10 Reasons High House Prices BROKE The Economy
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- Опубликовано: 24 май 2024
- A look at 10 problems of high house prices, reducing living standards, distorting economic behaviour, and more importantly can it be changed to make an economy less reliant on a booming housing market.
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► www.economicshelp.org was founded in 2006 by Tejvan Pettinger, who studied PPE at Oxford University and teaches economics. He has published several economics books, including:
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As an Italian living in the UK, I see we're heading in a similar trajectory as Italy. 35 year old living with parents, counting on heredity to pay for a house, contracted job market, lack of independence for young people. Plus, compared to Italy, worse food and worse weather
Not bad living with parents if we can all live in harmony. That's how everyone supported each other before
@@naeedaafzal3055 yes, but if you come from a family where things don't go well, you're trapped. In a modern country one should be able to choose whether to stay with parents or not
Mummys boys. 🙄
... and spoilt kids.
In South Italy are places where you can buy a house for 1 €
Ban banks from lending more than 4x annual salary for mortgages, and ban ownership of multiple houses. Then sit back and watch houses suddenly become affordable
UK governments of both complexions have exacerbated the problem by spending taxes on subsidising first time buyers instead of just building affordable homes, which benefits a very few but only adds flames to the price fire.
Housing should be a basic social amenity not an opportunity for investment like fine art.
As my old dad used to say: "If you continue to pay rent all your life then you will never own a brick of the property."
Perhaps an incentive could be that long term tenants acquire some form of proprietary rights over the residence. Some people have to take a bite of the s..t sandwich so why not buy to let landlords? That would help drive the parasite corporate landlords out of the equation. One thing is obvious: the "market" is not the panacea for housing ills.
@@johnwright9372exactly this. Same thing with businesses. You work at a company, therefore you contribute to its success and you should reap the benefits. Anything else will eventually just result in another form of indentured servitude. We're supposed to shut up and be thankful for business owners as our living standards fall.. they have zero accountability towards us so of course in the long term, living standards will fall as they maximise profit for themselves and cut costs everywhere else. The only solution is for workers to have a stake in those businesses. And it's the job of government to design and enforce this system. You can't trust "the market" to ensure high living standards for its citizens because the markets first and only priority is profits for the shareholders
Who would build all these homes you talk about Brits would rather be on benefits than working
Non sequitur?
Something can't be a "basic social amenity" and sill be owned. It's either a state owned asset or a privately owned asset.
It's a deliberate, significant and sustained wealth transfer by the debtmongers and their political lackeys designed to leave ever more younger and poorer people perpetually struggling, their existences perpetually precarious and in perpetual 'highly profitable for some' debt.
Asset prices like property keep rising rendering them either unattainable - shades of you will own nothing, but be happy - or only purchasable over increasingly longer (thus again more profitable for the debtmongers) time frames.
Meanwhile, the widening wealth gap also quietly helps to push up the price of even the most basic of services like dental or eye care for those who can increasingly least afford them.
These are, in fact, chosen political policies masquerading as inevitable economic ones with a suitable BS, if still frustratingly widely accepted, narrative attached to them.
Frankly, it's a scandal happening in plain sight.
Very true. And now the debt mongers want your parents' pension and house. They're clearly aiming to take everything
You are correct. Apart from people's greed, financial system is one of the main culprits. Making money from thin air based on debt contracts. The Fiat, fractional reserve banking system causes inflation whilst robbing from productive areas of an economy. Like you said, it's by design and the masses are unaware.
Mortgages account for, I believe, around 80% of the new money created in the UK economy each year.
They are now, more than ever, integral to the UK economy.
Money is debt and mortgages are the economy's turbocharged wellspring.
The last thing a UK government wants is enough housing with everyone securely, comfortably and affordably housed.
Mortgage lending is the 'engine' of our debt based economy.
The 2008 financial crisis proved that.
Unchecked immigration since 1990's. Foreign investors buying properties in places like London like they're gold bullion and leaving them empty. People buying second/holiday homes when interest rates were near zero as a way to invest. Older people living longer, stagnant construction industry. Apparently 1 in 4 MPs is also a Landlord which may explain why things have not changed for a long time. 🤔
And yet nobody wants to talk about all the empty properties around the uk. Our town centres are mostly empty above the ground floor. That’s a lot of apartments. Yes, it’s not houses with a garden and a garage, but it still would be a suitable living for young couples, students, people who don’t drive etc…
Also the amount of air bnb's and second homes, non dom status don't help
British people DON'T call them "apartments", it sounded a bit NGO..
@@James-dv1dfUncontrolled mass immigration is the main driver.
@@James-dv1dfmass immigration is the main driver of rising housing costs and homelessness in the UK, why even pretend?
@@James-dv1df I always hear that then in the same video/threads read how nobody in the UK can afford to do vacations, so I'm not sure which side is the lie.
Seems like it's happening everywhere in developed countries. In Korea, a lot of people point to high house price as the main reason of the record-low birthrate. People just can't afford live normally. The government should not try to artificially increase the population (e.g., import foreigners, incentivise having children). Overpopulation makes everyone's life miserable.
Done on purpose.
You will own nothing........
More people in a nation gives its leaders a greater sense of self- importance. This applies whatever the political colour the country is. Also, the religions push for families to have more children so that they can claim more converts. A complete disaster for humanity in the making.
Immigration is something needed for nation, so u can't just easily stop it. I think the main issue here is that people consider houses as investment, that's generate a lot of pressure on next generation
@@andriibakhtiozin4477needed? Imigration is a burden on the UK tax payer. Migrants are net recipient rather than a contributor. reference the london school of economics report , this was a three year study.
