I’ve written several times in the past about how housing, or more precisely the lack of it, is one of the biggest challenges we face as a country. It seems particularly appropriate that, on a week where the government is tearing itself apart over the gross unfairness of its own budget, the Chartered Institute of Housing (CiH) released their annual report of the UKs housing market. It does not make for pretty reading.
Two pieces of data in this report illustrate in the starkest of terms the disaster that has befallen British housing. Firstly, demand-side support (that is to say, investment to help people buy houses) such as Help to Buy and Starter Homes now amounts to £43 billion while supply-side support (that is to say, actually building houses to people to rent or buy) totals less than half of that at £18 billion. That figure is enough for the CiH to conclude that investment in affordable housing will soon fall to its lowest level since the Second World War.
You don’t have to be a student of economics to understand that the only thing that happens when you increase demand without increasing supply is that you make things more expensive. That’s why housing prices in many parts of country are now approaching their 2007 peak, and in many other places (mainly London and South East) they’ve gone far, far beyond that.
That leads us nicely on to the second piece of data, which shows that despite the money thrown at helping people to buy their own homes, first-time buyer numbers have not increased. In 2000 over half a million people bought their first home, 15 years later that number has plummeted to less than 300,000. Put simply, all the government has got for its £40 billion is an unsustainable housing bubble that has made it even harder for people to get their foot on the property ladder.
And if you think that’s bad, people who rent have it even worse. If investment (or the lack of it) continues at its current rate it is estimated that a combination of Right to Buy sales, demolitions and conversions will lead to a 9% loss in both council and housing association properties let at social rents by 2020. That’s a loss of over 350,000 badly needed social rented homes. Not only are the government refusing to build more homes for let at social rates, they are going out of their way to get rid of their existing stock as quickly as possible.
We’ve already seen where this path leads us. Obscene house prices leading to a colossal housing benefit bill for the Treasury and collapsing home ownership among the young. The only thing more infuriating than the economic illiteracy of our current housing policy is its devastating human cost.
We need to have a serious conversation about rebuilding our housing market from the ground up. We have made progress on this as a council through Residential Growth Summits and our house building and investment work with the Greater Manchester Combined Authority, Greater Manchester Pension Fund and Matrix Homes has been so ambitious that even Conservative ministers have praised it. However, in truth this is a national problem that requires a national solution. For the sake of the economic and life chances of the next generation we need to start finding that solution sooner rather than later.