Never heard of this guy Stephenson before but I see we have LSE in common. His career is a capitalist success story including (ironically) his media channels.
An aside on the housing issue. Most houses are bought on credit but I don't see reference in the equation to the price of credit. When I bought housing assets, mortgage rates were often in double figures, so that the price of the asset might have been lower but the slice of disposable income swallowed up was probably not too different from that of today. However the cost of a degree was quite different and here I do sympathise.
Is that it? House prices are high because we built 208,000 houses against a target of 300,000. A deeper analysis of the housing market would show that there is a steadily growing surplus of houses over the numbers of households to occupy them. However, the housing problems lie with government policies which have restricted the number of social houses, increased private rents and driven house price inflation. If home ownership is to become achievable once more for young people, either house prices need to fall or salaries need to increase, or both!
If there was a “growing surplus of houses over the number of households to occupy them” then houses would be falling in price to the market clearing equilibrium level. Remember too that the number of households in the economy is constrained by the lack of housing with children continuing to live in the parental home long after they would once have done.
The solution to house prices is, as the author indicates, to remove the constraints that prevent supply rising to meet demand and / or removing part of the demand by action on immigration. It’s really that simple.
The ONS figures show that the surplus has risen from 801,000 in 1996 to 2,051,000 in 2023. Many of these properties will be second homes or not occupied, so not directly available in the market. You are right that supply and demand create the market clearing equilibrium level, which is currently at a level that most young people cannot afford. New build is only one part of the market. There are over 30,000,000 "second hand" houses. Taking steps to free up this market, such as scrapping stamp duty and stream lining the legal process, would help to find a better market level for house purchase. Some young people might then be able to compete, but property prices would need to fall to make that possible.
As none of our Political Masters will ever take the necessary steps to reform our planning system may I suggest the following:-
Allow Planning Authorities, having published their plans/intentions for their electorate, the necessary freedom to compete AND benefit financially 100% from their decisions.
We believe in Fredom & Reward ~ what is not to like?
Never heard of this guy Stephenson before but I see we have LSE in common. His career is a capitalist success story including (ironically) his media channels.
An aside on the housing issue. Most houses are bought on credit but I don't see reference in the equation to the price of credit. When I bought housing assets, mortgage rates were often in double figures, so that the price of the asset might have been lower but the slice of disposable income swallowed up was probably not too different from that of today. However the cost of a degree was quite different and here I do sympathise.
Is that it? House prices are high because we built 208,000 houses against a target of 300,000. A deeper analysis of the housing market would show that there is a steadily growing surplus of houses over the numbers of households to occupy them. However, the housing problems lie with government policies which have restricted the number of social houses, increased private rents and driven house price inflation. If home ownership is to become achievable once more for young people, either house prices need to fall or salaries need to increase, or both!
If there was a “growing surplus of houses over the number of households to occupy them” then houses would be falling in price to the market clearing equilibrium level. Remember too that the number of households in the economy is constrained by the lack of housing with children continuing to live in the parental home long after they would once have done.
The solution to house prices is, as the author indicates, to remove the constraints that prevent supply rising to meet demand and / or removing part of the demand by action on immigration. It’s really that simple.
The ONS figures show that the surplus has risen from 801,000 in 1996 to 2,051,000 in 2023. Many of these properties will be second homes or not occupied, so not directly available in the market. You are right that supply and demand create the market clearing equilibrium level, which is currently at a level that most young people cannot afford. New build is only one part of the market. There are over 30,000,000 "second hand" houses. Taking steps to free up this market, such as scrapping stamp duty and stream lining the legal process, would help to find a better market level for house purchase. Some young people might then be able to compete, but property prices would need to fall to make that possible.
A brilliant article.
Thank you.
As none of our Political Masters will ever take the necessary steps to reform our planning system may I suggest the following:-
Allow Planning Authorities, having published their plans/intentions for their electorate, the necessary freedom to compete AND benefit financially 100% from their decisions.
We believe in Fredom & Reward ~ what is not to like?
Mike Fisher