problem and not as a solution.
Thanks for providing the link.
PS Housing is one of the great problems facing the UK. It brought down Northen Rock for example. They are far too expensive with people over extending themselves to get on the property ladder. Too many people are getting rich quick through tax breaks for the BTL brigade. A country cannot become wealthy by flogging expensive houses to each other but this is the route that many entrepreneurs take. Germany.....whose entrepreneurs make things do not have the housing problems that the UK has.
# posted by : 4:14 PM
: 4:14 PM
Another thing which would help to bring house prices down would be for the government to limit the amount they are willing to pay in housing benefit. There were cases of families receiving 100k in housing benefit in expensive areas of London. This is just outrageous and just goes to show how vested interests have allowed this practice to continue. I think the current government have made noises about tackling this but I'm not sure if they've done so. Also, London is without a shadow of a doubt a driver for HPI. I just don't understand why the UK government is allowing so many despotic regime leaders have homes in London. Even Gadaffi has property there which I believe they have not confiscated. Sharif of Pakistan also has a pad there as well as countless Russian Oligarchs. This is something your party at Westminster should tackle. Don't you agree?
Post a Comment
# posted by : 4:44 PM
: 4:44 PM<< Home
