House prices – a lesson in economics!

Chris Huhne, former MP waded into the debate on housing last week.  

“Our housing is in crisis – we need both brownfield and greenfield sites.   The tougher the planning controls, the higher the house prices.  We must ease restrictions in our cities and in the countryside.

The signs are that we are heading into another sharp rise in house prices, making matters worse. Last week the Royal Institution of Chartered Surveyors survey – one of the best leading indicators of house prices – implied 15% to 20% price rises over the coming year were possible.

The brave political promise would be to recognise that the supply of housing land and sites – brownfield or greenfield – is ultimately the government’s responsibility. Some of the cheapest housing of any major city in the US is in Houston, Texas, where there are no planning controls (as there were few in Britain before 1947). The tougher the planning controls, the higher are house prices.

Comment   Well yet again another lecture on why house prices are going up!    It’s all the fault of the planning system.   Planners holding back development.   If only they allowed more housing to be built then well prices would fall!

Hmmmm.   It sounds so simple.  For a start what about demand? Prices reflect not only supply but demand.   If there is a lot of demand for houses then prices rise.   London house prices have been rising for some time – lack of supply? – errr well actually lots of houses have been bought by people both from the UK and from abroad who see housing as an investment.  With lots of funds they easily bid up prices!   Some people it is alledged own seven or eight properties!

As we know in Cornwall lots of houses have been built, far more than the number required to meet local housing need – but house prices have not fallen – how odd?   Well not really, when you look at what has happened to many of the extra houses – some have gone for holiday homes and holiday lets, some have gone to people encouraged to move to Cornwall by estate agents looking to sell properties.

As for planning controls – well they were brought in to prevent the rash of housing that spread pre-war.  Britain is already rather over-developed, there is not  a lot of land left.   Now one issue that is conveniently ignored is that population pressure increases the need for more housing.  And some people seem to think that a) population pressure has nothing to do with housing pressure; and, b) there is no limit to the population of Britain.

No planning controls in Houston?

Hmm well the Planning and Development Department in Houston does the following:

  • Regulates land development in Houston and the extra territorial jurisdiction.
  • Reviews, investigates and promotes land regulation policies for the changing demands to Houston’s growth and quality of life.

Regulate and ‘no controls’ do not mean the same or do they?

So when anyone wants to argue their case please take note of:

  • the real world not some imaginary one
  • all the factors that affect house prices
  • get their facts right.

A question – is Chris Huhne forgetting that he has seven or is it eight properties?



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