Shared ownership and the changing reality of middle income Britain

HousesToday I participated in a conference organised by the National Housing Federation on the theme Affordable home ownership and intermediate tenure. I spoke in a session alongside Gavin Kelly of the Resolution Foundation and Owen Jones of the Independent. They discussed broad economic currents, in particular the trajectory of household incomes. They also considered the broad question of where housing policy currently features in the political universe, and how prominently it might feature in the General Election 2015. I focused more on some observations about shared ownership in this context.

The text to go with my contribution is posted on Scribd. You can also access it beneath the fold. [Read more…]

Rebalancing towards renting

Rent House Showing Rental Property Estate AgentsOne of the central conclusions drawn from the Global Financial Crisis was that the UK economy was too dependent on financial services and unproductive investment in the property market rather than the real economy. So the economy needs rebalancing.

One of the main issues facing the housing market is that households overwhelmingly aspire to owner occupation, even as the chances of accessing the tenure become increasingly limited. House prices that seem to defy gravity, stagnating incomes, and difficulties in meeting deposit requirements mean that thousands of households have to reconcile themselves to renting privately for the long term. That the whole system is a mess hardly needs saying.

Is addressing the broader economic rebalancing agenda compatible with addressing the dysfunctional housing market? Is it possible to rebalance the economy without persuading households to spend less on housing and invest elsewhere instead? Even framing the question like this implies that households have a choice over incurring large housing costs, which of course is not the case for many people.

Unravelling the dependence of the UK economy on financial services and property investment is no easy matter. It took many years to back ourselves quite so tightly into this corner. How is policy handling the complexities of the agenda?

On the housing side we could argue that things are not going hugely well. Efforts to increase housing supply directly are modest, while efforts to increase supply indirectly by assisting with housing costs – notably the Help to Buy scheme – have been widely condemned as wrong-headed. On the economic side, the government has clearly made some efforts in the direction of rebalancing both sectorally and regionally, but these are initiatives that are going to take years to have serious impacts on the productive capacity of the economy. Whether the government is pursuing the rebalancing agenda with sufficient vigour is debatable.

That brings me to a curiosity. [Read more…]

Housing and the global financial crisis

One of most interesting dimensions of current developments in the housing market is the way in which global economic events are being refracted through housing policy: how a problem created in the private sector is being used to reconfigure the social rented sector and advance some long-standing objectives for the political right. In this respect it is a microcosm of the broader austerity agenda.

I have a paper forthcoming in the journal Housing, Theory and Society that has just become available on iFirst. It’s called The global economic crisis and the reshaping of housing opportunities. The paper is coauthored with my colleagues Patricia Kennett and Ray Forrest. We’ve worked together for 16 years and, after discussing a lot of possibilities, this is the first paper we’ve managed to coauthor. It’s in a special issue on the housing fallout from the global financial crisis. [Read more…]

Laying the foundations?

Yesterday saw the publication of the Coalition’s housing strategy. It brought together policy touching upon housing from across a range of Whitehall Departments. The document represents a welcome recognition of the importance of housing to the broader economy and society. It covers quite a lot of ground, although not a lot of it represents news. There were, however, some high profile new proposals.

I have decide not to post an exceptionally long blog – even for me! – on the whole document. For a change I’ve written some of my initial thoughts up as a paper. I hope some of it is of interest. [Read more…]

Alternative housing futures

A few months ago the Building and Social Housing Foundation argued that one in five households could be living in the private rented sector by 2020, if current trends continue. Last week the estate agents Savills suggested that we could reach that situation by 2016. Is the housing market trend towards private renting speeding up? More probably, we’re not quite sure exactly what’s happening, nor how fast. But it is fairly clear that there’s plenty of change in the housing market. We know that something like a million additional properties have entered the private rented sector since 2005.

We may be witnessing a structural reorientation of the housing market away from home ownership. Or we may be witnessing temporary turmoil as a consequence of the global finance crisis. It is more likely that the future trajectory of the housing market is yet to be determined. The negative equity of the early 1990s led to the rise of the “slump landlord”- owners who wouldn’t or couldn’t sell who rented out their property while themselves renting elsewhere – but that phenomenon largely disappeared as house prices moved upward again. So what we are witnessing now cannot yet be assumed to represent structural change. What policy makers do over the next few months will shape which future is realised. The only thing that everyone is agreed upon is that increasing housing supply is a good thing. Beyond that, there is room for debate. [Read more…]

Shifting underoccupiers

There is little doubt that we are facing significant problems in the housing market. Most obviously, problems of access and affordability. And there is little doubt that we must be heading towards a housing statement from the Government. Reports from think tanks and lobby groups – each trying to exert some influence over the direction of policy – are appearing with alarming regularity. Last week it was the turn of the little-known Intergenerational Foundation to produce a report called Hoarding of Housing. The report received quite a lot of media coverage. As far as I could tell most of it was negative. That seems to me both fair and unfair. [Read more…]

Up to the task? Dealing with housing market volatility

It does not take great insight to realise the UK housing market is in a mess. Recently we’ve witnessed significant nominal house price declines and consequent negative equity, a massive contraction in the supply of credit, a private sector construction collapse, and social house building as a victim of austerity. Repossessions have risen. And that affects not just owner occupation but also ripples out to the private rented sector as Buy to Let landlords fall behind with their payments and tenants lose their homes. Demand for both social and private rented housing has increased as ownership becomes unaffordable or inaccessible for many.

Layered on top of all this we’ve had a series of policy initiatives around housing allowances in the private rented sector, support for independent living, and rents and tenure in the social sector that are not obviously going to improve the situation. Indeed, critics argue forcefully that these policy manoeuvres are only going to exacerbate the problems.

The dimensions of the problem are not generally contested. The question is what we do about it. The latest attempt to chart a course out of the jam we’re in is the final report of the Joseph Rowntree Foundation’s Housing Market Taskforce Tackling Housing Market Volatility in the UK, published today. [Read more…]

Under-occupation, over-accommodation, and the question of tax

It is always welcome when someone wanders on to your patch and looks at it with fresh eyes. That is why I found George Monbiot’s article in yesterday’s Guardian so stimulating (available here). Not that I entirely agreed with him, but I think he is right to pose unconventional questions about British housing policy.

Monbiot’s argument is, briefly, that if and when we think about under-occupation as a housing problem the focus is always on social housing, but this is to miss the bigger issue of under-occupation in the private sector. This is surely correct. [Read more…]

One and a half cheers (at least) for Mr Shapps

Our Housing Minister must be congratulated. Today’s Observer carries a front page article under the heading Minister pledges to end the housing price rollercoaster. Mr Shapps acknowledges that the rapid increases in house prices we have witnessed over the last decade have caused considerable pain for those seeking to enter the owner occupied market. Effectively many young people are completely shut out of the market by a combination of high prices and tight lending criteria – stringent deposit requirements in particular. Those without access to the ‘bank of mum and dad’ are further disadvantaged. They may be looking at heading into early middle age before being able to purchase a property. The remedy for this problem in Mr Shapps’s view is a housing market characterised by ‘house price stability’. The ideal, from his perspective, would be house price inflation of 2%, which is outstripped by the growth in real wages. This, of course, means housing becoming progressively cheaper in real terms.

This is all good stuff. It could turn out to be a defining moment in UK housing policy. [Read more…]