Here in Sydney, it's also a huge issue. Perfectly ordinary small suburban houses, in very run-of-the-mill suburbs, now routinely sell for A$1.5 million. It means even if you save assiduously, you will end up with a large 6-figure mortgage on even a modest home.

But the thing is, we're a market economy. When you go to buy a house, what do you do? You go the bank, they take your details, assess your income and credit risk, and then lend you as much as they think you're likely to be able to repay. It's in their interest to lend as much as prudently possible - that's what banks do. And if there are plenty of buyers, and not a lot of stock, then the result is houses that are 12 times the value of the average annual income, which is where we're at in Sydney (and I believe the picture is very similar in London; there's a report here).

What can the government do about it? Not very much. We don't live in a command economy where the Kommisar works out how many shoes, houses, or cars the citizens will need each year. It's a market economy, driven by supply and demand, and lubricated by the banks. Unless and until something drastic changes that, I can't see how it will change.

I think for sure that if there was a big economic downturn - a depression or long, deep recession - then prices would fall, but that's purely because less people would be making the income to repay loans. And that also wouldn't be a lot of good for anyone with equity in the housing market. Recall that after the 2008 crash, many people in the US ended up with 'negative equity', i.e. owing more on their house than its resale value. And, due to the very peculiar practice of mortgage holders being able to walk away from their properties, unique to the USA, many did. Whole neighbourhoods became vacated. You could buy houses in the rust belt of the US for a couple of hundred bucks for a while (not that you would want to.)

So I don't think there's an easy answer, I think it is a structural characteristic of the advanced economies. Sorry to sound so gloomy.

What can the government do about it? Not very much. We don't live in a command economy where the Kommisar works out how many shoes, houses, or cars the citizens will need each year. It's a market economy, driven by supply and demand, and lubricated by the banks. Unless and until something drastic changes that, I can't see how it will change. — Wayfarer

Do you not think that a middle-ground is possible? Because I haven't ruled that out. I want the government to intervene more, if that's what it takes, but that doesn't necessarily mean jumping to an extreme.

But I don't know how you would go about it. I mean, you can build public housing - we have that here too, but it's reserved for those who are permanently disadvantaged. I mean, you wouldn't want to live in it. You can't cap prices. And if you give subsidies - that's been tried here, also - then it just drives the prices up.

Here in Oz, we have a particular tax law called Negative Gearing, which means you can write off costs associated with investment properties. That has been accused of artificially inflating the housing market, but at the last election, the Opposition said they would wind back negative gearing, and the Government (who won by 1 seat) then accused them of trying to 'torpedo the value of the family home'. Result: nothing changed, as usual. Other than that, there's a lot of chest-beating and faux sympathy from the politicians, but what can they actually do? It's a devilishly difficult policy problem.

The obsession with buying up property or keeping property purely as an investment doesn't help. There are over half a million empty properties in the UK. The government should have a moral responsibility to stop this practice.

As a fellow UK citizen I am well aware of the housing problem and have watched it develop over the last 40 years with the government not addressing it, not lifting a finger to correct it and starving the local councils of funds, while saying it is for the councils to look after the housing stock. It has been a disgrace and Labour (new Labour) was just as guilty as the Conservatives.

Even now there is all this talk about building more affordable houses, but it will only be sticking a plaster, with all the problems of planning restrictions, lack of a skilled workforce to build them, and private developers continually creaming off the profit in building expensive housing in desirable (expensive) areas and scrimping on affordable housing commitments.

I think we should try something more innovative like the mass production of prefab housing after the 2nd world war and a government task force driving schemes through the red tape.

But I don't know how you would go about it. I mean, you can build public housing - we have that here too, but it's reserved for those who are permanently disadvantaged. I mean, you wouldn't want to live in it. You can't cap prices. And if you give subsidies - that's been tried here, also - then it just drives the prices up.

