11,000 empty homes – not the real problem!

More than 11,000 homes across the country have been lying empty for longer than a decade despite the housing crisis and rising homelessness, according to new research by the Liberal Democrats.

The data was collected through freedom of information requests to about 275 councils, which showed 60,000 properties had been empty for two years or more, 23,000 for five years or more, and over 11,000 have stood empty for at least 10 years.

Vince Cable, leader of the Liberal Democrats, told the Guardian: “At a time when the homelessness crisis is worsening and more and more people are sleeping out in the cold on our streets, it is a national scandal that thousands of homes across the country are sitting empty.”

https://www.theguardian.com/society/2018/jan/01/over-11000-homes-have-stood-empty-for-at-least-10-years-data-shows

One of the annoying aspects of housing policy is the way in which political parties misuse and misrepresent data. Now while it is a legitimate concern that houses are empty for a long period (though why they are empty would be useful to know), what about all those ’empty’ houses used for holiday lets, holiday homes etc? A far larger number than the number of empty homes!

[Oh and it would be better if Sir Vince did not continue to ignore the role played by his party in making it harder for poorer people to stay in accommodation due to welfare cuts!]

https://www.theguardian.com/society/2018/jan/01/over-11000-homes-have-stood-empty-for-at-least-10-years-data-shows

Advertisements

Housing – house prices and home ownership – (technical stuff)

In this blog we examine some aspects of housing. All the material was produced by Oxford Economics.

The housing market is at the top of the political agenda. Growing concern has tracked two recent trends: rapidly rising house prices since the late 1990s, and home ownership rates that have dramatically declined since the start of the century. Over the ten years from the end of 1996 to the eve of the financial crisis, house prices rose by 151 percent after adjusting for general inflation, a pace of growth that has recently resumed. Meanwhile, the UK home ownership rate peaked at 69.3 percent in 2002 but has since fallen rapidly to stand at 63.1 percent by early 2014.
In this context, the Redfern Review into the decline of home ownership commissioned this study in order to:
 establish the drivers of these two important trends;
 understand the outlook for home ownership and house prices; and
 shed light on the levers available to policymakers to change the outlook for both house prices and home ownership rates.

In this report we set out a new approach to modelling the macroeconomic drivers of house prices and home ownership based on data from 1992 to 2014. This approach enables us to explore the drivers, outlook and policy options for the housing market in a more comprehensive way than most past studies, which tend to focus only on one aspect, such as house prices.

The modelling results illustrate how sensitive house prices and home ownership rates are to a range of different macroeconomic drivers, including the supply of housing, the cost of capital and people’s incomes. The model also allows us to diagnose the underlying causes of recent trends—why have prices risen and why has the home ownership rate dropped? The answers are somewhat surprising in the context of the current public debate around housing, and have important implications for the appropriate policy response.
1.1 UNDERSTANDING THE HOUSING MARKET
The housing market is commonly thought of as a market for a single thing—houses—when in fact there are two distinct markets in operation. First, by living in a house one consumes housing ‘services’—having a place to live. Second, by owning a house one is seeking housing as an investment. The primary financial benefit of housing as an investment for an owner occupier lies in preventing him or her from having to pay rent.
Two sets of prices govern these markets. Rental prices balance the supply and demand for housing services, while house prices balance the supply and demand for housing as an investment. These markets are separate from one another. It is entirely possible to be in the market for one and not the other. Renting makes it possible to have a place to live without owning a house, or, conversely, to invest in housing but not live in it.
Although they are separate, these markets are closely related to one another. It is the intersection of the two which determines both house prices and home ownership rates. In terms of house prices, rent is of central importance because it affects how appealing owning is compared to renting. House prices, however, do not have an impact on rent. This relationship is analogous to the one between the price of the widgets sold by a company and the company’s share price: the ability to charge higher prices to customers will tend to boost the company’s share price, but fluctuations in the share price have no direct impact on the price of the widgets produced.

While rent influences house prices, it is not their only driver. A wide range of factors translate the house price into an annual cost facing owners. The so-called ‘user cost of capital’ is determined most obviously by the mortgage interest rate—if this rises so does the cost of owning a property at any given price level. It is also influenced by the forgone income that could have been earned on equity that is instead tied up in housing had it been invested in some other asset. In addition to these, property taxes, the costs associated with maintaining a property, and expectations of inflation and capital gains, all affect how costly it is to own a house of any given price.

