The first Bank of England interest rate cut since the record low was established in 2009 may well be good news for those about to buy, and those homeowners with either trackers or a standard variable mortgage rates. Downward pressure on interest rates may well be celebrated in this context, but it masks a larger, lurking systemic problem with the housing market: we simply don’t have enough homes!
Two separate reports this week continue to show that (affordable) house-building has to be a priority, and that it must be put at the top of our new prime minister’s agenda. Yet housing seems to be one of those topics where – time after time – new governments (and elected mayors) make encouraging noises, yet precious little tangible progress is ever achieved.
A report by the London School of Economics this week declared that parts of the green belt – a swathe of land surrounding London and aimed at stopping urban sprawl – were in fact ugly enough to build on. The green belt isn’t exclusive to London though, and can be found hugging our urban areas the length of the country. Is this the answer to our problems? Almost certainly not.
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Something as basic as ensuring we have enough housing to meet the requirements of the next generation, moving out of home and eventually starting their family, should be uncontroversial. But financial incentives for local authorities, loosening planning laws, building on brownfield sites, new garden cities – all proposed in one form or another – have not solved the problem, or really ever got new-build projects kick-started to anywhere near the requisite level.
The Resolution Foundation found that the number of people who own their own home in England peaked back in 2003, and has dropped ever since. In fact we’re now at the same level of homeownership as we were thirty years ago. The average house price for a first time buyers is now five times more expensive than thirty years ago too, and I guarantee you that averages wages have not increased by a similar multiple!
This mismatch between housing supply and housing demand has arguably never been greater in the UK; perhaps its time for some truly bold – even radical – thinking on house-building. I think I’ll leave that to our politicians though…
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