The government has decreed that pension annuities can be cashed in. With stagnation in shares, next to nothing in interest rates where is this money released to go? Why, to buy houses to rent of course. It just so happens the developers have been given more or less carte blanche to build on any green belt, common, SSSI reserve, public open space or good agricultural field they choose. Just happens that first time buyers can no longer afford to buy the houses for sale. So the retired generation, using their pension funds are snapping up, at highly preferential government incentives, any house for sale to rent out, to these first time home couples. UKplc economic 'recovery' is founded on building more houses. More houses means more furnishing, more white goods selling more means everyone feels better and jobs are generated to build the houses in the first place then all the goods needed to fill them. So simple! All boxes ticked, no one can possibly complain and everyone is happy. UKplc is all fired up.
Except it is not that simple. Another super container ship leaves China to restock all those emptying shelves. What we do not have is a resurgence in UKplc manufacturing for a world wide market. Worse still, to raise the money to buy the houses for rent requires new 'private' loans to be taken out, increasing our national indebtedness. Interest on those loans requires even more spending on stuff to pay the interest to keep the wheels turning. This then is the economic miracle that UKplc recovery is based on. Increase loans taken out so you can spend more. Developers are only in it for profit, profits come from quick turn round on easy green sites, take objectors out of the sequence and they can are performing miracles. House are shooting up all around the wealthier parts of UKplc. Towns are expanding at unprecedented rates just not necessarily houses to suit the homes needed nor necessarily in the right places.
Once apon a time UKplc used to have a vision, a view for a future and how to reorganise and arrange itself. How best to look after all its people and how to foster communities and encourage production. All swept aside. Now the only deciding factor is profit. Where can you make most profit and more quickly? These are the new ground rules that determine the future that we will pass on to our next generations. Scant else to pass on to them as all the inherited wealth we were given custodianship off has or will be sold off. National Park for sale, Stately Home for sale, Crown Estates for sale, national collections for sale. Any takers? You can name your own terms! This is not some Orwellian nightmare. This is reality, here and now.
Showing posts with label housing. Show all posts
Showing posts with label housing. Show all posts
Monday, 30 March 2015
Thursday, 16 January 2014
My House is my fortune
Once my house was my castle, the bastion of security and stability. The solid core binding the family together and the fortress to repel all invaders or those seeking to undermine our chosen way of life.
No longer.
My house is my fortune. Just an asset to be exploited, a transitory thing with no emotional ties to be dumped when the next opportunity presents itself. No point spending time or effort, investing in the properties future, unless it can be shown to produce an immediate return increase. So quick-fix, eye candy, on trend solutions, never mind getting to the bottom of the rot or decay. Several problems emerge out of this differing attitude. For a start house are not short-lived consumer goods to be re-cycled at the next fashion of technology change. They will outlive us by hundreds of years, we do need to keep them in good shape and relevant to the society of the time. That may require more than a quick immediate return, someone might have to invest in a longer term outcome.
A house is also a home, a home to a family. Family ties are not just those between each member of the family but with the wider community. If we are all doomed to be rootless, migrants, always on the move, never having the time or inclination for other than shallow superficial connections with our neighbours, what sort of sustainable society is that? We have to root ourselves and engage and care about the community that we live within. It is that community that shapes and defines us. It is what makes our family a family, the network of connections to those around us and the environment within which it is set.
So why this urgent need to move on, to move up the property ladder, to get to the next plateau of possibilities? It is fear, the fear of missing out of the ever remorseless spiralling upward of house prices. Fear of being left behind, fear of falling off and not being able to get back on. A fear generated and inflated by all the media, ever harping on about the latest price rises and easy sales to made. But houses are not consumer goods.Their price rise has nothing (or at least very little direct connection to) to do with the cost of land or the floor area or the actual cost of construction. Remember house prices are established by some bloke with a clipboard walking up and down a street, comparing this one to the others and to the prices similar houses have sold for. The price of a house is not its cost, but a reflective valuation of something deemed to be everlasting, someone's guess as to what it might sell for. So long as someone is prepared to pay that price then that is its worth. And why not when we are constantly reassured house prices can only go up. In this present very uncertain economic world where else can you put money that will grow? Houses are the only assured place because their value just goes on going up and up. The bubble just gets bigger and bigger, what is not to lose? Well for one thing, the bubble is so large it has cut off its renewal source. No new players can afford to come into the bottom of the market to sustain the chain. Second thing those player that do manage to join take on debts well beyond a sensible ratio to their income. Thirdly there is a rapidly diminishing pool of punters able to buy at the top end. Fourthly the only thing keeping the bubble growing is confidence, the expectation that the price will rise tomorrow and all the tomorrows.
