When people scream for more homes to be built, encourage Grant Shapps and the Government to do something about ‘the lost generation’ and blame the banks for refusing to lend what they are really asking for is housing to become more ‘affordable’ and often what they actually mean is ‘cheaper’.
Calls in recent days for more houses to be built have come many different groups including house builders whose business is the construction and sale of new homes. This may be welcomed by the 1million estimated to be on council housing waiting lists, 2m of the 3m who currently rent in the Uk but might prefer to own and perhaps a further 1m who are still living at home with mum & dad but I speculate that the owners (and mortgagees) of the nations 24m housing stock might be less keen to see house prices fall as a result.
There is a delicious tension between those who have and those who have not. Those who have acknowledged that something ought to be done but like the Green Belt ‘Nimbys’ don’t want it to be done at their expense. We now have a second generation of people who have found that owning property not only provides them with somewhere to live but also gives them a pension, the chance to better themselves with precious little skill or effort and a way to provide for their family in a way that their day job could never. The silent home-owning majority is unlikely to welcome anything that jeopardises the cash cow that property has been for the past 30 years in an effort to help the minority who many see as wanting to have what they feel as home owners they have earned.
The only alternative to more cheaper homes is to relax lending criteria and to return to the days of 2007 and Northern Rock. 100% mortgages, ‘liar loans’ and the inevitable ‘bubble’ that follows. Even the most enthusiastic builder must see the error of this plan but I heard the head of house builder Bovis on the BBC earlier this week calling for someone to take over the help they have been giving buyers with funding their deposits! He wants higher loan to values and wants someone else to take the gamble that history tells us doesn’t pay off!
As to the health of the market through the remained of 2011, I think that outside the ‘gated community’ of the M25 (and parts of the South East) sale prices will continue to fall – perhaps by 5% in some places, volumes will remain at historic lows and asking prices will fall back as sellers finally get the message that asking too much just makes you look foolish. Inside London, Tory ideas being aired at their party conference to introduce Capital Gains Tax on property sales to try and milk foreign owners of luxury homes in central London will hold back prices even in this oasis with the only real winners being the accountants charged with coming up with tax avoidance schemes.
The housing crisis is unlikely to be solved by the present generation without sharing the pain with those who feel that they have already paid for the privilege of home ownership and I suspect that there is more chance of Col. Gadaffi winning a Nobel Peace Prize!