Strange how immigration is being forced on all of us across the western world. Definitely done intentionally to harm us.
with limited supply side, a lower interest rate would increase the house price thus keeping things in a "back to square one" situation
Right To Buy has led to 1.4 million social homes disappearing. The majority of which end up with landlords.
End RTB
Those houses still house people and meet housing demand. Indeed they will do so more effectively in the private sector than in the rented sector. You can explode the myth that selling off the council houses has led to the housing crisis by looking at the chart at the start of the video. In 1997 there was NO housing crisis. In some cities at that time you could buy a house for £1. Yes £1? That was seven years after Thatcher left office. If selling off council houses was the cause of the housing crisis, why was there no housing crisis at that point in time long after the policy had come into effect? It is because it does not cause the housing crisis in any way.
What did happen in 1997 though? Blair got in, we had mass immigration pushing up demand for housing. Now young people in the UK cannot buy homes in their own country and the immigration doors are still wide open.
While the supply of new housing is sluggish, but we continue to increase demand (population), the price of housing - rents and mortgage payments - will continue to rise in real terms.
This argument blames the pot for the fire being hot, even as the cook strikes the match. Call it short-sightedness or folly, but I'm convinced that British oligarchs think that people with limited assets shouldn't have children. Why? Because since the post war economic boom, they have directly and indirectly made having a family more and more difficult for ALICEs - Asset Limited, Income Constrained Employees - to have families. Look at the policies:
- contraception to enable women of child bearing age (first at lower wages than males) to enter the workforce = cheap labour
- Low capital investment and low productivity to maintain profit margins = wage restraint + neutering of labour Unions = increased GDP but with a Inversed declining Labour Share of GDP/GDI over decades = increasing wealth inequality
- erosion of free local authority nursery places
- scapegoating of single mothers, whose increasing number was attributable to increasing economic pressures on family incomes due to low pay and falling social support.
- declining birth rate falls below the Replacement rate, as the ALICEs - Asset Limited, Income Constrained Employees can't afford to start British families = aging workforce + low productivity due to under investment reinforces low pay downward spiral
- creation of housing bubble by political fiat through increasing demand by preventing councils building replacement for stock permanently lost through Right to Buy
- deregulation of consumer debt finance allows increase in consumer debt use to maintain living standards of the ALICEs - Asset Limited, Income Constrained Employees, acts as a contraceptive
Until we deal with the reality that British employers don't want to pay real wages, or pay a fair amount of taxes relative to their wealth, the immigrants are going to be the scapegoat for British oligarchs not taking any responsibility for their absurd social engineering experiments, for which everyone else bears the cost of. Stopping immigration will not make a difference. Why? The Ship of State doesn't turn on a sixpence. It will take years And you have to persuade British employers in the meantime not to automate or digitise their operations, instead of employing more people at higher wage rates. How realistic is that? Especially when they look to the US for inspiration, and what are the US doing? It's a fantasy that stopping immigration with automatically lead to higher wages for the British ALICEs. Not even the government does that. Just ask British Nurses, who despite a shortfall of 100,000, can't get a real wage increase. Ask Junior Doctors. Why? Because British oligarchs believe that AI and digitisation will do things cheaper. Labour will only be required for jobs that can't be done by AI or be automated. And they are trying to do that with everyone and everything. So... They see current immigration as a stop gap. They're not invested in your living standards. They're invested in profit so they can become more wealthy and hold on to power. That's their plan. What's yours? Because that's your problem as far as they are concerned. That's why they have little issue throwing convenient scapegoats like migrants, single mothers, the disabled, the elderly, etc. under the bus. That includes the working class and the middle class, as Liz Truss inadvertently showed through not even considering the effect of her policies on Home Owner ALICEs - Asset Limited, Income Constrained Employees. It didn't even appear on her radar, and they're now facing severe hikes in the basic costs of home ownership. And the British oligarchs pretend everything is fine. And you're sadly mistaken of you believe that stopping immigration signifucantly will happen before Technological change removes the need for it completely. The years of social engineering our oligarchs have invested their hopes in is bearing fruit. And they will continue with their vision of the future, where many ALICEs might end up having less wealth, less security, and less prospects, because there will be less need for them as workers. Just a thought.
@CuriousCrow-mp4cx this. Why pay a British worker when u can hire someone overseas and keep the huge profit.
This guy doesn't touch immigration at all in his videos, yet its the steadily increasing immigration that is causing this problem.
Its not sluggish. We've more dwellings/m2 per capita in every region than ever. The notion that housing is a supply issue is a big lie put out by right wing economists and think tanks to protect vested interests.
Then just build more.
Excellent analysis. And now they're coming for the elderly and their pensions and property
Great channel by the way
The type of housing being developed is so wrong: The estates of unimaginative freehold houses, which waste space with individual land plots and vehicular access all around the development. In *German* cities by contrast, even in smaller towns, it’s normal to live in a mid-rise apartment building often with convenient car parking adjacent and well-maintained gardens around. The internal floor area of these apartments is much bigger than inside a typical newbuild house in England. Brits are obsessed with an inefficient legoland style of housing.
I like the UK style of housing as I have MY plot of land to take care of and use as I please. I can have a BBQ, wash my bike, hang my clothes to dry, whatever. Communal gardens have many restrictions
Apartments and flats are hit by ridiculously expensive service charges that go up every year due to the leasehold system. Effectively, it is a double whammy of a rising mortgage due to high mortgage rates and rising service charges so owning a freehold makes more sense in the UK unfortunately.
