How do we get to 250,000 homes a year?
Economist Kate Barker’s review into the UK housing market concluded that an extra 250,000 homes need to be built every year for the next 25 years to meet demand but 10 years on are we any closer to meeting that target? Holly Squire investigates.
In 2004, Kate Barker, economist, and a then member of the monetary policy committee, was asked by Gordon Brown and deputy Prime Minister John Prescott to carry out a review of the UK housing market.
She was specifically required to look at what was behind the lack of housing supply and the housing market’s inability to respond to increased demand.
Barker concluded that the UK needed to build an extra 250,000 homes annually for the next 25 years to deal with the nation’s housing crisis and demand shortage.
Almost ten years on this figure is still held up as the holy grail for housebuilding but with just 110,000 homes being built in the UK every year the gap between supply and demand is widening.
So how do we get to that target of 250,000 homes per year? That was the topic of three sessions at this year’s CIH conference which looked at the evidence for and against this target and asked whether it is really achievable.
Neil McDonald, Visiting Fellow at Cambridge Centre for Housing and Planning Research, said that as a nation, we can deliver 250,000 homes a year, but there must be the political will and desire to do so which is currently lacking.
“The government obviously doesn’t believe that there will be serious consequences if this target of 250,000 is not reached,” he said.
The growing population is one of the main factors contributing to the housing shortage, with the massive growth in single person housing driving increased demand across the whole industry said McDonald. Then there is the increasing number of young adults still living with their parents – which could mean that our housing shortage is more serious than the figures reveal with many young people delaying or putting off having families because they don’t have enough space, or are lacking in stability without a place to call home.
People are effectively putting their lives on hold because of the housing shortage and with housing and the cost of living being the single biggest factor driving young people to leave the country for pastures new, it’s clear that this is more than just a housing issue he said but “demand alone does not build houses”. So how can we boost supply?
Space clearly isn’t an issue when you consider that the UK has the least densely populated cities in Europe, only 11% of England is urban and we would only need to use 1% of our green and pleasant land to reach the 250,000 home target. So what is the problem?
Help to Buy has gone some way to make finance more accessible to buyers, helping to boost housing construction orders by 30% – the highest levels seen since 2008 – but more still needs to be done and while mortgage lending may boost house prices it doesn’t help home ownership levels.
Alex Morton from Policy Exchange believes that the planning system is to blame for rising rents, and it puts developers are in a very weak position because of the “very restrictive land use policy”.
He said: “Planning is a political issue that masquerades as a technical one and the model needs fixing, not just pumping with more cash. We need a more joined up approach across the board and a total reformation of the whole system from start to finish. We currently have a planning led system that is stalling progress and inflating costs. Supply must rise to hold down prices but developers need rising prices to build – this means that ultimately more needs to be done to support developers.”
But developers will only build if they know they can sell. And when it comes to the types of homes we should build, Morton believes that many developers have it all wrong; “people want traditional style homes – most people hate flats, don’t care about zero carbon and want parking spaces.”
Then there’s the regional discrepancy when it comes to what is actually demanded in terms of size and bedroom numbers – with many industry experts believing that local authorities need to have more control and the power to make decisions on their housing quota and what is needed in their areas rather than falling under developer’s stipulations. But as Terrie Alafat from the Department for Communities and Local Government points out, not everyone wants to buy their own property: “There are barriers to demand, and supporting demand also means recognising the demand for rented property. And whilst the majority of people do want to own their own home, some people are satisfied with renting.”
Differences in home ownership opinion aside we still need more properties to put people in. So if we are to aim for 250,000 homes a year, do we actually have the skills and infrastructure in place to make this happen?
Chris Blythe from the Chartered Institute of Builders doesn’t think so: “Bus pass syndrome is affecting the workforce, people in the industry are getting older and older and there doesn’t seem to be any young talent at the lower end coming into the sector to fill the gap”.
Blythe explained how during times of increased output, the focus moves from education to production, leaving many workers at the lower levels with incomplete training, which results in a fractured industry – as getting workers to site becomes the key motivation for firms. This therefore leads to weakened infrastructure investment in terms of people. He warns that as demand for volume increases, quality will drop, adding that: “the UK is not ready for a house building surge in the state it is in at the moment.”
So let’s go back to the start: because ahead of planning issues, housing preferences and finance, comes a major sticking point, and that’s land. Development land it seems is still in short supply and with residential land prices outperforming house prices viable, consented land remains hard to find with demand far outstripping supply. So where else can we build?
Peter Quinn, business development director at suggested that “we should be building houses in our gardens”.
Lack of clarity in the planning system combined with a lack of available land, limited access to finance, and an industry wide skills shortage are clearly affecting the housing market. Along with inflated land prices, tough economic and trading times and low consumer confidence. And whilst the Government has made welcome steps to try and address the low number of houses being delivered – with its flagship Help to Buy scheme – there are concerns that whilst it is having an instant impact, the scheme is not helping to create sustainable growth across the industry.
“We cannot meet the scale of the housing crisis on a plot by plot basis; we need cross party consensus about what we want to create in terms of future housing,” said Town and Country Planning Association chief executive Kate Henderson. “Times are hugely uncertain it’s really difficult to plan but it’s crucial to the future of communities. We need vision and to consider how we ensure growth and renewal in the sector.”
If Barker’s vision is to be achieved it is clear that a more joined up approach is needed to allow policy makers and developers to work together from start to finish to deliver more homes that are financially viable and built for purpose and more needs to be done to support house builders.
It is through increased support, changes to policy and planning regulations that we can begin to take steps in the right direction.