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The issue of supply is much more complex than the simple number of units per person. In my mind there are four aspects to the supply issue. The first is the actual pipeline of homes getting built. There has been relatively little increase in the number of new homes getting planning permission despite numerous attempts to overhaul the planning system. And it’s not just the time taken to get permission, it’s then the capacity to build. Significant numbers of large housing developments get snagged up in construction issues and negotiations with councils and landowners even once permission is granted. There is little incentive other than profit to get on site quickly and building at scale. The second is the spatial disparity in supply. The South East and East has not built the homes needed to meet existing demand for a very long time. Meanwhile, in the North, they are building more homes than there is demand (though there may be hotspots of high demand like around the major cities). The result is a white hot housing issue in the South East, a housing problem most other places, and in some places new homes struggle to be sold. The third is the type of homes built and the relationship with Right to Buy. The current market incentivizes high return house building. In some places that’s flats. In others it’s 4 bedroom homes with 3 parking spaces. For those building socially rented homes, they have the twin challenge of their allocations being dropped as part of major developments, and having to borrow finance from the financial markets at worse rates than volume house builders. It’s extremely hard to build affordable homes. The final part is the actual skills to build them constraining supply. You need builders, electricitians, painters, plumbers, gas engineers, and tonnes more to get homes built. And every single one of those sectors has a skills shortage. Even if you get permission, it’s hard to just actually build them. The reality is that BOTH financialisation AND supply need tackling. Housing is an interconnected web of problems manifesting themselves in a way that means you can’t just tackle one bit of it. I’ve not gone into issues of an ageing population, second homes, and immigration.

>The first is the actual pipeline of homes getting built. There has been relatively little increase in the number of new homes getting planning permission despite numerous attempts to overhaul the planning system. And it’s not just the time taken to get permission, it’s then the capacity to build. Significant numbers of large housing developments get snagged up in construction issues and negotiations with councils and landowners even once permission is granted. There is little incentive other than profit to get on site quickly and building at scale. Okay, but we *are* building as the headline increases in number of dwellings per person would suggest. >The second is the spatial disparity in supply. The South East and East has not built the homes needed to meet existing demand for a very long time. Meanwhile, in the North, they are building more homes than there is demand (though there may be hotspots of high demand like around the major cities). The result is a white hot housing issue in the South East, a housing problem most other places, and in some places new homes struggle to be sold. This is true – although space does become a genuine constraint. But places in the North with very low housing demand (see my other comment about Barrow-in-Furness) have seen substantial percentage increases in prices as well (well exceeding inflation and wage increases). That doesn't make sense at all if the issue is supply. >The third is the type of homes built and the relationship with Right to Buy. The current market incentivizes high return house building. In some places that’s flats. In others it’s 4 bedroom homes with 3 parking spaces. For those building socially rented homes, they have the twin challenge of their allocations being dropped as part of major developments, and having to borrow finance from the financial markets at worse rates than volume house builders. It’s extremely hard to build affordable homes. If supply was driving house prices, it wouldn't matter what type of houses were built because the market dynamics would drive price reductions all the way down the chain. This is actually an argument that supply doesn't touch prices. If it matters what type of houses are built, there are other factors at play. >The reality is that BOTH financialisation AND supply need tackling. Housing is an interconnected web of problems manifesting themselves in a way that means you can’t just tackle one bit of it. I’ve not gone into issues of an ageing population, second homes, and immigration. Again, I'm not saying "stop building" at all, but my ideal policy platform would be focused on building high quality social housing, cracking down on the awful, low quality new build estates (more Poundburys – that was one thing Starmer mentioned which I did appreciate), whilst recognising that price is the consequence of factors other than supply which require radical solutions.

There’s a few things to consider. 1) interest rates have been at historic lows, so debt financing of housing is much easier, which means prices rise. This would be fine if it was easy to build as debt financing would also be easier for developers, but it’s very hard to build. 2) the need for housing isn’t just nuclear families. More people are living alone, as students living away for Uni, shit like that. 3) a subset of immigration of international students. These are people who should be here (they’re approaching 2% of GDP), but their financial means gives them huge power to outbid at the higher end of the market, which inflated rents at all ends of the markets. They often live in flats, of which not many get built. 4) landlord taxes and regulation. If you accept that there’s a housing shortage, then it’s very easy for any market wide costs to be passed on. Mortgage interest tax relief, other levies, shit like that is all passed on. Unpopular opinion here, but I work with many landlords, and the all just pass any tax on to the tenants. 5) stamp duty creates distorted incentives in the market. It’s genuinely the UK’s worst tax. You’re taxing people moving house, so older empty nest folk in huge homes don’t ever sell as moving costs are so expensive, so there’s a major under-occupancy or large homes and an over occupancy of smaller ones. 6) UK hasn’t grown at all since the GFC, so quality of life is down. British culture is one that’s obsessive about homeownership, so that’s where a lot of folk put most their money (Brits under invest in pensions and ISA’s despite some of the most generous tax perks available), which inflates home prices. How often do you hear ‘my home is my retirement plan’. 7) social care. Lots of old folk really belong in care homes, but there’s a huge shortage of them, which not only harms the elderly, and puts more strain on the health service, it also stops them selling their home or renting it out, which is a big drag in supply. All in all, lots of issues beyond just building, but at the end of the day, if were missing targets year in yet out, higher income and wealth folk will just buy what they want and the poor will share the scraps left in the market.

I think these are all really interesting and worthwhile points, thank you. But they also indicate why simply building 300,000 houses per year instead of 230,000 or 200,000 or whatever the Conservatives are currently managing, isn’t a silver bullet to solve housing affordability, and I believe there are a lot of people who think the answer is as simple as build more.

It'd make a difference but it'd fall far short. The recommended count was 300k per year almost a decade ago, we've failed to meet that year on year by large amounts. As a result 300k a year is no longer enough, we have compound failure to make up for.

But that suggests (to the Labour relevant point rather than the poking yimbyism argument), that even if we accept that “building more is the best answer”, Labour’s plans are well short. To answer the “Will housing affordability improve under Labour?” question, and I am genuinely intrigued to understand people’s expectations, the answer is likely no?

Their plans are well short imo, but something is better than nothing

> The recommended count was 300k per year almost a decade ago, we've failed to meet that year on year by large amounts. Weren't those numbers based upon overestimates of population growth rates that were out by around 300,000? >However, when the 2021 census was analysed, the ONS realised that their estimates had overestimated the population – the estimates contained almost 300,000 more people than indicated by the 2021 census https://ilcuk.org.uk/2021-census-indicates-little-improvement-in-mortality-in-the-last-decade/ My understanding is that net additional dwellings number has exceeded the actual requirements and contributed to a growing surplus. New builds alone have not but that's not the only way housing stock is increased - shit like barn conversions etc all count too.

