![]() ![]() The problem is not a shortage of housing, but cheap and subsidised housing credit. But the reverse is happening: rents are falling relative to incomes – and are lower now than at any time since the rent controls of the late 1970s. If those housing services were really in short supply, then rents would increase relative to incomes. Rent measures the cost of purchasing housing services – shelter. So, while the stock of housing per head has been flat, the stock of private housing per head has been increasing – albeit less rapidly than it once wasĪny asset price ought to reflect the future stream of income which that asset produces: in the case of housing, that income is rent. Ever since the reforms of the 1980s, the share of social housing in the total housing stock has been falling gradually. The supply of private housing has increased. In fact, the degree of overvaluation is similar across all regions except Northern Ireland. House prices have grown more rapidly there because incomes have grown more rapidly. However, the ratio of house prices to incomes – the key metric – is no more extended in London and the Southeast than it is on average across the UK as a whole. In 2012, for example, the UK population grew by 0.6%, as did the stock of housing.īut surely that can’t be true in London and the Southeast? House prices have certainly grown much more rapidly in London and the Southeast than in the rest of the UK. Housing stock per head has been flat, though at historic high levels, over the last decade. Universally acknowledged it may be true, it is not. All political parties agree, so does the Bank of England and so (unsurprisingly) do the housebuilders. It is a truth universally acknowledged that the UK suffers from a chronic shortage of houses. The most frequent excuse is a supposed shortage of supply, especially in London and the Southeast of England. Now those stories are being rehearsed again to explain why we need not worry about house prices, at least not yet. We are still in a house-price bubble, and we are now inflating it even further.īefore the recession, stories abounded that purported to explain and justify the house price boom: things are different now… the UK is a small country with a limited supply of housing… there are more households now than there used to be, etc. If the current momentum persists, the ratio will increase further – back towards the all-time peak it reached before the recession, or even beyond. ![]() Our estimates suggest house prices need to fall by a further 20% to 30% relative to incomes to bring them back to fair value. With Help to Buy, the government put a rocket under house prices which were already far too high. Although house prices fell back during the recession, they remained far in excess of fair value when Help to Buy was introduced. An unsustainable boom in house prices (and the debt that went with it) was the main cause of the banking crisis and therefore the recession. Since then, the UK has leapt from the bottom to the top of the league table of advanced economies in terms of its growth rates house prices have accelerated into double-digits bank lending has turned positive (at least to households) and inflation has slowed. The government would subsidise mortgages and finance for builders. ![]() The scheme has two planks: support for housebuilding and for homebuyers. The Budget changed all that – specifically, the Help to Buy scheme announced by Chancellor George Osborne. House prices were falling, the government’s finances were deteriorating, bank lending was contracting and inflation was uncomfortably high. After the biggest recession on record, the recovery was weak at best. Until the March 2013 Budget, the UK economy was in the doldrums. © 2023 policies have put a rocket under over-inflated house prices while social housing’s share of the total stock has steadily fallen. You must take responsibility for abiding the law of the city, country or the jurisdiction where you are located. Relying on the information from this website is strictly at your discretion. We strongly advise consult with your physician before consuming any products displayed on this website. Always consult your doctor or other professional health care if you have any questions or uncertainty regarding your medical condition and appropriate treatment. None statements provided by AskGrowers should be discerned as medical advice. AskGrowers is not responsible for the accuracy of the information displayed. The data about strains, products and their effects, contained on the website is based on the consumer reviews. We do not grow, sell or promote canna products nor propagate consumption or distribution of cannabis. All the information available on AskGrowers is only for educational purposes. AskGrowers is an encyclopedia with cannabis-related data. ![]()
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