A crisis of supply
By Hannah Fearn, freelance journalist specialising in social affairs
The housing crisis we’re in is a complicated beast that isn’t only one of supply. But it is a crisis of supply, to which there’s only one solution: build more houses, more quickly.
Given the rate of progress in recent years, that’s not a difficult goal to achieve. The Conservatives once promised that they would build 300,000 new homes every year, but between 1 April 2022 and 31 March 2023 there were 36,4478 new homes started on site and just 32,990 completions. Prime minister Rishi Suank has now admitted that his original target is an “ambition” rather than a deliverable plan. Labour promises to do better – it says it can meet 300,000 new properties a year, aiming for 70% homeownership and a new generation of social housing to restore social rent to the second largest tenure.
There are reasons to be sceptical about both parties’ ability to actually deliver on their promises. Both parties also consistently over-estimate the role that the private sector will be willing to play in meeting national needs. Their position was bolstered by a Swedish academic study published this summer. Researchers at Uppsala University looked at what impact the construction of new homes had on the population, accounting in particular for the movement of people in different income bands. The data analysed showed that while most new homes built are occupied by households with above-average incomes, the properties that those families freed up by moving into a new build were most moved into by households with an income below the average. Ergo private sector development benefits all income groups.
This analysis is a warm bath for public-minded policymakers. Meanwhile, private developers are deep in the icy plunge pool. They’re facing falling house prices, rising material costs, difficulties securing experienced labour post-Brexit and rising costs to pay for those in-demand skills – and on top of that a planning and development policy system that generally operates to frustrate building rather than smooth the way.
“In a crisis as deep as ours, finding ways to encourage private development will not be enough to create the capacity we need”
It doesn’t make much economic sense for developers to be speculating on new sites right now. In a crisis as deep as ours, finding ways to encourage private development won’t be enough to create the capacity we need. The Swedish model can only tell us so much; it can’t be fully replicated back home. Here in the UK, below average incomes still don’t meet house prices and mortgages are harder than ever to obtain. In this environment, those positive chains may be impossible to build in the property market.
The result is that housing associations are going to play a critical, even the primary, role in meeting any development targets. After years of finding their budgets shrinking and government support ebbing away, the reverse is likely to be true. Government will be leaning on you. And in return you can make significant demands of the incoming government.
That must include full investment in social housing and a rethink of ‘affordable’ housing models which offer little respite from the broken private rented sector. Serious financial help to address repairs and maintenance issues ought to be forthcoming too.
It will be a sensitive negotiation, but handled well it could also provide a neat solution to the sector’s reputation crisis.
