Is There Really A Housing Shortage?
Read a piece by Merryn Somerset Webb, the Editor of Money Week, a few weeks ago and meant to reply.
MSW gave Graham Norwood a bit of a clip round the ear for suggesting that the slump in house-building was sowing the seeds for the next house price boom.
“This is all total complete and utter nonsense,” wrote an exasperated MSW.
“If there weren’t enough houses in the UK, why would Paddington Basin – home to hundreds of new-build flats – be pitch black at night? Why would the centres of Leeds and Manchester be jammed with empty and utterly unlettable, let alone unsaleable flats?
“The Empty Homes Agency estimates that there are more than 840,000 empty homes in Britain. That’s almost four per cent of our total housing stock. So there’s no shortage of houses here.”
I have two responses to this argument:
1. You’ll notice the crucial slippage from ‘houses’ to ‘new-build city centre flats’ … not the same MSW, not the same at all.
2. Halifax has just published a report based on Empty Homes Agency stats. It reveals that:
- 17 local authorities have a proportion of empty homes that is at least twice the national average
- All seventeen English LAs with the highest proportion of empty private homes are in the North of England with nine in the North West.
- Fifteen of the 17 LAs with the highest proportions of empty private homes are amongst the 20 per cent most deprived areas in England, according to the CLG’s 2007 Indices of Deprivation.
My point? Very simple: if we’re going to debate the issue of housing supply we need to consider property type, location, economic performance of an area, demographic trends and government planning policy.
In absolute terms there may well be lots of properties out there, but what we need is the right (and habitable) property types in the right places.
When MSW packs her bags and moves to a deprived northern borough I’ll be a bit more willing to take her arguments seriously …
Related Tags: housing supply, GeneralRelated Posts:
Posted by 
Loading ...
Great article! i for one am clinging to a positive piece about the property market…
No there is no housing shortage. Just look at any property paper or internet site. What there is a shortage of affordable of property caused by a unsustainable housing boom fueled by now finished cheap credit.
The ratio of 15 sellers for every 1 buyer should suggest there is no shortage. Everyone would love a Porche or Ferrai but that doesn’t mean there is a shortage it just meansthey can’t afford them.
With the buy to let pyramid scheme collapsing there is a rapidly increasing supply of repossessed properties idea for first time buyers pouring in the market.
Its time the government local councils got ther act together and not leave empty houses to be vandalised and then not repaired for months and months.
This statement seems to have confused several different issues into one misguided answer. Interesting and headline making it maybe, but there is a shortage of housing. Perhaps unknowingly or knowingly Merryn Somerset Webb may have been part of the real problem like many other people have. If you have any shares or pension schemes life policies etc many of these products will have invested in business or direct involvement in the construction of these properties that may know stand empty in city centres.
The reason for these properties potentially standing empty is in itself a different issue. In many of the circumstances it is due to the price of the property that is being asked. If these properties were more realistically priced rather than over priced they would probably not be empty. In the cases where they are for rental, the rental values are also excessive.
As many of these properties will be held in pension schemes etc it is unlikely that they will reduce the rental values or sale prices, and if they did, you probably would not be happy when they told you that the return on your portfolio had been revised downward by 40 -50%.
There is a shortage of housing, partly created by the inability of people to be able to afford these overpriced properties. So what is needed is to allow smaller developers to build smaller scale developments, but increase the density on smaller plot sizes, allowing for a better integrated and mixture of housing. There is a dire shortage of housing for an ever increasing number of single people. Building in this format would increase the sustainability of the housing and provide the housing that is actually needed most, which is for first time buyers. This would provide a housing system that was lower cost to developers to build resulting in cheaper housing for the first time buyer to buy. This will stimulate the housing market at the bottom, which would kick start it all the way up the chain.
No one has been building ‘affordable’ private sector housing due to lack of profit margins, but it can be done. The word ‘affordable’ can also not be used as it has been adopted by the planning system to mean a specific format of housing supplied by housing associations for rental or shared ownership. This should be changed in the planning system as housing that can be best described and supplied to market that is should be classified as ‘affordable’ is unable to make use of this word. ‘Affordable’ means ‘having enough money to buy’ which should justifiably mean any housing which is low enough in price to attract purchasers on low incomes, but also be restrictive in how it can be sold to market by the use of covenants to deter purchase from buy-to-let property landlords looking to make a killing out of the market again.