I have been involved on the periphery of the ‘housing’ debate for the last 14 years – the story was bleak when I started and is no less bleak today.
I am neither a builder nor a politician but I suspect the answer to the problem lies somewhere between the two; and it’s not an easy challenge to address (it’s certainly on a par with the NHS crisis).
We’re within weeks of a general election and it’s to be hoped that irrespective of which party flag will be flying over 10 Downing Street on the Friday 8th May, the victors will understand the size and enormity of this particular problem. There are only two questions that should be asked:
Knowing the answer to question 1 may or may not provide the start point for dealing with question 2; as with most big problems – the cause is rarely one thing and often not entirely clear. Here are some of the explanations previously provided by many and varied sources:
So where has this put us as a nation?
The population argument – forecasts predict that by 2030 there will be three million more adults aged 65+ expected in England. The National Housing Federation estimates that over 100,000 extra homes for older people will be needed in the housing association sector alone in the next 15 years. Latest reports from Age UK showed that 1.9 million bed days were lost to the NHS in the four years to June 2014, as older patients waited in limbo, ready to leave hospital but delayed because of care packages or home adaptations taking time to be arranged.
The occupancy argument – the 2011 census confirms that while 1 in 20 households were overcrowded, 7 in 10 were under occupied!
The migration argument – 2013 net flow of 298,000 to the UK (highest level since 2005)
The building argument – the number of homes being built is less than half of the 250,000 needed each year just to stand still. The amount of affordable housing has also fallen sharply.
The finance argument – the building industry has been contracting since the late 1980s, but the financial crisis hastened the decline as small developers found it increasingly hard to raise money. Data from the Home Builders Federation shows how the number of firms in England and Wales building 100 or fewer units a year fell over the 24 years to the end of 2013. The purchaser finds it no less difficult. In some areas of the country homes now cost almost nine times local salaries, and those who will never be able to afford to buy or rent privately are on council house waiting lists with more than 20,000 other people.
From 1978 to 2014 in real terms house prices have risen by 2.7% pa when adjusted for inflation (source: Nationwide)
*Adjusted to account for inflation
So, that pretty much sums up how we got into this position. Now how do we get out of it? If I had the answer I would be doing a different job to the one I am doing, but I know this much … there needs to be far more than just political will power to solve this, and money alone is certainly not the answer. As a nation we need to recognise the enormity of the problem before we can embrace any solution. Save for the fact that first-time-buyers have dominated the news headlines since 2007 as the constraints to obtaining a mortgage have driven up the number of people who may never get on the first rung of the house owning ladder, the housing shortage broadly is less understood by the average consumer who would probably have little or no idea of the annual target requirements. So surely there is need for better communication to re-educate the national conscience.
One of the perpetual concerns of any political administration is an over-heated property market – I have been raised as part of a generation who see the money that can be realised in the life-time of a house, as the corner stone of their pension pot, yet the boom and bust reality of property ownership flies in the face of this. When adjusted for inflation the price of housing in the UK has more than doubled in the last 30 years. The cost to build a house varies little between one county and another, so the only variable that makes a 4 bedroom house in the North East worth £200,000 and the same in the South East over half a million, is the cost of land. Yet is it not the case that the greater the availability of anything, the less of a value it can command in its market? There are three fundamental features that make or break the suitability of land for re-development:
But more recently further factors have been …
I fear that no politician has the courage or the motivation to see this through. It’s a complex many layered problem that will take a Herculean effort and, the buy-in of the electorate for at least a generation.
The construction industry clearly has a major part to play. Post economic melt-down we have seen new companies emerge (often from the ashes of those who were burnt). The later bread of new home developer is a slimmed-down variant of leaner proportion. Largely operating with few senior experienced managers and out-sourcing many of those functions previously handled under the one roof, to external specialists. It’s by no means unique and other industry sectors long since learned the lessons of top heavy overheads in times of recession. As an out-sourced service, we see every day examples of companies who burden themselves with problems they don’t need and solutions they can’t sustain. It is refreshing to work with developers who understand that their focus is to concentrate on those things that create value, than those that merely cost money.
The UK has been sliding into this problem for decades and, like most other galactic size crises (the NHS, Pensions and the cost of University Education) we have to start the process of correction by accepting that eventually everything changes and will never be the same way again.
After Build Limited
Units 1 & 2 Woodfield Farm Offices, Isaacs Lane,
West Sussex RH15 8RA