We warned of the impending housing crisis a month ago. The dearth of land and abundance of cheap money has pushed average house prices in London above £200,000 – beyond the reach of most nurses. Meanwhile, all the government's other initiatives are in trouble, too. Tenants have rejected stock transfers in London and Birmingham, PFI housing pilots are grounded and attempts to repair substandard homes will still leave a million uninhabitable. Then, last week, we discovered that developers are pulling out of a 600-home scheme in impoverished Lambeth because the council's tariff of 50% affordable dwellings is too high. The net result is that ministers' vision of offering "everyone the opportunity of a decent home" is a mirage.
Perhaps the free-marketeers are right, and the rampant price inflation can't be sustained: April's 3.4% hike was the biggest monthly rise since the late 1980s. And it must be remembered that, for all its anguish over key workers, parts of the government like rising house prices; the Exchequor has netted £3bn over the past five years from stamp duty and inheritance tax (although not from the Queen). However, the public has also started buying to let, and personal debt is rising to dangerous levels. If the rental market topples, it could presage an almighty crash. The other argument for leaving it to the market is that if prices do become unsustainable in the South-east, firms will relocate. But privately, ministers accept that Chairman Mao would have had difficulty persuading them to move to Burnley, where 4000 private homes lie derelict. And even if commerce does migrate north, 100,000 key workers will still need homes in the South-east.
Should ministers acquiesce to the HBF, then? Conditionally, yes, because the case for more housing is incontrovertible. There's also an argument for developing where people want to live, as they do in the USA, albeit without repeating the untrammelled expansion of 1930s London.
If there must be percentage quotas of affordable homes, let's make it 30, not 50. Releasing more land is only part of the solution, though. Roger Humber argues eloquently against Falconer's prefabs (see news), but the minister's call is a sign of imaginative thinking – mixed with political desperation. Of course, Falconer would have to make it clear that we aren't shoving our "angels" into Nissen huts. The contented residents of Murray Grove in London and Poplar Tree Gardens in York may help with that. Prefabrication is proving quick and cost-effective. If Falconer can deliver the land, planning approvals and (if need be) subsidies, construction should support him. Who knows, he might be open to other suggestions, such as the stack developments we highlighted last week. Clever ideas, such as building flats over rivers and petrol stations, are the sort of thing that can be left to the market. But nobody can leave the present housing crisis to chance.