Many 1828 readers will despair at today’s news of a 10.9 per cent rise in house prices in the last 12 months. Prior generations waltzed into buying a home at prices only about three times their income but today, homeownership or indeed just decent housing seem totally out of reach for many.
All is not lost. The first point to remember is that anyone buying a home today is probably paying an average of three times what it would cost to build that home. There is no healthily supplied market on earth with prices at that kind of premium over the cost of building. In a healthily supplied market, housing would be vastly more affordable.
House prices have risen in expensive cities around the world, and all for the same reason: it’s incredibly hard and costly to get permission to build more. Most of the price of the average UK home is the value of the planning permission for it to exist.
That was not true in the 1930s, when land for a new home in the South East was about 5 per cent of the final price. The discrepancy between selling price and cost to build has accumulated over the 80 years since England all but stopped building housing during the Second World War and then, in 1947, brought in a new, untested planning system, that has never since then allowed housing to be built in plenty.
The second point is that YIMBY campaigns like YIMBY Alliance, PricedOut and London YIMBY are making good headway in pushing the government, not just to try the repeatedly failed suggestions of the last eighty years, but to try new ideas, designed using the best scientific approaches to solving political blockages, that have the scope to finally end the housing supply famine.
So long as two-thirds of voters own their own home, it will be impossible to ram through a wave of new housing that they all hate. But there are plenty of options that get enough of those homeowners onside to make it possible to reach a new world of plentiful, affordable housing – most particularly the ‘street votes’ and block votes ideas to share the upside with homeowners who agree to break the current housing cartel and allow more homes in their local area.
Imagine spending one third as much on your current rent, or getting a place three times better for what you pay today. That world is possible, if we can just push hard enough to end the crisis – with workable solutions that help everyone, raise wages and boost growth.
So renting is only ‘pouring money down the drain’ if you are confident to bet that house prices will carry on rising. In the meantime, you can join or form your local YIMBY group, join us on Twitter and email your MP to support more housing.
Scarce, unaffordable housing may be a short-term gravy train for some, but every needless shortage ends eventually. How soon that happens is up to you.