It is Obvious

Chris Rick has got altogether too much to say

There is no housing shortage

Posted by chrisrick13 on November 24, 2017

It is obvious: I have lived in a hole in the ground

If I am right then we need lots of new houses for the doubling of population needed to keep GDP on its 2% exponential growth so we can pay debt out of future earnings via the bond market.

I am wrong, because the OBR have said it will be 1.5%, it is not enough to keep this economy running. The only bright spot is that the OBR is never right. Perhaps they will be wrong in the right direction this time!

(Debt at 90% of GDP is the point at which an economy enters a spiral of increasing debt and reduced ability to pay it off. The OBR has ours peaking at 89%. Lets hope this is one they do get right…they won’t.)

I wonder that there is a housing shortage. There are a few people living on the streets but not many. So everyone is somewhere under a roof. By definition there is enough housing. The problem is that it is often not the roof that the person wants to live under. Could be for many of many reasons.  I read today that there are many empty houses.

At that point I could enter the debate on why houses cost so much to buy. I’m assuming that rents also match house ownership costs because part of the cost side of rent is the interest on the money that instead of being invested in a house could be invested elsewhere…at 0.5%

The elephant in the room is that if house prices were suddenly to drop by (say) 50% then many people would find themselves in houses with loans on the houses worth much more than the house itself. Many would walk away from the debt and the banks would go bust. We might also have riots in the streets. There would be so many doing this that many might walk away and then squat in a newly empty house with plenty to choose from. Perhaps swap with their neighbours. Everyone would still have a roof but many would not be paying anything for it! This would turn around finances for many families…and the rest of us!

What interests me is building houses for the population needed to keep us afloat economically or simply to meet the shortage. Where will these houses be built? People can move around and do it very well in a mainly rented house market. It is not easy to move houses. Suppose that you build 100,000 houses in Birmingham but nobody wants to live in them. Post the war there was a thriving car manufacturing industry. It is not there now. Same for shipbuilding in Newcastle. It carries through to computer industry with ICL and not so far back to DEC. Big manufacturers to the west of London that no longer exist. The jobs and the people no longer needed in those locations.  You cannot just build houses.  A lot of other things needing building at the same time: hospitals, schools, prisons (lots of those).

So I am happy that someone will build 300,000 houses next year, but tell me where and why before you build one. (And we need 600,000 of them each year at least.)

It is obvious: I have lived in a hole in the ground – and it’s not nice.

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