Here in Oz, we have a particular tax law called Negative Gearing, which means you can write off costs associated with investment properties. That has been accused of artificially inflating the housing market, but at the last election, the Opposition said they would wind back negative gearing, and the Government (who won by 1 seat) then accused them of trying to 'torpedo the value of the family home'. Result: nothing changed, as usual. Other than that, there's a lot of chest-beating and faux sympathy from the politicians, but what can they actually do? It's a devilishly difficult policy problem. — Wayfarer

Well, like you say, the Housing Needs Register here only works well for those assessed to be of a higher priority. It won't work for someone like me, so although I continue to bid on council properties, I have no hope of being successful. So, that rules out that option.

So, I look to the private renting sector. But, as I said, there's a critical shortage of homes to rent. So, create more? Make them affordable? Make housing benefit work for people in my situation and similar situations? Increase the minimum wage? Intervene more.

The obsession with buying up property or keeping property purely as an investment doesn't help. There are over half a million empty properties in the UK. The government should have a moral responsibility to stop this practice. — bassplayer

Yes, that's the sort of thing that the government should be focussing on rectifying, I believe. But what have they done? What do they plan to do? I don't have much faith in the current government.

So, I look to the private renting sector. But, as I said, there's a critical shortage of homes to rent. So, create more? Make them affordable? Make housing benefit work for people in my situation and similar situations? Increase the minimum wage? Intervene more. — Sapientia

The problem with the private sector is that it's up to the landlords to determine the rent and whether or not to accept people on benefits, and given the demand they're obviously going to try to get as much money as they can and from people with a job.

Unless the government decides to regulate this sort of thing and enforce maximum prices based on location (and make it illegal to refuse people on benefits), but then the landlords might decide that selling the property is the better option for them, and so they might be bought by those who plan to live there rather than rent it out.

Maybe the government could itself become a property investor, building and renting out houses as if they're a private business, and so not prioritising prospective tenants based on their need, as is the case with council houses.

The problem with the private sector is that it's up to the landlords to determine the rent and whether or not to accept people on benefits, and given the demand they're obviously going to try to get as much money as they can and from people with a job.

Unless the government decides to regulate this sort of thing and enforce maximum prices based on location (and make it illegal to refuse people on benefits), but then the landlords might decide that selling the property is the better option for them, and so they might be bought by those who plan to live there rather than rent it out. — Michael

There are things that can be done to improve this situation though, and not all of them drastic - although drastic change may well be required. For example, it used to be the case that housing benefit would be paid directly to the landlord, and that gave them some security, but then for some reason it was changed, and it now gets paid to the tenant, some of whom inevitably and irresponsibly spend it on other things and fall short when it comes to paying the rent, so now they don't have that security, and potential tenants like me are worse off as a result.

The government could provide incentives, even if stronger intervention were to be ruled out. But, to be clear, I haven't ruled out stronger forms of intervention. Regulation might be just what's needed.

The problem with the private sector is that it's up to the landlords to determine the rent and whether or not to accept people on benefits, and given the demand they're obviously going to try to get as much money as they can and from people with a job.

Unless the government decides to regulate this sort of thing and enforce maximum prices based on location (and make it illegal to refuse people on benefits), but then the landlords might decide that selling the property is the better option for them, and so they might be bought by those who plan to live there rather than rent it out. — Michael

Also, you can have a job and qualify for housing benefit, like I do, and like many others do, but they simply say: sorry, no housing benefit.

And, regarding the bolded part in your second paragraph, the government should do more to make renting the more attractive option - at least, unless they do a whole lot more to make buying the better option for people like me - whilst either enforcing or incentivising landlords to accept people in circumstances like mine, which ought to include some housing benefit, rather than taking a gross amount of my wages and leaving me with very little.

Enforcing maximum prices based on location might not be the right way to go about it, and I very much doubt that it's the only way to go about it.

Is there not a tiny-house movement in the UK?

They are called "terrace houses" there, which have been minute since Georgian times.

Tiny houses would help, that's why I mentioned mass production of prefab' houses. With current technology they would be quick and easy to make and portable.

In this country councils wound up council house building about 40 years ago, which provided the required cheap rental housing. Sold the stock off cheap and then forgot about the whole issue for a few decades. In the meantime planning restrictions have become small minded, full of red tape and painfully slow. Meanwhile immigration is running at around 300,000 per annum.

