Article suggests there’s a 1:1 relationship between population size and number of housing units needed. A unit could have 1 person living there or 10. So you can very much have a housing shortage without changing the population size.
The United Kingdom household sized dropped to 2.36 in 2022, that’s the core issue here.
In fact this drives most of the shortage in the developed world, especially in big cities. In many apartments there are 1 or 2 people (plus maybe a dog) living where there used to live 10 (ok, 5) half a century ago.
My parents used to sub-let back decades ago... So even that increased the number of people per unit. I don't think outside room mates that is popular anymore either. Which means more units are needed.
Sometimes even less than 1. For much of my childhood, the middle-class aspiration was a second home… though implicitly for a family rather than for an individual.
I have since known one single (in both senses of the word) person to briefly rent and live in an apartment despite also owning a detached house, due to an injury making commuting hard.
> Article suggests there’s a 1:1 relationship between population size and number of housing units needed
From the OP: Over the last 25 years, there has not just been a constant surplus of homes per household, but the ratio has been modestly growing while our living situations have been getting so much worse.
That's the ratio of homes to households, not to individuals. (Also, it's linear, not 1:1, but I assume that's what you meant.)
They use population not number of households in many places such as:
“the UK has roughly the average number of homes per capita: 468 per 1,000 people in 2019.”
“even though its population is roughly the same as it was 70 years ago”
“the UK’s homes-per-capita ratio actually exceeds the US’s.”
The last one is why I brought up the US household size. 2.36 vs 2.67 is a huge difference requiring a great deal of extra housing stock. IMO, using households once at the beginning then swapping to population was intentionally deceptive.
And if you make housing more affordable, household size will drop further, as fewer people choose to live together purely for economic reasons. For example, housing is pretty affordable in Finland, and the average household size was 1.93 in 2022.
But most homes in the UK are single family homes (66%) and women changed from having 2.4 kids on average in 1970 to 1.66 in 2021, so you would expect household size to fall.
Yes, and if the number of households stayed the same then they wouldn’t need more housing. But, that’s not what is happening.
So when they say things like this: “the UK’s homes-per-capita ratio actually exceeds the US’s.” they are ignoring the differences in household sizes between the two countries.
> The yimby argument has always seemed flimsy. Its strange logic is that speculative developers would build homes in order to devalue them: that they would somehow act against their own interests by producing enough surplus homes to bring down the average price of land and housing. That would be surprisingly philanthropic behaviour.
This is probably the dumbest thing I've ever read in my life. The real argument against yimby is that if the conditions for hold property is cheap, then landlords can afford to not be elastic with pricing thereby creating an inefficient market. The obvious solution is to increase property tax to force the hand of landlords. Another more radical way is to create legislation that gives the right to renters and/or gov to buy property at a certain price.
If you fund your schools with tax on property, the amount of money you need scales with the number of residents you have. So now you have to distribute those liabilities across land value rather than per occupied units, that could lead to some huge distortions (a 100 story apartment with 200 kids paying negligible taxes while a single family home paying for 200 kids while they only house 2).
Local councils do collect a "council tax", but it's basically a fig leaf to disguise a poll tax by just enough that people don't outright riot: https://en.wikipedia.org/wiki/Poll_tax_riots
And in practice, council tax is only about 55% of local council's funding, the rest coming from central government. And the councils do sometimes go (effectively, but not literally) bankrupt: https://www.bbc.com/news/uk-politics-66878229
How wealthy would a family have to be in order to live in a single-family house on a piece of land so valuable, so centrally located, that its value could equal that of the land hosting a massive high-rise? This sounds like a very progressive form of taxation.
There is a lot of housing that is unimproved because the owners can't afford to improve it. E.g. you bought a long time ago, or it is used as low income housing now (conversely, in my neighborhood at least, the low income housing is older and less dense than the shiny new dense luxury apartments). The only recourse for that land is to convert it into a tower of new luxury apartments, gentrifying and pushing out whatever poor folks are housed in it now.
There are other ways to game this, there are always arbitrage opportunities when a tax isn't aligned with its expenses.
Yes Taxes. I keep proposing that idea in threads like this.
