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Tuesday 6 October 2020

 Chloe Bright New Star of GenerationRent

There’s a bright new star writing about the crisis in the housing market, and specifically the lost ‘Generation Rent’. Because of sharply rising house prices far fewer youngsters can afford to buy a house, and are forced to carry on living with their parents or try their luck on the for-rent market. Chloe isn’t just reporting the generally horrid facts about the reality of renting in England today, she has got out there and interviewed many of the ‘players’.

But Chloe doesn’t stop at the ‘point-and-sigh’ stage, she wants to know what is causing the problem, and why. The main cause of the crisis is that prices have been allowed (by politicians) to get completely out of hand, rising to absurd levels. She gives a very good explanation of how we have arrived at this sorry state through the liberalisation of credit and mortgages, pushing up prices. The alternative public rental sector has been starved and shrunken via sale of council houses. Governments respond by Help-to-buy schemes which only make things worse.    Read on 

Thursday 11 June 2020

THE POLITICS OF HOUSING A report from the National Housing Federation NHF By Keohane & Broughton, published in  2013

Now this should be useful! And it starts well:

“The affordability problem dominates England’s housing market: an increasing proportion of disposable household income being consumed by housing costs; difficulties for younger generations seeking to access the housing ladder, despite aspirations and expectations to do so; and, very long waiting lists for social housing.

Brilliant! They get it. Houses are too expensive. Prices must fall. 

Friday 29 May 2020

Why would they ever love losing their Wealth as a result of LVT ?
Here’s our proposition: We've decided that wrapping up all of the current taxes on property -- Council Tax, Stamp Duty, IHT, ga-ga Granny Tax, Housing Benefit etc. -- and  transform them into LVT. But how on earth are the politicians going to sell that idea to the 60% of the population who are owner-occupiers and their families? Think of the reactions:

"Watch the price of your house drop to one-third of its present value."

"Be forced to pay tax even if you don't earn a penny."

"Pay the State for something you thought you owned outright, or have the very land under your house nationalised, just like they did in Soviet Russia."

Sunday 24 May 2020

BANKS ‘Too Big to Fail, Too Big to Jail’ 
The Politics of BANKING and LVT:
During the Great Financial Crash of 2008, caused by the reckless behaviour of the bankers, our government rushed in with our money to rescue them. In the aftermath very little was done to change the way banks operate, and not a single banker went to jail for their crimes. (Big Short ref). A more stunning example of power over the political system is impossible to imagine (unless you include a virus like CV19!).

LVT would threaten to wipe out 75% of the banks favourite retail business – mortgage lending. To break another side of the Iron Triangle that is clamping the Housing Market, namely Banks and Finance, we are up against a formidably well-connected political force. Money power sometimes seems greater than political power, so can the banks be persuaded or compelled to go along with LVT?

Monday 18 May 2020

Can they change? Might they WELCOME LVT?
So the housebuilding industry, working to its current business model is a failure. It is certainly not producing enough houses. Those that are built are of poor quality. But the greatest criticism is the price of these new houses increases year-on-year. Who is to blame for this mess?
It would be wrong just to heap all the blame the builders, as Liam seems to do. They are compelled to follow this business model, which only politicians could fix.
But the builders are not completely blameless. Their lavish funding of the Tory Party reaps its rewards, and sways the actions of government ministers. (Liam seems to find it especially reprehensible that Tony Gallagher a successful property developer hosted the 50th birthday party for David Cameron).
Not a normal industry

How would the housebuilders (one arm of the Iron Traingle locking down the housing market crisis )react to the imposition of LVT? 
 Before answering that I have to explain the strange beast that is the house-building industry.
We rely on the house-building industry for our supply of new houses, but we blame them for vastly under-supplying our needs. Perhaps if we understood the production methods which they are forced to follow we could see what is preventing the housebuilders from doing more. Understanding the peculiar characteristics of the spec-builders is essential if we are to find ways to help the housebuilders do better, build more and most of all get prices down.

Thursday 16 April 2020



and very little else

Steve Keen, one of the very few economists who DID see the 2008 Great Financial Crash coming has posted the clear-cut evidence that it is Mortgage Lending that drives up house prices. Here's the graph for theUK followed by the explanation.
The impact of that increased debt for the household sector has been simply higher house prices. 

Putting it simply, most houses are bought primarily with mortgage debt, rather than out of income. 

So the monetary flow of demand for housing is primarily the flow of new mortgage debt. Divide this by the number of houses for sale, and you have a rough measure of the average demand price per house. 

Given how inflexible the supply of housing is, the change in this flow of demand is the primary determinant of the change in the house price level. 

So all this additional debt has done is simply drive up house prices by higher leverage.”

Monday 30 March 2020

Another posting on Halligan’s excellent HOME TRUTHS book on rescuing the housing market
Why would he say a thing like this (page 248)

“A ‘Georgist’ land value tax requiring high annual payments from all landholders, whilst scrapping most other taxes, would not help to solve the UK’s housing shortage. Many landowners do a superb job of looking after our rural environment and are far from wealthy – caring for the land in part from a sense of obligation and duty. They should not be taxed simply for land ownership.”

Phew! A definite No! to LVT then. Obviously I’m disappointed with this. From the depth of his understanding of the Housing Crisis that Liam has shown, I hoped he would have leapt at the perfect ‘Golden Mean’ solution of LVT. But no.