I cannot think of any clearer indicators that the bubble is poised to burst. All such seemingly unstoppable bubbles have always burst in the past, there is no reason to believe this bubble is going to be any different. The fact that the world economies are dependant on the bubble continuing, their 'growth' coming from the increase in house loans, will not stop it happening despite various governments desperate attempts to shore it up. Their concern at the financial mess it will cause is not sufficient rationale to stop the burst, but just makes it louder and messier. When the inevitable burst comes and we somehow claw out of the ensuing mess perhaps we can once again get back to our house being our home and castle, a place of permanence and security.
No longer.
My house is my fortune. Just an asset to be exploited, a transitory thing with no emotional ties to be dumped when the next opportunity presents itself. No point spending time or effort, investing in the properties future, unless it can be shown to produce an immediate return increase. So quick-fix, eye candy, on trend solutions, never mind getting to the bottom of the rot or decay. Several problems emerge out of this differing attitude. For a start house are not short-lived consumer goods to be re-cycled at the next fashion of technology change. They will outlive us by hundreds of years, we do need to keep them in good shape and relevant to the society of the time. That may require more than a quick immediate return, someone might have to invest in a longer term outcome.
A house is also a home, a home to a family. Family ties are not just those between each member of the family but with the wider community. If we are all doomed to be rootless, migrants, always on the move, never having the time or inclination for other than shallow superficial connections with our neighbours, what sort of sustainable society is that? We have to root ourselves and engage and care about the community that we live within. It is that community that shapes and defines us. It is what makes our family a family, the network of connections to those around us and the environment within which it is set.
So why this urgent need to move on, to move up the property ladder, to get to the next plateau of possibilities? It is fear, the fear of missing out of the ever remorseless spiralling upward of house prices. Fear of being left behind, fear of falling off and not being able to get back on. A fear generated and inflated by all the media, ever harping on about the latest price rises and easy sales to made. But houses are not consumer goods.Their price rise has nothing (or at least very little direct connection to) to do with the cost of land or the floor area or the actual cost of construction. Remember house prices are established by some bloke with a clipboard walking up and down a street, comparing this one to the others and to the prices similar houses have sold for. The price of a house is not its cost, but a reflective valuation of something deemed to be everlasting, someone's guess as to what it might sell for. So long as someone is prepared to pay that price then that is its worth. And why not when we are constantly reassured house prices can only go up. In this present very uncertain economic world where else can you put money that will grow? Houses are the only assured place because their value just goes on going up and up. The bubble just gets bigger and bigger, what is not to lose? Well for one thing, the bubble is so large it has cut off its renewal source. No new players can afford to come into the bottom of the market to sustain the chain. Second thing those player that do manage to join take on debts well beyond a sensible ratio to their income. Thirdly there is a rapidly diminishing pool of punters able to buy at the top end. Fourthly the only thing keeping the bubble growing is confidence, the expectation that the price will rise tomorrow and all the tomorrows.
I cannot think of any clearer indicators that the bubble is poised to burst. All such seemingly unstoppable bubbles have always burst in the past, there is no reason to believe this bubble is going to be any different. The fact that the world economies are dependant on the bubble continuing, their 'growth' coming from the increase in house loans, will not stop it happening despite various governments desperate attempts to shore it up. Their concern at the financial mess it will cause is not sufficient rationale to stop the burst, but just makes it louder and messier. When the inevitable burst comes and we somehow claw out of the ensuing mess perhaps we can once again get back to our house being our home and castle, a place of permanence and security.
Thursday, 24 November 2011
What we are worth
It is tossed off so easily as if it was definitive, an all embracing understanding, "My house is worth half a million" or "My house is worth £90,000", if you happen to live in a northern blighted town. Then the cough and half-apology of "well it is only worth that if someone else is prepared to pay that much". As we begin our descent into the substrata of meaning, "Of course I cannot get any benefit from that worth until I die or buy a smaller cheaper place". None of this matters in any real sense, it is just flotsam of life, until you make the connections.
UKplc borrowed heavily on the basis of the future continuing rise in its property values. That borrowing, mainly in mortgage debts taken on, was used to fuel a spending bonanza, the like of which we have never seen this side of the WW's. We could borrow so heavily because, property, for the man in the street, houses, just keep getting more and more expensive, keeps growing in value. Aside from gold, property was the next copper-bottom bet. And a bet it always was.
So what is a house worth? Certainly not just its replacement costs, the cost to rebuild it, other than in a very circuitous self-referencing way. Not even for its build cost plus the value of that scarce permission to build. Once a habitation permit exists, it exists and is very hard to take away. What it is worth, in essence, is the gut feel of what it is in comparison to other properties nearby and what other similar properties have sold for that are comparable. There, that is the worth of a house, a gut feel. Let us hostage all our futures on the basis of this. A gut feel sustained to some degree by a scarcity of perceived 'desirable' properties available. This perceived scarcity fuelling the rush to snatch what is going at whatever the cost, spiralling the costs ever up.
