Tuesday, 13 October 2015

"The Ladybird book of living with your parents your whole life"

Normally you visit the Guardian website to find some fish in a barrel which you can shoot, but this article is really rather good.

My latest blogpost: "The Ladybird book of living with your parents your whole life"Tweet this! Posted by Mark Wadsworth at 17:01

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22 comments:

Tim Almond said...

I haven't examined it much, but how much is this a South East thing? Looking at prices of flats in Swindon you can get a 2 bed apartment for about £90K. That's not great, but it's not that unaffordable.

13 October 2015 at 17:48
Bayard said...

I caught part of a programme on Radio 4 today. The Beeb's reporter was in Carmarthen, talking to an estate agent. The agent was saying that he had lots of houses on his books for sale, many of them had been for sale for years and half of them were empty. He pointed out that local people would be hard pressed to afford many of these houses, as local pay was very low. The Beeb reporter then said that house prices were once more going up in Carmarthenshire.

And people still think that building more houses will bring the price down.

13 October 2015 at 18:12
Mark Wadsworth said...

TS, it is very much a London/South East thing, but it's Ricardo's or Von Thünen's law of rent.

It depends primarily on [wages minus living costs] and secondly on transport costs.

Living costs are the same everywhere, so a disproportionate amount goes into rent.

Then there's travel cost/time, fact is, three of my family go into central London each day. If we lived in Zone 2 not zone 5, we would save 3 hours a day between us, times £10 per hour time/ticket cost x 200 days a year = £6,000, capitalise that at 3% interest rate and that is why our house is £200k cheaper than one in Zone 2.

Plus London is a fun place to live.

13 October 2015 at 19:02
Mark Wadsworth said...

B, good anecdotal.

13 October 2015 at 19:02
DBC Reed said...

You don't think we need some good old post-war planning with New Towns and the mass building in "depressed areas "of housing estates with across the by-pass, reachable by bike, some industrial estates? Something a bit more British (and German)?The regime of public schoolboys who call themselves economists by repeating "Market forces will provide" over and over is a bit played out now. A short lived ruling class fad like arming the mujahidin in Afghanistan.

14 October 2015 at 09:24
mombers said...

All the calls of 'move to a cheaper area' are infuriating. In a free society, you live where you want to, provided you can stump up the cash. The fact of the matter is that there a loads of people who are living rent free or leaving their land underutilised, i.e. not stumping up the cash, and placing an incredible burden on everyone else.
Young people don't want to live in cheaper areas of the country because they are cheap for a reason, i.e. they don't offer good jobs and amenities.

14 October 2015 at 10:46
L fairfax said...

In Spain they built lots of houses and now they are cheap.
It can't because of lack of credit as they now have 30+ year mortgages, subprime lending etc again.
I don't know why it didn't work in Carmenthshire, perhaps people think prices will rise and so are waiting for it to happen.

14 October 2015 at 12:05
L fairfax said...

@"Then there's travel cost/time, fact is, three of my family go into central London each day. If we lived in Zone 2 not zone 5, we would save 3 hours a day between us"
I am not sure it is that simple. Some very similar places in zone 5 have wildly different prices like e.g. Orpington and Hampton.

14 October 2015 at 12:09
Tim Almond said...

DBC Reed,

It might be a good idea, but you also need to create the incentives for people to get out of London, like stopping the billions in subsidies and making it more tax efficient to put a productive business in a cheap place (so, LVT). You'd get a lot of software work moving out of Reading and to places like Yeovil or Tyneside if you did that. You might then need a Yeovil new town for the work.

It'd also be a good idea to link more places up by fast roads or good railways.

14 October 2015 at 12:52
Francis said...

I think if you build more houses, the rent for "a house" might stay the same, but you will get a bigger house for your money, which is still an improvement. There's nothing in the Ricardian theory to refute this idea since how much living space is needed is determined by people's willingness to live in less space. If the houses/flats were bigger, people would pay the same amount for them, but would get more.

14 October 2015 at 15:16
Francis said...

I am assuming no or low immigration and reasonable birth rates, though.

14 October 2015 at 15:17
Mark Wadsworth said...

DBC, over the years, I have realised that council housing is part of the way forward. Not so sure about 'new towns' as it is much more efficient all round to expand existing towns.

M, I can't wait until we the Poor Widows In Mansion have to move to cheaper areas.

LF, I mentioned the first and second most important factors. Then there is a long tail of other stuff. For some reason, houses where I live are cheaper than the next suburb further in AND cheaper than the next suburb out. And houses downhill of the train line are cheaper than houses uphill of the train line. Local factors.

F, there is an answer to that but it is quite lengthy.

Thought experiment, overnight, all houses grow magically by 20% in size and all cities become 20% larger by surface area.

In less favourable areas - i.e. those which are now further from the amenities would go down and houses in more favourable areas would go up because more people can share it AND because the relative advantage of those houses is larger. To a large extent the two effects would cancel out but overall rents would go up.

14 October 2015 at 18:42
Bayard said...

DBCR, I am not sure that there is any lack of housing in "depressed areas". It's just that people can't afford what housing there is. To the extent there is a problem with people being able to afford somewhere to live, the answer is more social housing. The problem that people can't find somewhere they can afford to buy, so that they can sell it in a few years and make a huge windfall profit is not so easily solved. The R4 programme went on to say that the biggest problem buyers face outside London is the deposit, not the price.

