4 ms·

It's very simple. If you have N house-seekers and M house-sellers then when N >> M: houses get expensive. Given it's hard to change N, raising M implies buildin

It's very simple. If you have N house-seekers and M house-sellers then when N >> M: houses get expensive. Given it's hard to change N, raising M implies building more houses. In the UK the equivalent of 'zoning' regulations keeps M low. Government 'help to buy' here exacerbates the problem as it directly increases N without directly increasing M. The fundamental model here is musical chairs.

iso1631 5y ago
I'd still be renting if it wasn't for help to buy. The mortgage payment was the same as we'd pay in rent, so affordable, but saving up even a 10% deposit would have been impossible.
- conjectures 5y ago
  I'm glad you found a place, but I think this amounts to help to buy incrementing N.
  - iso1631 5y ago
    Yes it lets more people without money buy houses, which I can see why socialists don't like that (same as they didn't like buying your council house - reducing dependency on the state) The problem with the council house sell off was not replacing them on a 1:1 ratio -- for every house sold, a new one was built. It also reduces the number of people renting, which lowers rental prices, which is also good. It may increase the price of new houses for cash buyers. I have little sympathy for people that wealthy. If you want to get more houses built, institute a land value tax. Taylor Wimpy owns 6,000 heactares of land. With just 25 houses per hectare, that's 150,000 unbuilt houses across the country. Assuming that a land value tax would replace council tax that would be about £1500 a year tax, or £225m a year in tax, maybe that would encourage them to speed up construction rather than building them at a rate that maximises profits.
    - nybble41 5y ago
      > The problem with the council house sell off was not replacing them on a 1:1 ratio -- for every house sold, a new one was built. At least you agree that there is a problem with supply. > It also reduces the number of people renting, which lowers rental prices, which is also good. Converting renters into buyers without building more housing reduces both the demand for and the supply of rental housing. This will not reduce rental prices. > It may increase the price of new houses for cash buyers. I have little sympathy for people that wealthy. Your sympathy is not required, but you should at least see how landlords paying higher prices for housing leads to higher rents for tenants.
      - iso1631 5y ago
        > Converting renters into buyers without building more housing reduces both the demand for and the supply of rental housing. This will not reduce rental prices. HTB is only available on new homes so not removing any stock > Your sympathy is not required, but you should at least see how landlords paying higher prices for housing leads to higher rents for tenants. Why? Someone is either willing to pay £1k a month for renting a place or not, they care not for the cost of the house they are renting. > you should at least see how landlords paying higher prices for housing leads to higher rents for tenants I owned a flat, I rented it out for the maximum amount of money I could get for it (balanced against other things like reliablity of tennant etc). It doesn't matter how much the flat sells for. https://www.rightmove.co.uk/properties/75180448#/ https://www.rightmove.co.uk/properties/75180448#/ sold in November 2006 for £150k, it's now worth about £320k, it's being rented out for £1k a month because people will pay £1k a month, it has nothing to do with how much it was bought for, only what people will pay.
        nybble41 5y ago
        > HTB is only available on new homes so not removing any stock Okay, increasing the supply of housing will lower prices regardless of whether they are rented out or bought. > Someone is either willing to pay £1k a month for renting a place or not, they care not for the cost of the house they are renting. Sure, but landlords do care and won't buy property to make it available for renting if they don't expect to be able to cover the cost. This decreases the supply of rental housing, which means fewer options and higher prices for tenants. If they already own the property and can't manage to get tenants paying rent which represents a competitive return on their capital (i.e. the current market value of the property) then they'll sell to someone looking to either own the property outright or demolish it and redevelop some other form of property. Either way it removes the housing from the rental market. > … now worth about £320k, it's being rented out for £1k a month because people will pay £1k a month … So the owner is only getting a 3.75% return on their £320k investment. That's not completely terrible, but it still essentially has negative value compared to the opportunity cost of selling the property and investing the proceeds. This is not a sustainable situation. > … it has nothing to do with how much it was bought for, only what people will pay. That much is true. The original purchase price doesn't matter in hindsight. (Obviously it does matter when deciding whether the property is worth purchasing to begin with.) Aside from calculating capital gains/loss for taxes, what counts after the purchase is only what the property would sell for now, not the amount that was originally paid.