There are a few things in life you take as rock solid, hospital care for us when we are sick, policepersons are there to help not to harass you, within the four walls of your house you are safe and buildings last for ever. We grow up surrounded with buildings that have been there for all time. Building just do not fall down and are seldom demolished in our own experience. The buildings we put are now are nothing like the way they used to be constructed. Building in the past was craft based using easily obtainable materials and relied on accumulated experience of what worked with large amounts of built-in redundancies. Nowadays materials are honed to the least essential to achieve the required effect and we depend on calculation to prove that the structure will stand the test of the weather. Previously there was several overlapping redundancies of structure. Now we design for a life of thirty years, or if you are lucky enough to live in a Housing Association home then sixty years. That is all. A thirty years life is the design norm. It will almost certainly not fail in less but the structures integrity relies on many, many small components which may or may fail after thirty years. No one knows, we have not had a century of experience of modern building practices to know where the weak points are. We build a time limited product. Yet we value that same product on the basis that it has an indefinite life. We value houses by their location and not on the floor area provided nor an estimate of the remaining life expectancy or even the amount of repair or upgrading required. It is nonsense but that is the market we have and accept blithely as the norm.
When you live in a fantasy world, do you close your eyes, ignore the contra evidence, and carry on regardless? No of course not. You stop, take notice and start the search for some other path, that leads away from the present fantasy-land nonsense. With UKplc mortgaged up to the hilt in shortlife property with repayments based on a longlife, we have to change tack. Again no simple easy answers. Harking back to another post (Right to Plunder), first step remove freehold, only a long term lease is possible with a commuted sum to restore it back to fertile land. No one can 'own' our land. Secondly the Council Tax is based on per person floor area with a rebate for properties below a set norm and a tax on attached land, setting dependant, and again rebated for those below a norm. Such that City dweller would expect no land whilst out in the country some M2 of land would be a norm. Those two measures will push the market into greater visibility of square footage, land take, life cycle costs and together with the greening measures may take our housing away from the fantasy place it currently bloats in.
UKplc borrowed heavily on the basis of the future continuing rise in its property values. That borrowing, mainly in mortgage debts taken on, was used to fuel a spending bonanza, the like of which we have never seen this side of the WW's. We could borrow so heavily because, property, for the man in the street, houses, just keep getting more and more expensive, keeps growing in value. Aside from gold, property was the next copper-bottom bet. And a bet it always was.
So what is a house worth? Certainly not just its replacement costs, the cost to rebuild it, other than in a very circuitous self-referencing way. Not even for its build cost plus the value of that scarce permission to build. Once a habitation permit exists, it exists and is very hard to take away. What it is worth, in essence, is the gut feel of what it is in comparison to other properties nearby and what other similar properties have sold for that are comparable. There, that is the worth of a house, a gut feel. Let us hostage all our futures on the basis of this. A gut feel sustained to some degree by a scarcity of perceived 'desirable' properties available. This perceived scarcity fuelling the rush to snatch what is going at whatever the cost, spiralling the costs ever up.
There are a few things in life you take as rock solid, hospital care for us when we are sick, policepersons are there to help not to harass you, within the four walls of your house you are safe and buildings last for ever. We grow up surrounded with buildings that have been there for all time. Building just do not fall down and are seldom demolished in our own experience. The buildings we put are now are nothing like the way they used to be constructed. Building in the past was craft based using easily obtainable materials and relied on accumulated experience of what worked with large amounts of built-in redundancies. Nowadays materials are honed to the least essential to achieve the required effect and we depend on calculation to prove that the structure will stand the test of the weather. Previously there was several overlapping redundancies of structure. Now we design for a life of thirty years, or if you are lucky enough to live in a Housing Association home then sixty years. That is all. A thirty years life is the design norm. It will almost certainly not fail in less but the structures integrity relies on many, many small components which may or may fail after thirty years. No one knows, we have not had a century of experience of modern building practices to know where the weak points are. We build a time limited product. Yet we value that same product on the basis that it has an indefinite life. We value houses by their location and not on the floor area provided nor an estimate of the remaining life expectancy or even the amount of repair or upgrading required. It is nonsense but that is the market we have and accept blithely as the norm.
When you live in a fantasy world, do you close your eyes, ignore the contra evidence, and carry on regardless? No of course not. You stop, take notice and start the search for some other path, that leads away from the present fantasy-land nonsense. With UKplc mortgaged up to the hilt in shortlife property with repayments based on a longlife, we have to change tack. Again no simple easy answers. Harking back to another post (Right to Plunder), first step remove freehold, only a long term lease is possible with a commuted sum to restore it back to fertile land. No one can 'own' our land. Secondly the Council Tax is based on per person floor area with a rebate for properties below a set norm and a tax on attached land, setting dependant, and again rebated for those below a norm. Such that City dweller would expect no land whilst out in the country some M2 of land would be a norm. Those two measures will push the market into greater visibility of square footage, land take, life cycle costs and together with the greening measures may take our housing away from the fantasy place it currently bloats in.
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