July 2012: There’s every indication that there are serious problems ahead for the UK housing market. And we’re not talking about whether the value of your house is increasing as quickly as you might like. There are much more serious underlying problems we should consider.
To meet the demands of a growing population we need to build 230,000 homes a year. We are only building 100,000 – this is a disastrous supply issue. Easpecially when you consider that building houses is labour-intensive. If each home creates 2.3 jobs then the extra 100,000 homes creates 230,000 jobs – this could kick-start broader economic growth.
But there are considerable forces ranged against a prospective house-building programme. The National Trust and the Campaign to Protect Rural England don’t want anything built outside of the major existing conurbations. This sort of thinking tends to get the backing of existing home owners. Any suggestion that enough homes will be built to actually solve the supply problem might mean house prices softening!
Home owners in desirable areas are, of course, keen on voting – they pay the highest mortgages and feel they have the most to lose. So the Governments real incentive to encourage new house building is countered by there desire to be re-elected.
In addition there is a massive social problem brewing as well
- Risk of building subsidised rented housing has become too great, the borrowing too high and the payback too long
- Housing Associations will not “commit financial suicide on behalf of the Government”
To make things even more complicated London’s housing stock is “an increasingly internationally traded asset” which can only be bad for business as workers can’t afford to live there.
So the Housing Strategy solution must start from the bottom solving the social housing crisis. Unfortunately the Housing Association client is far less likely to vote. So if the Government tries to the right thing the Nimbyism of the middle classes (who do vote in large numbers) is likely to kick them out.