Stop using housing as a commodity.
Limit how many houses an individual can own
Stop companies buying houses as investment
Put a rent cap and any landlord who decides to "retreat" will put their property on the market lowering the cost. Some of these houses can be purchased by the government then rented out as affordable housing.
These policies would reduce house prices, increase the equity owned by the government, give the government cheaper ways of tackling housing benefits and homelessness..
But of course no government will ever push it through when most ministers are landlords themselves and being funded by organisations benefitting from high rent and house prices
Housing is a commodity because it is essential for living, like food is. It's treating housing as an investment that is the problem.
We desperately need to build more Social Housing with affordable rents. We are actually in desperate need of NewTowns. Social Housing was created because it became obvious that low income families thrived when they had a forever home surrounded by communities that look after each other. The Thatcher plan has created these issues. The NHS was created to ensure that all of the nation would be healthy not just those who could afford to pay.Austerity measures only ever hurt the already poor and those who live pay cheque to pay cheque and those who have accrued a lot of debt.We need to stop Privatising our vital services like the NHS, OUR WATER ENERGY AND SO ON. The Government is complaining about the amount of people out of work caused by this Governments lack of empathy and understanding that work has to pay enough to lift people out of poverty and to give them a positive hope for a better future. Right now millions are living in darkness with no hope of a better life. It’s time to STOP EXPECTING EVERYONE TO FIND WELL PAID JOBS AND START CREATING A BETTER FAIRER SOCIETY THAT WORKS FOR ALL NOT JUST THE ALREADY RICH.
Spot on. The Tories balme the nations ills on, in the 80s blamed the unions. Then the so-called lazy unemployed. The looney left. Then the single mothers, Then the absent fathers. Then the immigrants, the EU, now it's disabled, and the small boats.
Your intentions seem good but you're wrong
There hasn't been any real social housing (ie- 'Council Houses') built since the 80's. It's all 'partnerships' with developers. Which is another way of saying 'Build 'x'% of low cost housing for us or you won't get planning permission'. The net result being that the developers fight tooth and nail to build as little of it as possible. What we have now is the result of decades of this. And I doubt there are any simple or quick fixes on the horizon.
@@theguy9067 Actually, no. He or she most definitely isn't wrong. The original poster is absolutely (and indisputably - and I pick that word carefully) correct. Because a) what this person is proposing has already been done between 1945 and 1980 and it was very, very successful and b) the alternative that we have now has also been done since 1980 and it really, really wasn't successful at all, still isn't and shows ZERO sign of being successful in future. I'm referring very specifically here to the issues that the original poster referred to.
British national productivity has taken a nose dive as a result of the issues that the original poster has highlighted: particularly housing and health (where life expectancy is current falling in the UK after consistently rising during the 20th century). The tax burden is sky high while expenditure on public services is rock bottom. Yet bizarrely, public finances are used across the board to subsidise the private sector. The birth rate is plummeting because younger people can't afford to start families. Thus the economy is destined for sclerotic performance in the coming decades.
There are no indicators at all that any of this will improve going forward. That's precisely what is so concerning.
@@SaintWill70 It may seem like that to you. Regrettably what you're currently building is a drop in the ocean. What seems like a lot to you in 2024 would've seemed pitiful between 1950 and 1980. And in no way at all does what you're building come even remotely close to actual housing demand. It's completely inadequate.
And here I'm only referring to the numbers of dwellings. Not the inadequacy of the size and quality of the dwellings themselves for a healthy family life.
But when one looks at the size and living standard of council dwellings constructed post war - with a good amount of space within the building as well as in the surrounding garden (for children to play in and families to enjoy for leisure, gardening, a vegetable plot and generally a decedent quality of life), the vast majority of housing association dwellings (as well as "affordable"/"starter" dwellings in the private sector in general) are *laughably* inferior to those available in decades gone by. And even then at sky high prices/rents with respect to wages.
In terms of quality of housing and accommodation (albeit with respect to the building standards at that time) and suitability for families, your typical council semi from the 50s and 60s were streets ahead of those built by housing associations since the mid-1980s. The gulf is huge. So much so that seen from other parts of Europe, the UK now has the unenviable reputation of building the smallest and pokiest housing with the poorest natural light. The irony being that it's also some of the most expensive housing per square metre in Europe and yet not particularly energy efficient. From a European standpoint, many British young people are paying a small fortune as a percentage of their wages to live in a glorified shoebox built on a postage stamp sized plot.
While commendable for their non-profit status, housing associations have not been (and will not be) the answer to the problem that the UK now has. You really have to think on an entirely different scale to even begin to seriously tackle that problem. And as we know from the last decade or so (of missed building targets for residential housing), not many politicians, developers and housing associations have demonstrated the appreciation of what's required to build at that scale and not cut corners on the size and quality of the dwellings that are to be constructed. And nor have the resources been made available to do so.
Canada: The average home price was about 6 times the average Canadian's earnings in 2003. By 2023, it was 11 times.
A common theme then. Homelessness is going to explode.
@@bushmonster1702 No explosion of anything, passive citizens, divided, stunned, and 60% ready for voluntary simplicity.
My son was a drunken conman in Tenerife for 20 years... He ran out of victims and came back to the yookay. The Gov gave him enhanced sickness benefit coz his alcoholism meant he had to buy vodka coz stopping quickly would be dangerous. The Gov provides him a privately owned house which he uses as a base for drug dealing. He doesn't work and runs a silver Jaguar with tinted windows... The Police can't catch him..there are too many of his sort. I had him in my WILL for £500k, but here in Wisconsin I am allowed to disinherit him...and I did.. The Government needs to make a LOT of changes..
unaffordable housing has also lead to, in part, the increased immigration because if young people can't afford property, that means they can't afford to get married and have children, which are needed for the labour market but that's been replaced by increased immigration
The Tories didn’t care about the homeless problem, it was a ‘lifestyle choice’ remember?
