Saturday, 3 September 2011

Housing crisis! What housing crisis?

A great deal of column inches are being dedicated to England’s housing crisis - mostly coming from the ranks of housing organisations themselves:

Is a dysfunctional housing market creating Generation Rent, with most young people permanently frozen out of home-ownership by huge deposits, shortage of supply and high property prices?

The National Housing Federation thinks so. Research it commissioned from Oxford Economics foresees an ‘unprecedented crisis’ with the proportion of households living in an owner-occupied home falling to just under 64pc over the next decade, compared with a peak of 72.5pc in 2001.

This prediction is based on assumptions of soaring private rents, long waiting lists for social housing, and a new house price boom, all driven by an under-supply of properties.

The core point of this analysis lies in that final sentence – the ‘under-supply’ of homes. Now there are two possible ways to answer the question as to whether we have an ‘under-supply’ – data on homelessness (it would seem logical that when there are too few houses there will be more people without houses) and figures for house prices (excess demand will drive prices upwards).

The problem is that neither of these measures actually tells us that we have an under-supply of homes right at the moment. The latest official homelessness statistics show a sharp increase:

During the 2010/11 financial year, there were 44,160 acceptances. This is an increase from 40,020 (10 per cent) in 2009/10 - the first financial year increase since 2003/04
On the face of it this is a problem – but is it due to a lack of housing? Or are people becoming homeless for other reasons? And bear in mind that all of those ‘homeless’ people will be housed – sometimes in temporary accommodation (although these numbers are falling).

So we need to look elsewhere. If there really is a crisis – that we really don’t have enough houses – then we would expect the numbers of people sleeping rough to rise. Indeed, given that the most vulnerable and least well off are most likely to be homeless, we might expect these figures to have risen during the “crisis”.

The latest figures (and we should treat them with caution a quite a few genuinely homeless people don’t get counted) show that 1,768 people were sleeping rough at the time of the count. While we should be concerned about these numbers they again do not suggest a “crisis”.

The reality is that, despite an unprecedented surge in population and a rising birth rate, we are managing to provide housing for all but a very few. This does not speak to me of ‘crisis’ but of a problem being managed.

So why do the National Housing Federation, the Chartered Institute of Housing, the Royal Town Planning Institute, charities like Shelter all tell us that there’s a housing crisis – something demanding of urgent, if not immediate, action?

The central part of these organisations’ argument is that to address this housing ‘crisis’ it requires government to provide more subsidy – ideally in the form of direct capital grants to affordable housing providers. Here’s the NHF again:

At the heart of the problem remains a chronic under-supply of new homes. In 2010/11 just 105,000 homes were built in England – the lowest level since the 1920s.

More government investment in affordable housing would stimulate a wider, faster economic recovery and help fix our broken housing markets, according to the Federation.

There are some huge challenges facing the housing sector – not helped by a sclerotic planning system, the stickiness of house prices and a social housing sector that has, since the 1980s, lived on a steady diet of government subsidy via direct grant funding. But we do not have a crisis, there isn’t a huge increase in people without houses – if there were these problems then house builders would be tripping over each other to build new homes to satisfy that pent up demand. That they aren’t suggests to me that we can be more considered in our approach to housing.

This talk of crisis seems mostly to be special pleading from a sector so used to public subsidy it doesn’t know how to operate in the real housing market.


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