Bill Gleeson: Blame lies with disequilibrium in home sales

Jul 18 2007 by Bill Gleeson, Liverpool Daily Post

IN THIS column three years ago, I suggested that high house prices were socially unsustainable and that the price of housing should become a political “hot potato”.

While demand for homes has been fuelled by numerous causes in the last decade, the supply of new homes has been constrained solely by Labour government planning policy.

John Prescott is the chief culprit. It was his department (in the days he had one) that imposed tight quotas on the number of new homes that could win planning permission from local authorities around the country.

Those quotas covered a 10-year period, but by the time they were finalised, many local authorities found they had already come close to, or even exceeded, them.

As a result, many boroughs introduced moratoria preventing any further approvals for new housing developments. As a result, demand and supply in the UK housing market is out of equilibrium.

But things might be about to change for the better. Just in this last couple of weeks, both Gordon Brown and David Cameron have finally pushed the issue towards the top of their respective agendas. At long last, the parties are vying with each other for the votes of those currently frustrated by the ridiculous cost of homes.

While millions of twenty and thirty-somethings have put their life plans on hold while they spend years saving the huge sums needed before they can buy a small property in which to start a family, there are millions of other voters who are against more development, particularly if it’s in their own backyards.

There are also sound environmental reasons for wanting to limit the number of homes. The energy consumed by households is a major contributor to greenhouse gases.

But there is another side to this coin. Ask any primary school headteacher and they will tell you the number of children applying for places at their schools is falling. The lack of housing is undoubtedly a major contributory factor to this phenomenon.

Ordinary, averagely-paid workers such as teachers, nurses, factory staff, police, firefighters and many others will take a look at the size of house or flat they can afford before deciding to have fewer children than would have been the case if property was cheaper. Surely this is too high a price to pay for constraining development?

And while greenhouse gases must be reduced, we need to find smarter ways of tackling the issue than crudely forbidding the construction of badly- needed homes.

I suspect the issue is still only partially understood by our politicians. To solve the housing shortage, Britain needs many more new homes than Mr Brown is currently planning. These need to be homes of every kind; big and small, expensive and cheap, for ownership and rent, social and private.

There is some residential construction going on, but most of it is providing the sort of homes that are not wanted by the market. There is an over-supply of urban apartments in cities around Britain, yet more are being proposed.

These city centre apartments lie empty while children in the suburbs are shoe-horned into rooms with inadequate space for a study desk. Construction is also taking place in run- down parts of some inner cities, where, unsurprisingly, people don’t want to live.

The reason the existing housing stock in places like the Welsh streets has remained empty is that the residents have voted with their feet and left in droves a long time ago.

And then there is the daft idea of shared equity. Nobody wants to part-own their house.

Britain needs cheaper homes that offer the space to properly house kids in a safe environment free from the worst of the social problems afflicting our inner cities.