Last time Labour came to power with promises of over 200,000 new homes a year, they ACTUALLY built 7,500 in FOURTEEN YEARS while flooding the country with immigrants,
Any thoughts??
Last time Labour came to power with a promise of over 200,000 new homes a year, they built 7,500 in FOURTEEN YEARS while flooding the UK with migrants..
Any thoughts??
Last time Labour came to power with the promise of over 200,000 new homes a year, they ACTUALLY built 7,500 in FOURTEEN YEARS while Blair opened our borders..
Any thoughts??
I agree they don't want average /poor people owning homes and like all the police stations over a 100 alone in London they closed down no wonder this country's a mess ,👍
@@Jahfriend Actually they do want people owning homes hence right to buy and help to buy because when you own you vote Tory.
It’s a shame greed and lack of imagination have encouraged so many people to “invest” in housing. It does nothing for the UK economy.
The plan of downsizing and selling up rental properties may backfire if there’s an entire generation coming up that are excluded from joining the property ladder.
The banks and asset managers are buying up all the properties. It's all a massive wealth transfer
Over the last few years I have traveling to many places in Europe & I can tell you that the same situation exists in all European countries, & even further afield such as in New York & the Far East. I hate to be a pessimist, but TBH I don't think that house prices & rents will ever drop significantly....
Should have bought those old terraces when they were £20k a pop. No one under 25 believes me
It also distorts working practices. The emphasis is on wait and see thinking- my house will go up in price so no need to work ( passive) instead of I'm off to work to earn a living for my me and my family ( productive)
Channel growth is well deserved 👍🏻🔥
It can be fixed, it just requires the political will to do so.
We’re screwed then.
You do some really high quality analysis! Thanks.
Hi as someone hoo has experience in this subject being a house builder and landlord I must congratulate you on a very in depth assessment of the housing market in must have taken a lot of work to get that amount of information.and to be honest I totally agree with your assessment the only one thing you missed what's the current cost of building materials which will limit any way of being able to reduce house prices and then will create a basement cap for affordable houses which may still be higher than certain communities can afford. It would be very interesting to hear if you have any ideas on improving the situation with out a negative affect (apart from building more houses).very important and interesting video thanks John
Another excellent video and analysis.
I wonder if it’s worth doing these videos as podcasts? Just listening they make a great deal of sense
Thank you for your research. I find your videos are well done. RIght now I'm keeping an eye on Eledator
thank you!
Would love to see a video on Land Value Tax and how that would turn around the housing situation here in the UK.
Cheers dude, you're such a legend. I've learned so much from you.
I’d be interested in 1. how much revenue and profit the banks have made, 2. then compare this to house prices over 5,10 and 15 years 3. How much government rent contribution is paid where the tenant is related to the landlord
On point 3, the real property cancer is Right to Buy.
Councils forced to see a property which may originally have cost 50k to build.
It's then worth 150k but they have to sell it for a pittance of actual worth.
Then until recently, the sale money all went to Central government.
1.4 million social homes gone since the 80's!
Then is said Council want to rebuild an equivalent property, they haven't git the money.
In the meanwhile, the ex tenant sells up (makes a killing) and a landlord buys it.
Landlord then rents it out to Council at extortionate price as Councils by law have to meet certain housing obligations to vulnerable ppl.
Thus Councils going bankrupt
@@stuartburns8657Councils are also going bankrupt because since 2010 the central government grants have been cut 50%. All of it designed to destroy the public sector to benefit the private sector. The banks have cleaned up. If they go broke as in 2008 they get socialism and everyone else got austerity.
@@stuartburns8657exactly this! Few people seem to understand how fundamentally fucked up this is. Thatcher ruined our generation for short term political gains
@@stuartburns8657 issue is people would rather be on uc and housing bens than work.
the only way one can change it is to not subject housing to a capitalistic market as there always be investors that gonna price out normal owners out of the market - look what happens in australia and canda - precisely the same
This new normal in terms of cost of living, has stolen a life of motherhood from me. So many women will choose to stay child free. I will not be bringing kids into this situation. If I can’t own a home then I’m not getting anything out of society, so I’m not contributing to society. If I could withhold taxes I would.
Great video. I wish he would explain what the graphs show a bit more.
Five stars! This is highly insightful as to the multiple effects of letting asset price inflation roar ahead.
Tejvan, on the one hand your videos seem to always skew to the negative (which I initially assumed was to promote clicks), but I can't argue with any points you make.
I especially like the point you make about money being locked up in housing that could otherwise be spent on productive assets. Housing in the UK has been so lucrative for so long that it has sucked up all the money that could have been spent on more productive assets that would create many more jobs.
Why take a gamble on a promising new tech startup when you can just buy an ex-council house and rent it out?
yeah sadly its not just click bait but a reality.
Imagine all that money was invested into infrastructure, new technologies, new ways of working and being more productive.
So much more taxes would be raised, so much more public services would be, and if housing is plenty and unrestricted, so much lover the rents would be.
Buying a council house with a 70% discount is just about the single best investment one can make in the UK but UK property on the whole isn't actually that performant. UK property has been stagnant in real terms since 2004 and the tax regime for rental income is incredibly unfavourable
@@dlc2479 don’t forget the leverage via a mortgage.. very hard to beat
@Metro6am It's true that for most, a mortgage is the most leverage they'll ever access. But that works in both ways, it's good if the value goes up but catastrophic if the value goes down which is what's happening now.
