What are the silver linings to the Brexit cloud? the question posed on the Cornwall – a developers’paradise blog.
The first and most promising is the effect on the property market. During the referendum campaign, George Osborne and the Treasury predicted that house prices would fall by 18% and David Cameron chimed in to claim mortgages would be more expensive. Of course, it was a little difficult to tell whether this had any basis in reality or was just another scare story blowing around in the blizzard of mendacity that passed for campaigning. However, prices at the luxury end of the London market are falling, shares in property funds plummeting and the construction industry slumped badly last month. So maybe house prices will fall and the building bubble burst before it’s even properly under way.
But if you think that’ll solve Cornwall’s housing crisis and the serious imbalance between affordability and unaffordability then think again. If prices fall developers will just sit on their land and restrict supply until they rise again. That’s how the market works and the provision of houses is almost entirely dependent on market mechanisms these days. Don’t forget the excessive number of planning permissions that have been thrown around like confetti since 2010 and the 17% leap in Cornwall’s housing target. That’ll be more than enough to ensure that after any temporary difficulties builders will be back at work all over our green and pleasant land. Cornwall’s problematic status as a prime spot for asset speculation and a source of unearned income needs a lot more radical, structural reform and will survive any short-term ups and downs in the property market.
Comment Indeed a complete rethink on the housing market is needed and on the planning system. Neither are fit for purpose being mainly designed not merely to accommodate growth but to encourage it. Housing provision has be based on actual local housing need not developer led and the planning system has to be reframed to as to allow local housing need not second homes/luxury/relocation ‘demand’.