Does not compute

This is an odd thing for an economist to say:

If houses could be bought relatively cheaply, it was because local councils once provided \”social housing\”. Council houses were sold off by Margaret Thatcher – leaving housing entirely to the market,

Flogging off council houses increases the supply of houses that can be purchased. Other things being equal (which of course they weren\’t, I\’m looking at this one single point) that would make houses to buy cheaper, not more expensive.

Then again, Irvin is an \”economist\” at SOAS and they do things differently there.

13 thoughts on “Does not compute”

  1. Don’t you recognise him?

    “George Irvin, David Byrne, Richard Murphy, Howard Reed and Sally Ruane (2009) In Place
    of Cuts: tax reform to build a fairer society, London: Compass Pamphlet.”

    Ritchie and Georgie. Co-authors. At Compass.

    Tim adds: Oh, sure, I know who he is. Even annoyed him directly via email.

  2. Right to buy would n’t necessarily have flooded the market with new to the market houses would it? Most would have been bought by long-term tenants tired of paying rent and so the effect might have been fairly neutral, with no great number of houses being made available for the
    general run of market customers until these former tenants started popping their clogs. And then builders could have built fewer houses to balance it out.And maintain price levels.
    I would have thought this might have been of more interest “Most workers experienced years of stagnating real wages and growing job insecurity.With real wages lagging behind labour productivity growth…”

  3. You are right. The only way to make homes more affordable for all is to build about four million more of them. On that narrow test, it really does not matter which sector they are in.

  4. Pingback: Always Someone Else’s Fault « Neil Reddin … No G

  5. Right-to-buyers who sold their houses quickly had to pay back a fair amount of the market discount, so there wasn’t that initial enthusiasm for quick sales.

  6. What really counts in the long run is things like planning laws. Increase available supply, then other things remaining the same, prices will drop. (And DBC, don’t even try and claim that some cabal of Evil Landlords/speculators/whatever) would “hoard” this new supply in the hope of a rising price, since without the benefits of cheap interest rates, any “hoarder” will have to release it eventually, if only to cover their costs.).

  7. @RA
    What I was suggesting was something along the lines of supply and demand.Right to buy may have increased the supply of houses available on the market but it also increased effective demand by bringing onto the market a whole lot of former tenants.Result: pretty much neutral I would have thought.

  8. @RF
    And which house builder is going to flood the
    market with cheap houses? If prices fall somewhat 1) recent purchasers pre flood are going to be aggrieved 2) wannabe homeowners are going to hold off buying to see if prices fall farther.
    A test case for the romantic notion that capitalists are just swashbuckling scapegraces who in their rough and ready way contribute to the public good economically was the Rating (Empty properties ) Bill ,subsequently, Act of 2007.This was expressly designed to stop landlords keeping commercial properties empty to boost rent levels in the rest.Gormless Michael Gove was incredulous “The basic premise of this bill is that owners are deliberately keeping property empty!!Who (are ) these remarkable individuals or odd companies who (want) to earn less than they could every year?”
    His confusion is total .Capitalists who do not boost productivity?Capitalists who restrict supply in a tight corner ?How can this be?
    Fortunately New Labour knew what was going on and passed the bill which imposed full rating on vacant commercial property.The effect would have been more beneficial if rating (or local LVT) had been imposed on unused land.But the principle would have been the same.

  9. Totally bizarre claims by the author. How councils providing housing for rent meant that houses were cheap to buy is beyond me. In many parts of the country substantial holdings of council homes exist alongside astronomical prices for private houses.

    He also parrots the “Thatcher sold all the council houses” myth. About 1.5 million councils houses have been sold under right to buy, but a huge proportion of the population was housed by local authorities before the scheme started – the great majority have not been sold off.

    Social housing still exists – provided in some boroughs by councils, in others by RSLs who have taken over council housing stock, and also by almshouses and housing trusts (eg Peabody, Guinness) which existed long before the 1st council house was built.

    Typical Guardian article – absurd logic and total disregard for the facts.

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