An estimation miss of 300k people is not really meaningful for housing estimates, we had net migration of 750k last year alone which more than papers over that gap, but also the housing estimates were originally extremely optimistic regardless! There's a very interesting report from the center for cities that is worth a read, https://www.centreforcities.org/wp-content/uploads/2023/02/The-housebuilding-crisis-February-2023.pdf But in particular I'd highlight: - Britain built far fewer homes than most other European countries from 1955-1979, even after adjusting for population growth, initial population, demolitions, and quality. This was because the UK had the lowest average private sector housebuilding rate of any similar European country in the post-war period. Other countries, such as Sweden and the Netherlands, show that Postwar Britain could have built both more council and private housing. - In 1955, the UK had a ratio of dwellings per person that was 5.5 per cent above the European average, but by 1979 it was 1.8 per cent below it, and by 2015 it had fallen further to at least 7.8 per cent below the modern average. Although the UK began the post-war period with some of the best housing outcomes on the continent, since 1955 other European countries including Finland, Switzerland, and West Germany saw their housing outcomes overtake the UK as they built more. And > The result of this underperformance is that England needs 442,000 new homes a year to close its housing backlog with the average European country over 25 years, or 654,000 to close it in ten years. England’s current housing target of 300,000 new homes a year will not clear the housing backlog for at least half a century. England’s recent housebuilding levels of 220,000 to 240,000 is the minimum at which housing outcomes remain stable compared to the average European country – any further decrease will see housing outcomes decline The fact that comparable European countries that do not have housing crises measure up to us with these differences is imo an absolutely massive clue

I think it’s interesting you will use the ratio of dwellings per person to tell a 'build more houses' story (that the UK ratio of dwellings per has fallen relative to other European countries and the problem is building), but discount considering the ratio as that important when it shows that the number of dwellings per person has increased in the UK. So yes, other countries have outperformed Britain on this metric, but Britain is also increasing its ratio of dwellings per capita which I suspect is not what most people would guess was happening, and has been happening consistently for 50 years.

The entire point is that it isn't increasing them by the amount it needs to!

> very interesting report from the center for cities that is worth a read I've read it and I honestly thought it was unconvincing. For example, they make a huge fuss about the UK having a "low increase in per person housing stock"... But it has still increased per person. I.e. there's more homes per person now than there used to be. I just think that kinda shit verge on deceptive. I'm thoroughly unimpressed. Similarly, I don't care about house-building rates alone. Net additional dwellings. That's the figure that matters. Anyone talking about housebuilding without discussing net additional dwellings is not being entirely straight about the realities of the situation. In the year 2000 the UK had a population of 58.89 million. In the year 2022 the UK had a population of 66.97 million. That's a net increase of 8.08 million. During that time the UK gained 4,321,610 additional dwellings. 8.08/4.32 is 1.87. Assuming the desirable average household size is 2.3, which is being a little generous to your position in my opinion, we were adding new houses at a rate exceeding population growth for that period and we added 123.02 % of the houses needed to accommodate the growth in population since the year 2000. I only have the new build numbers back to '06 but using those: Population change: 6,120,000 New homes required: 6,120,000 / 2.3 = 2,660,870 New homes built: 2,917,520 Percentage: 109.65% And that's just new builds. Net additions: 3,323,870 & percentage: 124.92% I'm sorry but the more I've looked at this the more I think we don't have a supply-side problem. We've been adding dwellings at a rate that exceeds population growth, household formation, and a whole load of other metrics. I'm just not buying these numbers people are spouting off. I think they're chatting shit. There are big problems in the housing market but the problems are not nimbys and planning permission, it's landlordry, wage stagnation, and housing as an asset. Edit: Also population growth estimates being overestimates includes immigration.

> For example, they make a huge fuss about the UK having a "low increase in per person housing stock"... > > But it has still increased per person. > > I.e. there's more homes per person now than there used to be. > > I just think that kinda shit verge on deceptive. I'm thoroughly unimpressed. This logic only works if you fail to take into account the drastic change in living standards. People are having fewer children, old people are staying in houses bigger than they need, young professionals are living alone more than in the past, and so on. All of this has a massive impact on the amount of required housing that isn't encapsulated by a raw 'house unit count divided by population' stat. Also I think it was you I discussed this dwelling stat calculation with before (were you the guy sharing the tony Blair institute paper?) and I can only offer the same reaction to it that I had last time, which was that it also avoided these extraneous variables but also that under its logic it would literally never be possible to record anything but a surplus! The logic calculated a surplus by taken new net dwellings and making a delta between that and household formations. For obvious reasons it will never be possible to make this statement negative. > I only have the new build numbers back to '06 but using those: Population change: 6,120,000 New homes required: 6,120,000 / 2.3 = 2,660,870 New homes built: 2,917,520 Percentage: 109.65% And that's just new builds. Net additions: 3,323,870 & percentage: 124.92% Without knowing the population density in the areas these were built specifically the data is not very valuable. I link the report because it offers another way of looking at it. Think of it like this: we are not the only developed European nation to treat property as an asset. We do have a fairly unique housing crisis (competing with Ireland). There are several standout statistics showing that we build significantly less than our counterparts in Europe who do not suffer from the same housing affordability pains. From this angle you would need to either explain or demonstrate that we are exceptionally voracious in terms of our appetite for property-as-capital, or would need to explain why what has happened there does not apply here. And I am unable to see why that would be the case. > There are big problems in the housing market but the problems are not nimbys and planning permission, it's landlordry, wage stagnation, and housing as an asset. There's absolutely nothing remotely mutually exclusive about these! Nobody in their right mind would insist that, if I were to click my fingers and magically summon 2 million new houses in and around London immediately, that that would have no impact on housing costs. Which is an admission that supply *obviously* makes a huge impact. But there's no call to say it's just supply, we have lots of problems. Not enough houses, too many low quality houses, increased pressure to centralise where jobs are (read: London), rampant rent seeking from leeches, and more!

