This Week in Property: The Latest News (28th July 2022)

Take a look at what our CEO Gill Fielding has to say about this week’s property news…

Planning confusion

I’ve written often about how the government don’t build the number of homes that they promise but in order to be fair to any government (not sure why) it isn’t entirely in their control. Every government claims that they’re going to build 300,000 homes per year and since 2106 planning permission has been granted for over 300,000 homes per year and reached 329,000 in 2017 and even in this post Covid year 307,000 planning permissions have been granted. So what happens to them all? Of the 307,000 permissions granted this year only 172,930 new homes were started and 171,630 completed so about 45% permissions have fallen by the wayside. There are many reasons: land banking by builders is an obvious reason but it’s more than that. Builders only build at a rate that maintains their selling prices and profit. If a builder builds too many and too quickly the selling price starts to fall and that doesn’t suit their business. The next reason is that larger builders tend to build the same sort of houses and developments and eventually that has limited appeal for the buyers and what we want is variety of housing stock but builders will always want to build those houses that give them the greatest profit. Larger builders won’t sacrifice profit for the good of the national housing availability but of course these constraints don’t apply to the smaller developer or investor and that’s why the government allow so much to be done now with permitted development – to encourage us small players to contribute to the overall housing stock. But of course we don’t build or develop at anywhere near the rate required for the government to meet any of their housing targets and I can’t see them offering larger builders any subsidies or perks to develop more so we’re stuck with what we have – and that means house prices will always be strong because we just don’t have enough housing stock for our national needs.

The rich get richer…….

There’s no such thing as levelling up as far as money is concerned and the rich will always get richer and the gap between the top 10% of wealth and the other 90% gets wider each year. In 2006 the richest 10% of people owned £900k more than a person in the middle 10th but now that gap is £1.2m per adult. Interestingly since 2006 we’ve had the credit crunch, a recession and Covid and it seems that the rich do better in difficult circumstances than the poor. There’s obvious reasons for that: the rich tend to own stuff – houses, shares, and art for instance which increase in value over time but it’s more than that. The rich know how to treat money, how money works, how to behave with money and they have the confidence to invest when prices go down. Poor people panic when prices fall and hide their money under the bed which is always the worse financial decision anyone could make. The good news is that the lessons and behaviours of the rich can be copied and learnt; poorer people don’t have to stay poorer and in our society wealth is a choice for everyone – so get learning those wealth lessons and make sure you don’t fall behind the top 10%.

Are the posh feeling the pinch?

I always imagine that people who shop at Waitrose (or M&S now) are not affected by rising prices as much as people who shop at lower cost supermarkets but it turns out that not’s true! The average cost of an Ocado shop has now fallen from £138 in 2021 to £120 now. Obviously as prices are rising that £138 shop would now cost nearer to £150 so the Ocado shoppers are definitely tightening their belt and that’s understandable as costs, and inflation are spiralling. The cost of living is rising for everyone and consequently we all need to spend less in order to make our money last and one thing we can all do is just to cut back on our shopping spend. But also try making your shop last longer. I used to shop every week but I moved my shopping day one day more each week – so rather than my shopping lasting me 7 days, I made it last 8 and so on. I’m now at shipping every two weeks rather than one and although my shopping list has changed and I have to plan better – it’s worked and I’m spending significantly less on my food shopping than I was. And that works whether you shop at Ocado or a local discount shop.

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