Negative Steps in the UK Housing Market

biz4Biz Co-Founder & Chairman Adrian Hawkins gives us his thoughts on the UK housing market, and why we need new settlements in the style of Hertfordshire towns like Stevenage.

Responding to a direct question raised by local MP Bim Afolami in Parliament, Alok Sharma MP and DCLG Minister stated, “The Homes and Community Agency will expand to become Homes England… (with) a clear remit to facilitate delivery of sufficient new homes… and deliver a sustained improvement in affordability.” The main issue here though is the reference to affordability.

The Government has produced a white paper on the UK housing market which appears to attempt to support the belief that in areas of high average house prices (calculated by dividing the value of the average wage into the value of the average house locally) they will increase the volume of homes built by a set factor to ensure a reduction in local house price value. My concern is that the average house price is linked to the real value of the average person’s wealth, and in many ways underpins the essence of our consumer-driven economy.

Whilst I accept that we need homes and house values are currently very high, I also believe that creating a glut in the housing market will not serve the purpose intended by the Government. I further believe that the very existence of Stevenage is the proof we actually need to consider in this debate. 70 years ago, the Government bravely delivered a series of New Towns, supported with significant plans to build large numbers of council or social houses. Today the average cost of a home in Stevenage is on average £70,000 lower than homes in the neighbouring Garden Cities, confirming that the enduring investment made at the time was the right choice to make in controlling house prices, to some degree, for the future.

A view of Stevenage Town Centre Gardens (Photo from HTA Design LLP)

Building homes on Green Belt areas for example will not create more affordable housing in the UK market. Much of the Green Belt is enjoyed by residents of small villages whom forgo many of the benefits provided by living in towns. Many of the homes built alongside villages attract a premium of up to 20% more in house pricing, and this makes the very land, often protected by Green Belt, attractive to developers who merely wish to expand their margins.

I must say I take great exception to the fact that the Government wishes to actively undermine house pricing by actively building more homes, without any concern for affordability. It appears that their policy of support for the financial services sector has resulted in our pensions, savings and investments being seriously undermined. Now it appears that they wish to undermine the second pension of our house valuations in much the same way. This scheme is foolhardy, and I urge the Government to consider the option of building a number of New Towns with swathes of social housing, in preference to building more houses anywhere they please. In fact, in North Hertfordshire, the Local Authority have plans to develop 87% of its new homes in the 32% of Green Belt which it manages because the Conservative Government is pressing for developments anywhere possible.

It has to be said that the arrival of 3.6 million EU nationals in the UK during its time in the EU and the distribution of only 1 million Brits throughout 27 member countries of the EU is the sole arbiter of higher house prices here in the UK. The supply and demand of a free market system created the house price levels we experience today, and the safety of our democracy has led to homes in London in particular becoming safe haven investment zones for those depositing funds from abroad.

The Government’s ill-conceived idea that building more homes will lead to lower house prices will merely lead to Green Belt destruction and higher house prices in the long term if they don’t control immigration and the greater distribution of homes away from the south east. There has never been a better time to build more social housing and this can only be achieved by a central government’s delivery of new settlements.

Build new settlements now!

This article is from the Spring 2018 issue of Insight, the Hertfordshire business magazine for companies big and small. Read for free the latest b2b views on Herts in issue #13, out now at Issu.

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