There is another problem created by too much govt intervention in the housing market to protect prices and make them grow. This is that housing is an investment that you cannot lose on entirely unlike investing in a business which you can quite easily lose on. The govt guarantee on house prices encourages investment into non productive housing rather than a business which actually produces more stuff.You can sit around literally for centuries at an extreme version like the aristocracy does watching their value increase without producing anything new and additional. Governments meddling in the housing market by manipulating interest rates are part of the problem combined with the keenness of the banks to increase debt which increases their assets. Housing is a very skewed market in the UK full of elite interests.
Very true - rent seeking. Not adding value to GDP.
@abrin5508
Not sure how this is relevant.
First off, rental income is taxable is it not? Plus, stamp duty is charged on purchase of investment property. Property investors can only receive a 20% tax credit of mortgage interest now so they’re now paying a lot more tax. All of which is being used to support public services.
What about the landlord paying for cleaning services and or redecoration services between tenants or if they’re doing it themselves purchasing the materials to undertake such tasks, is that not contributing to GDP?
You really haven’t thought this through.
@@andymurdoch2776 rent seeking has a special meaning in economics which most often has nothing to do with the general English term rent
@@andymurdoch2776 What you are calling a great contribution to GDP is really a lower tier money changing hands - bit like selling coffee to each other (which you imported). I very much doubt you having a few rentals contributes to GDP like a pharma co selling products in the USA through its IP, or selling jet engines internationally, or even a small mechanical shop doing custom jobs around Europe - those examples are tier 1 GDP generation and bring money to the UK. You do have some limited value as ultimately people who develop/make those things may need somewhere to live. This is why the UK is broke - focus on the wrong things.
I earn £75,000, my girlfriend earns £50,000ish and we feel poor. We are in about £500,000 of debt because of housing costs and we have decided we cannot afford children as one of us would need to quit our jobs to look after them. Without the joint income we would need to sell everything and start over
With that joint income, you are a rich family mate !!
Use maternity/paternity leave mate.
@georgeantony8468 Very fortunate compared to most our age. But it doesnt feel like it, honestly. We live a nice lifestyle, but I do feel very conned out of life. The amount of work/stress is not worth the relatively modest lifestyle we live. I work permanent nights shifts and do about 60 hours a week, and my girlfriend works and lives away in the forces. The amount of pay doesnt seem worth the effort and sacrifice we put in. Our parents (56 years old) could afford so much more and had a much better quality of life despite having basic jobs without the stress/ long hours/ working away.
I appreciate there are so many worse off than us, and we are in an amazing position, but it is all relative to the majority of people who are doing terribly. The lifestyle we have would have been considered very average for our parents' generation yet we need to do amazingly well to achieve their average.
About 60% of my salary goes onto taxes in one form or another, so earning more money almost seems like diminishing returns.
@joanneburford6364 Girlfriend is in the forces living away and is only back on weekends. I work permanent night shifts and do about 60 hours a week. We can only earn the money we do by moving down south away from all of our family networks so we wouldn't get help from anyone. Maternity is great, but it needs to extend until the child goes to school, and unfortunately, that's not the case
So you're earning over 50 grand after tax and är half a mill in debt due to "housing"? I'm gonna assume it's a mortgage you're talking about, if you're in half a mill of debt that's not mortgage than you failed at life big time.
Great channel mate but pls leave your charts up longer, particularly when comparing countries.
My solution, just pause the video
@BaronCorrino already done mate, but thx for the advice 🤦♀️
I always grab a screen shot on the iphone to review the charts
It is mentioned in the video that house prices have fallen for 10 (?) years but most people's experience has been rapidly rising prices. I am prepared to accept this is true, I just don't understand it. I would like to understand the way the fall is measured and by which metrics?
06:04 brillant ! Economics Help Uk , the Boss is in Town!
It’s happening everywhere in the west. In Poland property prices have risen by 28 percent per year and it now costs almost 4k gbp on average per sq m to buy an apartment in cities like Warsaw, Krakow or Sopot. I think it’s a mix of inflation and things like airbnb rentals etc. But in the uk it’s probably the worst, it literally costs a 1M pounds to get a decent detached property in the south of England. To get a mortgage for a normal detached house you need a salary of 200-250k GBP which is like 8 times the average salary. Insane. Combine that with extremely high taxes especially on higher incomes and we have a feudal system. And Labour is only going to make it worse.
Who is this academic please? He's really good! I can't find his name anywhere.
I think one of the problems is land banking, where a developer has targets that trigger investment towards local infrastructure, so they built to just short of that target, and then just sit on the land until there is another shortage, increasing demand and prices, only then, do they start building again. Any major development should have time restraints put on them, so that have a period of time in which to build the homes, and trigger points along that time, where they have to provide the infrastructure to the area. Any failures should be met with large penalties.
This is one of several endemic problems that affect the UK and perhaps the most intractable.
The major issue is how reliant we are on a booming house market for growth.
Net migration produces enough people to fill Northampton three times over and shows how hard it will be to fix our housing habit.
As a country we are very good at hiding our homeless.
Your charts show us to be the second worse for homelessness and worse than the US, which means those RUclips videos of encampments could be our future.
Given it has taken 40+ years to arrive at this point I believe we need to reverse those policies that has led to this situation, the first and most harmful being ‘the right to buy’.
Councils must be given the ability to acquire property and rent it out at a sub-market rate so acting as a natural brake on rent increases.
