There is one direction that I feel very compelled towards, and something that I have been thinking about nearly everyday, almost obsessively, and that is the UK housing market. I believe that is holding the UK back, and preventing it from becoming a world leading economy. There just aren’t enough housing. If there aren’t enough places to live, costs of living rise, the economy becomes uncompetitive. There’s no overall vision.
Here are my main points
- We need more houses.
- The primary purpose of the housing market is to house the people.
- The housing market has become distorted and it has become more of a store of wealth than a place to live.
- This is a generational issue.
- Homeowners, want the prices of houses to keep rising. They want to limit the building of housing so their house prices keep going up.
- Your life totally changes when you own a house. You have security, confidence, and optimism. This makes you want to start a family and have more children.
- With limited housing options, the population starts falling.
- In order to fix a declining birth rate, most economies have resorted to immigration. Basically, people who have worse options, moving to somewhere that has better options. This is a race to the bottom, but also doesn’t solve the problem, it helps boost the economy in the short term.
- Homeowners, and the government’s economic targets, want the house prices to keep rising steadily, and this is a wealth effect, that causes people to borrow and spend more.
- When there is an obsessive focus on GDP and “economic growth”, while at the same time doing net zero, there are no other pathways to grow, except for milking the people more, and raising prices.
- It’s not right that a foreigner, who hasn’t been paying 40% tax for their whole life, can buy a house in UK (and only pay 2% extra). This disadvantages the local people who have been contributing, and prices them out of the market. 50% of the prime London property market went to foreign buyers.
https://www.lettingagenttoday.co.uk/breaking-news/2023/12/half-of-prime-london-new-builds-in-2023-went-to-foreign-investors-agency/ - An empty house tax could make the housing market more efficient. To those who buy for second homes, or those who have large houses, and empty nests, to encourage them to downsize and free up their housing. Many of these people want to change houses, but there just aren’t options for them.
- This could then fund young people and subsidise their taxes so they can own a house.
I am also very aware that this issue is a problem in China and Korea and why the birth rates are falling so much. They have the same issue. It’s not good to live in high rise apartments. They need to move more people out of the cities into suburban housing developments. This would solve their economies and boost birth rates. It would result in a short term economic pain as the prices of houses falls, but it would result in long term growth. GDP is a backward looking indicator anyway. An overemphasis on GDP results in economic distortions. It’s not an accurate reflection of economic growth.
So we can solve it with the following ways:
- Lobbying – making this issue a mainstream issue
- Particularly among young people.
- Helping homeowners to understand.
- Education – of the voters, so they understand the economy in more depth. We need to move more to longer form mediums such as podcasts. Understand that GDP can fall while the economy grows. When you invest in something, you don’t see the benefits straight away. Plant seeds, harvest later.
- House building needs to happen
- We need to modernise housing permission.
- Build more beautiful housing and houses that add value to the community.
- Tax incentives – on foreign buyers, on empty homes, and tax breaks on younger people.
- Support local people with funding
- Support young families
