The world’s housing market is broken.
Whether from an economy developed or developing. There are simply too many people chasing too few dwellings. More people born that can be coped with, less wanting to give up second homes or not able to move out or on.
In England, a country so crowded that it’s suffers over four-times America’s ‘Lower 48’ population density, the problem appears fatally compounded.
Economics journalist Liam Halligan suggests ‘the main barrier is that there are very, very big vested interests to tackle’.
His book Home Truths, talks of an ‘iron triangle of vested interests’.
This interested me for two reasons. First, as a tangent, is that this phrase is long well known in project management circles. Their ‘iron triangle’ refers to the three sides of cost, scope and time that when altered, impact upon the inner theme of quality to change your project outcome. Constraints also framed as budget, functionality, deadline upon risk.
Second, it is a fascinating construct when mapped onto the often nefarious subterfuge for which vested interests are infamous.
In the housing market, the three ferocious ferrous forces being; homeowners, housebuilders and the banks.
Homeowners don’t want more houses to be built near them. Nor do such ‘Nimbys’ want a larger pool of houses to dilute their own home’s price.
The big housebuilders and land agents like to sit on land. Pursuing ‘contrived scarcity’. Making both land and any house-stock artificially more valuable. They’ve also seen off a whole raft of smaller housebuilders, leaving them with oligopolistic power through their abuse of a now non-functioning market.
The banks are up to their necks in property loans. About 70 per cent of all bank loans in Britain are linked to property. Banks want the value of the underlying assets that their loans are linked to to keep rising, to make their balance sheets look stronger. So they have got no incentive to lend to small builders to build more homes.
Many (most?) solution sales stir vested interests. Whether silently manoeuvring behind the scenes or publicly shouting down your ambitions, their own agendas are considered superior to the greater good.
To recognise them, and share with allies, can go a long way to diluting their power.
Those wanting any money spent elsewhere, promoting their own fiefdom’s pet initiatives instead or sticking to the status quo.
Can you make your own buyers iron triangle?