Appetite for construction

I blogged recently about the need for ambitious ideas to tackle our housing shortage and the IPPR has duly obliged, today publishing a comprehensive analysis of British housing policy. Our excellent guest blogger – Matt Griffith – gives his take on the new report.

Matt Griffith is a campaigner for PricedOut.   

Matt Griffith

Good news, housing is getting some serious attention. The, not so subtle, question being ‘how the hell do we get out of this mess?’

It’s a question that needs answering, given how central housing was to the UK’s experience of the credit crunch and the resulting painful recession.

But considered reflections have been surprisingly thin on the ground. As IPPR point out, in today’s comprehensive reassessment of housing policy, there has been:

‘an overabundance of small-scale initiatives. At times it has seemed these were designed to distract from, rather than solve, the central problems.’

So what went wrong? What lessons can we learn from the car crash?

There are two sets of central problems that IPPR take on.

The first is delivery. There has been a  dismal failure to meaningfully increase the supply of homes, combined with a crippling omission in constraining the most powerful driver of house price growth and volatility, the loose credit and speculative demand so characteristic of housing bubbles.

The second is the imbalances of housing politics. The ‘winners’ of housing failure are powerful and effective at mobilising against change. The ‘losers’ are unrepresented and weak. Politicians see the cost of housing failure every day in their constituency surgeries, but don’t see a clear political reward for addressing it.

This would be difficult to address at the best of times, but is now up against powerful economic headwinds.

We appear to be locked into a slow stagnation, in which existing losers pay the highest price and housing’s structural failings get more entrenched. Now is the time to break this cycle.

IPPR do this by taking aim at several housing sacred cows with gusto. They are brave in the need to reclassify greenbelt land (something that even the National Trust’s Simon Jenkins will admit is needed in private, but which causes hysteria when discussed in public).

And they take on the mistaken assumption that just getting banks lending again will lead to the salvation of first-time buyers:

‘… [too much irresponsible] lending actively worsens the housing prospects of would-be first-time buyers. Moreover, when housing bubbles burst, it is the first-time buyers, having pushed themselves to the limit to buy a house, who suffer the most.’

The report is also excellent on why our housebuilders have, and will continue, to fail. In doing so, they sketch out the ground on which a meaningful solution could occur.

We should learn the lessons of the failing land market, and create intervention that can effectively release new development into the hands of new actors with an appetite for construction (apologies to Guns & Roses).  

The IPPR proposal is a modern hybrid of new towns and intervention to take land from failing housebuilders. We can cut the knot of a restrictive planning system combined with a risk averse building sector, if we combine state release of land with untapped private investment. Not to do so risks a lost decade for housebuilding.   

Should this be done by creating entirely new towns or would it be better focused on the expansion of existing smaller settlements. Or do we need the central state to upset entrenched local communities?

The IPPR report points towards some interesting and radical answers for these questions – answers that may upset some powerful interest groups. It’s time we started listening.