Wednesday 21 August 2013

Indian Bicycle Marketing

From yesterday's Evening Standard:
Shadow housing minister Jack Dromey warned: "Unless the Government invests in building the homes our capital city badly needs,(1) rapidly rising property prices will put the dream of home ownership beyond the grasp of millions of Londoners."(2)
... Housing minister Mark Prisk said:
"Today's figures show our Funding for Lending Scheme, and record low interest rates, have led to the highest level of mortgage lending since 2008.(3) But alongside this, we're also pulling out all the stops to get Britain building,(4) and the increased availability of mortgage finance is boosting confidence in the housing market, and encouraging house builders.(5)
"We've also been working with the Mayor to invest billions of pounds to deliver the fastest rate of affordable housebuilding for two decades."(6)
1) Clearly, when Jack Dromey's party was in government, they did everything they possibly could to drive up house prices and rents - especially in and around London - because that's what gets you re-elected in this country. His government sold off as many council houses as Thatcher did and kept new construction down to under 200,000 a year (very little of which was replacement council houses).
2) What's with the "will"? For the past ten years or so it has been the case there are at least three million people who live and/or work in London who can't afford to buy there any more, that's why a quarter of London's population is now renting privately and there is a large group of London workers who live tens or hundreds of miles away because that is the only place they can afford to rent or buy.
Pots. kettles.
3) That bit's true, actually. What he doesn't mention is that his government is desperately blowing another credit bubble, stoking inflation and robbing savers and taxpayers alike.
4) Nope, The Tories are the true party of the NIMBYs, one of the few election pledges which they have fulfilled is to halve new construction from its old low level to its lowest level in a century, i.e. about 100,000 a year. So he got the word "stop" in the wrong place.
5) Encouraging them to do what? Push up their prices mainly and make handsome margins on the minimum of activity. From the BBC, yesterday:
House-builder Persimmon has announced a big jump in profits, amid "improving customer demand" for its properties. Underlying pre-tax profits were up 40% to £135m in the first six months of 2013, from £97m in same period in 2012.
The company said that it spent £236m acquiring new land, up from £142m in 2012, bringing the total number of plots it owns to 70,716.... It currently has 390 active construction sites across the UK.
6) That's the usual vague promise about what might happen in the future and is not even quantified. Will the money be spent on new construction (good) or wasted on land (bad)? How many homes? Under Labour, virtually no "affordable homes" were built, so improving on that is hardly an achievement.
And IIRC, the Tories were quite happy to sell off thousands of new flats in the Olympic park at a huge loss to some chap who just happened to have donated £50,000 to the party.

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