The UK's Housing Stock - Is There A Demand For New Homes?

[scrumpyjack]

The price of land for building will adjust, due to market forces, to be the balancing figure between the sales proceeds of housing less all the costs of building less the required builders margin. There is obviously a time lag in this equation and if house prices fall significantly, builders will for a while make losses until the replacement cost of their building land falls to adjust to this. That is why, when we last had a big collapse, and builders shares collapsed, I bought Barratt and Persimmon. I thought they would survive and the above equation would reassert itself in a few years. That is what happened. If builders accounted on a replacement cost basis, as oil companies do, analysts might take a different view of them.

Builders balance sheets are hugely stronger than last time!

[tjh290633]

We are shortly due to go to the funeral of my wife's cousin who made his living as a spec builder in West Yorkshire, having started by working for Taylor Woodrow.

He reckoned that if he built a pair of 3 bedroom semis, the price of one covered the cost of the pair. His houses looked nice and met the market demand.

When we bought our first house in 1961, there were 2-bed bungalows available in Rotherham for about £1,600, which was about the lowest price anywhere. We opted for a 3-bed semi in the Peak District, in a small village. The local builder was into local authority housing, and started this small estate adjacent to his yard as a means of keeping teams busy between council jobs. They had to be built in a stone finish, using Davy blocks of concrete with lumps of limestone in the face. We added background heating from the lounge fire, and paid £2,600, which was reasonable at the time.

If we take the price of beer as an inflation index, 1/3d then (about 6p in today's money) compared with £5 or so today, we have a multiplier of just under 100. Probably not far off the mark for the semi, but low for the bungalow, perhaps reflecting on the cost of land. The footprints of the two would have been similar.

Is the price of land a major factor these days? A few years ago land for building was well over £1million per acre. Gardens have got much smaller, and perhaps a ratio of 12 houses per acre is reasonable, allowing for access roads. As has been said about building land, they are not making any more of it. Hence the frequent use of agricultural land for building.

An article in today's Sunday Telegraph suggests that it is the planning system which will prevent Keir Starmer of reaching his goal of 1.5 million houses in his first five years. http://digitaleditions.telegraph.co.uk/ ... rticle/NaN

Near us, the small area of open country between our village and the next keeps being subject to attrition. Much of a golf course has now been built on. A development in our village was conditional upon several fields being given to the Parish Council for public open space. Preservation of some land from building is essential, let alone the limitations of water and sewerage systems, place restrictions on how much land can be devoted to housing.

Maybe the answer is to let the housebuilders get on with the job, with minimal restrictions?

TJH

[Lootman]

An article in today's Sunday Telegraph suggests that it is the planning system which will prevent Keir Starmer of reaching his goal of 1.5 million houses in his first five years. http://digitaleditions.telegraph.co.uk/ ... rticle/NaN

Near us, the small area of open country between our village and the next keeps being subject to attrition. Much of a golf course has now been built on. A development in our village was conditional upon several fields being given to the Parish Council for public open space. Preservation of some land from building is essential, let alone the limitations of water and sewerage systems, place restrictions on how much land can be devoted to housing.

Maybe the answer is to let the housebuilders get on with the job, with minimal restrictions?

A few years ago there was an in-depth study in the Economist about global property prices. The one factor that was universally correlated to high land and home prices was a high level of planning and regulation.

In other words, the more a local or national government tries to micro-manage land use, the higher the cost of buying a home. The cities with the highest home prices are those with excessive land use rules e.g. London, New York, San Francisco etc. It is not the only factor that drives prices of course, but it is a reliable one.

Note that this also applies to rents. Locations that have rent control and other tenant "protections" invariably have high rents, because rent and eviction control reduces supply by deterring landlords from offering long-term rentals.

[AsleepInYorkshire]

Some facts

Builders have about 500,000 to 700,000 plots in their landbanks. That's approximately 2.5% of all the homes in the UK. It's not a significant amount of land when compared to the numbers being quoted by Labour and the Conservatives as they claim they have targets of 300,000 new homes per year.

The last time such number of new homes were built in the UK was 1977. The industry seems able to produce about 200,000 new homes per year, subject to the vagaries of macro-economic events. (The graph below was prepared by me using data from the ONS website)


As with many of today's statistics there are discrepancies with the following information. However, I've used those figures which seem to be the sort of average. It shouldn't make that much of a difference to the overall picture it paints.


