£23bn scandal of London’s housing bubble

October 1, 2013

According to the Bank of England, each year since 2010, £23 billion of foreign money has poured into the London property market. One would think that this is a good thing for the economy, but most of these foreign buyers have never been to London, or at least have no intention of spending any time here.

It’s all about the preservation of wealth. The residents of unstable oil-rich countries fear the Arab Spring. The residents of China and Russia fear their governments. All are looking for stability. It has become the fashion to “park” money in London. It’s what wealthy people do when they don’t trust the banks, they “park” their money through the purchase of an asset, as a store of value. In this regard, the London property market has become a gynormous piggy bank.

In 2011, Regent Street was valued by The Crown Estate at £2bn. Each year a multiple of over 11.5 times this in ordinary homes is being snapped up. That’s the equivalent, each single year, of Oxford Street, The Strand, Fleet Street, High Holborn, Trafalgar Square, High St Kensington, Old Bond Street, Berkeley Square, Park Lane and Knightsbridge, and more. That’s just one year.
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The Economic Case for more Social Housing

April 1, 2013

Rising house prices used to make cheery headlines in the papers. It was associated with economic success. We were all getting richer. If people can afford to pay more and more for houses, then the economy must be getting bigger and bigger. In truth, the rise in house prices had just as much to do with the easy availability of mortgages, which created an “effective demand”.

As a youngster, I remember how people’s excitement of buying their own council flat infected everyone else. Aspiration amongst the working population must be one of the most important factors to a thriving economy, and it was very much instilled in the east enders in the ‘80s. This is how Thatcher won.

Today we hear commentators speak of the “lack of animal spirits”, referring to an economy which is moribund. Few people are investing lavishly. Few new enterprises are born from a sketch on the back of a beer mat. There’s a general lack of excitement, of inspiration. A lack of moral.

The problem is that if we want to fix the problem of over-valued houses, then we would need to supply enough new homes to cause house prices to fall. However, deflation would stop developers buying land for fear of losses through falling prices. House price deflation would effect consumer spending. If people believe they are getting poorer in their assets they will avoid splashing out. How many politicians would choose policies that would have such an effect?
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Landshare – Promises to Clean Up the Estates

February 8, 2012

There’s a problem that’s been bugging me for as long as I’ve been involved in local politics, and I think I’ve finally found the answer.

The problem is the way that the estates in east London look so scruffy, due to the gardens on the ground floor of blocks being untended and often overgrown with weeds. When I first became involved with labour campaigning I thought this indicated that the demand model of social housing was a failure. People who buy their homes or pay private rent wouldn’t pay for a garden if they didn’t want it, but in social housing they just get given a garden when they have no interest in tending it. However, I was corrected by the fact that people with mobility issues are housed on the ground floor. It’s not the allocation that causes the problem, but the aging population.
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Plan B unveiled, Time to back Miliband!

November 15, 2011

At last the Tory-led coalition have accepted the merits of Keynesian economics, and have begun to draw up plans for a £50 billion stimulus, concentrating on roads, housing and national grid improvements.

Unfortunately, they want someone else to pay. According to The Times, “government hopes private investors… will be tempted to pour cash into the infrastructure schemes. In return they will get the proceeds from tolls, rents and energy bills.” I’m not sure if this sounds like The Big Society or PFI, but the gushing copy of The Times would suggest that the Tory-led government has remarkable foresight in economics.
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Attack, Attack, Attack!

November 26, 2010


The chickens have really come home to roost for the British Labour Party. Look at that map that shows the whole of the south of England smothered with Tory Blue with only the tiny enclave of inner London bearing the Labour Red. This diagram demonstrates the confined extremity of the Labour core vote. It also shows how close we are to being wiped out. If you swapped the constituencies with pictures of Cowboys and Indians, it would be a diagram of Custer’s last stand. In all my time as a labour Party member, I have never known this party to be in a greater sense of denial. The housing policy, of the Nasty Coalition, aims to bring market forces to bear upon the inner cities, so as to push social housing out to the suburbs, or rather, to cleanse the affluent districts of poverty. This Kosovo-style social-cleansing is not just nasty but also politically sinister, in that it aims to disperse that Red; to disperse our people, our communities. They don’t care where they go, as long as they take their votes with them. And while all this is happening, we, the Labour Party, are slouching about discussing whether we should back AV. Shameful! Wanna know what the AV camp are saying privately? I’ll tell you. They’re saying that if we please the Lib Dems, they’ll agree to form a coalition with us at the next election and allow the Labour Party to form a government. That’s what they’re saying. Allow us? Just when the Lib Dems are on the ropes, these snivelling little runts in the Labour Party want to divide us in order that the “united” Lib Dems can give us permission to form a future government. These dividers want us to get out the begging bowl and go grovelling to a party who are so insignificant, that their HQ offices didn’t get smashed up by the students, only because no one knew where they were. There is one way and one way only of dealing with the coalition government; that is to vote it down, vote it down, vote it down. Let the Tories get divided over AV, while we are united in campaigning to bring about an imminent general election. Here’s the strategy to achieve it:- In the recent Kentish Town by-election the Lib Dems stopped campaigning on the estates because they couldn’t explain their Kosovo policy. Half of the Lib Dem MPs are in traditional Labour seats, half are in Tory seats. Nick Clegg is currently getting punished for his error over tuition fees, but the Kosovo policy is far more damaging because the student vote is scattered while the housing vote is concentrated. The Labour party needs to create a campaign concentrating on vulnerable Lib Dems; Simon Hughes in Southwark & Bermondsey is a good example. If we began voter ID campaigns in that constituency, I am convinced that the data we’d return would so frighten this MP that he would either vote against his party, or defect to Labour. Either way, we bring down the Nasty Coalition. So let’s not take the lead of Custer. While the Indians are circling and the arrows are pouring, we are not so foolish to fight a defensive battle, on their ground, and their terms. Now is not the time to offer gifts to the pitiful and struggling Liberal Democrats. Now is the time to come out fighting, on our ground, our terms and with our strategy. We all know how vulnerable the Nasty Coalition is, so let’s concentrate our fire and attack, attack, attack!