The balance between the cost of renting and the annual effective cost of owning a property is the central determinant of the home ownership rate. If the annual costs associated with ownership begin to exceed rent, more people will choose to rent and vice versa. In normal times, theory suggests that the costs of renting and owning should be equal.

Again, a set of other factors also influences the balance of home ownership. These include the incomes of would-be first-time buyers and the costs of mortgage credit they face relative to those for existing owners who tend to have more equity and can therefore secure lower mortgage rates. The absolute level of house prices also has an impact of the affordability of buying a property: a rise in house prices implies a bigger cash deposit to access better mortgage rates.

Overall the interaction of these forces gives rise to the housing market system depicted in Fig. 1. This informs the basic structure of the three-part model for the housing market that we have developed for this study. It illustrates, how income, for example, affects house prices directly, but also indirectly through their influence on rent, which also has its own impact on house prices. In turn, income affects home ownership through several channels, since the home ownership rate is determined by a combination of house prices and rental prices (as well as other factors where income plays no role).

Forecasting UK house prices and home ownership, A REPORT FOR THE REDFERN REVIEW INTO THE DECLINE OF HOME OWNERSHIP, NOVEMBER 2016

Homelessness – its not about building more houses its about funding and welfare!

There are those who misuse the homelessness figures to support house building. Homelessness is a tragedy for those involved and a poor reflection on our society.

The following quote is typical – Britain’s housing crisis will get much worse in the coming years unless building levels increase rapidly, according to Dame Kate Barker, an influential economist and former Bank of England policymaker. The UK has been building too few homes for years, forcing young people to live with their parents for longer, and pulling vacant homes back into use. But those sources of relief in the market are fast running out, and if building rates do not improve then homelessness will be the result, she warned.

http://www.telegraph.co.uk/business/2016/12/07/build-houses-homelessness-could-rocket-warns-top-economist-kate/

The National Audit Office has analysed the causes of homelessness in a report. The following extracts are from the report.

The ending of private sector tenancies has overtaken all other causes to become the biggest single driver of statutory homelessness in England. The proportion of households accepted as homeless by local authorities due to the end of an assured shorthold tenancy increased from 11% during 2009-10 to 32% during 2016‑17. The proportion in London increased during the same period from 10% to 39%. Across England, the ending of private sector tenancies accounts for 74% of the growth in households who qualify for temporary accommodation since 2009-10. Before this increase, homelessness was driven by other causes. These included more personal factors, such as relationship breakdown and parents no longer being willing or able to house children in their own homes. The end of an assured shorthold tenancy is the defining characteristic of the increase in homelessness that has occurred since 2010.

The affordability of tenancies is likely to have contributed to the increase in homelessness. Since 2010, the cost of private rented accommodation has increased three times faster than earnings across England. In London, the increase was eight times, with private rents rising by 24% and average earnings increasing by 3%. Homelessness tends to be higher in places where private rents have increased most since 2012-13.
11
Changes to Local Housing Allowance are likely to have contributed to the affordability of tenancies for those on benefits, and are an element of the increase in homelessness. Since 2011, the Department for Work & Pensions has introduced a series of welfare reforms, including capping and freezing Local Housing Allowance. These reforms have been designed to reduce overall welfare spending and to provide incentives for benefit recipients to take up employment. They have reduced the amount of household income that it is possible to derive from benefits where the Local Housing Allowance applies. At the same time, rents in the private rented sector in much of the country — London in particular — have increased faster than wage growth. All of these factors appear to have contributed to private rented properties becoming less affordable, which in turn is likely to be contributing to homelessness caused by the ending of an assured shorthold tenancy.

The government has not fully assessed the impact of its welfare reforms on homelessness. In our 2012 report Managing the impact of Housing Benefit reform, we found that the Department for Work & Pensions’ assessment of the impact of its housing benefit reforms did not reflect their potential full scale, including an increase in homelessness.1 Subsequent research commissioned by the Department for Work & Pensions in 2012 on the impact of housing benefit reforms on homelessness did not establish how many of these households would have been homeless if the reforms had not been introduced. The Department for Work & Pensions has not carried out any more recent analysis, despite the introduction of a series of further welfare reforms since late 2012.