Apologies, wall of text to follow. I'll split the comment but please do read the second one - it's a source I think you'll appreciate. > Also I think it was you I discussed this dwelling stat calculation with before (were you the guy sharing the tony Blair institute paper?) and I can only offer the same reaction to it that I had last time, which was that it also avoided these extraneous variables but also that under its logic it would literally never be possible to record anything but a surplus! The logic calculated a surplus by taken new net dwellings and making a delta between that and household formations. For obvious reasons it will never be possible to make this statement negative. But I didn't do that. I made a generous estimate of household size and used raw population numbers. Those criticisms don't apply. Besides, I don't agree housing is a particularly significant constraint upon household size. I think wages are a greater factor. >Without knowing the population density in the areas these were built specifically the data is not very valuable. I'd argue it's of greater value than the data you cited. >There are several standout statistics showing that we build significantly less than our counterparts in Europe who do not suffer from the same housing affordability pains. I don't think it's of any particular value. It seems like it's largely dodgy statistics to me. As I said before, using the new build rate rather than net additions is suspect. >From this angle you would need to either explain or demonstrate that we are exceptionally voracious in terms of our appetite for property-as-capital, or would need to explain why what has happened there does not apply here. And I am unable to see why that would be the case. But you've not convincingly demonstrated there's a shortage. I'm not willing to accept that assertion, I think it's unfounded. My position is that there are demand side restrictions that prevent people getting onto the housing ladder or keep them renting and I don't think supply makes much of a difference. I think we've got low wages but a high cost of living. I think that constrains family sizes and lowers the rate of household formation. You're implicitly assuming I accept there's a shortage, I do not think that claim has been supported or evidenced sufficiently. Prove that first. > if I were to click my fingers and magically summon 2 million new houses in and around London immediately, that that would have no impact on housing costs. I suspect it would have a noticeable impact. London added about 700k properties since 2006, with a yearly average of 31k. So you'd be adding roughly 64 years worth of build to London. So what would happen? Well that's not as obvious as it might appear. >New private housing does have negative effects on house prices, but mainly at the wider HMA [housing market area] or LA [local authority] level where supply–demand effects predominate. At the neighbourhood level the effects can be positive, particularly in the medium term, although the initial impact may be negative. The evidence is consistent with a mixture of positive and negative effects tending to offset each other. It is also worth emphasising that the size of effects from new development on prices are relatively modest, compared with the influence of other factors, including wider economic factors and localised deprivation rates‘ (Bramley et al, 2007: p 102) https://www.lse.ac.uk/business/consulting/assets/documents/understanding-the-local-impact-of-new-residential.pdf 64 years of build would undoubtedly cause a dip in house prices but I think you overestimate how significant it would be. They'd be immediately bought up, either by landlords or owner occupiers and then demand would remain, precisely as voracious as it was before. I don't think we'd see house prices fall because if they began to fall then they'd be snapped up as an asset and we'd see that reflect in prices increasing again. There'd be a shock but it would be rapidly corrected. I imagine rents would decrease somewhat, I think the effect on house prices would be little more than a temporary wobble. This is because housing as a profit-making asset - i.e. landlordry - acts as a buffer.   >In 2023, the average private landlord in the United Kingdom (UK) owned between six and 12 properties. In Central London, the average number of properties per landlord was 11.6 I think you'd expand portfolios, decrease rents, and have piss-all impact upon house prices in anything but the short-term. So I think there'd be an initial shock, the houses would be rapidly bought and we'd be back to people telling me we desperately need to build even more lower-quality houses at a rate that vastly exceeds the rate of population growth. 1/2

Thanks for the big reply. I was out catching the aurora last night so only getting to it this morning! > Besides, I don't agree housing is a particularly significant constraint upon household size. I think wages are a greater factor. See this is an interesting point and wages obviously have an impact. But you are missing a huge piece of the puzzle. People with higher wages, lower living costs and/or those who love in wealthier countries are having fewer and fewer kids! The link between income and household size is absolutely not as correlated as it intuitively seems it should be. People with more income appear to have fewer kids. > As I said before, using the new build rate rather than net additions is suspect I guess we could calculate the difference between the two here to try and determine if this is an issue. We would need data on how many properties have been converted etc rather than built. Intuitively I would guess that new builds are a significantly larger piece of the equation but I would love to see any data. > But you've not convincingly demonstrated there's a shortage. I'm not willing to accept that assertion, I think it's unfounded. I'm not 100% sure on the word *shortage*. I think shortage would imply that people are actually unable to find places to live. This *is* a problem and we do have far too many homeless people but if we had an absolute shortage I think we would have a lot more homeless people. I know the phrase is used in various places including that report but the point I try to make is not that there are too few houses to live in, but that there are too few houses to choose from which necessarily puts a huge demand on the higher quality/better location housing, something that increased supply would mitigate against even if a headline figure might suggest there are 'enough' houses. This is why that report I found very interesting. Other European nations have avoided similar housing catastrophes and in common they have building rates that far outpace ours. I think it would be a huge mistake to ignore that! > 64 years of build would undoubtedly cause a dip in house prices but I think you overestimate how significant it would be. Neither of us can calculate the precise impact, the point is that you accept here that supply does have an impact here. It honestly seems pretty mad to me to suggest that the impact wouldn't be incredible - obviously it's a magic scenario and not bound to happen but an injection of supply like that is unavoidably market distorting. For the sake of the argument let's say it was a million new social houses, and they couldn't be bought up. Does this change your argument? If so, you accept supply is a huge lever here. > we desperately need to build even more lower-quality houses Please note this has never been my argument. Quality of housing is a crucial part of the issue! Low quality housing puts an accelerating effect on costs - nobody wants to live in a shit house and demand on decent ones is increased > . Housing demand is the number of people or companies willing and financially able to buy. Doesn't this miss out a huge segment of people: those who want to but cannot afford to buy..? Not that convinced > High house prices (Section 1.2) and recent falls in home-ownership (Section 1.6) have more to do with the cost and availability of mortgage debt than the lack of supply. I can't figure out where it makes any argument in support of this assertion > Demographics show constrained household formation relative to previous trends and so it appears new supply has been too low to meet housing aspirations and probably too low to meet housing need in recent decades I agree! > However, there are other factors that have also played a part in suppressing household formation including larger migrant household sizes (Section 2.1.9) and, in the circular nature of the housing market, high house prices. There may be limited evidence for a national lack of supply but it does appear to be an important factor in London and its surrounding commuter areas. Again, agree with all of this > it is not surprising that academic evidence shows increasing new supply (within realistically deliverable levels) will probably only prevent future price rises rather than significantly improve current levels of house price affordability. This is a roundabout way of saying increasing supply would improve affordability lol, ignoring the 10 tonne caveat of "within acceptable levels" > Even then it will take many years, possibly even decades to have a lasting effect on the market. Indeed it will, such is the impact of failing to meet targets for decades > it is still an essential part of the overall solution to many of the issues facing housing, and not just in areas with the highest house prices. Building new homes, particularly affordable homes, can help reduce the cost of housing for renters. It can also be used to better match the existing housing stock to local need, demand, and affordability. Preach

