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Thanks for writing this! > Housing in Britain is expensive because getting planning permission is difficult. Isn't the real problem that supply is artificiall

by AJRF 1y ago

Thanks for writing this! > Housing in Britain is expensive because getting planning permission is difficult. Isn't the real problem that supply is artificially constrained because house prices and the economy are interlinked in a way in a special way in the UK economy, such that the majority of home owners don't want it changed (because more supply == downward pricing pressure) I think the only entity that could meaningfully change this situation is government, and well it's easier to not upset your donors. Edit: To be fair to the author, they do mention artificial supply constraints but I think my point stands - it is there by design, too much inertia forcing it to be that way that won't be changed by streamlining the bureaucratic elements

lalaithion 1y ago
One of the ways in which supply is artificially restricted is that getting planning permission is difficult, so you’re not actually disagreeing with OP
nemomarx 1y ago
is that a very special thing? it seems like that in the US too imo
Destiner 1y ago
I think you're describing NIMBY, which is more of a US/SF thing (but also is a case in Europe to some extent).
- zihotki 1y ago
  NIMBY is an universal human concept, it's present everywhere - Europe, Asia, South America. It may come in different flavours but it's everywhere. People don't welcome changes to the surrounding environment if it doesn't benefit them more or less directly.
  - dickersnoodle 1y ago
    It isn't as simple as "doesn't benefit them more or less directly". There are often projects that benefit some people that will actively degrade life for everyone else.
  - amy214 1y ago
    It's one of those things like littering or tragedy of the commons - one instance, by itself, is not a big deal so it's understandable why people might not think much of NIMBYing. But en masse these behaviors are ruinous
rob74 1y ago
I agree with you that that's probably the real problem, but not that the situation is unique to Britain (although maybe it's worse in Britain then elsewhere)...
kijin 1y ago
It looks like this startup tried to hack the system by streamlining one of the key mechanisms of artificial constraint: the difficulty of getting permits. Not a fundamental cure, of course, but it sounds like a promising hack to squeeze out a few more building permits than would otherwise have been issued.
mytailorisrich 1y ago
Supply is somewhat constrained and demand is also artificially inflated (at national level it is 100% caused by immigration, which is kept high by the successive governments). Everyone relies on the property market going up. Beyond the obvious reasons, another important one is that fixed rate mortgages are not fixed for the life of the mortgage but only for, usually, 2 to 5 years after which rates jump so everyone is continuously worried about remortgaging.
- spacebanana7 1y ago
  It's curious to think about what house prices in the UK would be like without immigration. With a sustained negative fertility rate over the past few decades, there could've feasibly been stable prices with no new houses built at all.
  - mytailorisrich 1y ago
    The UK population would have started to decrease naturally I believe around 2024 without immigration. It so happens that the past few years have also seen record high immigration and population growth... Obviously the property market would be looking very differently if population was decreasing. The whole economy would.
    - immibis 1y ago
      Are you trying to paint a conspiracy here? It seems like people just move around if they can, and one pressure that drives people away is a lack of housing even worse than other places' lack of housing. If there's less of a lack of housing (relative to how bad it is everywhere else), of course a place becomes more attractive to move to.
    - spacebanana7 1y ago
      > It so happens that the UK population would have started to decrease naturally I believe around 2024 without immigration I think it would've been much earlier than that. Cumulative net migration since 2000 is around 8.5 million people. So the UK's current population would be radically lower today without immigration. https://www.statista.com/statistics/283287/net-migration-figures-of-the-united-kingdom-y-on-y/ https://www.statista.com/statistics/283287/net-migration-fig... (annoyingly the per year figures need to be summed up manually on both this and ONS reports)
AJRF 1y ago
NIMBYism is not unique, but the importance of house prices to the UK economy is more severe than other countries. - The UK has a very strong household wealth affect (consumption is tied to house price growth / decline). The US and UK borrowers borrow at a rate against household wealth not seen in other nations (look at the chart on page 6 - https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1117.pdf https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1117.pdf) - It has had dramatic, sustained house price growth (400% real price growth since 1980) vs US (200%), France (200%), Germany (150%), Spain (Collapsed in 2008), Italy (Stagnant since 2008) Some Links: - https://www.bankofengland.co.uk/-/media/boe/files/working-paper/2019/uk-house-prices-and-three-decades-of-decline-in-the-risk-free-real-interest-rate.pdf https://www.bankofengland.co.uk/-/media/boe/files/working-pa... - https://www.imf.org/en/Publications/CR/Issues/2016/12/31/United-Kingdom-Selected-Issues-41795 https://www.imf.org/en/Publications/CR/Issues/2016/12/31/Uni...
- immibis 1y ago
  It's been said about the New Zealand economy that it mainly consists of five people trading houses with each other for ever bigger numbers.
rhubarbtree 1y ago
I’ve posted this before, but I think the reason house prices are expensive in the UK is that they are an asset. If the rich can buy that asset and make a return, they will buy it. So price equilibrium is where rents are at an absolute maximum that can be born by tenants. As the price is determined the potential yield, the price then rises as high as possible. Building more houses won’t change this situation until the number of houses is greater than the number of tenants. At the point where the number of tenants equals the housing supply, the returns can still be made and prices will be bid up. The problem is that is a competition between the rich buying as an asset vs the rest of us buying as a home. The only solutions are to reduce or eliminate the possible returns for the rich. And as posted if the prices are then allowed to fall, the whole economy is in danger, because it is based on the creation of illusory wealth via asset inflation. Remortgaging a house that has risen in price feeds money into the economy, despite no wealth actually being created. And the entire economy is based on this, because the rest of the economy has been destroyed by neoliberalism.
- matt-p 1y ago
  Yes, it's seriously unhealthy to have most of peoples individual wealth tied up in the fact that there's constrained property supply. If we just built a bunch more housing (or removed net immigration) such that house prices dropped say 25% (which would still be too little, actually), people would be in negative equity, the banks would collapse, government voted out, riots in the street. Yet it's whats needed. If a late 20's professional in London is earning £40,000 after tax they're doing fairly well, yet a one bed flat in zone 2 would still be 10X their annual income.
- automatic6131 1y ago
  >Building more houses won’t change this situation until the number of houses is greater than the number of tenants. That's wrong though. Building more houses eases this situation as it approaches the number of tenants. It gets better! Better is good! And the (perceived) appreciation of houses is also part of the asset price, not just the rental income.
  - matt-p 1y ago
pyb 1y ago
It's true that the general public have a revealed preference for the housing crisis to continue forever. However in principle, as with many social issues, a motivated actor such as a startup could still have a chance of fixing it.

