“We will only fix this broken market by building more homes,” the prime minister said. “Solving the housing crisis is the biggest domestic policy challenge of our generation. It doesn’t make sense to stop councils from playing their part in solving it. So today I can announce that we are scrapping that cap.”
Nope.
In reality, councils – or anyone else for that matter – building more homes will do very little to address the fundamental problem in the housing market, and if you want to understand why, there’s a new book which explains it.
‘Why Can’t You Afford To Buy A Home?’ by Josh Ryan-Collins – a researcher at University College London’s Institute for Innovation and Public Purpose – is about the phenomenon which he dubs ‘residential capitalism’.
It follows on from his less snappily-titled volume ‘Rethinking The Economics of Land and Housing’, which was written jointly with fellow economist Laurie Macfarlane and policy wonk Toby Lloyd and published last year.
Both books address the question of why a growing number of people are being priced out of the property market, with rising house prices accelerating away from household incomes.
The answer is financialisation – and it is not an aberration, according to Ryan-Collins. The ‘housing crisis’ needs to be understood primarily as a product of the banking system.
Business Telegraph
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As others in this blog have stated, the housing crisis is not caused by a shortage of housing, but by a shortage of affordable housing.
A house is worth whatever the banks will lend for it. Banks want to lend as much as possible for each house, since higher loan amounts cause higher bank profits. Banks create loan principal money out of thin air. Banks make their profit from the interest that is paid to banks in addition to the principal.
If we do not regulate bank lending practices, then the housing crisis will continue to worsen, no matter how many new houses we build.
“The ‘housing crisis’ needs to be understood primarily as a product of the banking system.”
Correct.
Theresa May wants less regulation of banks. She pretends to be helping average people, when in fact she is only helping the banks, and she knows it. Theresa May will do anything for the banks in order to retain her office. Let the UK become a Mad Max dystopia, as long as Theresa May can remain in office. Ugly hag!
With great flourish, Theresa May last week announced that she was lifting the borrowing cap which constrains local councils’ ability to finance new housebuilding.
That is, Theresa May further unchained the banks so that banks may further pursue predatory lending, and thereby worsen the housing crisis.
“This is not just a British problem; this is a trend which has gripped developed economies across the world over the past three decades.”
Correct again. Most American cities with populations of 500K or more have companies that are madly building houses and apartment complexes in service to the banks. The quantity of housing keeps increasing, while the affordability of housing keeps plummeting.
As a result, despite the boom in construction, there is a boom in homeless people living on the street. This is a worldwide phenomenon.
Why do the masses tolerate this? Because most “leftist” political parties have nothing to offer except identity politics. (Man-bashing feminism, heterosexual-bashing “gay rights,” etc.)
Some members of leftist parties are genuinely humanitarian, but they are marginalized by the parties’ leaders, and are denounced by the masses as “communists.”
Beyond this, the main reason why various crises continue (housing crisis, immigrant crisis, private debt crisis, etc) is that most people blame these crises on the victims, not the perpetrators.
Most people who are not (yet) homeless hate the homeless. They do not hate the banks that cause homelessness.
Likewise most people hate refugees. They do not hate the imperialistic governments that create refugees.
The masses hate the victims, not the perpetrators.
Again, this is a worldwide phenomenon.
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