The politics of housing is a delicate thing. The public have little understanding of how it works. The problem is difficult to grasp. And the solutions are even harder to formulate. Consensus, when achieved, can be easily rocked.
All in all, this means Professor Danny Dorling’s new book, ‘All that is solid’ is kicking up a bit of a storm at the moment, asking fundamental questions around the solutions to our housing problems as a country.
He’s not wrong in his analysis of the current situation – housing is hugely unequally distributed. Prices are extremely volatile, causing untold damage. And when credit is far too easily available we become even more at risk of further booms and busts. The soaring house prices we are seeing will just make that worse for ordinary families and the wider economy when they crash.
We therefore (mostly) agree with Professor Dorling on the diagnosis. Similarly, we know too well the impacts on ordinary people caused by a failure to tackle the problem: from families finding it harder and harder to get on the ladder – forced instead into the unstable private rented sector – to those of us stuck in poor and overcrowded accommodation.
The next step is of course the solution. We face tough choices in how we respond to this issue. And the politics of it, as always, matter just as much as the policy intervention. As far as we see it here at Shelter, there are three broad directions available:
The worst choice is doing nothing. Professor Dorling’s analysis and previous economic history show that this is not a safe approach. More people will be priced out of a home of their own, housing costs for families will continue to escalate, and increasing numbers will be at risk of homelessness. Hopefully we can all safely agree this is a dangerous choice we cannot make.
Professor Dorling’s way forward requires a dramatic redistribution of wealth in the UK, to ensure bedrooms are shared out more equally. The only realistic way to achieve this on the scale he advocates would be through major reform of property taxation, for example a land value tax on all homes. This is something that’s been floated by political groups for decades. Crucially though, the politics are very hard to square. It’s controversial to many people, and could leave housing issues riven by class and intergenerational divides, breeding paralysis. And as a result, there is no appetite for it amongst the public as a whole, or politicians. Property taxation reform could and should be a positive instrument, and one worth exploring as part of a suite of broader measures, but we are unlikely to see it on a scale that would genuinely make the difference any time soon.
Shelter’s preferred approach, and one which is growing in momentum every-day, is to substantially increase in the number of homes, especially affordable ones, we build as a country. Of course, with this approach some people will keep their spare bedrooms, studies and conservatories. We’re happy to live in a world where many people have these. But we can’t live in a world where at the same time so many people are denied a shot at somewhere reasonable to live. Increasing the number of new homes would change this completely, though only if include sufficient numbers of genuinely affordable homes (both at social rents and for shared ownership). It’s an approach that families are beginning to understand and sign up to. Concerns around where the next generation will live are real and growing – meaning housing has moved to being a top five electoral issue. All the main parties are subscribed to the view that building more homes is the only answer. We’ve therefore moved into a position politically of not why we should build, but how and where.
This won’t be easy. It will involve tough choices. But at least we’ve all begun to agree on the objective. Re-opening the debate on the housing shortage is a backwards step for those that want to see an end to bad housing and homelessness. We hope that Professor Dorling’s book opens up conversations around moderate reforms to property taxation, but doesn’t detract from the momentum that is finally gathering behind the need for a major house building programme.
Even if building more homes dropped prices by half(which it won’t), affordability would only double.
The reason building more home will not result in a drop in prices is if they are built in places people most want to work and live i.e London and the SE, you will be simply be accelerating the rate of agglomeration.
Agglomeration raised wages and therefore house prices. This has always been the case.
Yes, there will be a drop in marginal areas in the North of England for example. But aggregate prices will not drop by building more houses.
On it’s own if will simply lead to even more inefficiency than we have at the moment.
The cause of this inefficiency is the fact that landowners do not create land values. So they get an implicit subsidy worth £250 bn per year. Naturally this free lunch is capitalised into selling prices. It also leads to over consumption. This is why we have a million empty homes and 25 million empty spare rooms.
If we end this subsidy not only will selling prices fall by over half, but the reduction in other taxes means lower income families will be far better off. Around £10,000 per year.
This means affordability as ratio of discretionary increases by four fold.
That’s the answer to our so called “housing crisis” and “cost of living crisis”. And that presumes without the need to build a single new home.
My worry is, the build more homes bandwagon seems to be dominant in the media. This strategy is destined to fail. It will not succeed except in enriching builders/property developers/landowners/banks.
The subsidies need to stop, End of.