Comment: Housing strategy leaves "huge mess" for next generation
Monday, 21 November 2011 4:15 PM
By Matt Griffith
Credit where credit's due – that the government has put together a housing strategy is a big change. For the past two decades housing has been knocking around in the lower tiers of Whitehall, detached from the main economic departments of state and cursed with housing ministers motivated by press releases and gimmicks rather than difficult political choices and actual delivery.
Today's strategy has been driven by concern at the top – No 10 are worried, as declining homeownership among younger working households strikes a body blow to core Conservative and Lib Dem beliefs about aspiration. There is also a notable cultural change, one based as much on age as ideology. Many of those now advising ministers are themselves 'priced out'. As one (renting) No 10 advisor told us "don't worry - we get it".
Things are not what they used to be. The number of first time buyers has been falling for a decade. A new generation now rents not buys; and for us this means instability and uncertainty, little chance to save, and life choices postponed.
Meanwhile, the UK delivery of new homes has reached a post war nadir because of its dysfunctional planning regime, pervasive NIMBYism and underperforming housebuilders. The market we enter is also different: 'Buy-to-Let' investors are setting prices at the bottom of the market, while foreign money is driving prices at the top. Young buyers are still taking on levels of debt that would have made their parents' eyes water.
The flavour of these generational differences has been made stronger by the fall out from the credit crunch.
A credit boom pushed prices into a bubble and UK households became worryingly indebted. The result is that government and the Bank of England, in throwing the kitchen sink at the banking system, put concerns about financial stability over letting the market fall back to a saner level.
This creates a new post-crisis politics: you bail out the group that benefited most from the boom (lenders, home owners, housebuilders) yet leave a huge mess for the next generation to clean up and pay for – in higher rents and higher house prices.
Successive governments have presented younger generations with the bill for decades of excess but have failed to offer them anything in return.
Has this housing strategy changed this? Housing minister Grant Shapps has tried to bridge this gap with a pledge of 'house price stability' – a welcome change of rhetoric, but one that ignores the fact that house price adjustment is likely to take well over a decade, leaving a 'lost generation' of would-be buyers living in the private rented sector.
Whilst some of the initiatives – notably the government's pledge to provide insurance for mortgages to new build properties - are the equivalent of an intergenerational mugging: the state underwrites young people taking on a huge debt for an asset that is clearly overvalued.
Elsewhere there is a strange sense of déjà vu, as gimmicks from the Brown era are reheated and presented as new. Much of the package seems to be about channelling more government subsidy to housebuilders, an odd tactic given their long history of failing to deliver the goods.
So what is the deal for those who can't afford to buy and face spiralling rents? Too much of the strategy offers soothing generalities, in a hope that awkward questions about an unfair market are put to one side. It is a start, but there are huge omissions.
We need a better deal for those priced out and currently renting, particularly stronger tenancy rights. We need to tackle the drivers that have changed a home from a place to live into a speculative commodity and geared the nation to the hilt. We must start reforming housebuilders so that new actors who build in numbers enter the market. Above all we need cheaper prices – which much of what is announced cuts directly against.
The worry at the back of No 10's mind must be that today's strategy will not be a game changer, and that the coalition will preside over the continued widening of the generational housing gap.
Matt Griffith is from PricedOut, a campaign group for first time buyers and renters.
The opinions expressed are those of the author and are no reflection of the views of the website or its owners.
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