Live somewhere 35% or more of a tax year*(or if sold/bought)? Counts as a primary residence and the low tax bracket. OTHERWISE it's a rental and will be taxed _hard_. Even if unoccupied.
The problem is that moving is economically inefficient and a large part of the population will be priced out and have to continually move so you need some hysteresis.
Moving is extremely economically efficient. Older people should not live close to the financial district, people with kids should cluster around schools and playgrounds, people without cars should live closer to transit, etc, etc
Sorry is "real estate agents need their cut" an argument against moving, or an argument for reducing the power of real estate agents, who are pretty much useless for 99% of residential transactions anyway?
Taxes should be used to pay for government services, not as arbitrary attacks on people you don't like.
Also, raising taxes just raises costs for renters. The solution to housing affordability is building more housing. Align the market incentives to build more housing, don't try to fight against market forces.
I assume that means, "The obvious solution is to increase property tax on rental properties to force the hand of landlords.
Otherwise you're taxing the potential and new home-owners who might be on the edge of being able to afford a house.
I'd pretty much go for anything like this at this point that would stop the ever widening gap between average income and average house price - and I'm a landlord.
If you only increased property tax on rentals and not owner-occupied homes, it would basically be a tax increase on the poor (since they are competing for rentals, and landlords that would rent to them all have the same property tax increase). I would never go for it.
Much of the gap of debt to income comes from interest rates. I don't know what the best way to address this, but I think we can require larger downpayments for investment properties too.
Rental income already pushes most private landlords into a high tax bracket. Probably at least 20% of rent goes straight back to the government in tax. If the tenant was paying mortgage payments or social housing rent instead then no tax...
Their claim is that they have enough because the number of houses is about the same as in the Netherlands, Hungary, and Canada. I have no idea about Hungary, but there are terrible housing crises in the Netherlands and Canada.
And even if there is enough houses they are in places where there is no demand due to lack of work... Remote work can serve some, but you also need robust enough manufacturing sector. And those are not remote jobs... In the end globalization might have made stuff cheaper to buy, but also led to housing issues.
In terms of the Organisation for Economic Co-operation and Development countries, the UK has roughly the average number of homes per capita: 468 per 1,000 people in 2019. We have a comparable amount of housing to the Netherlands, Hungary or Canada, and our housing stock far exceeds many more affordable places such as Poland, Slovenia and the Czech Republic. It is impossible to make a case for unique levels of housing scarcity in Britain, in comparative international or historical terms.
Not directly related but I'll take any opportunity to rant about property investment in commonwealth countries.
Something I have observed about Commonwealth countries is the obsession with property as a vehicle for investment. Speaking from my experiences growing up in New Zealand and living in Australia, I find the culture infuriating.
Every single financial planner I have spoken to has recommended that I invest heavily/exclusively in property. The tax incentives and welfare given to property investors are so generous that they renders all other investment vehicles irrational.
Why buy stocks, start a restaurant, or do anything other than buy property and sit on it? It's such a parasitic industry perpetuated by policies designed to deepen, or at the very least maintain, the current status quo.
It has resulted in an environment where investors have no incentive to increase housing stock (particularly in terms of density) or improve living conditions for tenants.
For instance, adding thermal insulation to a property is an expense with no advantage to the investor (they don't need to be competitive) and the disincentive towards higher density contributes towards sprawl which strains public transit resources.
As a young professional trying to be smart with my hard earned, slowly accumulating nest egg - I'm deeply saddened by this environment.
Yes, let's do everything apart from increasing supply, surely this time that will work. There's some sanity in the comments of the article which explain the silliness of the articles thesis.
Causing landlords and speculators to actually put units to market does increase supply, without the added complexity (and cost and time lag) of having to build it first.
It doesn't increase the supply of houses. It increases the supply of houses for sale, and reduces the supply of houses for rent. I don't see why this is a better state of affairs, especially if you can't afford to buy.
That's a temporary solution at best, and hurts those that cannot afford to buy even with reduced prices which I believe is what is happening now. Lots of small time landlords exiting the market due to changing in taxation causing rent to increase. Oh, and house prices are still rising.
Unfortunately, it's mostly in places where people don't want to live, because there's no jobs in those areas.
