Yes thats because there is a shortage of the supply of housing. If you build more houses the price will fall.

depends where you build them

No, it depends more on what quantity they are built in.

A couple of thousand houses dotted around the south east won't change much in great scheme of things, building them in the tens of thousands country wide just might.

The demand for affordable housing is all around the country and as the parent of a child who is looking for an affordable house of her own I can see the evidence myself.

Truth of the matter is that there is a small government backed scheme to make new housing affordable to first time buyers called NewBuy which offers guarantees to lenders to allow those lenders to offer 95% mortgages.

Unfortunately its only available on a very limited number of developments and properties although I understand (and correct me if I'm wrong) that its actually doesn't cost HM Gov anything in hard cash, they just act as guarantors to the lending company.

Most new developments have a legal requirement as part of their planning authority to build a small percentage of houses which will qualify for NewBuy and these properties are ALWAYS sold off plan and immediately in the first few weeks of release - this indicates the huge demand for such properties.

As an example a development near here has two bed houses starting at £160k, which, if you can get in on the NewBuy scheme will require a deposit of £8k, if not then you'll need a minimum of £16k.

It may surprise you but £8k is not an unsurmountable obstacle to first time buyers, for a couple looking to spend upwards of £800 to £1000 a month on their first mortgage then a years worth of saving and getting used to putting that amount of money aside every month will generate their deposit, if not then some parents would consider stumping up that sort of money too - bump it up to £16k and you're now talking about saving for several years or lending your offspring some substantial amounts of cash and suddenly the option to rent becomes the only option.

Not that there is anything wrong with renting, other than the fact that its not going to stimulate the building trade very much, but a big push on schemes such as NewBuy and the previous HomeBuy scheme, would be popular, would stimulate the building trade (a HUGE business), would solve an imminent housing problem, would boost every allied business associated with having a home (DIY, Garden Centres, Furnishing Retail etc), and would not cost very much at all other than set-aside guarantees.



And I'll chuck another one into the mix for you - back in the recession of the early 90s the big saviour was 100% tax allowances for business asset purchases, and if no-one is modernising at the moment (and they aren't) then there is no tax income to lose by re-invoking this.

The government can borrow money at record low interest rates (during the last year it was borrowing at negative real interest rates). A fiscal stimulus would be very effective at delivering increased economic growth, because the economy is currently struggling and we are in a liquidity trap.

Its not a case of borrow money for a stimulus vs save money by cuts. Its a case of borrow money to fund much needed economic growth (which reduces debt as a percentage of gdp), or make cuts which devastate the economy, kill off growth and thus lead to higher borrowing anyway.

Remember, because the cuts have damaged growth to such a larger extent than planned, Osborne is actually borrowing more than Alastair Darling was going to.

The trouble is so many got used to 100%+ mortgages that the thought of saving for a deposit became old fashioned, you had to get on the "Property Ladder" before you got left behind.

I remember my parents having to rent for years to save up a deposit, this then showed the lenders you could budget and cope with the commitment of a mortgage, you certainly didn't get one in your early twenties.

What stops people saving today is the huge cost of renting, lack of housing stock has not only pushed house prices up to insane levels but has pushed rents up dramatically too. Investing in houses for both sale and rent can and will bring down both house prices and rents, impacting on the economy is several ways, a dramatic one would be forcing down the amount councils hand over to private landlords in housing benefit. The houses for rent don't have to be council houses either, pension schemes have huge investment pots that need a decent return, legislation for them to get into the private housing market shouldn't be too taxing.

Only building houses in the tens of thousands can really sort this problem, governments of either hue have been ignoring this crisis for far too long

Your first para is very true, my eldest is looking at renting in the short term but they are having to look at rents which are equivalent to mortgage repayments in order to do so, which then negates their ability to save for a deposit, its Catch 22, if I had the balls to do it and any sort of job security then I'd make enquiries about buying a second home with some of my equity as a deposit and renting it to them for the cost of my second mortgage - having a #2 daughter waiting to follow on behind gives some sort of long term stability to my plan



Your second para reflects what I mentioned some time back that when I first entered the job market the building scene was focused almost entirely on housebuilding, it was massive and when I think back I'm staggered that such huge scale housing (both private and public, both purchase and rental) could ever be funded, but it was, and in a period when we had an economy that was on its knees, the PM having to beg from the IMF, interest rates in the stratosphere (comparitively), power cuts and a three day week - it was afforded then and I haven't a clue how.

Well at the risk of repeating myself (yet again) on this subject (I really should save this in note format):

There are thousands of hectares of government-owned (local and national), that is suitable for building new homes. Rather than sell this land and receive a one-off boost to the exchequer, it would be far better to lease it at a peppercorn rent on a 99 year lease, to charitable institutions or housing associations. The total cost of a new house is approximately 60% land price + 40% materials and labour. So any rents charged should reflect this and not the prevailing market rents of other similar properties in the area. New, rented properties could then be offered at around 50% of the prevailing rate. Couple that with an introduction of commercial property taxes applied to all empty buildings and vacant land (LVT-Lite if you wish) and a great chunk of currently banked land assets would also suddenly appear on the market at less than speculative prices.