One reason homes cost so much

https://www.youtube.com/watch?v=dcbjWGj3jBk

Argument: Not enough housing units are built to accommodate new families/couples/individuals.

Proposed Solution: Build adequate housing units. Easier said than done though.

In the meantime planning restrictions have become small minded, full of red tape and painfully slow. — Punshhh

That's true in big American cities as well. In some places a tiny house can fly under the radar of restrictions. Finding a place to park it is the trick.

They are called "terrace houses" there, which have been minute since Georgian times. — tom

tiny house

My next door neighbour's house has a footprint of 3m x 6m. Family with 6 kids lived there previously.

Probably very energy efficient.. which is part of what the tiny house movement is about. The other part is about owning your home without owning the land it's sitting on... thus the common use of trailer foundations.

I recently came across this youtube vid that had an interesting theory about why affordable housing is in such short supply.

It is not difficult to build affordable housing, the problem emerged with a financialization that

. . has developed over the decades between 1980 and 2010, in which financial leverage tended to override capital (equity), and financial markets tended to dominate over the traditional industrial economy and agricultural economics. — Wikipedia

A home is no longer a place to live in but a market commodity, hence the silly property shows on TV etc. The overwhelming influence of the limited interests of economists and marketers has become destructive for our societies.

The point of this discussion is to discuss why this is, what can be done about it - particularly what the government can do about it - and why this hasn't already been done.

Frequently reported in the news and mentioned on political programs is the severe lack of affordable housing. At least here in the U.K., but I expect it's a similar situation elsewhere as well. In recent years, house building in general reached its lowest level since the 1920s (in 2010, with 112,000 homes being built across England and Wales), and hasn't improved by much since then (in 2015, this increased to 149,000). — Sapientia

It seems the problem is the government, having severely limited the construction of new homes, thus making demand high and supply low and thereby creating increased prices.

The other solution is to get a better job. I know it sounds so American of me, but when there's a problem, how about looking within for the solution instead of asking for help. I'd have sympathy if you had one arm or half a brain, but you're fully intact, fully capable, just unwilling. Take a job that stresses you, annoys you, pains you, challenges you and your reward is a two bedroom apartment as opposed to a one room flat. If you don't want the job I've proposed, at least accept your one room flat as what you earned.

Did anyone here actually grow up with a real father figure in their lives? Doubtful.

The other solution is to get a better job. — Hanover

The rate of housing inflation compared to wage earning increases over the years does not really bear this solution out. Just getting a better job does not increase supply of reasonably affordable homes.

The governments are not useful because most voters (the majority of the population) are property owners, or are in the process of paying for the ownership of property.

Politicians have a vested interest in seeing property inflation, which benefits voters, so policies tend to be oriented towards increasing property values rather than bringing them down.

I live in a terraced house, which is modest though not tiny, and I live in one of the poorest areas of England, which is the only way I can afford a house with a view.

In my young days I was in Shelter, a housing charity and campaign group, and I keep up an interest in how it's all going. Sadly the British housing market has been seriously distorted by vote-seeking political parties: there is too much selling-off on the cheap of public housing to buy the votes of the tenants-turned owners, not enough building of public housing, and the wrong sort of tax incentives and disincentives, fantastic sums spent on benefits which go to landlords . We could remove tax relief for mortgage payers, sting the owners of empty properties with big fines, allocate more public funds to house-building, control the rapaciousness of landlords through the tax and licensing system, and introduce a Land Value Tax which economists of all political stripes have long agreed to be a good idea. (http://www.economist.com/blogs/economist-explains/2014/11/economist-explains-0) I'm not holding my breath re any of these ideas. Meanwhile, come and live in Todmorden, OP, it's lovely here! I daresay you could afford it! - But it'll be a bit of a commute to work.

When demand rises faster than supply expands, prices rise. One of the factors on the supply side is the amount of space considered necessary for each individual housed. The minimum has risen considerably over the last century. Many 'Efficient' apartments were built in the 1920s/30s consisting of a small bathroom, a sleeping room, a closet, and a very small kitchen provided around 250-350 square feet of space for 1 person. Smaller and larger versions were built. These days many people would consider 300 square feet of living space per person very inadequate.