The places with the jobs have severe housing shortages. Some of those shortages can be resolved by building more homes, but there are also places which look great right up until you realise they're on a flood plain.
But even the places where you can build more houses, if you just do that without also improving the surrounding infrastructure, you'll end up with horrible congestion… and if you're building infrastructure anyway, you should put that infrastructure in the places that already have houses so that businesses will want to start up there.
I live in Germany, and am moving to a place ~50km from my workplace. It's a small town with about 15k inhabitants. It's an affordable and nice place, but I'm only really doing because there's a direct regional train to the main city. In fact, I can commute faster than some people living _in_ the city.
But here's the thing: this train I'm talking about _is not_ an ICE, it's a _regional_ train, but it makes only one stop, and cruises at 160km/h. And being a regional train, I can ride on the Deutschlandticket, which costs 49 euros a month. Even if they raise the price on that ticket (likely), it will still be worth.
Good regional train services is the key to this problem. Provide nice services into the cities, allow those towns to densify around their station, and that will relieve the pressure.
> In fact, I can commute faster than some people living _in_ the city.
I've noticed a similar thing here in Berlin with some of the surrounding commuter towns.
I certainly hope the Deutschlandticket stays at the current price; but you're right, it will still be good value even if the price goes up — even the more expensive BVG ABC ticket is still only around 1/5th the price of a UK Cambridge-London season ticket.
My hope is that the political cost of cutting the Deutschlandticket (as in, let it go back to the previous situation) would be too high, so governments will find a way of making it fit in the budget and only bump the price a little.
As context, for people not in Germany: each transportation region sets their own prices, but the new (nationally subsided) €49 ticket is already cheaper than monthlies in most places. This is good and convenient for people living in downtown, but it is a godsend for people living in suburbs, because their distance-based monthlies were sometimes two or three times that. For people living in the edge of a region and commuting to another, it was even worse, as they needed tickets from both regions.
I believe the equivalent "legacy" ticket on Deutsche Bahn (all regional transport free) was something like €212/month. €49 is one hell of a deal.
I observe that my parents still live in a five bedroom home they purchased in the 1980s. This is not uncommon where I live. As the next generation moved out, they couldn’t find housing because their parents never left. In areas like where I grew up, it’s a ghost town of under-occupied monster homes and shuttered schools.
Time to roll out some tax policies designed to incentivize the old to move along and free up space for the young.
Over half of homes are owned by those 55+, and the vast bulk of them have either paid off their mortgage or don't have much left. Statistically, the vast bulk of those home owners will either be landlords, adults without kids, or parents who's kids have left home.
While I think we should be very careful applying things like taxes which can be seen as actively "punishing" folks who've worked hard and paid off their mortgages. It's important that those people need to understand that they're actually causing housing problems for the generations below them, it's not the younger generations having "unreasonable" expectations, it's their generations distorting the markets.
"Adam Smith and Karl Marx found common ground was in the idea that everyone’s interests are aligned against landlords: they are an economic deadweight."
They provide benefits: capital investment/capital risk, maintenance obligations, and most importantly-- mobility to renters.
In the country I live in, there are myriad tax breaks for landlording over owning. Perhaps removing those should be the first attempt to fix things?
Another housing shortage article, another extremely contrived piece trying to convince us that housing is the only thing that isn't subject to supply and demand.
If there are more houses, houses will cost less than otherwise. Stop with the weird strategies to ban, tax, mandate, subsidize etc... Build.
Much like the frequently vilified HF trader, the value that landlording adds to the economy is liquidity. What do these managed housing schemes provide when, for example, a household breaks up? Or two households want to merge? Or even when a household wants to move across town to be closer to work? If you have ~100% utilized housing, the only way this gets addressed is with elaborate queuing. The liquidity that an open rental market offers comes at a cost, and it's very worthwhile to interrogate that cost and seek to mitigate it because it mostly translates into homelessness. But the managed housing market / absolute rent control approach doesn't seem to have an answer to the liquidity problem, which also demands interrogation.
