Shaping housing policy post-2015

Building Site - New Home ConstructionIt’s clear we’re already entering what is going to be a very long election campaign in the run up to May 2015. In the housing policy field we’re seeing plenty of organisations pitching ideas at the moment, with the aim of influencing the content of the manifestos for 2015. But we’re also seeing thinking aimed at shaping the programme for government post-election, whichever flavour of government we are landed with.

All the parties are ostensibly signed up to the idea that we need to increase housing supply dramatically. So setting out the steps likely to be needed to achieve that objective is a worthwhile exercise.

Enter the novel partnership of KPMG and Shelter. [Read more...]

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Policy Unpacked #2 – Housing shortage and housing supply

Policy Unpacked logoThe issues of housing shortage and increasing housing supply feature prominently in current debates over how to deal with the UK housing crisis. Housing analysts often seek to place these urgent policy problems in the context of the longstanding issue of excess volatility in the UK housing market, and alongside an exploration of how we might make better use of the existing housing stock.

In this podcast I discuss a range of issues around housing supply with Ken Gibb, Professor of Housing Economics at the University of Glasgow and Director of Policy Scotland.  (Running time: 45′ 56″) [Read more...]

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Shifting ground on housing?

Building Site - New Home ConstructionSomething interesting is happening in the world of housing policy. At least it feels that way in my more optimistic moments.

Since the Coalition government produced its housing strategy in late 2011 there has been a lot of talk about the need to deal with the housing problem, particularly on housing supply, but the action has been an order of magnitude short of what is required. With the exception of the lumbering lunacy of Help to Buy and some more focused initiatives to unblock stalled sites, there has been relatively little concerted action aimed at getting the market moving. Arguably the NPPF has worked in the opposite direction. Sure there was some talk of a new generation of garden cities. Yes there have been modest initiatives to encourage self-build. But housing supply is still at historically low levels. And yet the housebuilding industry is hitting capacity constraints.

Nothing has been attempted that you might call transformative. [Read more...]

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Britain’s property problem

[Originally posted at LSE British Politics and Policy blog, 14/08/13]

New build, increaseThis week has brought a slew of news about the UK housing market. Industry commentators are telling us the sector has “turned a corner”: levels of market activity increased significantly in July alongside a sharp upturn in prices. Average prices are now near or above those reached prior to the 2007-8 crash, although experience is diverging across the regions.

While some news outlets are reporting these developments in decidedly positive terms, the commentary is more mixed and critical than perhaps the government would like. As prices rise more households are shut out of the home ownership market. This in turn can have negative consequences for private rent levels. For those within reach of home ownership affordability is deteriorating: first time buyers are having to borrow more, when wages are largely stagnant. Loan-to-value ratios are reported to be edging up towards levels that must be deemed unwise. And all this is happening at a time when many existing home owners are only managing to sustain their current commitments because we are experiencing an unprecedented period of very low interest rates. [Read more...]

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Top blogging on housing policy

BlogA bunch of statistics about the housing market have been published over the last few days. Housing issues have been hitting the headlines in the mainstream media harder than is usually the case.  A number of the key pressure groups have made the point forceful that current developments in the housing market are by no means entirely positive. It is interesting and welcome to see commentators who usually focus on the economy more broadly also getting in on the act and giving attention to our pressing housing problems.

But the mainstream media does not always have the time, the space, or possibly the inclination, to do justice to the complexity of the issues. In that respect the blogosphere comes into its own.

Without the strict constraints of maximum word counts or limits on the the use of images, expert bloggers can often quickly produce better informed and more indepth analysis than is possible in other media. [Read more...]

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The problem of housing supply

Housing supply and the pressing need for additional investment in new housing are making significant progress up the political agenda.

Today’s Times carries an opinion piece by Tim Montgomerie that makes the case for more investment forcefully. It is an argument directed at Conservatives. Montgomerie calls for political focus upon aspiration for younger people rather than the NIMBYism of older people. It will be interesting to see whether the idea that Tories should style themselves a pro-aspiration party that therefore supports a substantial house building programme will gain any traction.

Today also saw the publication of the RICS Housing Commission report. I’ll blog about that as soon as I’ve had chance to digest it.

phs front coverWe are getting hints that there will be money for housing investment in this week’s Spending Review, in order to soften the blow of significant cuts elsewhere.

For those of us who have been exercised about the issue of housing supply for many years the increased media and political attention is welcome. We can but hope that it is not a fleeting moment, quickly past. Rather let’s hope it is a sign that the political elite is, at last, getting serious about a problem that for too long has been only too evident to many people outside the Westminster bubble.