Source

Overall, British golf courses are calculated to cover 1,256 sq km, an area roughly equivalent to the whole of Greater Manchester and, according to some estimates, just a little smaller than all the land covered by housing.

9.4% of UK land is peat bog


Source

The claim that our planning regulations and other bureaucracy associated with bringing a housing development to construction phase may be underpinned by the above information. Is it possible that we aren't planning as well as we think we are. We prevent building in many areas, putting pressure on those areas that are left. As we reduce the areas where we can build new homes we may well be increasing the value of land in that area due simply to the demand placed on it by several "bidding" builders?

We certainly don't appear to have used up huge tracts of UK land to build on. I'd suggest there's certainly some reasons to suggest that future planning is going to have to incorporate national interests in respect of energy independence and our carbon footprint. This could result in consideration of redevelopment of large areas in our conurbations, if we want to preserve the current land allocations.

AiY(D)

[TUK020]

AiY(D),
thank you for bringing interesting, useful and relevant data to the discussion
tuk020

[TUK020]

Some facts

Builders have about 500,000 to 700,000 plots in their landbanks. That's approximately 2.5% of all the homes in the UK. It's not a significant amount of land when compared to the numbers being quoted by Labour and the Conservatives as they claim they have targets of 300,000 new homes per year.

The last time such number of new homes were built in the UK was 1977. The industry seems able to produce about 200,000 new homes per year, subject to the vagaries of macro-economic events. (The graph below was prepared by me using data from the ONS website)


As with many of today's statistics there are discrepancies with the following information. However, I've used those figures which seem to be the sort of average. It shouldn't make that much of a difference to the overall picture it paints.


Source

Overall, British golf courses are calculated to cover 1,256 sq km, an area roughly equivalent to the whole of Greater Manchester and, according to some estimates, just a little smaller than all the land covered by housing.

9.4% of UK land is peat bog


Source

The claim that our planning regulations and other bureaucracy associated with bringing a housing development to construction phase may be underpinned by the above information. Is it possible that we aren't planning as well as we think we are. We prevent building in many areas, putting pressure on those areas that are left. As we reduce the areas where we can build new homes we may well be increasing the value of land in that area due simply to the demand placed on it by several "bidding" builders?

We certainly don't appear to have used up huge tracts of UK land to build on. I'd suggest there's certainly some reasons to suggest that future planning is going to have to incorporate national interests in respect of energy independence and our carbon footprint. This could result in consideration of redevelopment of large areas in our conurbations, if we want to preserve the current land allocations.

AiY(D)

Do golf courses count as "Green Urban"?
How would I find out what % of, say, Surrey is golf courses compared to built on?

[AsleepInYorkshire]

Do golf courses count as "Green Urban"?
How would I find out what % of, say, Surrey is golf courses compared to built on?

The Golf Course in Surrey’s Historic Landscape – Part 1

AiY(D)

[Lanark]

One thing that never seems to be brought up in these conversations is the need for more dense/energy efficient housing in city centres

https://especiales.eldiario.es/spain-lives-in-flats/

Less American style car-dependent houses = less travelling required = less carbon emissions

The current modern estates with nothing but ugly cul-de-sacs and road after road with zero amenities are soul destroying.

None of the political parties have a coherent housing policy, they do nothing but parrot whatever the big house builders tell them to say.

[ursaminortaur]

One thing that never seems to be brought up in these conversations is the need for more dense/energy efficient housing in city centres

https://especiales.eldiario.es/spain-lives-in-flats/

Less American style car-dependent houses = less travelling required = less carbon emissions

The current modern estates with nothing but ugly cul-de-sacs and road after road with zero amenities are soul destroying.

None of the political parties have a coherent housing policy, they do nothing but parrot whatever the big house builders tell them to say.

As I recall proposals made not that long ago for equipping areas with more local amenities under the banner of the "15 minute city" were demonised by the car lobby and climate change sceptics as somehow being an attack on free movement.

https://en.wikipedia.org/wiki/15-minute_city

https://www.cnn.com/2023/02/26/world/15-minute-cities-conspiracy-theory-climate-intl/index.html

The accusations flung at Enright were wild and varied, and mostly from people with no connection to Oxford, he said. Many were from outside the UK.