P.S
One question:
Ten reasons, but I did not spot number five. Was number five homelessness?
I saw (4) Cost to government and (6) Changed households.
Demand over supply…… the population of England and the provinces is rising by nearly one million a year. The major house builders have no incentive to build more houses thus reducing price.
British DECLINE is gradual, but constant and consisten, by the time your kids have grown up it is completelly different country in negative sence, there is no stopping of this decline in sight. UK became LAUGHING STOCK in 20 years time
Same here in USA, but now buying at these higher prices comes with higher property taxes and insurance. A $500k home will run you $12k to $15k annually thats even if you have no mortgage. Unsustainable.
I wonder if you need to tie house prices to inflation, having a yearly price target of 2% that they can't exceed. I think that could be controlled by a huge expansion in building and renovation, taxing developers who sit on unused land, quadruple council tax for second/third home ownership
There're plenty of brownfield sites to build on but developers need buyers to want to live there in order to make a profit.
My 58 year old Spanish companion MariCarmen speaks only Spanish so I have to & very well ,Alicante University has asked me many times to teach children English , biology chemistry & mathematics ,can teach them spoken English but the grammar of the stupid language never , many of my friends can speak it ,in the next town East a Spanish friend has a daughter in London that will come home soon ,too expensive to rent .goes out with groups to avoid violence so London will lose many teachers & nurses ! We have a wonderful free health system here .all helpful & polite !
Similar situation here in Germany
🙋
is cracks in brick work a structural issue, subsidence or settling? is it something to worry about❓
I’m told there is plenty of housing stock in England but they’re unaffordable and/or in the wrong location. Is this true?
n a lot of other countries UK people ie non native people are not allowed to buy property, full stop; only rent. Or they have strict immigration rules like Singapore has a 60% tax at purchase for foreigners and 65% for an entity or trust. This needs to be replicated in the UK
The UK government regards foreign purchase of UK property as investment into the UK.
Build affordable housing. Provide a landlord - the local council - who cares more about citizens than money. Basically, the exact opposite of Thatcher.
This was a fantastic video, Well Done! However, one thing that was not considered/discussed is that the UK has around 200,000 long-term unoccupied housing. In addition companies such as Airbnb which run short lets over the summer for holidaymakers, but are mostly unoccupied in the winter months, has had a detrimental effect on the housing market. Therefore, limiting wealth (e.g. taxing the very rich) should be considered to put a deterrent on wealth accumulation (assets such as housing). This would therefore have some effect on reducing house prices as the very rich will be put off buying.
It would be great to get your opinion on this. Your channel and videos are brilliant, thank you for the raising awareness through facts and figures!
The same thing has happened in Australia and Canada.
America seems to be the outlier to this housing issue.
Build more houses, with the government directly competing with the private developers, both by creating council houses and in the private sector. This is a clear market failure, as the current developers have no incentive to reduce house prices by actually fixing the problem. Add to that an aggressive progressive tax regime on people who own second and third homes along with rent controls.
This problem can be fixed easily, but requires bold, decisive action.
House prices are around double what they should be, we need to bring the prices down.
This is really bad news. The only winning move is to move abroad - to somewhere cheaper.
You mentioned how state income subsidies are being used to fuel the rent rise and property prices. The tax system is similarly used to subsidise the rich with tax deductible allowances and dividend payments. They have a far lower effective taxation rate than those on PAYEE. The UK wealth divide is created by our tax and benefits system and is bringing the country to its knees.
There simply aren't enough homes. Supply, whether rented or to buy, is less than demand.
In the 20th century, air pollution, food shortage and oil peak was thought to be the factors that bring us to stagnation.
Noone predicted that housing would bringing us to stagnation.
It won't. Look at cities like Mumbai to discover what awaits the UK and rest of the Western World. Or just open up a Charles Dickens book and read. History rhymes. The UK economy will continue to grow, and there will just be swathes of poor destitutes living in make-shift hovels but they won't count as part of the real economy.
Why won’t politicians ever talk about housing costs are bankrupting the uk
It's won't, not can't in regard of doing something about it.
Hate to gloat far less rain on your parade Britisher pals, nevertheless I'd like to
make comparisons with Japan. Talking suburban and rural property here. Something of an apples and oranges comparison and exchange rate is a major factor, but for a three-bedroom detached house with small garden parking for three cars you are looking at less than 30,000 pounds including agent's fee. That's outright purchase price not simply the deposit. The cost of borrowing money is also very low in Japan which should in theory increase the cost of domestic real estate property. I realise it's all about location, but 10-to-15 minutes from a Bullet train station or highway entrance/exit is easily achievable. So commuting into Tokyo is possible. While renting out is economically feasible, renovating and flipping is not.
With the exception of dairy products, just about everything else is cheaper here in Japan compared with UK. That said, inflation is kicking in for anything imported. The yen is about to breach the 200-to-the-pound barrier, having been at 130 some three years ago. That's 30% for sitting on sterling. A visit to Oxford in June 2023 convinced me that Britain was a total rip-off. The are far better places to visit where your hard-earned dosh will go a lot further. South and south-east Asia for example: Expensive to get to but cheap after you arrive. Well, for you guys at least. From this end of the ranch it's relatively cheap to get to. And who can argue with a five-star hotel at around 100 pounds a night. The equivalent would cost you at least a grand in London.
So for a retired ancient Brit, it's a case of fill your boots.
