Back in 2017, the Conservative government made a promise that 300,000 homes would be built annually in England until the mid-2020s, to help tackle the chronic lack of housing.
Although devolved regions were able to set their own targets, the policy was established to address the lack of affordable housing — a problem that has continued to get worse.
This is not just an England-specific problem. The data on the housing situation across the UK makes for grim reading. Scotland requires 25,000 new homes a year, and Wales 14,000, for the next 15 years to help level out supply and demand. Northern Ireland has more than 45,000 people on housing waiting lists and needs over 100,000 new homes too.
Inaction could cause the collapse of the market
And this is just the supply side. Add in the current twin terrors of rising interest rates and prices and you can see why the UK housing market should be one of the most important political debates in the lead-up to the general election.
While no doubt we’ll hear soundbites on the economy, taxes and schooling, the housing market has a considerable influence on all three of these things, and a strong housing market is key to a healthy economy. However, inaction could cause the collapse of the market as we know it. So what can be done?
Stock needs to match demand
House prices invariably start to rise when demand is outstripping supply, or when competition is so fierce that people are willing to pay over the odds to secure a home. This is clearly the case across the UK, with house prices increasing on average 73% in the past 10 years.
We need a government bold enough to come to terms with an ailing housing market
Inflation has not helped matters but, when houses are built and paid for, everyone is keen to take a slice and make a margin. From the price of the land through to the building materials, labour and management, multiple stakeholders are involved and all need to be paid. This is then reflected in the price of the property, with the desirability of an area also coming into play.
If these prices are never going to come down and stay down, the concept of ‘affordable’ housing could be blown out of the water for good, putting future homeownership in jeopardy. Taxes, subsidies or incentives may go so far but, realistically, this could totally remodel the average age of a first-time buyer, and in turn affect the rental market, which has also overheated.
Building based on actual needs
The UK needs a full and frank assessment of what sort of housing is required (social, private rental, flats, houses, etcetera), and how the ownership structure will change over the next 10 to 25 years.
Supply chains and labour forces have required radical remodelling in light of the UK’s exit from the EU
The current government is not the only one lagging on targets. London’s social-housing numbers are dwindling, meaning we’re heading towards a crisis if we don’t start fixing this problem.
We also have to consider that the tail end of the Babyboomers will soon be looking to downsize, so understanding whether we have the requirements to meet their needs, plus those of future generations, is critical.
Nitty gritty
How costs will be affected in the future should also be analysed in detail. The full impact of Brexit should be costed into this.
Supply chains and labour forces have required radical remodelling in light of the UK’s exit from the EU. How is this playing out in an industry that relied heavily on close EU ties? Only by forensically, fully and frankly addressing pain points can a long-term and sustainable plan be made to protect the market.
The UK housing market should be one of the most important political debates in the lead-up to the general election
The long and short of it is we need a government bold enough to come to terms with an ailing housing market. Only by grasping the nettle on the detail and on the numerous issues at hand, and by understanding the other macro headwinds our economy faces, can we review and consequently map out where we want the housing market to be.
No soundbites
This will be neither easy nor quick. However, the industry is crying out for help to manage a multitude of issues on which, so far, politicians have failed to have its back. Now is the time to roll up our sleeves and put plans in place to deliver not short-term soundbites but sustainable, long-term prosperity.
Kate Pender is managing director at Target Group
This article featured in the November 2023 edition of MS.
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