Crisis, what crisis?

What is the cause of the housing crisis? Most people in our sector would answer: a lack of supply. It seems obvious, doesn’t it?

Our failure to build enough homes for the past four decades is the cause of homelessness, of rough sleeping, of high rents and high house prices, and of a widespread increase in human misery. Build enough new homes and, by the immutable laws of supply and demand, prices and rents will fall, and everyone will have a decent, affordable place to live.

Of course, it’s not as simple as that, and in recent years a growing number of commentators have argued that supply on its own is not the answer: that there is, in fact, no shortage of homes and that the cost of housing has not increased significantly in real terms.

Economist Andrew Lilico, who has written for Policy Exchange and the Institute for Economic Affairs in the past, leads the charge on this, and has even called the housing crisis a “myth”, although I would challenge him to walk around central London and explain that to the hundreds of people sleeping rough!

For these people, interest rates are the key. Historically low rates have led people to consume more housing than they would if rates were higher. “When interest rates return to 4-5%, allthis issue will vanish like April snow,” says Lilico. It’s a little like the argument that building new roads just creates more traffic and is self-defeating. Of course, this is broadly true if motoring costs remain low and governments refuse to invest in decent public transport.

The latest report arguing that supply is not the problem comes from the Tony Blair Institute and its executive director, Iain Mulheirn. He states that interest rates have fallen from an average of 8% in the 1990s to around 2% now and that this is the primary cause of high house prices. Mulheirn also uses “official data” to show that there are more homes than households, and that this surplus has increased from 660,000 homes in 1996 to more than 1.1 million now.

I think someone who’s worked in housing for even a short time would recognise the three key flaws in this argument: the increase in second homes; the number of empty homes, and the fact that households form when housing is available and not the other way around, i.e. there are millions of concealed households across the country waiting for a place of their own. This “no housing crisis” thesis also tends to ignore the fact that there are also huge regional imbalances, with severe under-supply and an affordability crisis in London and the south east, in particular.

 

In terms of absolute supply, Mulheirn argues that the government’s target of 300,000 homes a year will do little to bring down prices and rents.

He writes: “… the available academic evidence suggests that no plausible rate of supply would significantly reverse the price growth of the past two decades…a 1% increase in the stock of houses tends to lead to a decline in rents and prices of between 1.5% and 2%, all else equal. This implies that even building 300,000 houses per year in England would only cut house prices by something in the order of 10% over the course of 20 years.”

I have a lot of time for Blair (oh, for the stability and progressive policies of his administration right now!) and, to be fair to Mulheirn, his report is nuanced and he does argue the case for more social housing. But I think the danger of reports like this is that the nuance disappears beneath the headline, and a report that says “supply is not the problem” will be taken up and used by nimby campaigners and those opposed to housebuilding in general. This example from the Hands off Thaxted campaign quoting Lilico, is a case in point.

In addition, the ‘more bed spaces than people’ argument defies reality. Many people consume more housing than they require. I will wager that almost every senior executive working in our sector has more bedrooms than they need. That is how the free market works, but, short of Soviet-style commissars going around billeting people in empty bedrooms, this is just a fact of life that we have to accept.

However, I do have some sympathy with the argument that just piling more private sector homes into the market will fail to reduce prices and rents significantly. The answer is obvious: let those who want to enjoy the benefits and pitfalls of the market to do so, and to invest in genuine social housing for those who don’t.

The government’s own figures on public attitudes to housebuilding show that 26% of renters do not want to buy – and for many of them a social housing home would be an ideal home. Building 100,000 social rented homes a year would produce a million homes within a decade and this, by removing people from the market who don’t want to be there, would have much more impact upon prices and rents than a zealous emphasis upon private housebuilding.

In the real world, of course, private housebuilding is more or less the only game in town, and our sector will have to live off the crumbs falling from that particular table for some time to come. But as a sector we should be rigorous in challenging reports that say supply is not the problem. It is.

(This blog was first published by the Housing Quality Network on 10th September 2019)

Homes of the future?

In 1945, in his regular Tribune column, George Orwell wrote about the “time-wasting drudgery” – washing up, mopping floors – that blighted the domestic life of ordinary people in Britain. He went on to speculate about the homes of the future:

“If one thinks simply in terms of saving trouble and plans one’s home as ruthlessly as onewould plan a machine, it is possible to imagine houses and flats which would be comfortable and would entail very little work. Central heating, rubbish chutes, proper consumption of smoke, cornerless rooms, electrically warmed beds and elimination of carpets would make a lot of difference. But as for washing-up, I see no solution except to do it communally, like a laundry. Every morning the municipal van will stop at your door and carry off a box of dirty crocks, handing you a box of clean ones (marked with your initial of course) in return…”

“And though it would mean that some people would have to be full-time washers-up, as some people are now full-time laundry-workers, the all-over saving in labour and fuel would be enormous. The alternatives are to continue fumbling about with greasy dishmops, or to eat out of paper containers.”