iso1631 5y ago

I'd still be renting if it wasn't for help to buy. The mortgage payment was the same as we'd pay in rent, so affordable, but saving up even a 10% deposit would have been impossible.

conjectures 5y ago
I'm glad you found a place, but I think this amounts to help to buy incrementing N.
- iso1631 5y ago
  Yes it lets more people without money buy houses, which I can see why socialists don't like that (same as they didn't like buying your council house - reducing dependency on the state) The problem with the council house sell off was not replacing them on a 1:1 ratio -- for every house sold, a new one was built. It also reduces the number of people renting, which lowers rental prices, which is also good. It may increase the price of new houses for cash buyers. I have little sympathy for people that wealthy. If you want to get more houses built, institute a land value tax. Taylor Wimpy owns 6,000 heactares of land. With just 25 houses per hectare, that's 150,000 unbuilt houses across the country. Assuming that a land value tax would replace council tax that would be about £1500 a year tax, or £225m a year in tax, maybe that would encourage them to speed up construction rather than building them at a rate that maximises profits.
  - nybble41 5y ago
    > The problem with the council house sell off was not replacing them on a 1:1 ratio -- for every house sold, a new one was built. At least you agree that there is a problem with supply. > It also reduces the number of people renting, which lowers rental prices, which is also good. Converting renters into buyers without building more housing reduces both the demand for and the supply of rental housing. This will not reduce rental prices. > It may increase the price of new houses for cash buyers. I have little sympathy for people that wealthy. Your sympathy is not required, but you should at least see how landlords paying higher prices for housing leads to higher rents for tenants.
    - iso1631 5y ago
      > Converting renters into buyers without building more housing reduces both the demand for and the supply of rental housing. This will not reduce rental prices. HTB is only available on new homes so not removing any stock > Your sympathy is not required, but you should at least see how landlords paying higher prices for housing leads to higher rents for tenants. Why? Someone is either willing to pay £1k a month for renting a place or not, they care not for the cost of the house they are renting. > you should at least see how landlords paying higher prices for housing leads to higher rents for tenants I owned a flat, I rented it out for the maximum amount of money I could get for it (balanced against other things like reliablity of tennant etc). It doesn't matter how much the flat sells for. https://www.rightmove.co.uk/properties/75180448#/ https://www.rightmove.co.uk/properties/75180448#/ sold in November 2006 for £150k, it's now worth about £320k, it's being rented out for £1k a month because people will pay £1k a month, it has nothing to do with how much it was bought for, only what people will pay.
      - nybble41 5y ago
        > HTB is only available on new homes so not removing any stock Okay, increasing the supply of housing will lower prices regardless of whether they are rented out or bought. > Someone is either willing to pay £1k a month for renting a place or not, they care not for the cost of the house they are renting. Sure, but landlords do care and won't buy property to make it available for renting if they don't expect to be able to cover the cost. This decreases the supply of rental housing, which means fewer options and higher prices for tenants. If they already own the property and can't manage to get tenants paying rent which represents a competitive return on their capital (i.e. the current market value of the property) then they'll sell to someone looking to either own the property outright or demolish it and redevelop some other form of property. Either way it removes the housing from the rental market. > … now worth about £320k, it's being rented out for £1k a month because people will pay £1k a month … So the owner is only getting a 3.75% return on their £320k investment. That's not completely terrible, but it still essentially has negative value compared to the opportunity cost of selling the property and investing the proceeds. This is not a sustainable situation. > … it has nothing to do with how much it was bought for, only what people will pay. That much is true. The original purchase price doesn't matter in hindsight. (Obviously it does matter when deciding whether the property is worth purchasing to begin with.) Aside from calculating capital gains/loss for taxes, what counts after the purchase is only what the property would sell for now, not the amount that was originally paid.