by AJRF 1y ago

lalaithion 1y ago

One of the ways in which supply is artificially restricted is that getting planning permission is difficult, so you’re not actually disagreeing with OP

nemomarx 1y ago

is that a very special thing? it seems like that in the US too imo

Destiner 1y ago

I think you're describing NIMBY, which is more of a US/SF thing (but also is a case in Europe to some extent).

zihotki 1y ago
NIMBY is an universal human concept, it's present everywhere - Europe, Asia, South America. It may come in different flavours but it's everywhere. People don't welcome changes to the surrounding environment if it doesn't benefit them more or less directly.
- dickersnoodle 1y ago
  It isn't as simple as "doesn't benefit them more or less directly". There are often projects that benefit some people that will actively degrade life for everyone else.
- amy214 1y ago
  It's one of those things like littering or tragedy of the commons - one instance, by itself, is not a big deal so it's understandable why people might not think much of NIMBYing. But en masse these behaviors are ruinous

rob74 1y ago

I agree with you that that's probably the real problem, but not that the situation is unique to Britain (although maybe it's worse in Britain then elsewhere)...

kijin 1y ago

It looks like this startup tried to hack the system by streamlining one of the key mechanisms of artificial constraint: the difficulty of getting permits. Not a fundamental cure, of course, but it sounds like a promising hack to squeeze out a few more building permits than would otherwise have been issued.

mytailorisrich 1y ago

Supply is somewhat constrained and demand is also artificially inflated (at national level it is 100% caused by immigration, which is kept high by the successive governments). Everyone relies on the property market going up. Beyond the obvious reasons, another important one is that fixed rate mortgages are not fixed for the life of the mortgage but only for, usually, 2 to 5 years after which rates jump so everyone is continuously worried about remortgaging.

