We’ve heard for years that house prices in the UK can’t fall because of the massive shortage of supply.
At Moneyweek, we’ve always said that supply had nothing to do with the bubble: that was caused by stupidly cheap credit and mortgage deals. However, that doesn’t mean that supply doesn’t matter. All other things being equal, the more houses there are the lower prices will end up being.
That’s why Channel 4’s programme on housing supply last night was so very good. It looked at the total scandal of the UK’s million-plus empty homes – something we’ve been going on about here for years.
This is partly about bad general policy – low taxes on second home and so on – but it is also about the last government’s Pathfinder policy, which planned to take old houses out of use and replace them with new houses deemed to be more suitable for modern families. It managed the first bit, but not the second.
So what makes a new house better than an old terraced house? The councils says that people don’t want to live in two-up-two-downs with doors on to the street. But is that really true? Surely people with no home are more than happy to live in two-up-two-downs.
And why can’t a two-up-two-down be knocked together to make a four-up-four-down? Isn’t a small townhouse better than a B&B? And what of all the people who keep saying they want to live in these streets? We saw lots of them on the show.
The lady from the council was also very firm on the fact that people don’t like to step straight from their house on to the street. I guess she’s never been to Notting Hill or Mayfair. The truth is that knocking a couple of these houses together would make a rather nicer house than a good many of the new houses I have been in.
Then there is the cost of keeping all these houses empty while the councils wait for the money to demolish them: the city of Liverpool spent well over £1m last year on securing empty homes. That doesn’t seem a particularly good use of taxpayers’ money: there are 21,000 people waiting for a council house in Liverpool.
Channel 4 is starting a campaign on this to “stop this senseless waste”. I suspect all the rest of us do too. You can join the debate here.
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