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Britain's Housing Crisis: An Analysis In Gifs

How hard is it to sort out? Well, actually, pretty damn hard.

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Everyone's trying to move to the same place.

Believe it or not, Britain's house prices are falling. Department for Communities and Local Government data shows that between their peak in 2007 and 2011, house prices fell by 12% in the North East and by 10% in the North West.

And in part, that's because more of us want to live in London: there, a large initial fall (9.3%) was quickly offset by subsequent rises, leading to an overall increase of 3.8% between 2007 and 2011. The South East saw a similar initial fall and a slightly weaker recovery, but prices still increased by 1.4% between 2007 and 2011.

And that messes things up...

Because that problem's distracting from the bigger one round the corner.

When demand goes through the roof, housing becomes unaffordable. But the trouble is that even in places where an £80k deposit will get you more than a rabbit hutch (without straw), it's no easier for first time buyers to find a place to live.

So when we focus on London we ignore the fact there's still a countrywide shortage of affordable housing. It's obviously a huge issue in the capital, but elsewhere it's getting more serious due to slow income growth, a lack of construction and a rising cost of living. Despite the general price falls in Northern regions, affordability's still a huge issue in places like Manchester, where more people want to live.

So what can we do? We could try dampening demand...

You could, say, make housing subject to capital gains tax. This would certainly stop all the baby boomers buying it, but no Government in their right mind could vote this through and expect to stay in power.

Or you could restrict rising prices by using rent control measures. This happens on the continent in the form of tenant-friendly contracts. Maximum annual rent rises are established at the outset of longer tenancy agreements, often lasting between three to five years. There's something to be said for the idea, but it would hurt investment in the rental sector and it risks making the people who get them prisoners to their homes. Boris Johnson's already vetoed it.

Whether you like them or not, both ideas are essentially a sticking plaster. They might reduce demand, but they have little effect on people who own their houses. How do you help the young?

We could address the issue of what people actually need.

Well, as it happens, we are. This is what the Government's attempting to do with the controversial Bedroom Tax ("spare room subsidy": I'm SORRY Mr Duncan Smith) - trying to get people to downsize so that people in cramped private accommodation can move into more spacious houses.

Campaigners say it's a sledgehammer to crack a nut. There's plenty of anecdotal evidence people either can't move - because there aren't the one-bedrooms available in the private sector - or don't want to, because it would mean vacating a family home they've lived in for generations. Not to mention the fact that disabled people (among others) get caught in the crossfire.

It'll be some time before we see how successful the policy's been, but the opposition are pretty clear they think the Government's just ended up taxing the poor and elderly and not solving the problem of space.

But if you want to try to address this issue of what people need, this is the only way to do it. Well, you could remove stamp duty on people downsizing. But that would cost the Exchequer billions, so good luck to any housing minister trying to get that one through.

If only there was another way to solve the problem. Oh. HANG ON.

Could we more houses?

Now doesn't that make more sense than trying to kick people out of their homes or artificially manipulate the economics of the housing market?

The answer is of course it does, and our Government knows it. For that matter, so did the last lot, which is why they brought in top-down regional plans, which tried to force local authorities to build more housing.

It didn't work. Between 2001 and 2011, about 1.4 million new homes were built in England, while the population rose by just under four million.

So the Coalition tried a new plan: the new 'national planning framework', which has more 'localism' and a package of financial incentives to encourage development. It doesn't appear to be working much better.

Seriously builders....

The problem lies with developers. They buy land, but then they hoard it. And here's why.

House prices are really about land prices. Higher house prices simply mean land with residential planning permission has increased in value. That's because council plans control land use. These plans try to work out housing demand via household projections about the level of future demand. The problem is that they either get it wrong, or it takes too long to get land through the system. So developers hold land for hundreds of thousands of homes as land prices rise because the planning system is releasing it too slowly.

And what we've ended up with as a result is a theoretical city of houses the size of Birmingham that hasn't been built, which no doubt your children or children's children might one day enjoy, if any of you ever get to have them.

Meanwhile, as the Observer's Will Hutton recently pointed out we're left with young adults who either spend all their earnings on rent or end up stuck with their parents, waiting for their lives to begin; with ghettos such as the unoccupied squares in London inhabited by the super-rich, or the entire streets in which multi-occupied student houses outnumber families; and with former council houses sold off to buy-to-let landlords who then charge twice as much as the local authority ones, and so on and so on. To quote Hutton:

It is mad, mad, mad, yet much of Britain's economic structure and culture are invested in the madness. Around 60% of all UK bank lending is in residential mortgages and most personal wealth is bound up with housing. Everybody is a rentier or wannabe rentier and although the malign effects are there for all to see, any politician who challenges rentierdom can expect only woe.

So for this very simple thing to happen, the entire system needs to be reformed. But that takes - guess what - time. We're waiting.

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