spacebanana7 1y ago
It's curious to think about what house prices in the UK would be like without immigration. With a sustained negative fertility rate over the past few decades, there could've feasibly been stable prices with no new houses built at all.
- mytailorisrich 1y ago
  The UK population would have started to decrease naturally I believe around 2024 without immigration. It so happens that the past few years have also seen record high immigration and population growth... Obviously the property market would be looking very differently if population was decreasing. The whole economy would.
  - immibis 1y ago
    Are you trying to paint a conspiracy here? It seems like people just move around if they can, and one pressure that drives people away is a lack of housing even worse than other places' lack of housing. If there's less of a lack of housing (relative to how bad it is everywhere else), of course a place becomes more attractive to move to.
  - spacebanana7 1y ago
    > It so happens that the UK population would have started to decrease naturally I believe around 2024 without immigration I think it would've been much earlier than that. Cumulative net migration since 2000 is around 8.5 million people. So the UK's current population would be radically lower today without immigration. https://www.statista.com/statistics/283287/net-migration-figures-of-the-united-kingdom-y-on-y/ https://www.statista.com/statistics/283287/net-migration-fig... (annoyingly the per year figures need to be summed up manually on both this and ONS reports)

AJRF 1y ago

NIMBYism is not unique, but the importance of house prices to the UK economy is more severe than other countries. - The UK has a very strong household wealth affect (consumption is tied to house price growth / decline). The US and UK borrowers borrow at a rate against household wealth not seen in other nations (look at the chart on page 6 - https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1117.pdf https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1117.pdf) - It has had dramatic, sustained house price growth (400% real price growth since 1980) vs US (200%), France (200%), Germany (150%), Spain (Collapsed in 2008), Italy (Stagnant since 2008) Some Links: - https://www.bankofengland.co.uk/-/media/boe/files/working-paper/2019/uk-house-prices-and-three-decades-of-decline-in-the-risk-free-real-interest-rate.pdf https://www.bankofengland.co.uk/-/media/boe/files/working-pa... - https://www.imf.org/en/Publications/CR/Issues/2016/12/31/United-Kingdom-Selected-Issues-41795 https://www.imf.org/en/Publications/CR/Issues/2016/12/31/Uni...

immibis 1y ago
It's been said about the New Zealand economy that it mainly consists of five people trading houses with each other for ever bigger numbers.

rhubarbtree 1y ago

I’ve posted this before, but I think the reason house prices are expensive in the UK is that they are an asset. If the rich can buy that asset and make a return, they will buy it. So price equilibrium is where rents are at an absolute maximum that can be born by tenants. As the price is determined the potential yield, the price then rises as high as possible. Building more houses won’t change this situation until the number of houses is greater than the number of tenants. At the point where the number of tenants equals the housing supply, the returns can still be made and prices will be bid up. The problem is that is a competition between the rich buying as an asset vs the rest of us buying as a home. The only solutions are to reduce or eliminate the possible returns for the rich. And as posted if the prices are then allowed to fall, the whole economy is in danger, because it is based on the creation of illusory wealth via asset inflation. Remortgaging a house that has risen in price feeds money into the economy, despite no wealth actually being created. And the entire economy is based on this, because the rest of the economy has been destroyed by neoliberalism.

matt-p 1y ago
Yes, it's seriously unhealthy to have most of peoples individual wealth tied up in the fact that there's constrained property supply. If we just built a bunch more housing (or removed net immigration) such that house prices dropped say 25% (which would still be too little, actually), people would be in negative equity, the banks would collapse, government voted out, riots in the street. Yet it's whats needed. If a late 20's professional in London is earning £40,000 after tax they're doing fairly well, yet a one bed flat in zone 2 would still be 10X their annual income.
automatic6131 1y ago
>Building more houses won’t change this situation until the number of houses is greater than the number of tenants. That's wrong though. Building more houses eases this situation as it approaches the number of tenants. It gets better! Better is good! And the (perceived) appreciation of houses is also part of the asset price, not just the rental income.
- matt-p 1y ago

pyb 1y ago

It's true that the general public have a revealed preference for the housing crisis to continue forever. However in principle, as with many social issues, a motivated actor such as a startup could still have a chance of fixing it.