OV9

Gavster wrote: Wed Nov 27, 2024 11:29 am

Nefarious wrote: Wed Nov 27, 2024 11:11 am In most cases food is a bit perishable to be an appreciating asset, and the commodity nature of basic foodstuffs means that their price will always largely reflect the cost of production.

"Shelter", although related to land/property prices, is a different thing. For example, rental yields (rental prices relative to property prices) have been dropping over the 15 year period that property prices have been rising.

And ultimately, it's not the sticker price on essentials that matters, it's affordability. And if something, like foreign property investment, is fueling affordability (majority of people get richer>buy more stuff>companies employ more people making stuff for them to buy), surely that has to be a *good* thing, no?

I can understand that yield is an investors perspective, however for most people that's irrelevant. As far as I was aware, the affordability of property in the UK has been consistently going down, e.g. property purchases have become less and less affordable for the average person over the last 50 years or so. I know that rents in London have been outstripping inflation recently too.

My comment was pointing out that property/land prices are not the only factor in the affordability of "shelter".

Rents have risen, but at a slower rate than house prices, so my point was that foreign investment in property isn't having a one-to-one effect on the affordability of essentials.

And yes, property is getting harder to buy for first time buyers (rising prices affect those already in the market less), but I'm suggesting that the welfare impact of people having to wait a little longer to get on the housing ladder is outweighed by the other economic benefits of a massive foreign cash injection into the economy.

ZedLeg wrote: Wed Nov 27, 2024 11:40 am We’re in a bad situation regarding housing in this country and the primary cause was selling council housing and the proceeding inflation of prices.

The primary cause was not selling council housing. There are numerous factors but supply and demand is the key; selling a council house doesn't change the number of dwellings available for people to live in so does not alter supply or demand.

I’d rather everyone had secure housing than developers get richer tbh.

ZedLeg wrote: Wed Nov 27, 2024 11:42 am Most people aren’t really making money off their house because they need the extra equity for the next move, or they pass it down.

That simply isn't true. Even if people aren't drawing down extra cold hard cash when they remortgage, the reduction in real repayments is putting more cash in their pockets.

Example - If I have a 50% mortgage on my house, and it's value and my wages double in value due to simple inflation, I now have a 25% mortgage. I'll still be paying the same £xxx a month, but now, due to that simple inflation, £xxx is worth half of what it was. The rest is in my pocket and I spend it on talking books and dildos.

Jobbo wrote: Wed Nov 27, 2024 11:46 am

ZedLeg wrote: Wed Nov 27, 2024 11:40 am We’re in a bad situation regarding housing in this country and the primary cause was selling council housing and the proceeding inflation of prices.

The primary cause was not selling council housing. There are numerous factors but supply and demand is the key; selling a council house doesn't change the number of dwellings available for people to live in so does not alter supply or demand.

Wouldn’t a large stock of social housing keep rents down as there would be less people looking to go through a landlord?

I’ve always understood it that selling council houses and never replenishing the stock was a big part of the mess we’re in.

Nefarious wrote: Wed Nov 27, 2024 11:51 am

ZedLeg wrote: Wed Nov 27, 2024 11:42 am Most people aren’t really making money off their house because they need the extra equity for the next move, or they pass it down.

That simply isn't true. Even if people aren't drawing down extra cold hard cash when they remortgage, the reduction in real repayments is putting more cash in their pockets.

Example - If I have a 50% mortgage on my house, and it's value and my wages double in value due to simple inflation, I now have a 25% mortgage. I'll still be paying the same £xxx a month, but now, due to that simple inflation, £xxx is worth half of what it was. The rest is in my pocket and I spend it on talking books and dildos.

Salaries are stagnating though, there was a big inflationary jump recently but before that they’d been mostly static for almost a decade.

ZedLeg wrote: Wed Nov 27, 2024 11:49 am I’d rather everyone had secure housing than developers get richer tbh.

Totally agreed, but this isn't a zero-sum, good-and-evil game. Who is going to build that secure housing other than developers? Why would they build unless there's money in it for them?

It's about balance - there needs to be a fair deal for those supplying houses and those demanding houses.

The government should be building new social housing.

We don’t need any more schemes full of poorly made £250k houses.

ZedLeg wrote: Wed Nov 27, 2024 11:53 am Salaries are stagnating though, there was a big inflationary jump recently but before that they’d been mostly static for almost a decade.

