[Closed] London housing bubble solution?

select the relevant post codes

You're mistakenly assuming that every house in one of the smarter postcodes is an oligarch's palace.

Then put the estate agents to hard labour ...

Build more houses. Its a supply-side problem being badly (madly) managed by a demand approach.

It would seem that a tax on one of foreign buyers/empty houses/rental properties could help to hold things back a bit without affecting people just trying to afford a house to live in too much.

However none of this will happen since the London housing bubble essentially [b]is[/b] our 'economic recovery'.

House prices are higher in London which logically means proportionally more of them pay higher stamp duty than elsewhere. Your suggestion is already indirectly in effect.

I thought they were only Palaces and penthouse apartments there, is London not all like Hyde Park One or whatever? 😉 To be honest, the price of a 'palace' is of little concern, it's the prime of your standard 2 and 3 bed that's the problem and I suspect the money from foreign high rollers comes in a little higher up the chain. It'll all end in tears except for those who sell high and emigrate (to the north).

2 up 2 down terrace houses near where I live are now over £500,000, it's ridiculous, and not due to foreign money. The biggest problem is that people in the uk now see property as a way to make money rather than as a place to live.
The BoE isn't going to raise interest rates any time soon because the economy is still in a mess and if they do so it won't be just the huge problem of overextended mortgages causing repossessions but all the zombie businesses that'll go to the wall that would put us back into recession.

House on friends street in Plaistow East LDN was for sale (2 up 2 down Victorian terrace), estate agents are now doing open house instead of individual views as demand is so high. There was a line of 15 waiting to see the house, out of interest she asked those not 'buying to let' to raise their hands - only two did.

Interest rates [i]should[/i] be higher - there are more savers than borrowers in this country. They are stupidly low - albeit for a reason - but a hell of a lot of people will get burned when normality returns, due to a combination of desperation, greed and stupidity.

However, it is a supply problem, been coming since Fatcher sold off the council house stock and Bliar ignored the problem. We need to build more affordable housing on brownfield sites/those already with planning permission, and not grant permission for any more until they are built and occupied.

Then mortgage lending needs to go back to 3 times salary and repayments no more than a third of disposable income, try and get some common sense back into people.

Obviously, these policies may require the reintroduction of workhouses to deal with those who will be unable to exist in this new world - aka I actually have no idea really how to solve the problem.

Quite like the idea of a windfall tax on foreign buyers. And 50% stamp duty on second home owners.

The solutions are already coming through, albeit piecemeal
1. Lloyds have begun to restrict what they'll lend for people buying in London postcodes
2. The strength of Sterling is making property more expensive to foreign buyers (up 30% against the Rouble in the last year
3. A public blame game between Carney and Gideon - clearly they're both shitting themselves things are going to go pop and they're both trying to protect their own reputations - which is a great motivator to providing a proper solution IME
4. Duke of Westminster pulled a chunk of his investments out of prime London, calling the peak of the market, a couple of weeks ago and made sure everyone knew about it
5. Fear amongst buyers that interest rates will be going up soon, meaning they're thinking more about what they can afford
5. Looking at Rightmove for Bromley, quite a few sales appear to have fallen through in recent weeks - suggests maybe people are not being able to get the finance, or just refusing to stretch themselves.

tbh we need a drop and whole load of people to fall into negative equity and for the media to make a massive fuss of it just to remind people that house prices are not guaranteed to go up for ever and ever...

Sitting here as a first time buyer with deposit ready I'm really not sure if now's a good time to buy or not - too much craziness (irrational exuberance) and too many suggestions of an underlying weakness from too many people taking on unaffordable levels of debt (again!)

OP the BoE isn't daft and they are not going to put interest rates up to try and slow London's property market, it's too damaging nationally and a lot of London buyers don't care about the level of interest rates, it's not really a factor in their decision making process.

Foreign owned properties should be subject to capital gains tax, currently they are tax free.

More social housing built by state and rented to key workers (a lot of key workers have to rent from private sector and the private sector buyers push prices up)

Government work to encourage employment growth outside the South East, not just government departments but private sector jobs.

Would that not help close the north south property divide?

No. That's a separate issue.

