The current government’s policy to build, build, build in a bid to reduce the housing shortage may be misplaced, so says a new report from leading think tank the ‘UK Collaborative Centre for Housing Evidence’.
The report’s authors, a consortium of 14 institutions which includes the Royal Institution of Chartered Surveyors, claim that efforts to boost supply are failing to address other key factors which are preventing many people from getting suitable housing. They focus on the fact that the government’s myopic policy of boosting supply ignores the fact that growth in the country’s housing stock has been greater than the rise in the number of domestic households. Official figures have suggested the number of homes in excess of households rose from 660,000 more dwellings in 1996 to 1.1 million last year. In other words it’s not about volume it’s about requirement.
The report also points out that the role of lower interest rates, which have apparently fallen from 8% in the late 1990s to around 2% today, is driving up house prices. This is not going to help the younger people reliant on the bank of Mum and Dad finding a new home. This may come as a surprise to some people as price rises may not be immediately apparent, mainly due to Brexit, but eventually the current moribund state of the housing market will be deemed the new normal and people will start moving again. It may not be this year or even by 2020 but the law of supply and demand indicates the market will need to move again at some point. Also, it is in every government’s interest to encourage mobility as this creates tax income from house sales.
However, with rumours of the new chancellor considering taxing sellers rather than buyers in his next budget, those at the top of the housing chain with the larger homes will be dissuaded from selling if they feel disadvantaged by having paid stamp duty when they bought their home as well as being required to pay again at the point of sale. The lucky people at the top of the chain with larger homes will surely not sell and this will block housing market chains.
The truth is that almost 700,000 more young people aged between 20 and 34 are currently having to choose between paying market rents or living with their parents when compared to 1996. This is a growing constituency and they are not going to vote for the reactionary conservative party re-positioned to the right by Boris Johnson. They are looking for a political, as well as a physical home.
The UK Collaborative Centre for Housing Evidence is clear that higher rates of home ownership will require more fiscal intervention from government to either subsidise first-time buyers or reduce financial incentives for landlords.
In my view, the current government has no interest in this issue and by placing the divisive and ill-equipped Ester McVey in the housing minister role is illustrative of their apathy and disinterest.
Julian Barlow is owner of BFC Marcomms Ltd
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