I have been blogging about the issue of housing supply every now and again over the last couple of years. I have now brought together a selection of these posts into a collection called The problem of housing supply. The collection touches on issues such as land use planning, the house building industry, and the land market. It also considers a number of Coalition Government policies including Localism and Help to Buy.

The collection is available below the fold here or via the bookshop. [Read more...]

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Help to Buy?

House front in scaffoldsThe objections to George Osborne’s latest wheeze to assist the housing market are hardly worth discussing. They are almost too obvious. And they have been rehearsed at length in relation to similar, smaller scale initiatives that have already been tried.

The new “Help to Buy” scheme, announced in today’s Budget, aims to provide equity loans of up to 20% of the value of new properties worth less than £600,000. Households have to come up with a 5% deposit to participate. The Chancellor is proposing that the scheme be backed up with government guarantees sufficient to support £130 billion of mortgages. The guarantee scheme will start in 2014 for a period of three years.

Just about the only perspective from which this initiative makes sense is carrying through on an absolute determination not to add directly to the public sector deficit, but not minding too much if the guarantees get lost amongst everything else in the public debt.

So it probably makes perfect sense to the Treasury.

Otherwise, the scheme has almost nothing to commend it. The economic illiteracy it displays is remarkable. The fact that, coming from the current occupant of No 11, this is no great surprise is perhaps equally remarkable. [Read more...]

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In a pickle over planning

ProgettazioneOne of the Coalition government’s first acts was to signal the intention to get rid of Regional Spatial Strategies (RSSs). They were seen as the embodiment of Labour’s centralising, top-down approach. In their stead we were to enter a new era of localism. Or, possibly, Localism. Spatial planning would have a much stronger bottom-up component. Local people would have a greater say in shaping the way their area developed, including levels of new housing construction locally. The rhetoric may have been of the removal of the dead hand of the State and of local people warmly embracing housebuilding in their neighbourhood, enticed by financial initiatives such as the New Homes Bonus. The reality was never going to be quite like that. And the claims that power is being localised have become ever harder to sustain. Mr Pickles seems to be placing ever more weight on the role of the Planning Inspectorate in overruling and overriding local plans that he doesn’t consider to be acceptable.

It was pretty obvious to anyone who knew anything about planning that removing the RSSs was going to lead to a reduction in housebuilding targets. Local authorities didn’t like the strategies precisely because they imposed higher housebuilding targets than those preferred locally. So removing the RSSs was going to see targets adjusted downwards in many areas. It seemed equally obvious that the sorts of incentives on offer through the New Homes Bonus or other mechanisms – such as the Community Infrastructure Levy – were not going to be sufficiently powerful to counteract this.

Anecdotally we’ve been hearing that this is precisely what has been happening across the country. Today the Policy Exchange produced a brief note, based on research by Tetlow King, that provides some more systematic evidence. It reports that as at mid-2012 some 57% of responding local authorities had reduced their house building targets. And that since 2010 local authorities in England have reduced the number of new homes they were planning by 272,720. [Read more...]

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Housing and the economy

[This text was prepared to accompany my presentation to the All Party Parliamentary Group on Housing, 10/09/12]

Many people appear to be coming round to the idea that investment in housing could be the way forward in attempting to revive the economy. There are good reasons for thinking that housing investment is a promising avenue to pursue. Even though the estimates differ somewhat in magnitude, the direct impacts of investment in terms of increasing employment and taxation and reduced unemployment benefits are now relatively clear. And import leakage is low. The multipliers and indirect impacts of housing investment compare very favourably with those for other types of investment.

Intersections

It is very welcome that greater policy attention has focused upon housing, but we should recognise that we face intersecting issues here. There is the urgent need to identify an effective macroeconomic lever. House building may well do the job.

But there are longstanding concerns about the housing supply system in the UK. [Read more...]

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Tory Green Belt Housebuilding Conniptions

We’re all pretty much agreed that it would be good if housing supply were a bit perkier. That is, perhaps, an understatement. The housing world is broadly united in the view that residential construction is currently in a parlous state, the housing supply deficit is chronic, and it lies at the heart of many of the housing affordability problems that have afflicted the UK housing system for a long time.

Affordability is improving in many parts of the country and for certain types of household. But the continued shortage of mortgage finance means that many potential buyers are shut out of the market.

The housing wonks have been joined in their aspiration to see an increase in housing supply by those more preoccupied with the enfeebled state of the marcoeconomy. They are looking for capital investment projects that could get up and running quickly. Housing fits the bill perfectly.

All that’s left now is to determine is what to build, where to build it, and who’s going to pay for it. So we’re almost there. [Read more...]

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