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

Our latest round-up shows that prices are on the rise in most markets…

THIS time last year, The Economist’s survey of global house prices was a sea of negative numbers. That was then. Of the 20 markets tracked in our latest survey, only four still posted year-on-year declines and only Ireland’s property catastrophe has worsened. (America’s FHFA index, which excludes houses that are financed with large mortgages, was also down, but the country’s Case-Shiller national and ten-city indices rose modestly.)

Asia’s price rises lead the way, as they did when the data were last published in July. Singapore, Hong Kong and Australia boast the gaudiest year-on-year price increases, even if the rate of appreciation is down a bit from the summer. House prices in China rose by 9.1% in the year to September, compared with a 12.4% rise in May. That is still too fast for the government, which unexpectedly raised interest rates on October 19th and has outlined more measures to cool the market in recent weeks, including higher down-payment requirements and the introduction of a property tax in some cities.

Our analysis of “fair value” in housing, which is based on comparing the current ratio of house prices to rents with its long-run average, suggests that China has less to worry about than the likes of Australia, which is again the most overvalued of the markets we track. That makes it all the more surprising that Australia’s central bank opted not to increase its benchmark interest rate this month.

Europe shows a familiar split between core countries and peripheral ones. Ireland, Spain and Italy continue to suffer year-on-year price declines; German and French homes have shown big gains in value over the past year, a particular turnaround for France since our previous round-up. The British housing sector’s talent for defying gravity may be on the wane. The pace of annual appreciation in the country’s property market has slowed over the summer. British housing is still overvalued—outright falls may loom.

America’s housing market, almost alone among those which experienced a big bubble, is more or less fairly valued at this point, at least according to price-to-rent ratios. But price rises may not last for long. Earlier gains were driven by substantial reward programmes and government subsidies, many of which have now lapsed. America’s overhang of housing inventory may get worse if concerns over lenders’ foreclosure processes jam up sales. The temptation for the country’s 11m underwater borrowers to walk away is another threat (see Economics Focus). And being at or below fair value is no guarantee of a bounce in prices: Japanese housing fell by 4% in the year to the end of the first quarter, despite being stuck far below its long-run price-to-rents ratio.

Report by Finance and Economics – The Economist.

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The Avenue has many spectacular and famous landmarks and is lined with luxury retail stores. It has some of the most expensive real estate in the United States.

A 800 square foot one bedroom condo can cost a million dollars upward, go get!

Find out more about real estate in New York.

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Average House Prices in Canada, (September 2009) Canadian Dollars

Vancouver $611,000
Toronto $407,000
Calgary $395,000
Montreal $285,000
Halifax $234,000

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