The need to focus on housing affordability and delivery couldn’t have been clearer
A year ago this month, amid growing evidence of a housing crisis, the government unveiled its ambition to build one million homes by 2020. The need to focus on housing affordability and delivery couldn’t have been clearer. Nationally, 11% more households than five years previously had asked for help to avoid homelessness; first-time buyers in London had just seen house prices hit a record nine times average earnings.
But the slogan-like tone of the government’s goal - “one million homes”, rather than the 200,000 a year it equated to - helped cynics to see the announcement as one more grandiose promise that would gradually fade away. And it looked like they could be right as, amid the usual photo ops of cabinet ministers on construction sites, detail on delivery was less forthcoming.
So it might come as a surprise that, today, the government isn’t far off the run-rate needed to hit its target. In 2014-15, 171,000 homes were added to the country’s housing stock, and many housebuilders expect the 2015-16 data to be significantly closer to the magic 200,000 mark. In view of this perhaps unexpected success, should the UK still be urgently seeking new ways to build more homes? The short - but emphatic - answer is yes.
The first reason for this is that the “one million” target is still 50% short of the number of homes some sector experts believe the UK needs - both to meet demand and, crucially, to address the affordability crisis for both sale and rental properties.
As recently as November last year, Kate Barker, housing expert and former Bank of England policymaker, told a Lords committee that the UK needs 300,000 homes built a year to address years of undersupply. So even were those one million homes created, the UK would still lack enough housing to keep up with demand.
Although the government is relying on an acceleration in housebuilding to hit its target, current trends suggest that the industry is plateauing at best
The second reason is that, although the government is relying on an acceleration in housebuilding to hit its target, current trends suggest that the industry is plateauing at best.
Fears of a post-Brexit vote meltdown in house sales may not have materialised, but the most recent NHBC data shows London housing starts dropped by 62% in the most recent quarter, due to a combination of confidence wavering after the vote and recent stamp duty rises.
Decades of official data tells us more homes are built only if more homes are bought - rather than in response to stated housing need. Residential sales, before the stamp duty changes, had broadly reached their pre-credit crunch height - so any further significant rise in sales, and therefore housing starts on private homes, is unlikely.
So the government does not seem to stand a chance of delivering the homes the country needs without shifting its focus away from a sole push on home ownership towards a mix of tenures.
The most obvious way to do this has been council housebuilding. But options also include subsidising homes for affordable rent, and promotion of the still-nascent private-rented sector which could - thanks to investors’ desire to get rent-payers into buildings as fast as possible - spur the wider adoption of off-site manufacture and modern methods of construction, thus boosting overall productivity.
Given how important housing is to the electorate, the political parties should take the opportunity this conference season to commit to pursuing some of these options. Theresa May’s new government should also start to flesh out some of the detail around the Housing and Planning Act, especially proposals to fast track planning, and take a closer look at London, where the pressure on homes is greatest.
Of course, this will require party leaders - particularly May - to move beyond dogma over housing tenure and pay heed to the market experts they frequently like to consult.
There are worrying signs that such voices being are increasingly sidelined amid the political game-playing of those they advise - the backtracking on statutory independence for the “independent” infrastructure commission is one example. But housing a population, surely, should be an issue considered too big to fail.
Sarah Richardson, editor