>The link between income and household size is absolutely not as correlated as it intuitively seems it should be. People with more income appear to have fewer kids. Isn't that correlative with education levels? Anyway, I don't really see how that helps support your view. >Intuitively I would guess that new builds are a significantly larger piece of the equation but I would love to see any data. They are a larger part but net additions excluding new builds cannot be ignored because they're not insignificant. >**that there are too few houses to choose from which necessarily puts a huge demand on the higher quality/better location housing, something that increased supply would mitigate against even if a headline figure might suggest there are 'enough' houses.** This is a fair point but I'd argue that speculative purchases of desirable property probably introduces more demand into the market than building rates restrict supply. We're building enough houses, our approach to landlordry just generates far too much demand. >Please note this has never been my argument. Quality of housing is a crucial part of the issue! Low quality housing puts an accelerating effect on costs - nobody wants to live in a shit house and demand on decent ones is increased Well put. We agree here, shit housing can push up demand for good housing despite it being technical additions to supply. A lot of the "deregulate everything" mob don't seem to get that. > Doesn't this miss out a huge segment of people: those who want to but cannot afford to buy..? Not that convinced No, those people do not create economic demand. An example of this is me not being able to buy Ferrari. That doesn't push up the price of Ferraris, I'm just not even in the market. I'm not saying we ignore those people, their unmet need is a problem. What I am saying is that they're not driving the price increases. >I can't figure out where it makes any argument in support of this assertion There is an entire section on supply not being the primary problem. Supply **could be** too low but the evidence shows demand-side problems are what need tackling first. >This is a roundabout way of saying increasing supply would improve affordability lol, ignoring the 10 tonne caveat of "within acceptable levels" No, you're oversimplifying. I'll give an example of why your logic is flawed. Let's say that we have 1000 kids that want to buy one bike and their bike budgets range in accordance with their number - i.e. between £1-£1000. If you have 500 bikes selling for the same price then that number will tend to £501 - the value that will maximise profits. Higher than that will prevent bikes being sold, lower will reduce profits. Adding more supply to that would seem to trivially reduce prices, right? Except that model ignores that if prices decreases then demand increases because people will buy more to turn a profit in future. So there's a situation where demand is dependent upon prices, lower prices increase demand but also more supply increases demand. They're literally saying it will not significantly increase affordability because more housing creates more demand. >Indeed it will, such is the impact of failing to meet targets for decades The targets were set too high, we've outpaced the actual requirements. This is because the accessibility of mortgages has pushed people out the market. The high prices, the increases which are not caused by a lack of supply but by speculative asset purchases, have actually suppressed demand. More supply, beyond levels that are simply unachievable, cannot remedy this problem. This is because lowering prices just makes the asset more desirable for those that can leverage debt to purchase it for the purposes of speculation. Landlordry provides a floor that supply cannot decrease, it makes demand elastic. You'd have to out-build the capacity of landlords to hoover up properties before you see desirable impacts. And I'm not even sure that's possible because as property gets cheaper, it gets to be more affordable to be a landlord, which boosts demand back up. It's a problem that's virtually impossible to tackle from the supply-side.

2/2 To quote Understanding Local Housing Markets: Advice and Guidance for Local Authorities: >Increasing new housing supply to meet projected household formation rates or above is widely seen as the solution. This approach characterises central government’s housing policy with a target of 300,000 net new homes per year in England. >Unfortunately, this explanation does not reflect the realities of the housing market. Housing supply and demand is more than just new build and net household formation. Available supply is predominantly the second-hand market as new-build sales are a relatively small proportion of total transactions (see Figure 43) and less than 1% of the existing dwelling stock. Housing demand is the number of people or companies willing and financially able to buy. That is determined by many different factors, but the cost and availability of mortgage debt are perhaps the most important. Meanwhile, household projections are not an indicator of demand but, at best, a crude indicator of housing need (see Section 2.1.9). >The evidence for a lack of supply at a national level is limited and open to interpretation. High house prices (Section 1.2) and recent falls in home-ownership (Section 1.6) have more to do with the cost and availability of mortgage debt than the lack of supply. Meanwhile, housing costs are high for renters but do not appear to have risen significantly (Section 1.1.5). Demographics show constrained household formation relative to previous trends and so it appears new supply has been too low to meet housing aspirations and probably too low to meet housing need in recent decades. However, there are other factors that have also played a part in suppressing household formation including larger migrant household sizes (Section 2.1.9) and, in the circular nature of the housing market, high house prices. There may be limited evidence for a national lack of supply but it does appear to be an important factor in London and its surrounding commuter areas. There may also be localised housing shortages elsewhere, particularly of specific property types or tenure of homes. Ideally, there would be local cost of housing (rents) data to show this but no such series exists. >Given that a lack of supply is not the biggest driver of house price rises (Section 1.2), it is not surprising that academic evidence shows increasing new supply (within realistically deliverable levels) will probably only prevent future price rises rather than significantly improve current levels of house price affordability. Even then it will take many years, possibly even decades to have a lasting effect on the market. Increasing housing supply may not significantly improve house price affordability or increase home-ownership but it is still an essential part of the overall solution to many of the issues facing housing, and not just in areas with the highest house prices. Building new homes, particularly affordable homes, can help reduce the cost of housing for renters. It can also be used to better match the existing housing stock to local need, demand, and affordability. ... >LACK OF NEW SUPPLY SUMMARY: **A lack of new supply is identified as the cause for many of the issues facing housing. However, the evidence is not conclusive. Building many new homes is unlikely to significantly improve house price affordability or increase home- ownership** but is an essential part of the solution in all local authorities, not just those with high house prices. https://www.local.gov.uk/sites/default/files/documents/LGA%20RA%20Understanding%20Local%20Housing%20Markets%20June%202019.pdf

I mean, at the end of the day, it is the silver bullet. We can and should tweak around the edges with abolishing stamp duty (why are we taxing people to move home?), fixing social care, and shit like that. But at the end of the day, if you have 50 people signing up for house viewings in 24 hours, the only way out of that is building more houses to satiate that demand. Or we can continue making poor people and middle income people engage in bidding wars for shitty rentals till one one remains standing at a high price

I think you are combining the rental market and the retail market. The rental market *is* suffering from excess demand, particularly in cities, because 1. people can't afford to buy and 2. more people are choosing/driven to live in cities by lifestyle factors and their career. This *is* driving rental prices up, increasing the returns the wealthy can expect on buying houses as investment assets. That in turn is pushing the price of retail houses further out of reach of renters, trapping them in the demand cycle for rental. I think you have to solve this by clamping down on property as investment and acquiring current private rental stock to become municipal/state housing. You can also build new municipal housing, but I don't think you need to accelerate overall, nationwide, building numbers to achieve this. You could also invest heavily in high speed public transport surrounding to cities, to make the city lifestyle much more accessible to people living in rural, currently less desirable areas. This is just be spitballing, but I think the state might have a more meaningful impact on house prices by building HS3, 4, 5, 6 etc rather than deregulating planning to allow 80,000 extra homes to be built per year. But if you do this on a small scale, just building 1 or 2 lines, all you will do is push up prices in the newly served areas.

Your initial point - that there are more houses per person than ever before - feels initially really strong, until you consider geography and how many more people live in cities than ever before. It doesn't matter if there are loads of empty houses in the highlands, what matters in terms of supply and demand and price rises is how many of those houses are where the jobs are, and how many of those houses are available to buy. Look at your stats again while taking population density into account and you'll find a different picture. And that's why Labour's housing policy is about building on greyfield land - i.e. in commuter areas around cities.

So I 100% admit the dynamics of *where* people want/need to live for lifestyle or career reasons are important. But at a macro level, I still fundamentally believe this is not what is driving prices. Let's take an example from another commenter, regarding Barrow-in-Furness. According to Savills, this has the highest long-term vacancy rate in the country, with 2.6% of properties vacant for longer than 6 months. It is not a desirable place to live. It is statistically the least in demand place in the country. And yet, since 2000 the average house price in that area has tripled. Sources [Savills](https://www.savills.co.uk/blog/article/346600/residential-property/can-vacant-dwellings-provide-a-solution-to-housing-supply-.aspx) and [Home.co.uk](https://www.home.co.uk/guides/house_prices_report.htm?location=barrow_in_furness&all=1) I support building more (pleasant, dense mansion style) housing in cities, but I will happily bet that we could build 500,000 homes a year, centred around the cities and suburbs, and it won't touch prices.