The money to build would come from pension funds and other institutional investors: these funds are always looking at long-term investments and this type of investment would offer the sort of security only usually seen in government bonds but at a far better rate of interest. Even if British investment funds were unwilling to invest, there would be no shortage of foreign funds willing to plough in the capital required to fund the projects. The knock-on effect of such a scheme would be to drive down rents in the adjacent private sector. There would have to be safeguards built in, such as covenants to prevent sub-letting, multiple tenancies and any future right-to-buy.

Further benefits would come from: increased direct employment in the actual construction and allied trades sectors. All these homes would need furnishing, so retail would receive a stimulus. The jobs created would benefit the exchequer through increased income tax, National Insurance and VAT receipts. The exchequer would further benefit from decreased housing benefit and tax credits. The people who inhabit these properties may find that they can now pay rent AND save for a mortgage deposit, should they wish to eventually own their own home.

Of course there will be losers: banks may see their assets shrink as property values reduce. Speculators who foolishly rushed into buy-to-let may find themselves paying more in mortgage repayments than they are receiving in rents. But after all, we're "all in this together" ain't we?

As a nation we need to shift from viewing a house as an investment and get back to viewing it as somewhere to live. You know, a home.

Gideon was on the telly this morning (yes folks, he was above ground, albeit a little pale, and deigning to be seen himself rather than sending some lobby-fodder nincompoop with no grasp of his brief).
He was saying how important it to build infrastructure as an investment in the future (jaw-dropper, who'd have thought of that? the man's a genius).

Unfortunately, he was talking about HS2 which will do nothing right now.

But ... is Gid moving stealthily to plan B do you think?

Not a chance.

Plan 'A' is driven by pure ideology and will be followed through until his final Autumn statement, when he will announce a return of the 10p tax rate and hope that plus the referendum (maybe) will be enough to fool the voters once more. The country could go to hell in a handbasket before then and he still will not change tack

I agree wholeheartedly with your comment about the real reasons for plan A... but plan A (as many of us predicted) is patently failing, even the tories are beginning to see that.
I reckon he will (too late) try and produce some cost-neutral infrastructure apparent growth-boost from his straw boater.

HS2, jam tomorrow?

Tomorrow?

I'll be pushing up daisies long before any HS2 train hits a northern city

This may sound strange to a government minister looking for a good news day on something that isn't going to exist until he is long since cold and dead in the earth, but I don't want to travel from Leeds to Birmingham 50 minutes faster than I can now (who would want to get to Birmingham faster ?).

The service as operated right now is fine, its far quicker than the car, costs about the same and is just about as convenient.

All I want is for more room on the bloody thing.

HS2 is just another grand headline grabbing plan that our inept, egotistical politicians of all parties are so fond of. It will do little to help the economy at a critical time and will no doubt drag the most indebted nation since Weimar Germany over the edge some time down the lime (as it were).

If they were serious about boosting the economy they'd put a modest part of the £32 billion into building quality council housing in the here and now. Within a year the economy would be picking up and within a couple booming. But ideology will prevent that (as it would for the modern Labour party).

With all that fish you eat, you might yet live to see it.



But not in Sheffield, as the route misses the city centre by 5 miles.
Apparently, it would cost too much and slow the train down too much if it actually went into the city.

When I heard that on the news, I thought I must have misheard.

They could build the station and then relocate the city

Is it not going to Meadowhall, which is linked to the city by tram, right on the M1 and much better to serve the population than having to get into Sheffield City Centre?

It's not going into Nottingham either, both sensible decisions given the rush hour traffic problems experienced, surely?

Using that existing line from Birmingham to Leeds there are often short delays entering both Derby and Sheffield and if you were looking to introduce another service onto that line and you could bypass Sheffield for Meadowhall then it would be a fair call if you didn't have the budget to lay a new track and build another platform just for your service.

But they're talking about possibly 30 years from now.

Jesus wept, we'll all be wearing hovver boots and flying our cars to Birmingham by then.

But the Sheffield Tap is at Sheffield station, not Meadowhall.

"Sheffield Tap"?

checked, it's a pub....not sure how it's relevant to the route of HS2 though.....

This is the public transport infrastructure equivalent of spending £10,000 souping up an old Ford Fiesta so it goes 5mph faster.

It's not needed, it's not wanted and it's entirely too expensive for the benefit it provides.

As for the supposed boost to the "regions" now all these Londoners will be able to commute up here to work so much more quickly, has the government not realised that what will happen is the exact opposite?

Londoners will continue to work in London, they'll just buy a house somewhere in the Peak District to commute from instead of a flat in Hammersmith. Property prices in the areas served by HS2 will go through the roof, forcing more an more people out of the property market.

It's the only reason for going to Sheffield.

Ah right, just like Eurostar which goes from the centre of London to the centre of Paris or the centre of Lille or the centre of Brussels ?

It's a bit rich quoting quick journey times when you need to add extra time on the other end to wait for and then catch a tram into the town from which the other transport links radiate.

The M1 will need serious improvement, there are already almighty rush hour jams to get past Nottingham and Meadowhall (where widening might be a bit tricky, given the width of the Tinsley viaduct).