From yesterday's Evening Standard:
Developers on rely high house prices
Regardless of how liberal planning laws are, developers will cap their output at a level which does not lead to any significant falls in prices [Letters, April 18]. If they can sell new homes to wealthy overseas investors, then so much the better.*
This is not a housing crisis — it has been deliberately engineered. After 1945 UK housing policy was to limit rents, protect tenants, cap house prices indirectly by capping mortgages at two-and-a-half times earnings and ensure a ready supply of social housing. This led to a rapid increase in owner-occupation, the nigh-extinction of the landlord class and a small and stable banking sector. This was eventually reversed.
London First may call for more houses to be built but the backers on its website — banks, large landowners and property developers — are the very people who will do anything to ensure that rents and prices in London stay sky-high.
These people know full well that simply building more homes in itself solves nothing.
Mark Wadsworth, Young People’s Party.
* They edited down my original opening paragraphs which explained the more subtle point:
Real-world evidence shows us that rents and prices in every country in the world are the highest in the largest cities. When more people will move into the new homes, this means a larger pool of potential employees and customers for businesses, which in turn means more job, leisure and social opportunities, all of which lead to yet a self-reinforcing cycle of even higher rents and even higher prices.
Real-world evidence also shows us that - regardless of how liberal planning laws are - developers will cap their output at a level which does not lead to any significant falls in prices. If they can sell the new homes to wealthy overseas investors who will leave them empty or merely collect the rent from younger workers, then so much the better. If prices show any sign of dipping, then projects are simply mothballed.