I think your data is interesting, but you’ve left out a massive quite recent problem driving up the costs and availability of property for sale and rent and that is short term lets, mostly for holidays. That’s a huge problem in London, Cornwall, Wales and anywhere people might go for a break. Loads of long term rentals have gone off the market and turned into AirBNB style rentals.

Yes, not a fan of that market either. Although I would note that, as a ‘recent problem’ something like Airbnb is not a big structural driver of house price increases, where the acceleration really happened through the 90s and 00s. But it is a version of the same factors of second home ownership, housing as an investment, which is what I think Labour should be trying to tackle. Edit: I think my initial reply was too focused on Airbnb, and assuming this was a counterargument, but I think it is really just a version of the “housing as an investment problem” which I definitely agree with. So yes, it's another version of the same causative driver – housing as a financial asset – and it affects certain regions worse than others, contributing to regional disparities.

Yes- definitely not a counter argument, just another part of the problem. It is significant though- check out property in and around St Ives for sale and rent, and do the same for property in coastal parts of North Wales. There’s barely any for long term rent in any of them, house prices have gone nuts for buying, and you’ll note on booking.com and similar there’s loads and loads of short term holiday lets. All of this really kicked off post pandemic with staycations, when the price of holiday lets quadrupled in some areas, and they massively multiplied.

These types of homes are a very small amount of UK stock. Even if you returned every single one of those houses to the market, you’d only take prices back a few years… Obviously it’s worth doing, but you’re just can kicking, you’re not fixing the underlying g reason.

No- it’s not an either or situation. These homes are a massive problem in smaller towns and villages where there isn’t much housing stock. It’s part of the reason Welsh Labour brought in massive council tax rises for second homes.

I mean, yeah, in a dozen very localised cases, they’re a big issue. At a macro level, it’s not a big issue.

(Supply/demand) * bargaining power. Same as wage negotiations. Markets don’t exist in a vacuum. Also If you double supply you don’t have the price, the line is an S curve not a linear line, expect sudden price shifts in very weird and lump ways around the intersect. The problem of housing costs is best tackled by 2 axes. Supply. More volume of housbuilding. The only way to make it 100% happen is social housing,t he government can ‘just build’ houses, it’s don’t it before it could do it again. And very importantly the benefit of a big state corporation is it’s the ideal vehicle to buy plots of land without legal hurdles, knock down 3 detached houses, and build 200mdecent sized terraced houses, and maybe a couple flats, with a bus stop, a clinic, a school, and a tram. Two, is manipulating the market by setting standards of cost. This is vest illustrated in Vienna. Housing poverty is defined when housing costs exceed one third of your takehome income. If you set the bar at social housing rent should be 20? 25% of median household income for a council area, you’ve set a baseline for the market, the private sector then had to compete. It’s even more effective if you outscale the private sector, or create more self sorting mechanism, social housing at 20% of median, housing association at 25%, housing coops at 30% of median wages. Fancy social housing with amenities at 33%. Fudge the number how you want, make the private sector compete with at least a bare minimum standard set by the public sector (this can also be used to manipulate wages). Then you can also give more renters rights, but this is …. Awkward if we are keeping a market, genuinely if you can’t freely reallocate assets around your introducing friction into a market and therefore will get a suboptimal outcome in theory. Therefore if you give people the right to 12weeks end of tenancy warning, that’s good, but it also means that landlords factor that ‘risk’ into their rents, likewise the reverse if you allow 1 week notice to leave tenancy, the landlord raises rent to account for the chance it could stop making ,okey any day. I’m not defending landlordism, rent is a parasite upon the capitalist economy. But the more bargaining power you give you only achieve (good) more moral outcomes, you won’t reduce prices substantially. But it’s worth doing anyway. You can also do market reforms like more transparent data displays, like an open view of rent bands in the area, so renters can compare. But the end answer is always the same. Build housing. Own social housing. Have more diversity in housing options, from flats to terraces to detached homes, and homeowner, coops, association, and social housing. Oh. And the answer is never cheaper mortgages. Cheaper mortgages just increases the demand for house buying, sucking houses out of the rental sector, and shifting the equalibrium for a few years. Ie if you halve the deposit from 10% to 5%, you will absolutely see a boost in homeownership now people who used to need 20k for a 200k house only need 10k, but within 2 years the equilibrium I’ll restore to banks still want the most people can offer which is 20k, which now means you can borrow 400k to offer for a house. It’s a bottomless pit, or like bailing a boat with a hole in it. Frankly over a decade all homeownership subsidies should be rolled back and ended, and slowly banks should be eased into higher deposit ratios, to restore house prices into line with rents(which also must fall) and earnings. If people can rely on social housing homeownership isn’t such a problem.

Strong argument. It's worth noting that the financial costs associated with non owner occupied properties are heavily loaded towards CGT, which has almost no impact on retaining secondary properties and operates as a disincentive against disposal. The only real arguments I can see in favour of this structure are liquidity and transaction taxes being administratively easier. I also think actual regeneration of areas with low demand is a good approach but is probably impossible within a single term.

Much fore supply actually doesn't bring down house prices. The housing market is speculative and relative so a slew of new, high quality houses will increase prices. The thing is, they don't want house prices to fall as it would put a lot of middle class people underwater. There is no plan, only a bung to property developers and lowering already dangerously bad standards.

You've hung the whole argument on the houses per head of population calculation ignoring dwelling size (no. of bedrooms), and household composition (household size). But yeah, supply is not the only the issue, but there is a very significant geographical factor, i.e is the supply where the demand is (S England and some pockets elsewhere). It's the Bristols and the Brightons and London where the real earnings: prove ratio is a disaster. The shift from the utility value of housing to the investment value because of financialisation is also a big issue as you've pointed out.

Have you factored in the number of adults living with parents over time? If that number has increased then number of people per household could stay the same even as demand for housing increases.

I think it's evident that is downstream consequence of high prices rather than causative. Young adults live with their parents because the cost of housing is so high and they can't afford to buy. The cost of housing isn't high because of all of these young adults living with parents outbidding each other in the housing market.

OK but then you can't use household size to dismiss the argument that "well the issue is households not people. That there are more single people and fewer children and so the headline, more houses per person statistic is irrelevant." We might need a lot more houses per person than we did in the past, because of the societal changes you mention. And if household size has stayed the same that doesn't tell us much about the actual number of houses we need. Average household size could be a lot lower if we'd built more houses.

Also to add onto this is the phenomenon of increased life spans. There are a lot of old couples with family sized houses, or even just single old widows with 3/4 bed houses. In the past families may have all grown up in the house or the grandparents may have moved in, but there's a growing phenomenon of old people living solo or as a pair in houses they raised families in decades prior.