“It was quite alarming,” Enright told CNN, “I haven’t really had anything like that before in my many years in local government.”

Enright had been swept into a conspiracy theory, fast gaining pace around the world, which has rebranded plans to cut traffic, reduce air pollution and increase walking and cycling in cities as “climate lockdowns.”

Oxford has become a flashpoint, in part, because its traffic filtering plan has been conflated with a separate proposal in the city to create “15-minute cities,” the main focus of the conspiracy theorists’ ire.

What are 15-minute cities?

Type “15-minute cities” into social media and be prepared for a barrage of claims the idea will usher in dystopia, people will be fined for leaving their “district” or it is “urban incarceration.”

The concept, however, is pretty simple: Everything you need should be within a roughly 15-minute walk or cycle from your home, from health care and education to grocery stores and green spaces.

The aim is to make cities more livable and connected, with less private car use – meaning cleaner air, greener streets and lower levels of planet-heating pollution. Around a fifth of the world’s human-caused, planet-warming pollution comes from transportation, and passenger cars make up more than 40% of this.

[Nimrod103]

As I recall proposals made not that long ago for equipping areas with more local amenities under the banner of the "15 minute city" were demonised by the car lobby and climate change sceptics as somehow being an attack on free movement.

I have pointed out in several posts on various threads in TLF that the modern British development norm of houses with gardens, built at a low density, spread out across greenfield sites and often isolated from public transport, is completely at odds with the Government desire for great energy efficiency.

However, in my view the 15 minute city is really a non starter. it might be possible to have a small supermarket and even a primary school and GP within 15 minutes walk/cycle time in most towns and cities, but people will still need to travel much greater distances on a regular basis, and for this a car is really essential. It may be possible for secondary schoolkids to get to distant secondary schools by bus, though in my area parents drive about half of the kids. But hospitals, shopping centres, car repair garages, garden centres, parks and tourist attractions (to name but a few) are all widely spaced, and in the main only easily accessible by car.

[vand]

The question has to be asked - does the UK really need more housing?

Our population is growing at at rate of approximately 0.5%/yr and will probably trend even lower in the future. The current housing stock is about 25m; 0.5% of 25m is 125k that is required to keep up with population expansion.. anything above that is raising the supply of housing in relation to population size.

The only caveat to this is if the average household size is decreasing, however the stats show this is not the case, and our persons per household has remained pretty constant over time.

[TUK020]

The question has to be asked - does the UK really need more housing?

Our population is growing at at rate of approximately 0.5%/yr and will probably trend even lower in the future. The current housing stock is about 25m; 0.5% of 25m is 125k that is required to keep up with population expansion.. anything above that is raising the supply of housing in relation to population size.

The only caveat to this is if the average household size is decreasing, however the stats show this is not the case, and our persons per household has remained pretty constant over time.

https://www.centreforcities.org/publica ... ng-crisis/
Compared to the average European country, Britain today has a backlog of 4.3 million homes that are missing from the national housing market as they were never built.

This housing deficit would take at least half a century to fill even if the Government’s current target to build 300,000 homes a year is reached. Tackling the problem sooner would require 442,000 homes per year over the next 25 years or 654,000 per year over the next decade in England alone.

[vand]

The question has to be asked - does the UK really need more housing?

Our population is growing at at rate of approximately 0.5%/yr and will probably trend even lower in the future. The current housing stock is about 25m; 0.5% of 25m is 125k that is required to keep up with population expansion.. anything above that is raising the supply of housing in relation to population size.

The only caveat to this is if the average household size is decreasing, however the stats show this is not the case, and our persons per household has remained pretty constant over time.

https://www.centreforcities.org/publica ... ng-crisis/
Compared to the average European country, Britain today has a backlog of 4.3 million homes that are missing from the national housing market as they were never built.

This housing deficit would take at least half a century to fill even if the Government’s current target to build 300,000 homes a year is reached. Tackling the problem sooner would require 442,000 homes per year over the next 25 years or 654,000 per year over the next decade in England alone.

Nice answer. I am prepared to accept that our rate of housebuilding has not been sufficient to keep up with the population. I did have to ask the question, however..

