As the bucket and spade season approaches and you head to your holiday home, you may be interested to know that just one percent of English houses are second properties.
Unfortunately for local residents, most of that one percent seem to choose St Ives as the location of their second home. According to the town council, fully one quarter of the properties in the town are owned by outsiders or are holiday lets. This, according to aggrieved councillors, prices out locals and turns St Ives into a ghost town during the times of the year when Londoners are away earning money.
In May, the town had a referendum on the issue and fully 83 percent of residents opted to introduce a ban on new homes being sold to outsiders.
This is a bonkers response to a difficult problem. If you restrict the market for new homes in this way, the prices of those homes will inevitably drop. This will prompt sane housebuilders to go elsewhere, so there will be no uplift in the number of new homes for locals, particularly as the supply of social housing that comes with new development will also be switched off. Rich incomers will have to look elsewhere and eventually that will reduce the money flowing into the town. Existing homeowners will resent the hit on the value of their houses and at worst the town could get ‘ghostly’ during the summer as well as the winter, hitting everyone’s livelihood.
The real answer to the problem in St Ives is to build more homes. If you increase the supply, prices will drop and locals will be able to afford to buy. But if a second referendum was held in St Ives asking locals to accept a 50 percent increase in the number of houses you’d get an even more emphatic response than the 83 percent who voted last time.
This is the British malaise. Those of us who own property are happy to profit from the upward escalator in value it brings. To protect our position, we resist new development. This selfishness causes the young and the poor to live in inadequate and expensive homes in areas they don’t want to be. It reduces the flexibility in our economy and constricts growth.
The answer to a shortage of housing is to build more houses. It’s a no-brainer. But unfortunately brains don’t seem to count.