Post WWII houses (built by the million) consisted of a bedroom, a kitchen, a bath, and an additional room set on a concrete slab (no basement). These were designed for at least 2 people, and were expandable into the attic space. Today, ordinary new houses and apartments might provide 1000 square feet (or more) per person. A suburban house for two might have 3 or 4 bedrooms, 3 baths, a large family room, a very large kitchen, an office room or library room, game room, large 2-3 car garage, laundry area, and so on. Land in suburbs is often parceled up into rather large lots. McMansions are are even worse, being absurdly big.

More living space and land = higher costs. One solution is to use zoning and tax law to discourage excessive size in housing, and to build better multi-family buildings. Many people dislike multi-family housing (apartment buildings) because they are usually quite unattractive, often too large for single family home neighborhoods, and worse, cheaply constructed. Better, older apartment buildings had thicker walls and floors which insulated one unit from other units. In cheaply constructed buildings noise and odors migrate freely within the building.

People also dislike multi-family housing because it is fairly common for many renters to be victimized by unruly, loutish, rude people in just one apartment. Barbarian-control is a necessity, not an amenity. (And unruly, loutish, rude slobs generally do not realize that they are a problem. Were young (or old) slobs housed in concrete bunkers far away from other people, they would not be a problem.

come and live in Todmorden, OP, it's lovely here! — mcdoodle

Be careful, there. I can just see your little corner of paradise being over-run and ruined by a plague of tourists, developers, builders, summer people--marauders all--coming to trash the place.

Is there not a tiny-house movement in the UK? — Mongrel

I had no idea what they were until I just googled the term. Interesting.

People park them in Washington DC (known for being a difficult housing situation even if, like Hanover, you have a job.) Could people do that where you live?

The other solution is to get a better job. I know it sounds so American of me, but when there's a problem, how about looking within for the solution instead of asking for help. I'd have sympathy if you had one arm or half a brain, but you're fully intact, fully capable, just unwilling. Take a job that stresses you, annoys you, pains you, challenges you and your reward is a two bedroom apartment as opposed to a one room flat. If you don't want the job I've proposed, at least accept your one room flat as what you earned. — Hanover

I thought someone might bring that one up, and I'm not surprised that it was you, Hanover. But this isn't all about me. It's a personal problem, but it's also a general problem, and it would be irrational to apply that reasoning universally or even in general. Obviously, we can't all get those higher paid jobs for various reasons, and it's not just a matter of being qualified or willing. Some of us have to do those lower paid jobs, otherwise the economy and society as we know it wouldn't function. So, even if I got a better paid job, the problem wouldn't go away, it would just go away for me - after a successful application, that is. But then, in a way, I would become part of the problem, because those who are less well off ought to be more of a priority, because it is harder for them to find a place within their budget. The focus should be on helping the lower class; and if the middle class increases, then the focus on the middle class, as opposed to the lower class, will likewise increase.

As for "...at least accept your one room flat as what you earned", I don't have a one room flat, so I can't. That's the problem. And I don't even want, let alone need, a two bedroom apartment. A small one bedroom flat or studio apartment within my budget would suit me just fine. The problem is that there aren't enough of them available, and when they do become available, they go very quickly; and also that even the ones within my budget are more costly now than they were before, and that the benefits system is a failure, in that it's supposed to help people like me, but it doesn't, and actually makes matters worse.

Be careful, there. I can just see your little corner of paradise being over-run and ruined by a plague of tourists, developers, builders, summer people--marauders all--coming to trash the place. — Bitter Crank

Call some place paradise / Kiss it goodbye...:)

No danger of excess immigration of late, BC, but thanks for worrying for me.

...fantastic sums spent on benefits which go to landlords. — mcdoodle

I get why it seems wrong to subsidise landlords, but the changes to the housing benefit system, including diverting benefits away from landlords to tenants has made matters worse, as this article explains:



Why landlords are shunning profitable benefit tenants.

A way of helping recipients budget? Are you fucking kidding me? They need to get their priorities straight, and the sooner the better. They've made a right mess of it.