Following on from my rather angry post yesterday, I thought I would elaborate on a possible solution to the housing problem.
By the housing problem, I refer to the fact that house prices continue to climb above inflation and therefore become more and more unaffordable. A contributing factor to this is the inability to match housing supply to demand – that is to say, we simply don’t have enough houses.
But actually, we do. Go for a walk around Clarence Dock or City Island and you’ll find them a ghost town. Nobody lives there.
A significant contributing factor to this is that a lot of people bought second homes to rent out and then the property market collapsed and so all of these people were left with properties they couldn’t rent out nor could they sell and nor did they really want. But of course people refuse to sell them at a loss, so house prices don’t go down to an affordable level, and so they continue to be unaffordable.
One way to resolve this problem is to ban the practice of buying a second home to let. Just make it illegal. This might sound crazy at first but it’s actually more common than you would think – in Japan for example, you can only rent out a property that you own in it’s entirety (without a mortgage).
Because, when you really think about it, buying second homes for rent is really just taking advantage of the younger generation, or poorer strata of society. If you weren’t allowed to do this, housing companies would be forced to sell to people who actually want to live in the house and so they would have to be affordable for people – no more fat landlords buying all the properties and forcing people to pay rent to pay off someone else’s mortgage.