In no particular order-
Build more houses on green belt land.
Regulate the build quality to a far higher degree and specify minimum floor areas that are what people want rather than what house builders want.
Build more state funded houses, to circumvent house building companies claiming they're getting insufficient return on their investment.
Vastly improve tenant rights.

MoreCashThanDash - Member

...mortgage lending needs to go back to 3 times salary and repayments no more than a third of disposable income, try and get some common sense back into people.

does that inlude all the ****ing buy-to-let landlords?

My friend rents a three bed ex council house in Earlsfield, similar houses to his have gone from £500K last year to £800K this year, as four have recently been bought at this price by Russian investors thus resetting the bar, so normal people in normal houses (if half a million quid is normal)are now being affected directly. He was hoping to buy in the area and now that is just impossible for him.

I don't think it will be solved by building more houses. There's too much money tied up.
If you're a developer, are you going to sell a batch of new houses (which are released in small numbers) at less then the going rate?
Maybe after 10-20 years of a huge building program it might work, but not in a year or too.
Just increase interest rates to 10%, that'll reduce prices.

There is absolutely no need to build on the green belt at present, loads of brownfield sites and other sites with permission already granted - need to offer a carrot - tax breaks if necessary - to make it happen.

Buy to let landlords have to jump through as many hoops as everyone else, but they will only start to decline when cheaper social or new build housing is available - simple supply and demand. And they are not all scum, some are decent landlords who were just lucky having cash to invest at the current time.

Why do we have to solve it?. For a start, I'd like to see a government that doesn't base nationwide housing policies because of what happens south of Watford.

We've just sold & bought in North London .
The estate agent told us that in the past 12 months the area we are in has been swamped with foreign buyers.
Our old neighbours were an Israeli couple who had bought a flat and were renovating it before moving in .
Not palaces,just poky 2bed flats!. In the last 6 months prices have gone up 15/20% ,depending on location. 😯
Don't know what the solution is tbh.people are prepared to work here so there is massive demand.

To say LDN is a bit too vague as well. Property in a lot of areas in LDN have always been very high especially for houses & out of range for almost all people What has happened over the last 20 years is East London has changed beyond all recognition. Certain areas where once affordable in fact stupidly cheap (Newham Tower Hamlets Hackney Waltham Forest). This all changed when the Olympic development & jubilee line extension started and has since carried on & on & on....even Canning Town now has penthouse flats 😯 & the last I heard the V&A & Saddlers Wells are looking at coming to Stratford. Couple this with a kind of domino effect where people who lived in flats across other areas of LDN & now want a house have had to look over East to buy and this has driven the price up. The property bubble isn't gonna burst here yet though if ever as East LDN is nowhere near its full development & the prices are still way off compared to West etc.

Just build and saturate the market with good quality low cost renal properties
will be the answer and be an end to the housing boom.
But Who is actually going to do that when the same companies are going to make
serious short term cash return if they sell the properties.

The end of the day it is a Government problem not a developers one

1: Vote Boris out at the next mayoral election

2: Tax those buying to let into oblivion.

2: Tax those buying to let into oblivion.
.
.LOL But at the moment they are the only ones providing Housing and do pay an higher Mortgage rate.
Its a Government Problem.

Its a supply-side problem

Not really: http://www.theguardian.com/commentisfree/2014/may/21/no-housing-crisis-just-very-british-sickness

MoreCashThanDash - Member
...mortgage lending needs to go back to 3 times salary and repayments no more than a third of disposable income, try and get some common sense back into people.

does that inlude all the ****ing buy-to-let landlords?

Generally no if it's a business (as is BTL). You just need to show you can cover the mortgage with the rent.

1: Vote Boris out at the next mayoral election

2: Tax those buying to let into oblivion.

@jambalaya You're making it sound like buying and renting out a property for profit is some sort of philanthropic pursuit for the greater good of society!
Without buy-to-let landlords inflating the market,a lot of younger people (myself included) could afford to buy and not need to rent at all.
It's bad enough competing with the first time buyers of my own generation for suitable housing without previous generations squeezing us out of the market altogether.

@El.Bent - Boris has nothing at all to do with the price rises in London. Without buy to let landlords there's a lot of people who would have no where to live as they don't have the desire or resources to buy a house.

Boris encouraged too much overseas investment into the London property market.

Without the land lords...the houses/apartments will still be there.