"In Spain they built lots of houses and now they are cheap."

Coincidence is not causality. You may have noticed a financial crisis between the building of the houses and them becoming cheap, which may have had something to do with it.

14 October 2015 at 19:23
L fairfax said...

@"Coincidence is not causality. You may have noticed a financial crisis between the building of the houses and them becoming cheap, which may have had something to do with it."
You may have noticed a financial crisis in the UK as well but no cheaper housing.

14 October 2015 at 20:04
Mark Wadsworth said...

B, LF, let's stick to facts

a) the 'average' house in Spain might be cheap, but that includes hundreds of thousands of surplus houses where nobody wants to live. Prices in places where people want to be i.e. Barcelona and Madrid took barely a knock.

b) Sure, the UK is going through a 'financial crisis' but unconstrained by Euro-rules, the UK government has done everything it can to prop up house prices, including running massive deficits, no matter what the cost. Spain did not have this option.

14 October 2015 at 20:23
L fairfax said...

@Mark,

I appreciate that this is true
"Sure, the UK is going through a 'financial crisis' but unconstrained by Euro-rules, the UK government has done everything it can to prop up house prices, including running massive deficits"
However credit in Spain is pretty loose. I don't want to go into too many details because it is family but we know people in Spain who are got mortgages very easily. Unlike the UK you can get 20 year fixes. Also fall in Spain is spectacular 45% nominal on average, in the UK prices have risen so is it just fiscal policy?

"the 'average' house in Spain might be cheap, but that includes hundreds of thousands of surplus houses where nobody wants to live. Prices in places where people want to be i.e. Barcelona and Madrid took barely a knock."

According to
http://www.ft.com/cms/s/0/248a1efa-e440-11e4-9039-00144feab7de.html
"Fotocasa.es calculated that the average home in Spain has lost 45 per cent of its value since the peak of the Spanish housing boom, with values in Madrid (a 44.6 per cent drop) representative, more or less, of Spain as a whole."

Certainly I know people with a flat in Barcelona which they would like to sell or rent who would disagree with you.

14 October 2015 at 21:21
DBC Reed said...

We really need to be developing more industry ,more industrial estates
alongside the housing estates. If you are going to develop both together you might as well go for New Towns.
We cannot keep waiting for market forces to somehow coalesce to organise the infrastructure and lure big (and small) industrialists to relocate.In the 1930's there was a push to locate big government offices out of London.One positive thing the Treasury could do now is re-locate to some former mining district.Might make them see things differently too(NB I believe its true that Liverpool has lost one third of its population since WW2)

15 October 2015 at 10:16
DBC Reed said...

Getting back to the original spoof, this shows that propaganda can be more effective for being low-key and not stridently political ( I think Marx said something to this effect).Such an approach could make our case now more confidently and more effectively than carefully costed plans etc because our main point that there is something majorly wrong with property values is now on the agenda.(Did anybody see Keiser last night? Given a slight push and he will start using the term Homeownerism.) We need to move into a new phase devising memorable oft repeated slogans in a second wave approach with them printed on T shirts, give-away tin badges etc.It might help if we could make them fashionable with the more hip young .

16 October 2015 at 11:32
Bayard said...

"We really need to be developing more industry ,more industrial estates
alongside the housing estates."

I heard last night that the Welsh Valleys are now full of shiny new roads, houses and industrial estates, thanks to spending by the Welsh Government, but that they are all empty. I suspect that the rents might be a bit high, or there is no suitable workforce available.

"One positive thing the Treasury could do now is re-locate to some former mining district."

There was a very good episode of "Yes, minister" which explained why this won't be happening any time soon. Government ministers like being in London.

16 October 2015 at 12:06
Mark Wadsworth said...

DBC, you came up with the winning slogan "Higher wages and lower house prices!", try and think up more stuff like that.

B, I guess lack of suitable workforce. Not because "the Welsh" are any different to the rest of us, but because it's all a bit far off the beaten track. They ought to focus on the Cardiff-Swansea corridor as their mini-London.

16 October 2015 at 21:16
DBC Reed said...

The thing about short slogans is that they force the reader to think what they mean and so engage them, according to all the reader reception theory deployed in literary criticism. Frinstance there was a graffito at my nearest mainline railway station which could clearly be seen demanding "Open the second front now!" fifteen years after the end of the War.Unconvinced by my father's orthodox explanation,I took notice of all references to the Second Front controversy subsequently and only now have worked out,in my own mind, what Churchill was up to .
It is no use thinking up slogans like "Higher wages lower house prices" if they are never used in anger. ( I once devised a LVT badge or flag which consisted of red,green and yellow right -angled triangles, no blue for obvious reasons,arranged as a rectangle based on a short side divided into two of the triangles by a diagonal with the third sticking out the right hand side,sharing its upright with the rectangle.(Very clear don't you agree.)Apart from buying a nearby house with its own flagpole on the roof during my shortlived flush period ,I could never think when to fly it.

17 October 2015 at 11:14
Bayard said...

"They ought to focus on the Cardiff-Swansea corridor as their mini-London."

Too many Tory and Plaid voters there. Labour's voter base is in the Valleys.

17 October 2015 at 12:13

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