Building a better future for Britain begins at home
THE property market should be an engine of prosperity in modern Britain, but has increasingly become an agent of division. Those who own their own homes often enjoy unprecedented wealth because of soaring values. Yet those excluded from this bonanza can find themselves in a permanent financial struggle.
This chasm is bad for cohesion, fuelling resentment and undermining equality of opportunity. In a well-functioning society, people who work hard should be able to buy their own home so they have a base for their family, an asset for their security and a stake in their democracy. But that is not what is happening today.
According to the monthly Halifax index, the average house price is now £286,000, almost ten times median earnings, while levels of home ownership have fallen dramatically. In the mid-1990s, 70 per of those aged 25-34 were owneroccupiers, a figure that has now dropped to just 40 per cent.
Apart from the tremendous social implications, this change is politically dangerous for the Tory Government.The vision of home ownership has long been central to Conservative philosophy, as epitomised by Margaret Thatcher’s flagship policy of right to buy for council tenants. That dream has turned to ashes for too many. Tellingly, the Levelling Up Secretary Michael Gove blamed the affordability crisis for the poor performance of the Tories in last week’s local elections across London and southern England.
IN THE Queen’s Speech this week, the Government set out a number of useful proposals to reform the housing sector, including more protections for tenants and a greater say for local communities on planning applications. But none of these measures addresses the fundamental point that most property remains too expensive for large sections of Britain’s workforce. It is a problem likely to worsen as the cost of living rises and mortgage rates go up in response to inflation.
At the heart of this affordability crisis lies the reality that demand for housing far exceeds supply, partly because of population growth and family breakdown. Simply put, our country is not building enough homes to meet its needs, so the shortage pushes up prices. In the last decade just 1.3 million homes were built, compared to 3.1 million in the 1960s.This week, Mr Gove admitted the Government will not come close to its promised target of 300,000 newly constructed properties a year.
It is common to blame this restriction in supply on the bureaucratic local authority planning process, propped up by selfish nimbyism, but that is something of a myth. In fact, four fifths of planning applications for residential developments are approved by town halls, but the big developers regularly sit on these permissions – a process known as land banking – to push up property values. Profits and prices have been further enhanced by misguided Government subsidies, like the disastrous Help to Buy scheme which cost the taxpayer £29billion but did nothing to improve affordability.The money would have been better spent on the direct construction of social housing.
A sense of despair is compounded by the ugly, shoddy nature of so many identikit developments. A recent study found the average new home comes with 157 defects. This widespread lack of architectural merit or craftsmanship is a central reason why the sprawl of new estates arouses such public hostility. One place that spectacularly bucks this trend is Poundbury in Dorset, the brainchild of Prince Charles who has ensured this magnificent new town has aesthetic appeal and a sense of community.
As the new planning reform suggested, Mr Gove believes Poundbury could be a model for the future, with its emphasis on neighbourhood consent, physical beauty, a large element of social housing and a viable local infrastructure.
BUT there are many other steps the Government could take to address the crisis. One is to break the stranglehold of the big developers by engaging in its own massive programme of public building. Another is to bring more empty homes back into use – it is estimated around 240,000 properties have been vacant for six months.A third is to use tighter controls and taxation of foreign home owners.
Above all, ministers should welcome a gentle, downward correction in house prices. There should be no attempts to keep values artificially high with desperate market interventions, as has happened too often in recent decades. A never-ending boom might be good for some households, but it is bad for the health of our nation.
‘A never-ending housing boom is bad for the health of our nation’