Jack, the Japan Alps Brit
Slavery was never abolished but strategically redesigned 70 years ago by elite bankers collaborating with big corporations and later big technology for marketing data and promotion. Modern day slavery is the endless financial credit and consumer consumption on things that add little value to life experience (fashion, grooming, medical, entertainment, food etc). Product refresh cycles are now annually for some goods, driving the consumer to buy the new model thing. These big corporations benefit and drive globalist/centrist political policies which in turn drive down labour rates whilst at the same time driving up demand for housing and further raising asset prices. Why else would Blackrock et al buy private property. The next stage is endless (lifelong) renting and corporate subscription models ….. Spotify, Amazon, Netflix, Uber, Pfizer etc but beware: you’ll own nothing and be happy.
Another great presentation. Thanks.
The problem with reducing immigration is that we then run into demographic problems with too few people of working age in later years. I don't know the solution to that issue.
I am going to try and make sense of Rachael Reeves' Mais Lecture later. Is that the sort of thing you might do a video on? From a strictly economic perspective?
Thanks.
The housing problem is a long term fix around 20 years, but of course governments only look at the 5 year election cycle. The government having a housing target of 300,000 homes a year is a waste of time unless they have a mechanism to ensure that number are built. The current situation suits private house builders very well supply constraints keeps prices up. There are a few key things that could be done
1. Training the construction workforce, it takes time but it is essential to train all the construction work trades.
2. Land valuation , land through CPO should be at current land value not at potential value ( ie developed value)
3. Large social housing building programme through local authorities and housing associations , but this has to go hand in hand with 1 above
4. Investment in modern methods of construction ( ie factory build homes).
None of these solutions can happen overnight, even if starting today the training programme before showing real value will be something around 5 years ( to train the number of workers required). There are no quick fixes but the sooner a programme starts the sooner benefits will be realised.
Only the ill informed think housing is a supply issue. Here's a clue, changing poor tax choices would reduce average rental incomes and houseprices by 2/3rds overnight. And take a huge deadweight off our economy. That is the solution informing us what the problem is.
The cost of building materials, paint, lack of properly trained brickies and sparks, leading to higher wage costs, make "affordable" housing expensive. Much the same with child care.
In a flat economy everyone, doctors, train drivers etc are demanding a subsidy. That is unaffordable.
The only answer is to tax the capital gain on property at 30per cent with a six month warning before the hit and, like India, ban foreign ownership of housing.
It will be excruciating for 5 years, but will work.
Re-indexing income tax brackets and introducing a land tax is probably a better solution. How does taxing capital gains help if people aren't selling their assets.
Surely we have to tax wealth to raise the money needed for our investment
It’s like the Hunger Games. We’re even building the train for rich people to travel around the districts
American style trailer parks would offer a relatively quick way of providing low cost homes for people on lower incomes. Made in factories they are quick to make and compared to brick built are much cheaper.
There's nowhere to put them and they are highly inefficient in a cold climate.
1 million moving to the UK per year.
Why is that because Brits would rather be on uc and housing bens rather than work.
Ah the 1mn are getting this? Right then I'll go quit my job and get free housing and bens, waaaaay
With 600 thousands yearly net immigration, you can’t have no housing crisis. Fix your borders and immigration policy, then the problem will be more manageable.
@@tachat1417 the uk needs that because Brits just won’t work
1.2 million.
A labour govt are going to increase debt thus sustaining inflation and increasing risk to gilt owners. Thus interest rates will remain high so hopefully there is some hope in terms of house prices but not for the economy. It’s definitely not the 90’s. More like the 40s
House as investment. It can't be fixed.
It's by design.
Removing planing permission, and free for all is the only way.
If it's controlled,then it will always be restricted.
The right to build by removing permission is half of a free-for-all, the other is encouraging or even forcing existing land owners to sell underdeveloped land. Develop it or lose it.
Housing is an issue with the unjust(unequal) distribution of the returns to land among society, capitalised into rental incomes and selling prices. Land's aggregated selling price of £5.5trn, thus measures housing affordabilty issues. This can be solved overnight by changing poor tax choices, which by equally sharing those returns drops that selling price to zero, thus reducing average houseprices by >2/3rds. By not mentioning this, Tejvan Pettinger shows he has no idea about housing or basic economics.
Housing issue has nothing to do with Economic and everything to do with population size, which means population birth rate and immigration. UK birth rate is falling, so this means the rapidly rising population is due to immigration. This means supply and demand. There is not enough housing stock to meet demand. If the UK started a cross political party consensus to build, build, build, it would take approximately 50 years to build enough houses to catch-up with current population growth, as UK and consecutive governments have failed to have a National building plan connected to population growth. Or, we just control immigration! So for next 50 years prices will remain as there is more demand than supply, that is the only economic equation!
Quite. And the demand for land is key component. Starmer will not be building any new land in our centres of population where demand is highest. The only policy that can work is controlling immigration. Everything else is for the economically illiterate voter.
Its a long time to wait, but if you look 20 years ahead a lot of my baby boomer generation (sadly including me) will vacate their homes for a Care Home, or the grave. That effect is exaggerated by the current very low birth rate. So the situation might be better for the children of today, with a shortage of buyers and a glut of houses particularly if the promises to reduce immigration actually are implemented.
Recently, housing prices in China experienced a decline of 20%, while its GDP experienced a growth rate of 5.2%. UK economy is a house of cards.
when the wealth of an entire nation is stored in a Ponzi scheme like house prices and this collapses, then China is clearly a house of cards for me.
china has way less home owership per capita . have you rented in bejing a studio 600 pounds a week
Build more AND prevent boomers from buying them all up
Prices cannot go down if they so your bankrupt everyone. Once you put people into negative equity you cause more issues issue with the uk is you rely to much on foreign workers doing all the jobs. So you import more people than you can build homes.