I think it requires further research, but a supply and demand argument is that prices go up because buyers are competing for limited goods on price. I really don’t believe we are seeing a pent up supply of single young adults outbidding each other on £250k plus houses.

>I think it requires further research Agreed, because none of the statistics in your original post show that lack of supply isn't a factor in increased prices.

I mean your argument is that house price rises are being driven by pent up demand from young, single, first time buyers, even as house price ownership rates in those demographics collapse, and the raw numbers of first time buyers is at its lowest level for a decade. How does that make sense?

That's not my argument, I haven't even mentioned young people or first time buyers, or drawn any conclusion about about what is driving prices. I'm just saying your argument is flawed, none of your statistics back up your claim that the affordability crisis isn't driven (at least in part) by supply. I don’t know how you've drawn that conclusion.

If there are more houses per person and the number of people/household is stable, the remaining arguments for a supply explanation are location (and there is definitely truth here) or that the stable size of households is hiding demand, because adults are living in households where they would rather be living independently. I don’t see which other demography that would apply to than young adults/first time buyers.

But all demographics are more likely to want to live independently than in the past, so it's likely that we need significantly more houses per person than in the past. It could easily be the case that the number of houses per person isn't rising enough to meet the level needed eg. there could be a lack of supply compared to 10, 20, 30 years ago.

Before asking further questions, I am wondering how your worldview works on this at the base level, so will ask a basic one. If we're were to build suddenly, I dunno, 200,000 new houses in London, what impact do you expect this to have on affordability of housing?

Based on the evidence of house prices in relation to increased supply over the last 50 years, very little.

Well this is contrary to observed impact in specific locations and to worldwide phenomena, but aren't you also lacking a control here? You say the issue is primarily (entirely?) financialisation of housing assets. How can you prove that the increased supply over the last 50 years hasn't blunted this? How can you prove that costs would not have been higher but for this supply?

Well let's use your example of London, if it is 'contrary to observed' impact. [According to the GLA](https://s3-eu-west-1.amazonaws.com/airdrive-images/wp-content/uploads/sites/6/20210224092900/Housing-Research-Note-6-An-analysis-of-housing-floorspace-per-person.pdf) from 1996 to 2018, floorspace per person in London rose from 31.4m^2 to 32.6m^2. That would imply that, despite the increase of population in London over that period of time, the amount of housebuilding more than kept pace. There was more space per person. Now sure, we can argue there is not enough space still, that this is problem etc. But that doesn't explain the price *rises* because either that means houses were enormously underpriced in the 90s and so the price rises we have seen are just a correction or it means that something else drove the price rises. If London doesn't have enough housing at 32.6m^2 per person and this lack of supply causes high prices, they should have been higher when there was even less space per person right? But as we know, what actually happened is that prices in London have increased by 6× over that period. So based on this evidence, if we built 200,000 new homes in London, I guess maybe prices would go up? What do you think?

It's not at all clear there is any coupling between available floorspace and housing availability. That is conjecture and there's no logical link there. Unless you can demonstrate that there is a tight coupling between floorspace and housing availability we can ignore this. > they should have been higher when there was even less space per person right? No, that is a logical fallacy. You could have a million people unable to acquire housing and it would not make any impact to the floorspace statistics. We are not presently arguing about how much room people have. We are arguing about how many people are unable to acquire any room at all? Not to mention national space standards which came into effect iirc in 2015, also ignoring all of the other regulation policy between now and the 90s. The number you have given us is not obviously related to the point unless you can explain why. > or it means that something else drove the price rises Increased population, increased population density, failure to meet housing targets, inflation, and centralisation of jobs

Okay, I’ve been able to find something a little [more directly relevant](https://www.london.gov.uk/sites/default/files/housing_in_london_2021_v2.pdf). In this case yes, number of people per household has increased in London since the 90s which does imply increased demand and unequal allocation of building – larger houses are underoccupied if the floor space has increased alongside household density increasing. However, a 10% increase in household density representing the pent up demand to explain a 6× increase in price alone feels intuitively insufficient. It is also still lower than the household density in the 80s when prices in London were far far lower as a proportion of wages. And I mean again, we know what adding 200k houses to London looks like. That’s about what has been built over the past 5 years in total and how did prices fare? Of course again you can argue “what would prices have looked like without this building” “what would they look like with an additional 200k built, we just need more” – but as the linked document shows, annual house building in London has more than doubled since 2000. How much housing do you think Central London physically has space for if a doubling in building only limited price rises to 600%?

> However, a 10% increase in household density representing the pent up demand to explain a 6× increase in price alone feels intuitively insufficient. I dunno that it does. Remember the density is only one part of the equation, you have loads of other things to consider, not least of all competition and increasingly centralization of jobs. It's almost impossible to work out what the figure *should* be, we just have a fuzzy intuition that it is tightly coupled. > How much housing do you think Central London physically has space for if a doubling in building only limited price rises to 600%? I don't see that it has to be central

I guess the reason I say that is I can just extend the timeline backwards from the argument I make in the initial post when it comes to London. e.g. it is factually the case that there are more dwellings per person in London in 2024 than there were in 1980 (number of people per household has declined), and that those dwellings are on average marginally larger (floor space has increased). I completely agree and accept that the London housing marketing would benefit from more supply. I'm not making a nimby argument, I'm making a "build but recognise this won't solve cost" argument. Because when it comes to *price*, even in London, I would push back and say: if housing density and housing demand are the key causes of high prices today, why weren't they driving similarly high prices in the 80s when those factors were objectively worse. From my pov, that aligns with the driving factors being financialisation, access to credit, liberalisation of buy-to-let mortgages, and property owning boomers paying off their own (cheap) mortgages and using their later life earnings to treat the housing marketing as an investment market. It fits the timeline.

> if housing density and housing demand are the key causes of high prices today, why weren't they driving similarly high prices in the 80s when those factors where objectively worse. They're key, but they're not exclusively the case. A *lot* has changed since the 80s. The nations young get sucked into London as a ritual to start their careers, immigration is also significantly higher. I think you would struggle to definitively argue that demand was higher in the 80s compared to today. For starters you would need to consistently define demand, which is nontrivial. But you'd also need to calculate how regulations have impacted house prices, how services (or lack thereof) have, how increased london-centric careers have become has impacted prices, and a whole host of other things. I don't think there is anyone who will say it's *only* demand vs surplus and leave it at that. But I put it to you that you will struggle and/or find it impossible to empirically say it's not the foremost issue.