In general I am in favour of more homebuilding and lowering home prices due to higher supply - I believe that when people spend less of their money on their home they can spend it on things that are ultimately more productive and beneficial to both themselves and society.

[Adamski]

Immigration is latest 504,000 per year. So we'd need to build a Birmingham ever 2 years along with all the schools, hospitals, infrastructure etc. Or 5 new Birmingham's every 10 years. Never happen, so house prices will continue to go up.

The headlines "house prices plunge" completely misleading. Just a minor blip on an ever upward trajectory. Nightmare for anyone under 50. But unfortunately that's how it is.

[CliffEdge]

Immigration is latest 504,000 per year. So we'd need to build a Birmingham ever 2 years along with all the schools, hospitals, infrastructure etc. Or 5 new Birmingham's every 10 years. Never happen, so house prices will continue to go up.

The headlines "house prices plunge" completely misleading. Just a minor blip on an ever upward trajectory. Nightmare for anyone under 50. But unfortunately that's how it is.

Makes you wonder if immigration is a good thing.
I usually just divide by two and multiply by two and see where that goes. It ain't pretty.

[CliffEdge]

One thing that never seems to be brought up in these conversations is the need for more dense/energy efficient housing in city centres

https://especiales.eldiario.es/spain-lives-in-flats/

Less American style car-dependent houses = less travelling required = less carbon emissions

The current modern estates with nothing but ugly cul-de-sacs and road after road with zero amenities are soul destroying.

None of the political parties have a coherent housing policy, they do nothing but parrot whatever the big house builders tell them to say.

And this good idea immediately got hijacked by the 15 Minute City stupidity.

Generally the state of thinking nowadays in this country makes you weep.

[vand]

Immigration is latest 504,000 per year. So we'd need to build a Birmingham ever 2 years along with all the schools, hospitals, infrastructure etc. Or 5 new Birmingham's every 10 years. Never happen, so house prices will continue to go up.

The headlines "house prices plunge" completely misleading. Just a minor blip on an ever upward trajectory. Nightmare for anyone under 50. But unfortunately that's how it is.

Net or gross?
Don't forget people leave these shores, and some even die here.

https://www.worldometers.info/world-pop ... opulation/

NET increases:
2020 +0.42% 281k
2021 +0.34% 228k
2022 +0.34% 228k

I would say we NEED the immigration, wouldn't you?

[Nimrod103]

Immigration is latest 504,000 per year. So we'd need to build a Birmingham ever 2 years along with all the schools, hospitals, infrastructure etc. Or 5 new Birmingham's every 10 years. Never happen, so house prices will continue to go up.

The headlines "house prices plunge" completely misleading. Just a minor blip on an ever upward trajectory. Nightmare for anyone under 50. But unfortunately that's how it is.

Net or gross?
Don't forget people leave these shores, and some even die here.

https://www.worldometers.info/world-pop ... opulation/

NET increases:
2020 +0.42% 281k
2021 +0.34% 228k
2022 +0.34% 228k

I would say we NEED the immigration, wouldn't you?

Seeing as most immigrants will never earn enough to reach the threshold for being a net contributor to the finances of the UK, immigration makes us collectively poorer. No wonder the GDP per capita has stagnated for years, productivity has stagnated, yet taxes inexorably rise and and people don't feel better off.

[spasmodicus]

Seeing as most immigrants will never earn enough to reach the threshold for being a net contributor to the finances of the UK, immigration makes us collectively poorer. No wonder the GDP per capita has stagnated for years, productivity has stagnated, yet taxes inexorably rise and and people don't feel better off.

where's the evidence?

this study says otherwise
https://www.ucl.ac.uk/economics/about-department/fiscal-effects-immigration-uk

S

[Nimrod103]

where's the evidence?

this study says otherwise
https://www.ucl.ac.uk/economics/about-department/fiscal-effects-immigration-uk

S

There was a study from Denmark which has often been quoted. From Google:
The main conclusion is that immigrants from richer countries have a positive fiscal impact, while immigrants from poorer countries have a large negative one. The negative effect is caused by both a weak labour market performance and early retirement in combination with the universal Danish welfare schemes.
The Impact of Immigrants on Public Finances: A Forecast Analysis for Denmark
IZA DP No. 8844
February 2015
Marianne Frank Hansen
Marie Louise Schultz-Nielsen

Rather obvious really.