Some of that has come to pass, but most rooms still have corners and councils have so far resisted the temptations of a communal washing-up service – dishwashers have come along instead. So predicting the future has always been tricky, but this was what HQN’s Rethinking Social Housing event in London last week, tried to do.

The day’s main purpose was for attendees to take time out from the office and do some creative thinking about the forces that will shape the UK’s housing over the next 50 years – one of which will be climate change, the topic of HQN’s annual conference a few weeks ago, where it was pointed out that the UK housing sector is not as geared up as it needs to be to respond to our changing climate.

But last week’s conference also considered other changes that will shape our future. What will households look like 50 years from now? How will a more diverse and ageing population affect us? How will technology change the way we build and retrofit our homes?

 

Continue reading

Water woes

Today [Thursday 29 August 2019] I will be chairing an HQN session on ‘Rethinking Social Housing’ – making sure that the homes we build now will be fit for purpose in 30 years’ time and beyond.

One important aspect of future-proofing our homes is to think more carefully about water. That ranges all the way from sea water levels to rainfall and the domestic use of water. On a global scale, as Matthew Gardiner will point out at the conference, if we fail to limit global warming and all of the earth’s ice melts, then sea levels will rise by up to 70 metres, wiping out much of our housing stock. That is the Armageddon scenario. But in the short term there are many things we can do to use less water (and hence less energy) and to protect our wildlife in the process.

We all take it for granted that clean water comes out of our taps, but we rarely think about the costs and processes that bring it to our homes.

The average person uses 66 cubic metres of precious fresh water a year. That’s nearly four billion cubic metres for the UK if my maths is right, which is equivalent to over 3,000 Wembley Stadiums. Yet too much of this precious fresh water is wasted on watering gardens and flushing toilets and other unnecessary uses. In the process, many of our rivers are drying up.

Feargal Sharkey, the former frontman of The Undertones, has been walking the chalk streams and rivers of England to highlight the problem. He blames the Environment Agency and private water companies for extracting too much water from chalk aquifers and for allowing farmers to use river water to irrigate their fields. As a result, river water quality is declining, and wildlife is suffering. This article explains the problems with the River Cam, which is at 33% of its long-term average flow. In total, 65% of precious groundwater is pumped out of the chalk for drinking water. Absurdly, the water companies then pump water back into the river during the summer months to keep a semi-reasonable flow of water going.

Sharkey says our chalk streams are the northern hemisphere’s equivalent of the Amazonian rainforest and says, “What hypocrisy that, as this country is chastising Brazil over fires in the Amazonian rainforest and criticising Indonesia about deforestation, we are destroying aglobally rare resource in our own backyard”.

 

Continue reading

Neutering the nimbys

In the fight for decent, affordable homes, one of the key constraints has been public attitudes to housebuilding in general and to social housing in particular.

I’ve studied dozens of anti-housebuilding campaigns over the years. In my experience, opposition to housebuilding is often based on prejudice, and a dislike of change. Campaigners typically invent a menu of often tenuous reasons for opposing new homes, whether it’s great crested newts (planted in some cases, allegedly), or exaggerated claims about a lack of health services or schools, transport gridlock, inadequate water and sewerage infrastructure, flooding, and so on. It’s as if the planning system was not meant to address such problems. In Uttlesford, the council was even captured by anti-development residents.

The stigmatisation of social housing tenants has also been a big factor in our failure to build affordable homes, whether it’s poor doors, or the tricks that developers use to evade or hide their duty to provide affordable homes. One of the key aims of the SHOUT campaign was to end the stigmatisation of social housing tenants by challenging the way they’re portrayed in the media.

The SHOUT manifesto in 2014 said: “Much of the media twins welfare dependency with social housing. This is untrue. Reliance upon benefits is the offspring of dependency, not its parent. Dependency is caused by lack of well-paid work, by unaffordable rents and house prices, by low wages and high living costs.”

In recent times both David Cameron and Boris Johnson have taken the view that social housing tenants vote Labour and homeowners don’t, so investment in social housing has been paltry. At the launch of the SHOUT campaign in Parliament we told the story of the Great Stink of 1858, when the Thames became an open sewer. It was only when Members of Parliament were directly affected by the problem (Parliament had to close) that they voted to invest in a proper network of sewers for London. There’s a lesson there for today surely?

Apologies for that long preamble but two recent opinion polls offer some hope that the tide may be turning. The first, from Ipsos MORI for the Chartered Institute of Housing, shows that a growing proportion of Britons think political parties are not treating the housing crisis seriously: 60% of respondents disagreed that political parties pay a lot of attention to housing problems, up from 41% in 2014. Only 12% agreed that they do pay a lot of attention. A majority, 55% (68% of renters), think the issue of housing has been discussed too little in Britain over the last few years.

 

Continue reading