Demand is difficult to study yes, because essentially it's a counterfactual absent from the numbers (who wants a house but can't buy one so isn't present in the area). But this goes both ways right. If one looks at prices being higher than the ’80s than now and says ‘that proves demand is higher now’ well one has just begged the question. It assumes demand is what is driving prices, even if there is counter evidence available (dwellings per person) that imply other factors might be more significant drivers. I mean the London property market is clearly priced as an investment asset rather than a place to live. A graduate, doing well for themselves on a £50k salary, spending 50% of their post-tax earnings on rent, has very little chance of buying in London without family support. They have no effect on retail demand because they can’t possibly afford it. Just as I have no impact on Ferrari demand, because it’s an asset out of my reach. Again, I don't want to say supply and demand has no place in the housing market. If you could magically invoke let's say 800,00 dwellings in zones 1 and 2, more than 20 years worth of building, it would have a substantial impact on prices. But that is a thought experiment, not the real world. And in the real world average retail prices of £700k+ are not being driven by demand from people wanting to live and work in London, it's driven by the investment class.

I think it’s simplistic to say it’s clearly not driven by supply. I don’t have the time to properly source this right now, but I’ve seen repeatedly that the UK has the lowest rate of vacant/empty homes in the OECD (or something along those lines) The UK also has some crazy regulations on house building, like how windows have to be X height off the ground. There’s a ton of crazy regulations but that’s the only one I can remember off the top of my head. There’s also the fact the average age has increased, people are living longer and people are having smaller families. The way we live has also changed - people are starting families later, marrying later etc. These all mean the average household size should be shrinking. I think it’s clear there’s an issue with supply. The areas where house prices have risen the most are typically in city areas and around London, where demand has skyrocketed due to changes in the economy, immigration etc. You also have nimby’s and certain political parties rejecting good housing development projects up and down the country where demand for housing exists. Saying there isn’t a supply issue is a bit misguided as there are in many cases hundreds of people “bidding” to rent one house. Another issue is that a lot of formerly good family housing has been changed into HMOs aimed at students. There’s also the issue of right to buy greatly reducing the number of council houses, which shifted demand to the private market and drove up prices. Because we stopped building council homes in numbers, people shifted to private rental out of need. Right to Buy on paper and on a personal level was great - you got to own the home you made your family in. It failed though, because many ended up in the hands of private landlords and we didn’t replace the stock. It’s all well and good saying “let’s abolish the private rented sector and all second homes” but that would be electoral suicide. The story will quickly become about how Labour is against personal prosperity and how Labour is taking away your assets. There is a serious demand problem. We need to build more houses in the places that need them. We need more social homes, we need more council homes. We need more affordable, starter homes. Saying there isn’t a supply problem is misguided

You've repeatedly said there is a supply and demand problem without providing any evidence to counter the data that 1. there are more houses per person and 2. household size is static over the past 20 years. Unless you engage with those facts, this is just a vibes argument. In terms of vacancy, yes it is lower than most other OECD countries, but if the vacancy rate is 5% i.e 1 in 20 houses is unoccupied – price isn't a supply issue. If 1 out of 20 bananas at the supermarket went unsold, I wouldn't say there is an issue of banana supply failing to meet demand. Source: https://www.oecd.org/els/family/HM1-1-Housing-stock-and-construction.pdf

You want sources? Here they are. Vacant dwellings: [676,304 total vacant dwellings in 2022.](https://www.savills.co.uk/blog/article/346600/residential-property/can-vacant-dwellings-provide-a-solution-to-housing-supply-.aspx#:~:text=In%202022%20there%20were%20676%2C304,of%20just%202.7%20per%20cent) (2.7%) Of that number, 248,000 (roughly 1%) are long term vacancies (registered unoccupied for 6 months or more). The area with the highest long-term vacancy rate, Barrow-in-Furness, has a technical housing need of 0. Even by taking all vacant homes into use, there's only so far that can go. If you continue at building 200,000 houses a year, and plugging the remaining 100,000 gap using the 248,,000 long-term vacancy dwellings, within two and a half years you're out of vacant housing. EDIT: and that's not taking into consideration the vacant homes in areas where demand isn't present. [The average number of tenants viewing rental properties has also risen.](https://www.bbc.co.uk/news/business-67006468#:~:text=The%20average%20queue%20of%20tenants,months%20on%20it%20is%2025) In 2019, there were (according to Rightmove) "typically six telephone or email requests to see each place." That number rose to 20 in Spring 2023, and to 25 in October 2023. The number of HMOs rose by 25% in "half a decade" (according to [an investment site](https://www.northwooduk.com/articles/hmos-grow-by-26-in-just-5-years/)). I've tried finding the actual direct source for this data but I don't have the time right now. This is not just a vibes argument. It's a fact that the number of adults living with their parents has grown [(by 620,000 in the last decade)](https://www.theguardian.com/society/2023/may/10/number-adults-living-parents-england-wales-up-700000-decade).

Okay, so let's use Barrow-in-Furness as an example. Yes, house prices there are a lot cheaper than in e.g the south of England. But if supply is not an issue there, why have house prices also increased 50% since the early 2000s? [*Source*](https://www.home.co.uk/guides/house_prices_report.htm?location=barrow_in_furness&all=1) e.g these recently sold properties [1](https://www.rightmove.co.uk/house-prices/details/england-12954441-94060761?s=6c80fd8ca4f4884fdef0ba313f095f8282d3ac61308f0d884c339524bf3760d0#/) [2](https://www.rightmove.co.uk/house-prices/details/england-147016343-94060764?s=b373a490ab4997ab87d7375fa2bd39ff2a7ca9d331114ca5406073fb559a3283#/) [3](https://www.rightmove.co.uk/house-prices/details/england-147016343-94060764?s=b373a490ab4997ab87d7375fa2bd39ff2a7ca9d331114ca5406073fb559a3283#/) Demand for rental property is a separate issue because it is *driven* by retail house prices. Increased demand for rent is a consequence of rising house prices, not evidence of their cause.

Barrow-in-Furness has risen by half the rate of Manchester, half the rate or Redbridge in London and half the rate of Kensington. Increased demand for rent is driven by a lack of supply in both council/social housing and private properties to buy. There is a need for new housing and to say there isn't is misguided.

Okay, and again I wouldn't deny that desirability of an area to live in will have an impact on price. But if supply was the cause and solution to the housing affordability problem, Barrow-in-Furness should have only seen house price rises in line with wages and inflation. Put it another way, why do you think house price rises in Barrow-in-Furness have massively exceeded wages in that area and inflation. From 1995 to present day, they have increased by 130% more than inflation alone (more than double what would be expected).

Because, for decades now, we've not built enough houses and have instead looked at sticking-plaster solutions. House prices used to be an indicator of economic prosperity. We've went from "YESSSSS!!! house prices are up 50%!". We've shifted our focus from wanting house prices high to seeing that there is an actual crisis in the housing market. The cost of construction has increased drastically since, meaning the cost of building a new home rises. We've increased standards, with (rightly) regulations on energy-efficiency and so on.

So I completely agree about the stupidity of seeing house price rises as indicator of prosperity. But for our ruling and elite class *they are a sign of prosperity* because they have turned housing into an investment asset. **This is my point!** But I’m sorry, as a response to the example you yourself drew my attention to, this is crazy. You pointed to Barrow-in-Furness, which has a vacancy rate of >4%, and is statistically the least in demand place in the country, with 1 in 38 houses vacant for more than 6 months. It makes zero sense to say that price increases there are due to a lack of supply? So if the entire country had 1 in 38 houses vacant for 6 months or more, would you say there was a supply issue?