1. Make it so you must be a citizen to own a Domicile in the UK.
2. Restrict properties to one per person, You may only own two properties jointly in a marriage.
3. Restrict leaseholds to apartments/multi story flats only, leaseholds cannot be applied to properties of the character of a single domicile.
4. Make house building permitted development. No more nimby Councils or Neighbors Rejecting a new build site because of Fear of falling property prices.
5. Allow housing benefit to pay a mortgage. It's paying for A landlords Mortgage anyway already, plus some. It will not only be cheaper on the government, you can have it set up so the percentage the government pays into the mortgage is how much the government owns. This allows them to claw back The money put in to the property upon sale, rather than it just sloshing around in the private renting sector. This also has the added benefit of increasing the social housing stock, because if the government owns the majority of the property, They can buy out any Inheriting party and repurpose it Into social housing.
Number one doesn't make any sence, you need to look up what domicile actually means. The most part your suggestions smack of communism. The supply of housing has always been a problem for the last 300 years. Perhaps the supply of housing can be addressed by looking at the supply of people, although there is the question of infrastructure not being able to cope with the amount of people that have entered the country.
@@spokes1018 From what I understand, a domicile is an individual's permanent home.
And I get your concerns about it sounding like Communism, However, I assure you it's more pragmatism.
We have something which is a basic need That's in short supply, And rationing is a viable policy. As for the part with the benefits, It goes to a private landlord so the government is already paying somebody's mortgage and the bank.
If money is just gonna get shoved at private entities, Why not just have it pay for a mortgage anyway and cut out one of the middleman. It's cheaper than rent, and it's money the government can claw back with a shared ownership arrangement when this occurs.
Realistically, however, The above is a short To mid term solution. The long term solution is making housing permitted development, Kicking the nimbys concern about their house prices out of the equation.
Housing is needed. if you wanted line go up, There's gold, silver, stocks, shares And if you're really adventurous crypto. Owning these things with an incentive for it to gain in value do not deprive others access to a necessity. Treating housing like this does.
Personally, I think we need more of a Japanese outlook when it comes to housing, and that is treating it as a commodity. Give the free market the rains to build the housing as required, and have fierce competition bring the pricing down.
As for the question on population, I agree. The problem though is the solution is messy at this point. It's gone past the point of no peaceful return, where the only answer will be forced emigration in order to bring the numbers down meaningfully. The upheaval would be so bad the Military may have to get involved to keep the peace during the process.
I'm not heartless, I understand that that would be extremely traumatizing and It's not really their fault. If a bank opened their doors and said free money, I would run in and get some for myself. That's essentially what happened with our immigration system. But it is unsustainable and it needs to be made clear that this is not against them, But an unfortunate consequence of Having to fix a massive mess made by a string of incompetent administrations.
As for the inevitable doctors and nurses comment popping up from some airhead. Yes, obviously trained doctors and nurses can stay.
Well, you could start by building more houses.
We need a maybe 200,000 houses a year just for all our 'newcomers' 🙄
@@andrewcarter7503 Yep. Better start building.
BHouse prices haven't moved in real terms for 15 years as you admit. I would say 20 years ( 2004). Yet house prices compared to wages were at a post war low in 1997, just seven years before. I bought a detached house in 1996 for 77k, for example. So who broke the economy by tripling house prices, the Labour Government between 97 and 04. I get very frustrated that you never do an analysis on when the damage was done.
9:24 you can't just skip over the population growth.
If the uk had keeped our population at the level it was in The year 2000 say 60 million. It would have kept housing costs down in the 4-6 x salary level rather than the 7-9 x it is now.
while also pushing pay up.
You will not get an increase in real pay all the time you increae the population by 500-600-700k a year.
Wait, do you think cryptocurrency will crash? I don't think so. I'm using Eledator, traders just do business instead of me :) I don't afraid even if crypto will crash
If only Thatcher had built 1.25 houses for everyone she had sold eh....
The Tories have done this deliberately.
I think you’ll find it’s down to the Bank of England, lowering interest rates to a ridiculous level and the printing presses working overtime making billions and billions extra .
Take back are countries people
Have a large programme of building council houses using government employees.
Growing wealth inequality is a real problem that needs to be addressed, probably through taxation. The main problem with the wealthy is that they are unable to spend enough so are always looking to invest in assets such as shares and property. This then firstly creates a drain on the active economy as increasing amounts get diverted in asset purchases. Secondly asset prices increase and the public's disposable income is squeezed and is a further drain on the active economy.
I think the starting point to resolve this is for government to place a cap on rental costs. This will invariable trigger a sell off by private landlords and the government should then be prepared to step in and start buying up properties at keen prices. These properties can then be let out again as council properties. We know that we can produce the money when we want to. When covid came along we produced £450bn and investing in property like this is unlikely to be any more inflationary than what happened with covid.
No
If you have the immigration levels the UK has you could never build enough homes for the prices to fall.
The immigration crisis is creating a shortage in many western countries.
guess who has the money
I just sold up, protect my equity. Bubble will burst
Ban all debt except government debt and have that heavily controlled
Why don't you look at houses prices through the lens of inflation. If you lower lending standards i.e. go from 4x one income to 8x one income you increase the amount of money bidding up house prices. That is the only thing that has change, we have always had tight planning regs and a shortage of housing. When priced in gold house prices are the same as the 1950s!
You can build all the houses you like but if you support more lending (allow low lending standards and create more help to buy schemes) then the new money will just raise the prices of the new houses!