> Whereas 20 years ago the house price to earnings ratio in London was about 4:1, it has now reached 10:1, and the mean rent-to-income ratio has climbed from 1:5 to 1:3 in the last 15 years. This situation implies that resources keep flowing to land owners and homeowners.
> By far the larger part of house price increases in recent decades is attributable to the increase in land prices. Fifty years ago, total UK land values amounted to around 50% of GDP, now they amount to 200% of GDP.
> Sadiq Khan seems intent on ramping up ‘affordable housing’.He wants to see housing rationed according to political prerogatives, up to 50% of all new housing provision, which thereby makes the remainder (which has to cover the subsidies) all the more unaffordable. No wonder that the income eligibility threshold is ramped up continuously also. So-called ‘affordable housing’ creates a vicious interventionist spiral.
[ > Adam Smith Institute — April 25, 2018 ]