I'm never sure about this supply crisis.
Isn't housing demand a calculation of "potential demand" and more a view of how many homes the market will support rather than actually need. If there was really a supply crisis we would have homeless people all over the place and we don't.

Does anyone have any actual data on vacant buildings, brown field sites and increase demand due to an ageing population(stripping out immigration and potential customers who may buy given easy finance but don't really need to)?

All sounds a bit like the "we need to build roads" argument, when do we have enough roads and when do we have enough houses?

As some have suggested, there's no such thing as "affordable housing" as as soon as it's built the market will correct it's value. The only ways to make this property is to either make it inherently undesirable or underprice it at time of sale and I can't see any developer not wanting to milk every last pound out of a development.

I'm hoping the crisis we've now got will correct itself in 20-30 years time when all the baby boomers are gone and we're left with a more manageable population size that doesn't have half the money.* There's just so many 60-75 cash, equity and pension rich folk around that very few of us that joined the party late can afford to either get on the ladder or get on the next rung. I'd be looking at another 100k for an extra bedroom where I am frankly, I can't afford it and short of earning 100k a year I can't see how I could.

* I haven't looked at the numbers on that but that's how it feels.

Just build and saturate the market with good quality low cost renal properties

Unless it's government backed and underwritten.

Build more, and try to sway the general love of home ownership towards home rental.

No more building in the south east.
With whole streets empty in Liverpool and Wales new comers to our country should be persuaded to move to those areas.
The infrastructure isn't there. Where's the new hospitals,doctors,sewers?

Watching Homes under the HAmmer - once they tell me the answer I'll post it up

Move as much government out of London as possible and increase taxes on companies based there. Simple solutions.

Without buy-to-let landlords inflating the market,

Nothing to do with globally available easy credit for years and years. No sir - just some private landlords. The evil murdering nazi serial killer banker bastards.

Need the jobs away from the SE so encourage businesses to set up elsewhere? London is seen as the appropriate place for many businesses for prestigious reasons and that attracts professionals but many poorer people want to live there too; not sure what can be done without someone saying it's ethnic cleansing. As it is the Green belt will be built on and housing become denser as gardens are built on and gaps between villages and towns shrink. With remote working being viable for many seems a shame more can't live away from the SE.

Buy to let distorts the market. I make no comment on whether it ethical.

Couple goes to buy a house as home. They'll need 5% of the value up front and then the interests rates will be quite high as of the high loan to value ratio. They'll also need any fees etc. up front

I could go along to the same property with cash in my hand to buy that same house buy re mortgaging my house. My loan to value would give a lower interest rate and I can choose to borrow enough to pay stamp duty and other fees up front

Move as much government out of London as possible

They did this in the 70s afaik.

Put restrictions on foreign buyers buying in cash who have no UK residency.
Limit the amount banks will lend.

IMO there's not a shortage of properties (or there'd be masses of people living on the street), but there is a shortage of properties [i]to buy[/i] ie: If I own 2 houses, live in one and rent the other out then the 2nd one is unavailable to a first time buyer.

Coupled with banks lending silly amounts, Estate Agent tricks with open days and sealed bidding + panicked naive first time buyers and you have a bubble. There's basically too much money chasing too few goods - classic inflation. Sellers simply can't ask for inflated prices if buyer can't access the debt...

The recent increase began almost to the day that Help To Buy began... (I was looking to buy at the time and prices literally went up in a matter of weeks)

Go figure.

We could turn the fox hunts of old into estate agent hunts.

23yr old wannabe The Apprentice types running through bracken and fields screaming they want a last supper of a line of coke and a night at Fabric before the hounds get to them

Put restrictions on foreign buyers buying in cash who have no UK residency

So, can anyone tell me what restrictions on second homes and/or foreign buyers have done in France?

Has it reduced house prices?

Completely different economy and housing market profile.

Buy to let distorts the market

Someone will own all the rented accommodation and you need rented accommodation for a healthy economy as it is necessary for movement of labour.

[url= http://www.ft.com/cms/s/0/a3e91ddc-e26f-11e3-a829-00144feabdc0.html#axzz32uUWeYE1 ]From the FT[/url]

See pt 5 - this especially:

The risk is magnified because nearly half the mortgage market is on interest-only deals, whose monthly payments will jump dramatically with every rise in interest rates.

