Our shortage of housing is good for rich foreigners and buy-to-let landlords, but bad for young adults – and even their parents.

They are a national sport, an unhealthy obsession, guaranteed to lift newspaper sales and warm up the most icy dinner-party conversation: I refer, of course, to Britain’s house prices. Napoleon’s nation of shopkeepers has indeed become a nation of homeowners, every one of us determined to acquire a slice of Eden to call our own. But there’s trouble in paradise.

New figures compiled by Oxford Economic Forecasting and the National Housing Federation prove the point: home ownership in the UK is expected to fall to 64 per cent in 2021 from a peak of 73 per cent two decades earlier. By 2012, London, for the first time in decades, will have fewer owner-occupiers than tenants. The generation promised “homes for all” may well beget an era of high-priced rents and housing instability.

Over decades home ownership has been knitted tight into the fabric of every political vision from Mrs Thatcher’s “property-owning democracy” to New Labour’s “stakeholder society”. One after another, prime ministers have promised to extend home-owning to an ever-wider circle of voters. David Cameron is no different. A little less than a year after he became leader of the Conservative Party, Mr Cameron took Kirstie Allsopp, the television property pundit, on a day trip to Chiswick to make his point. There, he explained that: “Home ownership for our young people threatens to become the preserve of the lucky few. I passionately believe that everyone should have the right to buy their own home.”

A little more than a year into his premiership, we now know this is bunkum. Mr Cameron faces the prospect that there will be even fewer of those “lucky few” at the end of his first term than when he began. Underlying these headlines are some truly disturbing trends. House-building rates stand at their lowest level since the 1920s. There are 10 per cent fewer first-time buyers this year than last. Vast swathes of the population can look forward to a life not in negative equity (they can’t get on the ladder) and not in council housing (waiting lists across the country are decades long) but in expensive, short-term rented accommodation.

Perhaps those who own property don’t object – indeed, the constriction of supply can only inflate the value of their homes – but as a national policy this is a catastrophe. Our housing market will continue its progression upwards, while failing to satisfy its most basic purpose: to provide secure, stable accommodation to the people of Britain.

And lest you think that these grim figures are merely a symptom of our more generalised economic malady, or some temporary glitch that will quickly be corrected once Mr Osborne’s Plan A kicks in, consider this: at the peak of Britain’s 21st-century boom, we were building only half the number of homes erected in the 1960s. Our housing shortage has been developing for years.

But there is a second problem which is almost greater: huge numbers of properties sold are not purchased to live in, but to speculate on.

Kicked in the teeth by Gordon Brown’s pension taxes, employers’ pension holidays and weedy investment performance, the older generations have turned to buy-to-let property purchasing to make up for the shortfall. In the past decade, 1.8 million buy-to-let properties have been created – purchased in the main by the babyboom generation. Spurred on by little meaningful regulation, standard contracts that allow landlords to jettison tenants at short notice and rising prices, the numbers will swell further.

Never mind the sale of gold at all-time low prices, this was surely New Labour’s worst blunder: to have presided over a capitalist economy in which those with money were incentivised to invest in dead housing stock rather than productive businesses. In this way, our housing obsession is harming economic recovery. But, for all his talk about growth, Mr Osborne has done nothing to reverse the trend.

Things are worst in London. Here, domestic buy-to-letters have been joined by Russian and Far-Eastern speculators who buy new homes for cash. For these people, property purchase in Britain provides tax efficiency, a safe haven and in some cases, the perfect mechanism for money laundering. In the last five years foreign speculators have bought housing worth £16.5 billion. At a time of unprecedented shortage, Britain is exporting the right to own its property. And, once again, the Coalition looks on and lifts not a finger. The cumulative effect falls hardest on young adults who now pay the mortgages of speculators rather than buying their own homes. Far from being cut out of the housing market, the hard work of the young underpins it – but as tenants they do not receive the assets.

The effects are more widespread, though. Last year, the housing charity Shelter estimated that 2.8 million people are delaying having children because they can’t afford to buy a house. Unsurprisingly, the prospect of being evicted from rented accommodation fills young adults who would wish to be good parents with dread. A further quarter of a million are delaying nuptials for the same reason – think about that when the Government next proclaims that it believes in marriage.