I will examine this quotation in two parts: Firstly I will explain how silly his statement above is. Then I will try to fathom out why such a smart guy as Liam would say such a thing.

Wednesday 11 March 2020

of drastically reducing all PLOT PRICES and
hence FIXING the housing market
as the only way to have cheaper, better and above all MORE dwellings

I've been thinking about Liam Halligan's excellent book Home TRUTHS. Has he produced a narrowly focussed special theory of why house prices are soaring, and I’ve got the GENERAL theory? [I know! This makes it sound like Einstein--but bear with me. I think I am on to something]  

Supply in the Housing Market isn’t just New Build. As I explained previously

Second-hand properties are the MAIN Supply to the Market. Using an iceberg metaphor, I’m going to explain why concentrating on new-build and the effect of Planning Permission on Land values, doesn't give a complete explanation of the workings housing market.

Imagine the value of all the housing plots aggregated into one huge mass. This is the total of land value. Next think of this plot-value mass as a bit like the proverbial iceberg. While most commentators obsess about the tiny fraction that is visible ABOVE the waterline, the huge un-noticed bulk BELOW remains unexamined. Big mistake, because it is the main bulk of the iceberg, the totality of plot (land) values that swings the market.

An iceberg — 10% above the waterline, 90% below — that’s comparable to the housing market. In normal times 10% of houses on the market are new build, 90% of the supply to the market comes from existing stock. 

[think of the Iceberg as all the plots of land on which homes are built, represented by their value/price as an ice crystal. So the whole iceberg is the total value of all the plots both for new-builds and existing dwellings]

Saturday 7 March 2020

Part 3 of my Comments on Liam Halligan’s excellent book HOME TRUTHS

Once upon a time there was a gallant knight from Ballarat by the name of Sir Augustus UTHWATT. And lo! During the dark days of the War against the Nazis did he labour alongside his fellow grandees Sir William Beveridge (born in India) and Lord ‘Rab’ Butler. Later the more proletarian Welshman Aneurin Bevan  joined their deliberations.
Beveridge as we all know laid the foundations for Full Employment and the Welfare State. The second B—Butler introduced free secondary schooling for all (and Grammar schools too). The third B—Bevan is probably best loved and remembered of all, for he is beloved as founder of our wonderful National Health Service. Since 1945 these three great B’s have been revered as founders of the new era of a civilised, caring state that still persists, despite the ravages of time and the forces of evil.

But who nowadays remembers Augustus Uthwatt? It was his Report that inspired the 1947 Town & Country Planning Act (TCPA). It was a conscious effort to improve on the (largely) failed promise at the end of the First World War, that there would be “Homes Fit For Heroes” as Lloyd George promised for the troops when they came back.

Uthwatt recommended a system of Planning Control and Green Belts together with a tax to reclaim the windfall gains resulting from Planning Permission. 

Thursday 5 March 2020

Part 2 of my commentary on Liam Halligan’s excellent book HOME TRUTHS
           As I wearily had to point out to my students, time after time, Supply in the housing Market is not just or even mainly about new-built housing. Eighty per cent, four out of every five houses on the market are second hand, pre-owned, have a single owner-occupying vendor behind them. I’m afraid Liam falls into this trap throughout the book. He is not alone.

Tuesday 3 March 2020


In his excellent book, Home Truths, Liam Halligan lays out in ten graphs of  what’s wrong with the Housing Market (In Ch2), and very good it is too. But I think he missed out the ultimate 11th graph which compares House Prices with Land Prices:  

Liam's missed a trick, and a blindingly obvious conclusion here. He should have explained that it is not HOUSE prices that are rising, it’s the price of the PLOT the house stands on that is rising much more sharply. 
 Read on

Thursday 13 February 2020

Do we need another book on the housing market?
A BIG-NAME AUTHOR of Irish origin who writes for the Telegraph.
Liam Halligan really ‘gets it’!
The UK’s chronic housing shortage— how it happened, why it matters and how to solve it
(19 Nov 2019) London: Biteback Pub   £20 or less hb

As a journalist Liam writes well in an easy readable style. He position has enabled him to grill important insiders — government ministers, captains of industry, bankers, civil servants, and many more. For his recent Channel 4 documentary ‘Britain’s Newbuild Scandal’ (July 2019) programme he’s even got out on-(building)-site and talked to both builders and home-buyers. His academic credentials are excellent as well (Warwick, Oxford, IMF, LSE).

So this is a great book on the crisis of the housing market. It goes beyond the usual ‘poin-and-sigh’ — listing all the deep problems and their dire effect on homebuyers. 

He digs deeper to explain the underlying reasons WHY the housing market is in such a dreadful state. 

And best of all, is the raft of policy suggestions aimed at fixing the market, fixing the policy mistakes of the past, and really getting a grip on our dysfunctional housing supply.

Monday 13 January 2020

Building Better, Building Beautiful Commission

—-] sounds a bit like what I am doing here. And who can quibble with homes that are better, homes that are beautiful? Here’s what they say about themselves:

The commission is an independent body that will advise government on how to promote and increase the use of high-quality design for new build homes and It will be responsible for developing practical measures that will help ensure new housing developments meet the needs and expectations of communities, making them more likely to be welcomed, rather than resisted, by existing communities.