The rise in vacant properties exposes the housing shortage myth

Empty homes in Accrington, Lancashire. Image: Getty.

Figures from the Ministry of Housing, Communities and Local Government released on Monday poured cold water on the widespread misconception that Britain’s housing crisis results from a lack of houses.

Official stats revealed that the number of long-term vacant properties in England rose by 5.3 per cent in the 12 months to October, to a total of 216,186.

In London, where housing supply is scarce, the growth of empty homes was double the national rate, increasing 11 per cent to 22,481.

This complements other evidence showing that housing stock levels have consistently risen at a higher rate than population growth, even in the past couple of decades – even in London.

Source: Positive Money (using ONS and MHCLG data).

According to the economic laws of supply and demand, this means we should be seeing an increase in housing affordability, rather than the rocketing prices that characterise millennials’ existence.

So why are homes so unaffordable?

We can’t think about the housing crisis in simple economic terms, where too many people are chasing too few homes. To understand the housing crisis, you’ve got to look at it as a broader political and economic problem – with finance and ownership both playing key roles.

Source: Positive Money (using Nationwide housing survey and Bank of England data).

In Britain’s financialised economy, homes are treated as a speculative asset, rather than simply as places to live.

In an era of low business profitability for advanced economies like the UK, housing is often the easiest and safest bet for those looking to expand their wealth, as property prices seem almost guaranteed to rise at a higher pace than interest rates, which have remained historically low throughout the past decade.

Correspondingly, banks love lending money against houses. Both in the decades leading up to and following the crash, around half of bank lending flowed into property.

Ultimately, houses are worth however much banks are willing to lend. Banks, which create new money simply by lending, are essentially unconstrained in the amount of money they can conjure to bid up property prices.

The nature (or lack) of regulation favours those who already own property, making it easier for buy-to-let landlords or wealthy speculators to snap up homes, keeping these empty as assets rather than places for people to live.


First time buyers, who are usually limited to borrowing only four or five times their annual income, are outbid by those who already own homes, who can leverage them as collateral and perhaps also use their rental income to borrow much higher amounts.

Both banks and homeowners are reliant on ever-rising house prices, otherwise they risk going into negative equity and becoming insolvent, with devastating consequences for the economy.

In the absence of productive investment, this housing bubble is driving the UK economy. To prevent it bursting, politicians create artificial scarcity. This means the state protecting the rights of existing property owners and speculators hoarding housing stock, a reality that is reflected in policies like anti-squatting laws that have made occupying empty properties more difficult.

Property developers love the dominant housing shortage story as it means councils will often let them build luxury developments, in the misguided hope that simply building more homes – any homes – will ease the crisis.

The “shortage” rhetoric also lets the property-owning class off the hook, instead allowing politicians and property owners to reiterate the toxic “Britain is full” myth, blaming immigrants instead of speculators.

So if we want to combat the housing crisis, what story should we tell? The common sense maxim that no one should own more than one home until everyone owns a home would be a good place to start.

 
 
 
 

The future is here: Register now for Barcelona’s New Economy Week

Barcelona New Economy Week (BNEW) starts this Tuesday with the goal of turning the Catalan city into the "global capital of the new economy".

BNEW runs from 6 to 9 October, with registration remaining open throughout the event, offering insight from 350 speakers on how businesses can bounce back from the impact of the coronavirus pandemic. It will feature top speakers from the business sectors of real estate, logistics, digital industry, e-commerce and economic zones.

The hybrid, business-to-business event – which is taking place in physical and virtual forms – is organised by Consorci de la Zona Franca (CZFB) and will showcase the way in which Barcelona is preparing for the post-Covid world and the "new economy". It is the city’s first big business event of the year and aims to help revitalise and restart the local economy.

“BNEW will be the first great event for the economy’s global recovery that will allow the redesigning of the productive fabric,” says Pere Navarro, state special delegate at CZFB. “It is an honour to have the participation of renowned professionals and attendees from all around the world.

“As we are not in a position to do a proper ‘in person’ fair, we decided to adapt by creating a disruptive and useful event in this way to relaunch the economy.”

The conference will encompass five interconnected events incorporating real estate, logistics, digital industry, e-commerce and economic zones. More than 8,000 professionals from 91 countries from all over the globe will take part virtually. A further 1,000 delegates are expected to attend the five events in person. Over 200 speakers will take part physically, while the rest will give their talks via a digital platform especially created for the unique event. An advanced digital networking platform – using artificial intelligence – will cross-reference the data of all those registered to offer a large number of contacts and directly connect supply with demand.

The conference will also be simultaneously broadcast in high-quality streaming on six channels, one for each of the five interconnected events and an additional stream showcasing Barcelona’s culture and gastronomy.

BNEW will take place in three venues in the city: Estació de França, Casa Seat and Movistar Centre. All are open, digital spaces committed to the United Nations’ 2030 Agenda. Estació de França will host the BNEW Logistics, BNEW E-commerce and BNEW Real Estate events, while Casa Seat will be home to the BNEW Economic Zones event, and the Movistar Centre will host the BNEW Digital Industry.


Some 36 companies are sponsoring BNEW, and 52 start-up companies will take part and present their highly innovative products and services. A further 128 firms will participate in BVillage, a kind of virtual stand where they can show their products and schedule meetings with potential clients.

Highlight sessions will include: "the era of humankind toward the fifth industrial revolution," by Marc Vidal, a digital transformation expert; "rational optimism," by Luca Lazzarini, a commercial communications specialist; and "future smart cities’ challenges and opportunities," by Alicia Asín, a leading voice on artificial intelligence. Sandra Pina will also talk about how sustainability is transforming us, Jorge Alonso on the humane future of cities and Pilar Jericó on how to face changes in the post-Covid era.

BNEW is described as a new way of developing your know-how, expanding your networks and promoting innovation and talent.

“Networking is always one of the main attractions of the events, so to carry it out in this innovative way at BNEW – with the high international profile it boasts – is a great opportunity for companies,” says Blanca Sorigué, managing director of CZFB.

Readers can register for BNEW for free via this link using the discount code BNEWFREE.