Advertise a house to rent in Cornwall and you will get 30+ enquiries in 48 hours and have to suspend the listing before getting overwhelmed. A third of them will have always dreamed of moving to Cornwall. A desperate third want to overfill the house with adults to share costs and be able to just afford it. A sixth are "interesting". The remaining sixth of reasonable locals who can afford the rent will still leave you five times oversubscribed. The market is fundamentally broken here. You can't check a reference with an agent because they are all swamped. I don't know the answer. Possibly train and support a skilled building industry? But the rental yields on current house prices are 1-2%. Costs are rising. It's not getting better.
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[ 7.0 ms ] story [ 106 ms ] threadThe United Kingdom household sized dropped to 2.36 in 2022, that’s the core issue here.
By comparison the US is at 2.67 vs 3.51 in 1950, 4.34 in 1920, and 5.55 in 1850. https://www.studycountry.com/wiki/what-was-the-average-famil...
Housing might also not exist in locations where it's desired.
Housing might be the _wrong_ type for what a prospective occupant / area needs.
One size does not fit all.
I have since known one single (in both senses of the word) person to briefly rent and live in an apartment despite also owning a detached house, due to an injury making commuting hard.
From the OP: Over the last 25 years, there has not just been a constant surplus of homes per household, but the ratio has been modestly growing while our living situations have been getting so much worse.
That's the ratio of homes to households, not to individuals. (Also, it's linear, not 1:1, but I assume that's what you meant.)
“the UK has roughly the average number of homes per capita: 468 per 1,000 people in 2019.”
“even though its population is roughly the same as it was 70 years ago”
“the UK’s homes-per-capita ratio actually exceeds the US’s.”
The last one is why I brought up the US household size. 2.36 vs 2.67 is a huge difference requiring a great deal of extra housing stock. IMO, using households once at the beginning then swapping to population was intentionally deceptive.
So when they say things like this: “the UK’s homes-per-capita ratio actually exceeds the US’s.” they are ignoring the differences in household sizes between the two countries.
This is probably the dumbest thing I've ever read in my life. The real argument against yimby is that if the conditions for hold property is cheap, then landlords can afford to not be elastic with pricing thereby creating an inefficient market. The obvious solution is to increase property tax to force the hand of landlords. Another more radical way is to create legislation that gives the right to renters and/or gov to buy property at a certain price.
Landlordism is an absolute scourge.
If you fund your schools with tax on property, the amount of money you need scales with the number of residents you have. So now you have to distribute those liabilities across land value rather than per occupied units, that could lead to some huge distortions (a 100 story apartment with 200 kids paying negligible taxes while a single family home paying for 200 kids while they only house 2).
Local councils do collect a "council tax", but it's basically a fig leaf to disguise a poll tax by just enough that people don't outright riot: https://en.wikipedia.org/wiki/Poll_tax_riots
And in practice, council tax is only about 55% of local council's funding, the rest coming from central government. And the councils do sometimes go (effectively, but not literally) bankrupt: https://www.bbc.com/news/uk-politics-66878229
There are other ways to game this, there are always arbitrage opportunities when a tax isn't aligned with its expenses.
Live somewhere 35% or more of a tax year*(or if sold/bought)? Counts as a primary residence and the low tax bracket. OTHERWISE it's a rental and will be taxed _hard_. Even if unoccupied.
Also, raising taxes just raises costs for renters. The solution to housing affordability is building more housing. Align the market incentives to build more housing, don't try to fight against market forces.
Land taxes are not arbitrary, it's a way of generating revenue from the single most important shared resource.
> Also, raising taxes just raises costs for renters.
Landlords usually have more pricing elasticity than renters, therefore taxes will have a depreciating effect on housing prices.
> The solution to housing affordability is building more housing.
Don't disagree
> don't try to fight against market forces
Increasing supply and using supply more efficiently are both important
It is not through the benevolence of the property developer that we expect our housing, but from their regard for their own self-interest.
Otherwise you're taxing the potential and new home-owners who might be on the edge of being able to afford a house.
I'd pretty much go for anything like this at this point that would stop the ever widening gap between average income and average house price - and I'm a landlord.
Their claim is that they have enough because the number of houses is about the same as in the Netherlands, Hungary, and Canada. I have no idea about Hungary, but there are terrible housing crises in the Netherlands and Canada.
