Vir Cantium

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Report: House Prices Are Too High And Not High Enough

Council-type housing stock in Weaverham, now m...

Some housing, obviously

Looks like we’re all discussing house prices again:

Homeowners who bought at the peak of the market may face four more years of negative equity, a housing group has warned.

The organisation, which campaigns for affordable housing, also said prices are still too high for many buyers.

So are they complaining that house prices are too low … or that they are unaffordable?

“… the big problem that we have is that we’ve created a kind of perfect storm where there is negative equity for some people and they’re trapped and can’t move, but prices haven’t come down enough to make buying a home a realistic option for people in their 20s and 30s in ordinary jobs.
“We really are in danger of pricing people out of owner-occupation.”

Ah, both.

The National Housing Federation (NHF) have indulged in the modern and annoying use of “we” when the passive voice and the word “some” would be more appropriate. Many people have not overstretched themselves and thus aren’t “trapped” since the dip in prices won’t have wiped out their equity, others may have negative equity now, but aren’t planning to move any time soon, so it’s all academic to them.

That bit of pedantry aside, in some ways “we” could refer to the NHF, or at least their members. The basic factor in house prices is, of course, the cost of the land. Planning law plays its part in driving up land prices due to scarcity, but there is also demand. Here, the usual refrain is to blame all those nasty buy-to-let landlords who buy up properties thus driving up the prices, and at the same time leaving first-time buyers with little option but to rent, usually from the buy-to-let landlords.

So who are the biggest buy-to-let landlords? Yep, the members of the National Housing Federation. And what is the NHF’s solution to the problem? Given that they are complaining about the cuts to their members’ funding, it would seem to be to buy more land to build on, which will drive up prices, which will have the effect of forcing more people to turn to social landlords.

Not that I’m suggesting some conspiracy on the part of housing associations, of course. However, if they wanted to help tackle the so-called ‘housing crisis’ and enable more people to become owner-occupiers, then they could start lobbying, say, for easing the rules for the ‘right to acquire’ scheme, maybe the ability to give higher discounts, and perhaps the issuing a press release endorsing some or all of the Policy Exchange’s suggestions, also out today (trailed by Iain here).

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