More houses in the South East?
The tubes are full http://www.bbc.co.uk/news/uk-england-london-24888358
The roads are full http://www.bbc.co.uk/news/uk-england-london-22941175
The trains are full http://www.bbc.co.uk/news/uk-england-london-23436819

You'd need a lot more than just houses.

As above, the problem is too high concentration of jobs in the South East.

To avoid the rest of us suffering higher interest rates

Not everyone wants low interest rates.

aP - Member

2 up 2 down terrace houses near where I live are now over £500,000, it's ridiculous, ...

Crikey. Soon it will just be multinational office blocks in London. 😯

If you have £500K you can migrate to any part of the world as you wish.

Presumably people who buy a £500,000 house to live in don't normally have £500,000 to emigrate with.

They have an income which is high enough to persuade some one to lend them the money, provided the loan is secured against that house. Their income is almost certainly reliant on them being in London 5 days a week 48 weeks per year

mikewsmith - Member
Move as much government out of London as possible and increase taxes on companies based there. Simple solutions.
..
. Really ? Are you actually serious !

Like all "bubbles" this one will sort itself out eventually as supply/demand/prices equalise. I can't see the SE of England building itself out of a housing crisis and it will be rising interest rates (poor for buy to let returns) or currency changes (as the pound strengthens foreign investors will sell and return their cash abroad) that will change things.

Otherwise some of the other suggestions are not going to happen (extra taxes on London jobs/houses/buildings/buy-to-let) for any government that wants to stay in power.

A lot of the value in housing in the southeast will stay since beyond any bubbles as the money stays within families and keeps property prices high. This is the reason that my sister and brother-in-law have just bought a nearly £1M house on fairly average salaries. Inheritance (brother-in-laws not mine!).

To compete internationally you need large cities, there are huge efficiencies to be had by having lots of businesses all in the same location.

One of the problems with the UK is we don't have a large enough 2nd city to compete with London.

Like all "bubbles" this one will sort itself out eventually as supply/demand/prices equalise

I can't see that ever happening. If you did suddenly build a million 2 bed homes you'd create a huge negative equity problem / bad bank debt as all the huge loans given out over the last few years would be under water.

If you did suddenly build a million 2 bed homes you'd create a huge negative equity problem / bad bank debt as all the huge loans given out over the last few years would be under water

Which is never going to happen.

What I meant is that the current London prices increases will slow or slowly reduce. This has the been way for London prices for the last half century.

Move as much government out of London as possible

... and then link it all up with HS2 and HS3 🙂

If you have £500K you can emigrate to any part of the world as you wish.

I've thought this, I could get a place in France or Spain for £250k and the money I could earn from the capital I released from my SE home would mean I didn't have to worry too much about what job I got. Can't see this happening as wife wouldn't go for it and, anyway, fairly settled in the SE.

Why is it a problem if more people rent though? People do this in the rest of Europe without problem and most only buy when they're later in life and convinced they're going to stay for a lengthy period of time. Keeps the labour market fluid. Would need much more protection for tenants if that's going to be an option in the UK though.

I can't see that ever happening. If you did suddenly build a million 2 bed homes you'd create a huge negative equity problem / bad bank debt as all the huge loans given out over the last few years would be under water.

We didn't see 2008 ever happening either.

As a first time buyer wanting to buy I'm slightly obsessed about this particular subject and I'm reading everything I can find so I don't buy at the wrong moment and massively overpay, and there is a HUGE amount of comment from serious people that we're setting London house prices up for another bust...

Why is it a problem if more people rent though?

Because you never get any of the money back. If you buy, you do.

Buyers now will end up £250-500k richer in 30 years' time. Renters will get nothing.

People do this in the rest of Europe without problem and most only buy when they're later in life and convinced they're going to stay for a lengthy period of time. Keeps the labour market fluid

In Germany AGENCY FEES were several thousand euros. So a fairly big barrier to moving house even as a tenant.

and there is a HUGE amount of comment from serious people that we're setting London house prices up for another bust...

A bust would just be a small cyclic blip.

I was talking about house prices returning to sensible multiples of average wage that they were at 20 years ago rather than a minor perturbation of the current upward trend....

Buyers now will end up £250-500k richer in 30 years' time. Renters will get nothing.

