The whole idea behind The New Localism was to appeal to NIMBYs, around eight or ninety per cent of the population, the sub-text being that it would be much easier to object to planning permission and councils would be able to turn down planning applications for the flimsiest of reasons.
And it seem to be working:
Planning permissions for new homes granted in the first quarter show a year-on-year fall and are now at around half the level of five years ago.
Permissions for fewer than 34,000 new homes were approved in Q1 in England, compared with 40,000 in Q1 2010 and against a quarterly housing requirement of nearly 60,000 based on the Government’s household projections.
The Home Builders Federation said there is an ‘acute housing crisis’ which the Government must address. Last year, the lowest number of homes were built for 90 years...
The rest of the article is a quote from the chairman of the Homebuilders Federation complaining that the government is being too restrictive, which seems fair enough, until you remember that the home builders are guilty in all this as well. When house prices fell sharply in 2008 and 2009, they expected them to bounce back, so they were quite happy to mothball all their construction projects and then finish them off when house prices had risen again.
Unfortunately, we don't know the missing figure, which we would need to apportion the blame, which is the number of planning applications. If the home builders are still putting in as many applications as they did five years ago, but only half as many are being approved, then The New Localism is to blame; if home builders are only putting in 34,000 applications a quarter and all are being nodded through, then the home builders themselves are to blame.
Wednesday, 15 June 2011
A Triumph Of The New Localism
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9 comments:
"The whole idea behind The New Localism was to appeal to NIMBYs" I don't entirely agree with that. New Localism, or just 'Localism' has been hijacked by home-owner-ists, which is what you would expect of any vetsed interest. The actual idea of 'localism' (which is better described as scrapping centralisation) is sound, but the proto-localists still want to fund it with a local sales tax. But we know better don't we?
I would hazard a guess planning applications are down by a similar degree. The money isn't there to build houses at the moment so its not surprising the house builders have pulled their horns in.
L, yes we do.
S, There is plenty of money to pay for houses to be built, the house building is as affordable as it ever was, but the home builders with land banks are primarily land price speculators - if house prices go up ten per cent, then their profits go up fifty per cent, so they are best advised to wait for an upturn (which may or may not come).
"the house building is as affordable as it ever"
If anything it’d be actually more affordable at the moment due to the lack of demand in the sector driving down margins.
But as you say most of the sizeable house builders are far more interested in land speculation than the more risky business of actually building things.
but the home builders with land banks are primarily land price speculators
The "land banking builders" is a bit of a myth. I recall looking into this some time ago and the average time from planning permission to completion was less than 2 years.
The main land banking businesses are like the guys in Glengarry Glen Ross. They don't sit on land, they sell worthless land to homeownerist mug punters at a high price with the idea that they'll be millionaires if it gets planning permission.
If you think about it, the NIMBYs are doing us all a favour. There is no real huge demand for new housing: the fact that the demand is purely speculation and bubble driven can be seen by the vanishing of that huge demand as soon as house prices start falling.
It's fairly obvious from examples like Ireland that price and demand are almost totally unconnected when it comes to houses, so what the NIMBYs are really doing is preventing a few people mortgaging themselves to the hilt in order to join in a state-sponsored Ponzi scheme and those people should be grateful.
MW is right about land speculators masquerading as propeorty developers/house builders.
Fact 1. My old man was a spec housing developer.
Fact 2. I did some time with Barratts (my advice about working for Barratts? Don't ever do it. Never).
MOM never factored in land price increases as profit, because he had to spend that to buy his next site. Cue constant rows with tax man.
OTH Barratts did the opposite -well at least Barratt East Anglia did. They treated the land price gains as profit.
I thought the best land price speculators were Tesco etc?
EdS, ta.
JT, I'm not keen to slag off home builders, but they do make more money from land price gains than building houses, that's just the way things work.
For example, in 2009, car production halved and new contsruction halved. The sales that the car makers lost are lost for ever, but the home builders just mothballed everything, waited for house prices to go up a bit and then recommenced.
In their position I would do exactly the same, that's how you make money nowadays.
B, that's a good way of looking at it.
L, you know as much about Tesco as I do, they do some land price speculation but mainly it's trying to shut down the competition by getting planning permissions rigged in their favour.
The wise words of Jim Claydon President of the Royal Town Planning Institute in June 2007:
"All landowners including housebuilders maintain land values by managing supply.It is not in their interets to release large quantities of land because this deflates its value"
Obviously this person is not going to get a very fair hearing from people who react intemperately to the word "planning" but, in his defence, he had been stung by criticisms from suchlike: that it was the planners restricting new-build by going through all the shareholder reports of the big developers and totting up how much land they were boasting about having in land banks.His figures ,which look pretty unassailable, was that they had banked a supply of sites WITH PLANNING PERMISSION to last six years at optimum rates of delivery (Obviously in the present emergency,they could,if pushed very hard,build houses at six times their normal rate in one flat-out year.NB 3 million houses were built by the private sector between 1933 and 1939)
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