Millions more are trapped on council waiting lists for social housing that may never come their way. Many councils suffer such intense shortages that they now pay premium rents to private landlords where once they would have owned sufficient property themselves. That is why immigrant families are found to be living in vast central London houses paid for by taxpayers.

The Government knows it must act. So far, the housing minister Grant Shapps has reiterated a commitment to deregulating the planning system to make it easier for private developers to build; he has underlined the need to make public land available for development, too. (Gordon Brown promised just the same.) But it’s not that simple.

For one thing, it will take a decade of concerted work by private developers to replenish our housing stock. For another, there is nothing to stop speculators leveraging the housing they already own to buy up more. So the best result of what has been proposed will be that Britain’s younger generation will spend another decade locked out of the property market. At worst, whatever properties are built will be swallowed up before they can be sold to owner-occupiers.

So what else can be done? At the top end of the market, the Government could levy specific taxes on the foreign speculators. Further down the chain, we should demand more of our buy-to-let landlords. Across the sector, capital gains tax avoidance is rife – landlords, just like those expenses-hungry MPs, often redesignate their rental properties as primary residences whenever they choose to sell them. The loopholes should be tightened up, if only to encourage investment in the productive parts of the economy.

And if a generation can no longer aspire to become part of the “property-owning democracy”, then the Government must bite the bullet and create more secure tenancy agreements. We can’t expect to create a continental model of rented housing if young families can be evicted at two months’ notice, and if rental prices are not being set by market demand, but by the mortgage rates of over-stretched amateur landlords.

Here is a final reason for the Government to be bolder: many of those who have benefited most from the house-price boom are also losing out. Today, nearly one third of adults aged under 34 live with their parents. The older generation, who made small fortunes as their properties rose, look on with sadness as their children can’t begin to live independent lives. So they, in turn, have begun to drain their retirement funds, sell their houses, and do whatever possible to give their children a decent start in life. But these noble acts simply mean that only those who can rely on rich parents can own a home.

What a tragedy this is. We have become a society convinced, just like David Cameron, that property ownership is a “right” at the moment when that right is beginning to be withdrawn.

Report by Ed Howker – UK Telegraph

House prices in Dublin have fallen nearly 50 per cent since their peak in 2007, the Central Statistics Office has said.

According to the CSO’s Residential Property Price Index, house prices in the capital are 46 per cent lower than 2007, while apartment prices have fallen 53 per cent since their high in February 2007.

Nationally, residential property prices fell by 1 per cent in the month of April. This compares with a decline of 1.7 per cent recorded in March.

The index, which looks at property on a national level, shows residential property prices throughout the rest of the country are 36 per cent lower than their highest level in 2007. Overall, the national index is 40 per cent lower than its highest level in 2007.

Dublin apartment prices fell by 1.8 per cent in the month of April and were 14.1 per cent lower when compared with the same month of 2010, while house prices fell 0.7 per cent and were 12.6 per cent lower compared to a year earlier.

Property prices throughout the rest of the country fell by 36 per cent in the first three months of 2011, and were 11.7 per cent lower than in April 2010.

Dermot O’Leary, economist at Goodbody Stockbrokers, said the national average price for a house was €180,000, back to levels seen in early 2002.

“It is clear that an unprecedented correction has taken place, but until the banking sector shows real signs of rehabilitation, facilitated by the restructuring efforts currently ongoing, there is little reason to believe that prices will rise,” he said.

Report by PAMELA NEWENHAM – Irish Times

More than 60 percent of China’s residents cannot afford an apartment and the high property prices in the cities are curbing the nation’s urbanization process, experts said.

“Migrant workers are unable to afford apartments in the cities, which forces them to return to their hometowns and build houses in rural areas,” said Li Enping, associate professor at the Institute for Urban and Environmental Studies under the Chinese Academy of Social Sciences, on Thursday.

Li was speaking at the launch of the Blue Book of Real Estate, an annual report on the development of China’s real estate market. It is the eighth year that the Social Sciences Academic Press under the Chinese Academy of Social Sciences has published the report.

“About 30 percent of the urban population own more than 50 percent of the total commercial houses in China,” he said, adding that of that 30 percent many have more than one home.

Such speculative investment is one reason that has caused urban house prices to rocket.

As part of its 12th Five-Year Plan (2011-2015), the central government pledged earlier this year to build 10 million units of government-subsidized housing in 2011 and 36 million units in total by 2015 in an attempt to cool the over-heated real estate market.