That's a different issue and nothing to do with foreign property investment. I was trying to use simple sums to demonstrate the effect, *in isolation*, of the change we were discussing

ZedLeg wrote: Wed Nov 27, 2024 11:56 am The government should be building new social housing.

We don’t need any more schemes full of poorly made £250k houses.

Why should government build it? Do they have a particular talent for building houses? There is an industry that is really quite good at it, and can provide housing at very economically efficient rates.

That industry just needs to be correctly incentivised

I didn’t mean that the pm should be out with a trowel.

The government should be paying builders to build houses.

We’ve tried incentivising developers to include social housing and it doesn’t work.

They don’t want the poors to bring down the value of their development.

As an example - our current rent controls in Scotland. Who is that incentivising?

If I'm sat here as a developer considering what kind of houses I'm going to build, am I going to build a bunch of socially accessible housing and have legislation halve my potential income from it, or am I going to build more expensive stuff that is outside the purview of well-meaning, but ultimately desperately naive social protectionism.

That’s the problem though isn’t it. You can’t incentivise people to work towards the common good when it’s more personally lucrative to not give a fuck.

ZedLeg wrote: Wed Nov 27, 2024 12:00 pm I didn’t mean that the pm should be out with a trowel.

The government should be paying builders to build houses.

We’ve tried incentivising developers to include social housing and it doesn’t work.

They don’t want the poors to bring down the value of their development.

No, I understand that. I mean - what is the benefit of a government effectively nationalising housing supply? There are certain industries that work better nationalised (e.g. some natural monopolies like rail network or electricity distribution). Housing is not one of them. The private sector does it better.

If you mean that government should take control as a means of artificially subsidising it, then its the subsidy doing the good, not the control.

ZedLeg wrote: Wed Nov 27, 2024 12:05 pm That’s the problem though isn’t it. You can’t incentivise people to work towards the common good when it’s more personally lucrative to not give a fuck.

Well, there was this chap called Adam Smith, who thought differently

It is ultimately the job of the government to set out the (largely) level playing for mutually beneficial transactions to take place, and make corrections in areas where the market does not find an equilibrium that is best for society as a whole

On what basis does the private sector do it better?

My suggestion is that the government says they’ll build 30,000 homes to a set standard. They pay developers/builders to build the houses and they’re managed by a government agency/local authority to make sure the people who need them get them.

Having dealt with private landlords and housing associations for most of my adult life, there’s no way the government could be worse.

I'm also uneasy with the development of large public spaces under private (often foreign investment) ownership, such as Paddington Basin, Granary Square, Potters Fields, Westfield etc etc. I can see that these spaces didn't exist before the development so hence there is a public benefit too, but the ownership also strips the public of many rights that we would otherwise hold in truly public spaces.

I hate to see anti social architecture in redeveloped public spaces tbh.

Its a balance. Battersea Power Station was redeveloped by the Malaysians. Having spent last Saturday there (and a few others), I can say I prefer it to the derelict land that was there before, and would still be there, but for their investment.

I should also clarify my previous point about Stamp Duty a la Singapore style - I was referring there to Chinese, Arabs and Russians buying existing prime London property where there is clearly very little tangible benefit to individual non-resident foreign nationals owning 50% of Mayfair and Belgravia. You would not want to place the same restrictions on foreign investment in "build to rent" otherwise that does inhibit development.

Of course, we only need to drastically expand housing stock because of population growth (last year was the largest in 75 years) and obviously you know what is driving that...

ZedLeg wrote: Wed Nov 27, 2024 12:09 pm On what basis does the private sector do it better?

My suggestion is that the government says they’ll build 30,000 homes to a set standard. They pay developers/builders to build the houses and they’re managed by a government agency/local authority to make sure the people who need them get them.

Having dealt with private landlords and housing associations for most of my adult life, there’s no way the government could be worse.

Your suggestion seems to be that the government sub-contract to the existing private sector. So basically everything carries on as before, but with an extra layer of adminisphere.

If you mean that the government should newly set up a letting agency business, how is that any different from a private agency doing it?

There is fairly well established economic theory on which industries benefit from nationalised supply, You can argue around the edges in terms of ideological priorities, but in terms of economic efficiency, it is generally better to let the people who are good at things just get on with doing those things. If you want to adjust the market with subsidies or taxation because you've identified some negative externality or market failure, then great, but simply replacing an existing market with centralised supply is generally a bad idea.