CASTLES IN THE AIR

Despite everything that has happened in the housing market these past couple of years, it seems an Englishman’s home is still very much his castle. In fact, homeownership is now rated as more important than getting married and having children! A recent survey by Barratt Homes Buyers Panel of 3,000 people to determine the importance of owning one’s home, found that just over 70 per cent considered it highly important compared to 46 per cent for marriage and 44 per cent for children.

All of which strongly suggests that, despite the recession, falling house prices and negative equity, there is an enduring confidence in bricks and blocks as an investment. In fact, when asked which investment would be likely to give the best financial return over the next ten years, almost half rated residential property as a much higher asset over such things such as shares, cash and pensions.

Unfortunately, these aspirations are looking increasingly unlikely to be realised in the foreseeable future, as the projected under supply of new housing and restraints on mortgage leading will prevent many first time buyers getting on the ladder much before they reach forty.

The Housing Green paper of 2007 suggested that we needed to build 250,000 new homes a year to meet demand. In fact, last year saw the lowest number of new properties built in the UK since the war. Although there are signs of cautious optimism returning to the market, we are not going to suddenly get from the 80 – 100 thousand homes currently being delivered to anything like those Government predictions. It is this deep-seated inflexibility of the supply of new homes which goes some way to explaining how house prices have largely held up during one of the worst economic downturns in living memory.

Interestingly, the poll also reveals that young people are more, not less, attached to the concept of ownership than their more mature counterparts. Some 81 per cent of 18 to 24 year olds rated home ownership as highly important compared to 74 per cent in the 53 – 64 bracket.

The problems are further exacerbated, of course, by a chronic shortage of suitable rental accommodation, meaning that more and more young people, high achievers at that, are delaying leaving home until their mid thirties. In effect, they are forced to postpone key life changing events, such as marriage and children, because of a lack of viable accommodation alternatives. Not surprisingly, many of these young people are ending up disillusioned and frustrated by the current state of affairs. It’s not being over dramatic to say that the very fabric of our traditional society will be fundamentally changed if the present situation is allowed to go unchecked over the next decade.
Of course, this new Government has many pressing issues to tackle, but there has been nothing so far to suggest that housing is any thing other than well down the list of priorities. In fact, it hardly warranted a mention from any of the parties during the pre-election debates, and yet it is clearly one of the most crucially important topics to the majority of this country’s relevant population.

Clearly the first objective must be to persuade the banks to return to more normal lending patterns, particularly in respect to credit worthy first time buyers. Housebuilders and Government should also continue to support the idea of shared equity products, which seem to have worked well to date. At the same time, developers would also appreciate an immediate reduction in the red tape and regulation which continues to stifle the development of many sites for housing, whilst most analysts are also advocating the release of vast swathes of public sector land for private development. Housing has long been regarded as something of a political football, with one own goal after another let’s hope this new Government decides its time to finally raise the bar and starting scoring some important ‘home’ goals instead.

Editor, Professional Builder magazine