The country will need to spend about 1.3 trillion yuan ($197 billion) to build the 10 million units of government-subsidized housing this year. To fund the work, the central and local governments will together provide more than 500 billion yuan, with the remainder channeled from social institutions and individuals, according to figures from the Ministry of Housing and Urban-Rural Development.

However, the government is under great pressure to find the money needed to support such a large-scale construction program.

“The money should come from the government, banks and various social institutes,” said Wang Yulin, vice-director of the policy research center under the Ministry of Housing and Urban-Rural Development at the launch.

“The State-owned enterprises under the administration of the central government should take the lead and further increase their investment in building subsidized-housing projects,” Wang added.

Li Yang, vice-president of the Chinese Academy of Social Sciences, said on Thursday that Chinese people should consider renting rather than buying.

“In China, only about 10 percent of people rent. That it is much lower than the 38 percent in the United States and the 70 percent in Germany,” he said.

Source: China Daily

The apartment rents in Dubai fell 17 per cent on average last year owing to an increased supply of quality accommodation, thus bringing several upscale developments within  mid-income budget reach, according to property management firm Asteco.

In contrast, the villa rental rates fared better than apartments in the fourth quarter, falling by just 1 per cent over the three-month period, primarily due to the limited availability in central areas, the Dubai-based company said in its Q4 report.

It was a ‘flight to quality’ for the tenants in Dubai as an increased supply of top-class quality, affordable accommodation, particularly in the apartment sector provided the catalyst for considerable tenant movement across the emirate in Q4, the report stated.

In addition apartment rental rates declined by just 3 per cent during the same period, the lowest quarter-on-quarter fall during the year, an indication that the market is showing signs of stabilisation, the Dubai-based company said in its report.

‘The real estate market is characterised by a large supply of high quality stock at affordable rates, leading to a flight-to-quality trend currently seen across Dubai,’ commented Elaine Jones, CEO, Asteco Property Management.

‘Indeed although apartment rental rates fell last year, it was still less than the 24 per cent drop in 2009, further indication that market prices are stabilising,’ she noted.

According to the report, International City has seen the largest drop due to tenants migrating to better quality developments in more desirable locations. Overall studios experienced the lowest decline and one-bedroom apartments suffered the largest fall.

“Rents are expected to continue their downward trend in 2011, albeit at a lower rate as more supply enters the market, providing prospective tenants with even greater choice,” added Jones.

Interestingly, the villas fared better than apartments as it fell by just 1 per cent primarily due to the limited availability in central areas. Quality communities such as Palm Jumeirah and Jumeirah Islands performed better than more mature developments such as The Springs and The Meadows.

Unsurprisingly, office rental rates fell by 8 per cent in the fourth quarter 2010. DIFC set the tone by reducing their rates per sq ft from Dh370 in the first quarter of 2010 to Dh230 in Q4 (a fall of 22 per cent) in an attempt to compete more favourably with quality developments on Sheikh Zayed Road such as Rolex Tower and Sama Tower.

Continued delivery of new stock in JLT and Tecom sent rents down by 20 per cent and 12 per cent respectively. Although transaction activity has picked up due to the improving economy, continued oversupply will no doubt put further downward pressure on rental rates, the report said.

In contrast, office sales prices only declined by 6 per cent in Q4 and just 8 per cent during the whole of 2010, predominantly due to weak transaction activity. Prices will remain subdued due to a lack of investor confidence, it added.

Apartment sales prices slipped by only two per cent on average suggesting a slowdown in the rate of decline, Asteco said in its Q4 report.

Continuous delivery has seen average sales prices in Dubai drop by Dh100 to Dh850 over the past year, while prices in International City and Discovery Gardens have fallen to Dh350 and Dh450 per square foot respectively.

The sales prices on Palm Jumeirah were flat in Q4 but still command one of the highest prices at around Dh1,500 per sq ft, Jones said.

Meanwhile, the villa sales prices in Q4 were relatively stable with only the Springs experiencing a 4 per cent fall, she added.

Overall the market prices fell just 8 per cent in 2010, with downward pressure more predominant in developments with a large inventory, such as The Springs and the Arabian Ranches. Market demand continues for smaller units, driven by affordability, the report concluded.

Report – TradeArabia News Service.