We are building a property-owning democracy
So we have a housing crisis. Again. The National Housing Federation yesterday released the results of a report that showed owner-occupation is likely to fall to just over 60% – the levels it was back in the 1980s.
And as usual, the politicians are scrapping over whose fault it is this time.
Yesterday the shadow housing minister Alison Seabrook MP (yes, exactly, who?) told Sky News that housebuilding increased under successive Labour governments, only to be shot down on Twitter by Housing Minister Grant Shapps, who pointed out that, under Labour, housebuilding fell to levels not seen since the 1920s.
Obviously, Shapps didn’t get around to saying that this fall wasn’t just down to Labour spending cuts but was caused in the main by the global financial crash which wiped gazillions off the value of housebuilders’ shares, causing them to grind to a halt in terms of output.
It doesn’t matter who was ostensibly to blame, and of course politicians will always try and pass the buck to the other side. The problems with the UK housing market go far beyond mere spending cuts and consumer confidence.
According to the NHF, we are in danger of having an entire generation “locked out” of the housing market, stymied by high prices, stagnant wages, and the need for larger and larger deposits – down to pressure from lenders and the fact that prices have risen so high.
One argument could be for prices as a whole to fall, allowing first-timers access to the property ladder but that means those who are further up the ladder already would be screwed, not to put too fine a point on it. For many elderly people, the assets they hold in their homes are the only ones they have. Living off the income from savings has become an impossibility thanks to rock bottom interest rates and for many of them, the only way to fund long-term care is going to be by using the equity in their homes.
Shapps says that the government is doing its bit by bringing in planning reforms and releasing government land for building but this will take time to filter through.
However, just building more houses won’t necessarily help further up the chain.
For the merchant sector, it’s the level of housing transactions which really count. The majority of RMI work on a property is done within two years either side of a house sale. Without first-time buyers to get onto the ladder, there isn’t a way for those transactions to move through the chain.
If you put too many first-time buyers into new build properties, who’s going to buy the houses of those former first-timer buyers who now need to move on and upwards through the chain, repairing, maintaining and improving as they go?