As we approach the time for another election, the temptation is to try to turn the so-called housing ‘crisis’ into a partisan issue. Each party will come up with supposedly magical solutions. Don’t believe any of it.
As our chart shows, we are not in an acute housing crisis. We are simply reaping the results of government policies over the last fifty years – governments of any colour or shape. In short, we have chosen to use the increased wealth accumulated in the country over the last several decades to spend ever more of our money on the same house rather than on expanding the housing stock and keeping house prices affordable. In what world does that make sense?
The housing predicament can be summarised as follows:
-In the UK, housing has been converted from a question of having enough affordable dwellings for people to live in to being seen as a financial asset and the subject of financial speculation.
– This benefits banks that see increasing money creation to finance loans that are seen as being safer in an environment of constantly increasing prices.
– It also benefits house builders who can improve profits by keep prices high by limiting supply and hoarding building land.
– Government policies such as Help to Buy are like cocaine – they give an immediate high while continuing to embed an entrenched problem of ever decreasing affordability.
– The public has also been sold the idea that rising house prices means that they are ‘wealthier’ – when in fact they are nothing of the sort. Yet the public is not as stupid as many seem to think. Only 18 per cent of the population believe that increasing house prices are good for Britain.
– In contrast to other wealthy countries like Germany and Switzerland, in Britain we have also established a culture that home ownership (which actually means bank ownership – at least for many decades) as the only route to being a respected human being. That rental is for losers. This has degraded the rental market to the point of near non-viability.
– We have had ever-exploding planning regulations, with room being created for endless appeal processes, and successive governments kissing the feet of every NIMBY vested interest.
These issues are now having a drastic impact on our economy’s ability to expand and be competitive. As one example, Cambridge’s dream of becoming a global science hub are turning to ashes because of opposition to housebuilding and lack of infrastructure.
It is likely that, despite all the hot air we are likely to hear during an election campaign, the housing issue is now too far gone to be fully resolved. Any politician promising to ‘solve’ the housing problem (and in a single parliament no doubt) should be laughed off the stage.
Yet it may be possible to make some progress. Here you will find our modest suggestions for the future of housing policy. Please write to us with any comments or suggestions.
And remember, this has been a failure spanning decades and in which governments of all colours have been complicit.