Only if house prices continue at such a high rate. Could rent and also invest in the stock market then buy later or rent and live off the generated income.

Only if house prices continue at such a high rate.

And if they don't, they'll only be £2-300k better off as they repay their mortgage. Hardly worth bothering with, is it? No, wait, it is.

I'd rather line my own pockets than someone else's, tbh.

Could rent and also invest in the stock market

a) Stock market is much more volatile than housing afaik and
b) That's assuming renting is cheaper than buying. In many areas it's not.

Out of interest, what would be the equivalent stockmarket investment? Presumably it would have to involve Derivatives or something? If you've 30k in the bank and 1000pcm for rent/mortgage or whatever, you can't use that to direclty invest, say 200k in the stockmarket by buying shares.

molgrips - Member

Why is it a problem if more people rent though?

Because you never get any of the money back. If you buy, you do.

Buyers now will end up £250-500k richer in 30 years' time. Renters will get nothing.

I'm not so sure it's so clear cut. I've been renting for years but the fact I haven't had to shell out a huge deposit on buying a house has meant that I've been able to invest in my own business. The returns from that have so far outstripped any possible financial gains from buying a house. Will buy when I'm convinced I'm going to stay put in an area long term but until then this US article kind of agrees with how I'm thinking:

[url= http://techcrunch.com/2012/03/24/entrepreneurs-should-not-buy-homes/ ]Why you shouldn't buy a home[/url]

Only if house prices continue at such a high rate. Could rent and also invest in the stock market then buy later or rent and live off the generated income.

I've never seen anywhere in the SE you could rent and have something left to invest vs. buying and paying down the mortgage. The monthly outgoing differential isn't there - renting you are just paying someone elses mortgage.

Houses in my village (S rather than SE really) rent for more than I pay in repayment mortgage, monthly for a better house I will own. If interest rates rise you can bet your ass rent will rise with them.

Why you shouldn't buy a home

Very specific set of circumstances that don't apply to most people. It's not always wrong to rent or buy, but equally neiother are always right - but for most people buying will make more financial sense long term. Plus you get a home you can't eveicted from as long as you pay for it.

Could rent and also invest in the stock market then buy later or rent and live off the generated income.

I was reading in the Economics section of the Guardian that housing has been out performing the stock market for some time, hence the huge number of wealthy people investing in BTL etc...

That's because equities had become expensive. Housing is now expensive v income but not against mortgage costs. Equities are so-so. When IR are allowed to return to non-artificial levels, the housing market will adjust accordingly. Until then we stimulate a bubble as is so often the case when governments intervene in markets.

I've been able to invest in my own business.

Well that sounds like a shrewd move for you, but it's hardly an option for everyone.

If you've 30k in the bank and 1000pcm for rent/mortgage or whatever, you can't use that to direclty invest, say 200k in the stockmarket by buying shares.

Good point - I'm paying about £4.5kpa into my investment currently, to do that whilst renting I'd have to find somewhere to rent for less than £400pcm. Possible, just about, if I were single and wanted a tiny scruffy place. Or I shared.

Yes you'd have to borrow money to be able to invest the £200k, or whatever, but the point is you're paying interest on what you are borrowing at a certain %age so your house has to increase by at least that amount just to break even - and there are maintenance costs of course.

We started looking for 3 bedroom house in October last year within the M25 in Surrey.

22 houses later and 6 or 7 good* offers, we still don't have a house as people are panic buying and putting in stupid offers. I'm told that a significant portion of the houses we've seen have been bought by investors.

* we offers 25k over for one, it went for 50k over**.

** I don't blame anyone for this, if someone's willing to pay well over the asking price, then there's not much I can do about that.

The people next door to my parents in Surrey just sold their house for at least* £465,000. It's a standard 3-bed semi in an okish location (20min walk to a station that's 30min into Waterloo)

I'm trying to convince them to sell up and move North!

*That was the asking price, but I don't know what it actually went for after an open day.

it went for 50k over**.

So did they have £50k going spare or did they just borrow more? I wonder?

It's kind of obvious where the problem lies with house prices... I mean prices went up 18% but the population of London didn't go up 18%, nor were 18% of houses knocked down...

So did they have £50k going spare or did they just borrow more? I wonder?

