Mark Carney, the governor of the Bank of England, warned that Britain’s housing market was the “number one threat to financial stability”, says The Times. He said that the root cause of rapidly rising house prices was a lack of building.
According to Savills, population growth has outstripped house building by 19% in the past decade; we should be building an estimated 230,000 new homes each year just to keep pace with demand.
The idea that we need to build 250,000 houses a year is “nonsense”, says Simon Jenkins in The Guardian. This “need” is based on crude household formation, without any reference to “demand, price, migration or anything else”.
Yet, this is seized upon by newbuild lobbyists, fuelling panic about planning delays and driving young people into “desperate over-borrowing”.
The housing pundit, Danny Dorling, says the main problem is chronic under-occupation. The 1971 census return showed Britons enjoying 1.5 rooms per person; today, with a larger population, the figure is 2.5.
Britain has a “huge stock of empty and underused residential space”. London’s employment density is similar to New York’s, yet its housing density is less than half.
The problem is that, as owner-occupiers, two-thirds of us are invested in rising house prices, says Deborah Orr in The Guardian.
Our houses tend to earn more than we do. This explains why, although politicians have been calling for a house-building boom for decades, they are “privately relieved that it never really seems to quite take off.
Any party that presides over low interest rates and rising property prices will now achieve good poll ratings.”
Inequality is rising, and now parental assets are likely to have a greater bearing on young people’s financial future than their education. “So much for meritocracy.” We need to create a tax system that helps the “vulnerable minority” of renters on low incomes.