Over the last week or so I have been immersed in reading about housing policy in the UK (all part of essay writing and planning for my dissertation). As a result, I now know more about housing markets, housing bubbles, sub prime lending, commodification, securitization, tenure transition and all kinds of other housing issues and problems than I ever thought I would or indeed would want to. The problem is that so much of it doesn’t actually make sense, it doesn’t appear to be logical or even appear that policy interventions could ever be expected to achieve their aims or deliver the desired change. Maybe that’s the point, maybe that’s why UK housing policy seems to be such a contradiction of ideology and failed delivery and why we still have an ever increasing housing crisis?
Undoubtedly, as a novice in this whole area, part of the reason it doesn’t make sense is inevitably down to my inability to understand and comprehend, as I am sure there are many policy people out there who do get it. But what struck me during the many happy hours of reading was the lack of clarity over what precisely our government has been trying to achieve with their housing interventions other than the obvious ideological drive for a property owning democracy introduced in the 1980s by Thatcher and largely supported by successive governments. For sure, none of them really seem to be trying to stabilise prices over the long term by creating the right conditions for increasing the supply of new homes to meet the demand for houses – they might say they are but the evidence is against them. Different policy interventions either seem to solve one problem whilst causing another or have all kinds of unexpected consequences that undermine the initial intention of the policy to start with – assuming we can believe what they say they are trying to do.
A good example is the recent contradiction of supply and demand measures that on the one hand support first time buyers (through schemes like Help to Buy) to access owner occupation by making it easier to borrow, whilst also removing national housebuilding targets through the abolition of Regional Spatial Strategies, ensuring the supply of new houses has hit an all time low which, when coupled with the aftermath of recession and its impact on the building industry, merely serves to reinforce the housing crisis as demand outstrips supply. The end result appears to be an increase in house prices which of course will surprise no one, but which does of course make it more difficult for many households to purchase their own home as they become more unaffordable to growing numbers. So home ownership declines further despite the government still re-stating its ambition for promoting home ownership – confusion abounds!
But you might ask, why do we care so much about housing markets anyway? What’s the problem with boom and bust cycles in housing? Shouldn’t we just leave it to the market, isn’t that what neo-liberalism is all about? And this is where yet another confusion or contradiction occurs, when government tries to intervene to reduce volatility in the housing market. The whole approach in recent years has been about state intervention, from counter-cyclical measures like credit controls and property taxes to incentives for new build, not exactly leaving it to the market then?
Having said that the implications of continual boom and bust in the housing market go beyond housing, to economic, social and political impacts, so you can see why governments get nervous and feel the need to do something. We have a dysfunctional housing market where house price increases far outstrip any increase in earnings which in turn leads to all kinds of problems such as unequal housing choices, increased risk, and repossessions, causing a growing divide between those that have been able to enter the realms of owner occupation and those that have not.
The answer to the problem according to many commentators is increasing housing supply, we are simply not building enough new homes to meet the continual and growing demand. So the focus should be on land availability, unblocking stuck sites, enabling conversions and supporting the construction industry to deliver. Indeed some policies have been aimed at doing just that but with limited success whilst other policies have conflicted with this aim – increasing land supply is difficult when the government seems to be stuck on pandering to Nimbyism by resisting calls to review green belt boundaries or by refusing to have national housing targets and thereby leaving the difficult decision of how many houses we need to make space for in the hands of local politicians. The net result is fewer homes being built and a worsening housing crisis.
Others, such as Dorling, have argued that we have enough housing but that it is unequally distributed therefore what is required is a dramatic redistribution of housing. According to Dorling if we build more houses it will just result in the wealthy owning more homes, so a more sophisticated solution is needed that redistributes housing. The problem with this is it is unlikely to be very popular and will therefore be unpalatable politically.
So we know what the problem is but the solutions appear unclear and policies in one area create problems in another. As I said in my last post on housing, is it any wonder politicians are confused, I know I am. But at the heart of the housing issue are the principles of equality and choice, creating the conditions for people to have access to decent accommodation is critical to a civilised society, yet even now we seem to be failing!