In a blog in December Ian Mulheirn points out why a report from the CPS (in common with many others) is wrong.
MP Chris Philp has penned a monograph for the Centre for Policy Studies on what’s behind the housing crisis. You guessed it, he concludes it’s a lack of supply. It’s a clearly-argued piece, drawing on many of the same data sources as various recent parliamentary reports and the housing white paper from earlier this year.
According to the CPS … the cumulative shortfall in dwellings since 2000. London, it’s claimed, has faced an undersupply of 343,000 units! The UK’s shortfall is put at 700,000 houses. … in fact, London added 74,000 more homes than households, and the UK as a whole 365,000 more homes than households (up to 2016).
View story at Medium.com
What a surprise if you use the wrong data you get the wrong results!
In the real world the Governments push for more and more house building will not solve the problem the Government percieve to be the problem as they do not understand the basic issue – its not supply of housing that is the issue!
Moving from the delusional world that policy makers inhabit into the real world what will happen if more houses are built?
Lets say that developers ramp up building to 250,000 a year, about 80,000 more than required.
If the current rules on mortgages for first time buyers apply it will be difficult to sell to new buyers. The alternative is that houses are bought by those with the resources and then added to the private rental market. Some people might (if they can afford the rent) move from other rented property, which begs the question what happens to the empty houses?
Developers will be looking for ways to sell their excess housing stock – in some areas this will be easier than others. For example in London there is always the luxury market for foreign investors. In areas like Cornwall they will market even more homes to encourage people to move to the area or buy a second or holiday home.
But all these extra houses will be of little use to people looking for cheaper rents or mortgages.
In the most extreme cases we hear of the issue of more rough sleepers. Now its a little incredulous to think that the problem rough sleepers have is due to a lack of housing. All the evidence points to cuts in welfare, benefit sanctions and insecurity of tenure in the private rented sector as being significant issues here.
Government ministers need to stop reading the Noddy guide to housing and get real by looking at the evidence and coming up with some sensible policy proposals.
For those interested details of the consultation regarding ‘building more houses’ is set out below.
Two consultations will run from 5th March to seek views on reforming developer contributions to affordable housing and infrastructure and text of the National Planning Policy Framework.
Yesterday saw the launch of a policy of building more houses with the Prime Minister arguing for changes to planning rules.
Housing Secretary, Sajid Javid, said:
An entire generation is being locked out of a broken housing market as prices and rents race ahead of supply. Reforming the planning system is the crucial next step to building the homes the country needs.
This government is determined to fix the broken housing market and restore the dream of home ownership for a new generation. There is no silver bullet to this problem but we’re re-writing the rules on planning so we can take action on all fronts.
In moving to a more integrated society, the focus for everyone, whether a developer or a neighbourhood group, must be to come together to build the homes our communities deserve.
As expected the Government has come up with more rhetoric about building more homes. A case of policy racing ahead of evidence. We wonder if the Government (and opposition) get their policy from the Noddy guide to economics. This is based on the simplistic belief that the only factors that affect house prices and rents are supply and demand.
In reality the housing market is more complex than that but never mind Government ministers plough on regardless.
As for facts they are missing from Government policy – not that that is a new phenomenon!
As policy makers and commentators continue to pursue the wrong policies; make unsubstantiated claims and are oblivious to evidence, lets reiterate some important points.
1) Housing supply has more than kept pace with household formation.
2) Household projections have been based on flawed evidence resulting in over-estimates of new housing numbers.
3) House prices rises are largely a response to low interest rates and cheap mortgages.
4) House price rises can also be attributed to investors, bidding up house prices as did the boom in ‘rent to buy’ purchases.
5) In real terms cost of housing for both renters and owner occupiers has fallen over the past decade, and is about the same as it was 20 years ago.
6) Ownership levels have fallen due to a first-time buyer mortgage drought with greater restrictions on affordability checks and caps on high loan-
The real problem with the housing market has nothing to do with a lack of housing but relates to limited social housing and a rental sector where greater insecurity is a major problem.
Government policies on welfare and austerity have also weakened the capacity of many to compete in either the rental or owner-occupier markets.
According to the BBC
Nimby councils” in England that fail to build enough new homes could be stripped of planning powers, Housing Secretary Sajid Javid has warned.
The government says councils will be told how many homes a year they must build and a failure to do so will see independent inspectors step in.
Mr Javid told the Sunday Times he would be “breathing down” the necks of local authorities to ensure targets are met.
However, Labour accused the government of “eight years of failure on housing”.
On Monday, the government will announce an overhaul of planning rules in an attempt to increase the rate of house building in England. A new planning policy framework will contain new rules to determine how many homes councils must build – taking into account local house prices, wages and key worker numbers. Higher targets will be set for areas where house prices outstrip annual earnings. “For the first time it will explicitly take into account the market prices,” Mr Javid told the Sunday Times. “If you are in an area where the unaffordability ratio is much higher you will have to build even more. It will make clear to councils that this number is a minimum, not a maximum.”
He said councils would also be held to account on house-building promises they make. Mr Javid said councils that fail to meet targets will be stripped of the right to decide what is built within their boundaries, with inspectors making decisions instead.
Nimby – short for “not in my backyard” – is a term that originated in the US but became popular in the UK from the 1980s to describe people who routinely object to any proposed development near their homes that might affect property values. It is not often applied to towns or councils as a whole but Mr Javid said his new rules were designed to stop “Nimby councils that don’t really want to build the homes their local community needs” from fudging the numbers in their area. “We have a housing crisis in this country. We need a housing revolution,” he added.
It is rather worrying that the Government minister in charge of housing policy does not understand the issues and comes up with the wrong solutions.
We don’t need to build 300,000 houses a year
House prices reflect various elements and supply is not the main one
Local communities do not need the extra houses which is why they object
Yes there needs to be a housing revolution – Sajid Javid (and many others), need to get their facts right
What the posts over the last few days – using extracts from Ian Mulheirns blog – have shown is the importance of critical analysis. Rather as most commentators, politicians and housing ‘professionals’ seem to do, regurgitation ‘known’ facts without any critical analysis, it is important to know and understand the data used in compiling reports; to assess it; to question current assumptions; and be prepared to come up with alternative opinions. Only then can a proper debate about housing and the appropriate policy responses be made.