Martin Eaglestone has asked for an honest debate about housing, here is my contribution to that debate.
The first thing that must be recognised is that there is not a single housing market. There are two housing markets. There is the market in homes (people who buy a house in which to live), and the housing investment market(people who buy a house in order to make proffit).
The dividing line between these two markets is often blurred, most people who buy a home hope that there is an investment potential in their purchase, but their primary purpose in buying a house is as a place in which to live.
At the other extreme are the people who buy surplus houses to rent as permanent or holiday lets purely to make a profit.
In the middle ground are those who by design, or more often by accident, have purchased a house that they can sell on retirement, or earlier, and buy a property more suitable for their home needs cheaper elsewhere, releasing equity for a retirement income or a business investment.
The problem with any intervention in the housing market from government is that it will p***s everybody off. From those who just live in hope, through the accidentals, and without a shadow of doubt the positive investors.
The problem with every party's attitudes towards housing is that they are all trying to tackle the problem from the wrong end.
Build a thousand new council houses in Wales and you take a thousand first time buyers out of the housing market, hitting the lowest rung owners who are trying to sell (and forcing their houses into the holiday homes / rental market).
Any help to buy policy, such as Plaid Cymru's £5K grant, or Labour's buy and rent schemes just inflate the first rung market (and every step above it), and wipe out the value of the grant / rent portion of the scheme.
Both socialists and conservatives will hate me for saying this, but the only way of resolving the home ownership / housing crisis is by offering tax brakes and grants to the upper end of the market for selling their houses at less than market value thus allowing a deflationary effect to trickle down to benefit the lower end.
Investment in the housing market has created untold harm to the home buying market; there is no other way of making homes affordable to working and middle class people, than by compensating those who have invested in houses in order to release those houses as nothing but homes
I suspect Martin's sudden interest in "affordable housing" is as opportunistic and as shallow as everything else he does.
ReplyDeleteA secondary and sustainable local housing market is needed. especially as that is the way England is going.
PS his suggestion that things are pretty much as they are now only demonstrates further both his intellectual ineptitude and Labour's utter contempt for Welsh communities.
ReplyDeleteBoth socialists and conservatives will hate me for saying this, but the only way of resolving the home ownership / housing crisis is by offering tax brakes and grants to the upper end of the market for selling their houses at less than market value thus allowing a deflationary effect to trickle down to benefit the lower end.
ReplyDeleteI actually thought that was quite a good idea. I've no problem with better off people getting some benefits out of the tax system, otherwise they will feel disenfranchised.
I did come up with several problems, but the more I've thought about it the more sense it makes. I guess the million dollar question is how much it would cost, and how far below market value you have to drop for it to be effective?
I hope not opportunistic as I have spent many years in town planning trying to deal with aspects of the problem. Why not throw some ideas in the pot - rather than mud at someone offering up democratic discussion.
ReplyDeleteI'm not convinced throwing money at those fortunate to own property is the solution.
The truth is that all three measures are necessary. Tax breaks to sell houses at below market prices is a good idea, but buying a house for the first time is still a big step - so a grant would also be needed. As I said on Martin's blog, supply side issues can't be solved overnight - as you point out, 1000 new builds would just end up as a disaster for the market. You do need new build, but this needs to happen gradually.
ReplyDeleteThe £5K grant is a good place to start, then tax breaks and then a long-tem and gradual new build.
Martin, nobody is slinging mud. You are far too pretty for that.
Nationalise and compulsorily purchase building land, relax the building regulations, give planning consents that insist on sale and re-sale to locals. It's not that difficult surely. Meanwhile the economic illiterates of Plaid Cymru want to give new buyers £5000 which will just mean the market price of houses will rise by £5000. Twp!
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