In terms of the Organisation for Economic Co-operation and Development countries, the UK has roughly the average number of homes per capita: 468 per 1,000 people in 2019. We have a comparable amount of housing to the Netherlands, Hungary or Canada, and our housing stock far exceeds many more affordable places such as Poland, Slovenia and the Czech Republic. It is impossible to make a case for unique levels of housing scarcity in Britain, in comparative international or historical terms.
Something I have observed about Commonwealth countries is the obsession with property as a vehicle for investment. Speaking from my experiences growing up in New Zealand and living in Australia, I find the culture infuriating.
Every single financial planner I have spoken to has recommended that I invest heavily/exclusively in property. The tax incentives and welfare given to property investors are so generous that they renders all other investment vehicles irrational.
Why buy stocks, start a restaurant, or do anything other than buy property and sit on it? It's such a parasitic industry perpetuated by policies designed to deepen, or at the very least maintain, the current status quo.
It has resulted in an environment where investors have no incentive to increase housing stock (particularly in terms of density) or improve living conditions for tenants.
For instance, adding thermal insulation to a property is an expense with no advantage to the investor (they don't need to be competitive) and the disincentive towards higher density contributes towards sprawl which strains public transit resources.
As a young professional trying to be smart with my hard earned, slowly accumulating nest egg - I'm deeply saddened by this environment.
/rant
Unfortunately, it's mostly in places where people don't want to live, because there's no jobs in those areas.
The places with the jobs have severe housing shortages. Some of those shortages can be resolved by building more homes, but there are also places which look great right up until you realise they're on a flood plain.
But even the places where you can build more houses, if you just do that without also improving the surrounding infrastructure, you'll end up with horrible congestion… and if you're building infrastructure anyway, you should put that infrastructure in the places that already have houses so that businesses will want to start up there.
Unfortunately, the UK government keeps cancelling the bits of infrastructure that would help: https://en.wikipedia.org/wiki/High_Speed_2
But here's the thing: this train I'm talking about _is not_ an ICE, it's a _regional_ train, but it makes only one stop, and cruises at 160km/h. And being a regional train, I can ride on the Deutschlandticket, which costs 49 euros a month. Even if they raise the price on that ticket (likely), it will still be worth.
Good regional train services is the key to this problem. Provide nice services into the cities, allow those towns to densify around their station, and that will relieve the pressure.
I've noticed a similar thing here in Berlin with some of the surrounding commuter towns.
I certainly hope the Deutschlandticket stays at the current price; but you're right, it will still be good value even if the price goes up — even the more expensive BVG ABC ticket is still only around 1/5th the price of a UK Cambridge-London season ticket.
Unfortunately, the UK does not have particularly good train service any more, thanks to cuts made in the 1960s: https://en.wikipedia.org/wiki/Beeching_cuts
As context, for people not in Germany: each transportation region sets their own prices, but the new (nationally subsided) €49 ticket is already cheaper than monthlies in most places. This is good and convenient for people living in downtown, but it is a godsend for people living in suburbs, because their distance-based monthlies were sometimes two or three times that. For people living in the edge of a region and commuting to another, it was even worse, as they needed tickets from both regions.
I believe the equivalent "legacy" ticket on Deutsche Bahn (all regional transport free) was something like €212/month. €49 is one hell of a deal.
Time to roll out some tax policies designed to incentivize the old to move along and free up space for the young.
https://www.statista.com/statistics/321065/uk-england-home-o... https://www.statista.com/statistics/321097/distribution-of-h...
Over half of homes are owned by those 55+, and the vast bulk of them have either paid off their mortgage or don't have much left. Statistically, the vast bulk of those home owners will either be landlords, adults without kids, or parents who's kids have left home.
While I think we should be very careful applying things like taxes which can be seen as actively "punishing" folks who've worked hard and paid off their mortgages. It's important that those people need to understand that they're actually causing housing problems for the generations below them, it's not the younger generations having "unreasonable" expectations, it's their generations distorting the markets.
They provide benefits: capital investment/capital risk, maintenance obligations, and most importantly-- mobility to renters.
In the country I live in, there are myriad tax breaks for landlording over owning. Perhaps removing those should be the first attempt to fix things?
If there are more houses, houses will cost less than otherwise. Stop with the weird strategies to ban, tax, mandate, subsidize etc... Build.