It's kind of obvious where the problem lies with house prices... I mean prices went up 18% but the population of London didn't go up 18%, nor were 18% of houses knocked down...

?????

They teach economics in the room opposite me. I think its a bit more complicated than that......

The proposed site of Ebbsfleet Garden City, Kent. ‘The poor have no ‘need' for executive homes in distant commuter land. They just want somewhere cheap to live near work.' Photograph: Graham Turner for the Guardian

Housing booms are today's medieval plagues. Boils suppurate on the political backside. People rush to find culprits to lynch. Quacks appear on street corners with fake remedies. Reason takes a holiday.

Thus it was yesterday, as the Today programme's John Humphrys chided David Cameron for the "housing crisis" and for not building more houses in the Tory shires. It was like curing famine by sending caviar to Africa.

Meanwhile, everyone from Ed Miliband to the governor of the Bank of England screams crisis. There is a crisis when prices fall and a crisis when prices rise. Almost everywhere house prices are still bouncing along the bottom, but at London dinner parties they are a "bubble".

Most people would like a nicer house. That is not a "need" but rather a demand, and thus drives house prices in a free economy. But in Britain demand is not just for a nicer house: it is for an investment, a hedge against inflation and old age, a golden gate to otherwise impossible wealth. It is this that drives middle-income families into a frenzy, and has pushed up house prices in the south-east by some 9% in the past year.

Neil Monnery's Safe as Houses is one of the few sane books on the housing market I have read. It compares Britain's boom and bust with experience elsewhere in Europe. Germany is much richer than Britain, with ever rising wealth and immigration, and a cautious government. German house prices have actually fallen in real terms over half a century. There is a flourishing rental sector, regulated and with a degree of tenant security, while just 43% of Germans, mostly in middle age, own their homes. They invest their savings not in property but in productive industry, much to the benefit of the economy. Germany's housing stock, says Monnery, "is a stable, functional and affordable asset".

Or consider another housing pundit, Danny Dorling. His new book, All That Is Solid, emphasises that the central failing of British housing is chronic under-occupation, which is getting worse. The 1971 census return showed Britons enjoying 1.5 rooms per person. Today, with a larger population, the figure is 2.5. Small households were moving into larger properties and staying there, even when children fled the nest. The rich are simply storing money in surplus rooms.

Another economist, Rebecca Tunstall of York University, long ago stole a march on France's Thomas Piketty, in showing how housing has reflected income inequality. In 1981 the richest 10% of Britons had three times as many rooms as the poorest, while by 2011 the gap had widened to five times. The issue is wealth, not housing supply.

As Dorling concludes, "We cannot build our way out of the disaster of our current housing system." We should rather tackle "how to better share and look after what we have already got".

We still read daily nonsense about Britain "needing" to build 250,000 more houses a year to "hit a 1.1% inflation target" for annual price rises. These figures are near-meaningless. The need is based on crude household formation, with no reference to demand, price, migration or anything else.

Yet it is still seized on by newbuild lobbyists, such as the Home Builders Federation and Savills estate agency, eager to grab lucrative plots in the south-east. This in turn fuels panic about planning delays and drives young people into desperate over-borrowing.

A belief that more housebuilding nationwide will both meet "need" and drive down prices dates from the 2004 Barker review, which has guided policy ever since then. There is no proof of this thesis. As Monnery points out, more houses were indeed built, yet "real price increases actually jumped to 5-10% a year".

London also had a "crisis" in the seventies, when its population was plummeting. The reason was the same as in the United States and Australia, where houses were built with none of Britain's planning constraints and yet prices soared: reckless bank lending.

Building estates on greenfield sites – which is the current coalition policy – may delight free-market lobbyists and leftwingers eager to enrage rural Tories. But it wastes energy and infrastructure. It promotes commuting and destroys a dwindling environment. Housing "need" is in cities, where labour mobility and immigration are high and most poor people find work. The rejection of Labour's brownfield-first planning policy was the crassest of coalition innovations.

I may not go so far as Dorling in declaring: "We have built enough homes." But he and others are surely right to refocus on demand. Britain has a huge stock of empty and underused residential space, public as well as private. It is why Iain Duncan Smith's "bedroom tax" was in the right direction, however hamfisted its implementation. Council tax should now extend the principle to the private sector.