Homelessness, HC 308 SESSION 2017–2019 13 SEPTEMBER 2017.

2018 – another year of delusions and fake news?

We can expect 2018 to be similar to 2017

Policy makers and the commentariat will continue to delude themselves:
that we can grow the economy and be sustainable

We can’t, the earths resources are finite

that population growth is good for society and the economy

as above – the earths resources are finite

On housing there will be more fake news

that we must build more houses as there are more households than houses being built!

Its not true but apart from here, Cornwall a developers’ paradise and Ian Mulhearn that’s what you will hear

There will also be a refusal to admit that Government policy on welfare; market failure (second homes/holiday homes/investment property); the low levels of income tax for high earners; a jobs market which has failed to provide good well paid jobs for many, particularly the young; have all made housing affordability a major problem.

Without leadership the majority of the public will carry on as before, consuming more than is needed to provide that extra boost to sustain a feeling of happiness; seeking greater spectacles in an effort to hide from the realities of a society in crisis.

More fake news – a ‘Guardian’ report!

The housing crisis could profoundly change Britain’s electoral politics, rallying support for the left but also potentially boosting the far right, Britain’s former top civil servant has said.

Bob Kerslake, the head of the civil service under David Cameron, told the Guardian the government’s failure to build enough cheap social housing and public anger over housebuilders’ bonuses means “more people feeling like they are losing out from the UK economy”

    The UK is 110,000 new homes short of the annual target of 300,000 set by the chancellor Philip Hammond in November’s budget to be achieved by the mid-2020s. New homes for social rent – the cheapest rents charged for council housing – are only being built at the rate of 6,800 a year.

We do NOT need to build 300,000 houses a year!
Between 2001-13 there was an average of 165,000 households per year, and 169,000 extra dwellings were built each year. Basically in balance, not a shortage!

He also thinks their access to the scheme should depend on their commitment to building affordable housing, and investing in training workers in construction skills. He predicts a looming problem with around 500,000 construction workers expected to retire in the next five years and many of the 200,000 from the EU expected to go back to their home countries as a result of Brexit.

“We are risk on the labour supply,” he said. “We face a major investment need in skills at a time when we are trying to build more.”

Does Lord Kerslake not realise that importing construction workers only adds to the demand for housing?

For actual facts on housing why not read Ian Mulhearns blog:-

View story at Medium.com

False news – on the BBC!!!!

‘You and yours’ a consumer programme on Radio 4 in the course of an interview it was stated “There are less properties available versus the number of people we have..”

But as we know this is untrue – there are more houses than households!!!!!

“and the shortage of properties is to do with baby boomers..”

Really? Evidence – none.

The problems that people face buying houses lie elsewhere, notably competition from second home/investment home buyers; and reductions in younger peoples income.

The BBC must stop propagating false news.

Boxing Day sales: bargain hunters out in force across UK – so never mind your environment!

Move towards online sales and rising prices fails to deter legions of shoppers for traditional first day of high street sales

The Christmas shopping marathon has continued in earnest with thousands of Britons queuing from the early hours to get their hands on Boxing Day bargains.

More than 1,000 people were waiting outside Next in Birmingham’s Bullring shopping centre before its 6am opening, with some eager shoppers standing sentinel from 12.30am.

Unlike most high street rivals, Next does not cut its prices before Christmas and the big crowds outside its branches, including 1,000 at the Silverburn centre in Glasgow and 500 at Highcross Leicester, show Britons think its sale, when its slashes clothing and homewares prices by two-thirds, is still worth getting out of bed for.

https://www.theguardian.com/business/2017/dec/26/boxing-day-sales-bargain-hunters-out-in-force-across-uk

Ah well not a surprise, Britons are still fixated with consumerism, the quick fix to blot out the realities of living in an increasingly dystopian society.

We could proffer an alternative – a more sustainable one, less dependent on consumerism; a fairer one, allowing people to take time off and relax; and one where we appreciate some of the free benefits of the planet.