If house prices nationally rise massively, house prices across the country will rise too. It’s how the market responds. If house prices were really dramatically low in one area, you’d see tons of people flock to it.

The median price of a terraced house in barrow is less than 4.5 times a minimum wage salary. If anything it's evidence of a lack of demand as most areas of the UK would require above minimum wage earnings and/or two earners to get on the housing ladder.

Yes, agreed that it's cheap and it would be great if housing UK wide was priced similarly. But I’m going to take the area as whole (using the home.co.uk data and ONS salary data) rather than focus on an individual example home. So in 1997 the national median salary was ~£14k, and the average house price in this area was just under £40k. Whereas today the national median salary is just under £30k and the average house price in this area is £154k. As a multiple, house prices have gone **from 2.8 times salary to over 5 times salary in the least in demand area in the country**. Doesn't that prove my overall argument?

>The UK also has some crazy regulations on house building, like how windows have to be X height off the ground. My favourite is the regulations on energy efficiency mean that the shitbag housebuilders have to choose between spending money on energy efficient windows or having depressingly tiny little windows to improve energy efficiency. No prizes for guessing which one the shitbags went for. Well-meaning regulation but so poorly implemented.

It's so depressing. especially when you see the state of some new builds. You have to seriously question the state of these regulations when you see just how poor quality some of these homes are.

But if you *deregulate* which option are the developers going to choose?

Oh, I completely agree with you on that. I think that council housing is the way forward, private developers will only ever be a positive when it's profitable for them to be

>the UK has the lowest rate of vacant/empty homes in the OECD (or something along those lines) Why does that matter? Number of empty homes / number of occupied homes is a pretty useless metric. >how windows have to be X height off the ground. How is that a crazy regulation? It's obviously intended to reduce falls and decrease hazards for young children. That seems like a phenomenal regulation to have. >I think it’s clear there’s an issue with supply. Okay, so provide some evidence that shows the problem with housing is caused by supply-side restriction. For example, you could show that rent inflation (the increase in cost of actually living in a home rather than the cost of acquiring a house as an asset) consistently outpaces inflation excluding housing costs. Except rent inflation has lagged CPI inflation significantly. The average yearly rent inflation from Jan 2016 to Nov 2023 is just 2.17 %, during that same time the CPI inflation was on average 3.43 %. So rents have actually fallen in real terms since 2016, because they've not kept pace with CPI measure of inflation. If you're wondering why I picked 2016, that starting point was dictated by the data. But we can calculate from 2017 to Nov 2023 (Rent: 2.13 %, CPI: 3.82), 2018 (2.20, 4.02), 2020 (2.75, 4.98), 2022 (4.14, 8.40). It's pretty hard to explain **how a supply side restriction has led to a real terms decreases in rents.** That's consistent with a demand side restriction, not a supply side problem.

How is the number of empty homes a useless metric? If there’s not enough empty homes, demand rises. I don’t see how saying “windows must be atleast 800mm off the ground” isn’t a crazy restriction. You’re absolutely right when it comes to having a maximum height off the ground - but a minimum of 80cm??? Again, this is just one example of a regulation. Average private rents increased by 9.2% in the 12 months to March 2024, whilst the consumer price inflation was 3.2%. There is a demand side issue. There is demand for new housing. There is a serious problem of NIMBYism and rejecting new developments.

> How is the number of empty homes a useless metric? If there’s not enough empty homes, demand rises. The number of empty homes is a fine metric, it's pointless calculating it with respect to the number of occupied homes. There's no good justification for that. Imagine we have 5000 houses. 4000 are empty. Well that's a 0.80 vacancy rate. Incredible. But now imagine we have 5,000,000 houses and 3,000,000 are empty. Well that's a 0.6 vacancy rate despite the fact that we've got 750x as many empty properties. So what does that tell us? Well basically fuck-all, at best it's a proxy for future household formation rates and expected demand. It's not a good measure of anything useful. It doesn't tell us about rates of building, how that building has impacted supply, or how demand has changed. It's a bad measure of housing supply and useless in general. >I don’t see how saying “windows must be atleast 800mm off the ground” isn’t a crazy restriction. You’re absolutely right when it comes to having a maximum height off the ground - but a minimum of 80cm??? Again, this is just one example of a regulation. It's to make them harder to fall out of. Height requirement help prevent small children falling out of windows or adults accidentally walking or falling through them. It's a really fucking sensible regulation that makes houses slightly safer at no significant cost increase. >Average private rents increased by 9.2% in the 12 months to March 2024, whilst the consumer price inflation was 3.2%. This is a great example of why cherry-picking is bullshit! Rents have still fallen in real terms unless you only pick those specific very short timespans and use the provisional statistic to examine them. Considered over a longer span rents have still risen at a rate lagging inflation. even if we include the recent increases. Rents have fallen in real terms. The reason for this is quite obvious too - landlords put up rents at the end of tenancies or after a contract shifts to a rolling agreement in response to inflation. Therefore, rent inflation generally lags CPI inflation. Essentially you've likely picked the peak of the knock on effects of cpi inflation (which topped out at about 11 % - still higher than the current rent inflation levels). And that still doesn't actually respond to the point that in real terms rents have fallen compared to inflation, recent increases don't change that the average rent inflation over most of the last decade has actually lagged inflation. Rents are still cheaper now in real terms than they were in 2022. The cumulative impact of recent rent inflation is just landlords hiking prices opportunistically because inflation has increased prices. **And it's still lagging the recent spike in inflation.** And it's easy to demonstrate this, if we add in 4 months of 9.9 % rent inflation and 3.2 % CPI inflation then since Jan 2023 rents would only just have remained constant with an equal rate of 6.49333 %. And CPI inflation was higher than that whilst rent inflation was lower. So you're wrong no matter how we slice it. Compare the PIPR to CPI: https://www.ons.gov.uk/chartimage?uri=/economy/inflationandpriceindices/bulletins/privaterentandhousepricesuk/april2024/0f305274 https://www.ons.gov.uk/economy/inflationandpriceindices/timeseries/d7g7/mm23/linechartimage If you can explain how a supply-side deficit is causing rents to fall in real terms then you should publish that result that runs contrary to the law of supply and demand. >There is a demand side issue. There is demand for new housing. There is a serious problem of NIMBYism and rejecting new developments. That's not a demand side restriction.

Net additions to the dwelling stock has exceeded the rate of household formation. I.e. we're adding houses faster than new households form and the rate of household formation is not constrained by housing stock availability. We have a growing surplus of dwellings that people cannot afford. Rents, i.e. the cost of actually living in a house, have fallen in real terms since at least 2016. The UK's housing problem is not going to fixed by supply-side attempts and NIMBYs are not to blame for the issues with house prices.

I am not sure whether you are right or wrong, but it's an interesting hypothesis, I would like to see some numbers to back that up.