A policy for housing supply cannot lie in Eric Pickles's "war on the councils", in Nick Clegg's garden cities, or in planning minister Nick Boles's skirmishing across Cotswold meadows to win a handful of town houses. It lies in retrofitting old cities to modern demands. It cannot make sense to leave urban land derelict, in the south as well as the north, while commuter corridors sprawl into the surrounding countryside.

The wasted space in inner Manchester or South Yorkshire is comparable only to eastern Europe. Inner London's employment density is similar to New York's, yet its housing density is less than half. Housing supply in inner cities will have to rise to counter this glaring mismatch. The poor are the true victims of today's locked minds and political tribalism. They have no "need" for executive homes in distant commuter land. They just want somewhere cheap to live, near work.

Everything in policy seems the wrong way round. Stamp duty discourages transactions just when they should be encouraged. Limiting VAT relief to new construction discourages urban renewal. Council tax is regressive when it should be progressive, with higher bands taxing space as well as value.

Councils should be set free to develop and manage their low-cost estates. Tax incentives should encourage renting, co-ops and sublets such as Airbnb.

It may be true that income inequality lies at the root of housing inequality. As such both will always be with us. But housing policy should not make inequality worse.

http://www.theguardian.com/commentisfree/2014/may/21/no-housing-crisis-just-very-british-sickness

The recent increase began almost to the day that Help To Buy began... (I was looking to buy at the time and prices literally went up in a matter of weeks)

But the facts are that the average mortgage guaranteed under help to buy is under £150K - so this can't be stoking the "bubble" in the South East as the average house already costs twice that.

This is classic example of causality vs. correlation.

But the facts are that the average mortgage guaranteed under help to buy is under £150K - so this can't be stoking the "bubble" in the South East as the average house already costs twice that.

This is classic example of causality vs. correlation.

I'm not claiming causality in respect of putting more money in the market in London but Help To Buy did send a signal that the government wanted to encourage people to buy... coupled with lax lending policies and off it went like a rocket. It had been flat for 2 years before...

IIRC from Land Registry data a 2-bed flat in Sydenham went for £212k Feb 2013, another for £242 in May and come October, £300k was being asked for (and got). Mar this year, they're now above £300k... even West Norwood is £350k!

Germany is much richer than Britain, with ever rising wealth and immigration, and a cautious government. German house prices have actually fallen in real terms over half a century. There is a flourishing rental sector, regulated and with a degree of tenant security, while just 43% of Germans, mostly in middle age, own their homes. They invest their savings not in property but in productive industry, much to the benefit of the economy. Germany's housing stock, says Monnery, "is a stable, functional and affordable asset"

Agree 100% - and they are nice houses too, not like our rabbit hutches with shoebox rooms and tiny windows. Just a shame we're so fixated on property prices here in the UK, at the great expense of investment in new business and exporting things that we could actually be making if the investment was there.

Yet property prices are so high that they eat up a huge chunk of peoples disposable income. In the mean time a friend who owns a successful and growing business that exports has had to go through hell and high water to borrow to expand from the bank - yet low interest loans seem to be doled out to BTL investors to buy an overpriced house like bread at a duck pond. Something seriously wrong here!

But the facts are that the average mortgage guaranteed under help to buy is under £150K - so this can't be stoking the "bubble" in the South East as the average house already costs twice that.

Well it pushes up demand for the cheapest places which means those prices go up and then so do the prices of all properties above them as they become relatively better value.

Well it pushes up demand for the cheapest places which means those prices go up and then so do the prices of all properties above them as they become relatively better value.

But this is negated by two things - firstly there aren't any "cheap" places to buy in the South East, and secondly the majority of Help to Buy transactions have been in the North East, North West and Midlands, where just about everyone agrees there's no sign of a bubble - to the extent that the average Help to Buy Transaction actually fell £10K between December last year and April this year.

The figures out today also suggest that the numbers of mortgage offers extended last month is down. I guess that the new tougher lending rules will slow down things, plus the talk of interest rates going up.

But this is negated by two things - firstly there aren't any "cheap" places to buy in the South East, and secondly the majority of Help to Buy transactions have been in the North East, North West and Midlands

Well there are small flats in unappealing parts that aren't too pricey but I haven't seen any stats on where the Help to buy has been used so got a link?