As our power-crazed, five holidays a year, saviour of the world Prime Minister ignores the terrible state of the British economy (“It’s still all Gordon Brown’s fault”), there is a statistic that should worry the life out of all of you who care about the recovery.
Fewer homes are being built in England than at any time since the 1920s
During April – June 2011 permissions for residential developments totalled 25,171, the second lowest on record. It is half the number granted in the first quarter 2006.
This is another condemnation of the Coalition Government whose proposed reforms to the planning system are intended to ease the barriers to new residential projects. In political speak, this means trying to stop local councils finding any reason to stop new developments. It gets worse. The proposed National Planning Framework (sponsor: G. Osborne) has provoked a bitter backlash from MPs of all parties and all those charities set up to protect rural England.
There are two main consequences from this Coalition shambles.
a) A revitalised housing market would create liquidity and increase consumer spending. Little is being done to stimulate it.
b) The UK population is growing as the elderly live longer so the demand for housing will increase. The law of supply and demand would suggest that the outcome will be rampant inflation in the property market. The Tories will love this. Most of their funding comes from property based wealthy individuals and most of the cabinet own property assets.
Pity about Middle England who will be priced out of the market.
If you believe that a re-vitalised US economy is good for the free world it is worth looking at their housing market.
The US currently has 11 million residential properties with negative equity, of which 2.8 million have been foreclosed last year by the banks and a further 4.5 million will suffer the same fate this year. A 5% fall in property prices (which is quite possible) will see another 2.3 million properties caught in this no-win situation. There are 2 million vacant properties in the US. Due to the expiry of the US $8,000 tax refund scheme for home buyers the number of new mortgage applications fell by 40% in June. This is expected to impact on GDP which is also under pressure.
Both the UK and the US have real issues affecting their property markets. Neither leader seems to have the acumen or will to do anything about it.