There is little that all the major political parties agree on at the moment, not even the rebuilding of their own Palace of Westminster. One thing, however, that unites them all is a common acceptance that we need more houses and we need them quickly.
The political parties fight to upscale each other on this issue, but we can safely say we need to build between 250,000 and 300,000 houses per year for the foreseeable future. Unfortunately, the news from the capital is not good: figures show that over the past quarter there has been the sharpest drop in new London home registrations for 20 years.
Developers registered only 2,494 new homes in London between July and September this year. By comparison, 7,000 houses were built during the same period in 2015. This is contrary to the UK as a whole, where there has been a modest rise in new homes.
It is all too easy to blame builders for the housing shortage, complain about land banking, criticise a lack of supply or argue that planning regulations are too restrictive. The conversation is all about the supply side.
The argument goes: ‘Build more houses and prices will drop and so will rents.’ However, to really understand the problem you need to look at the demand drivers that are causing high prices and lack of affordability.
Bonds and equities, for instance, that were a draw for private investment in the past, have been replaced by property. Also, interest rates available to the buyers of government and corporate bonds have collapsed over the past 10 years and property has filled the gap.
A few small rate rises will not affect this. Finally, even though new tax thresholds have been introduced, the drop in sterling after the Brexit vote has presented a buying opportunity for Asian – especially Chinese – investors and we have been glad to take their money.
The situation is surely past the point at which we can just leave it to the builders. They quite rightly have a different agenda to the government and they are facing a skills shortage as well as a fluctuating market ahead of Brexit, as their lack of activity in London shows.
A National Housing Commission with overarching powers could be the answer. It needs to involve developers, housebuilders, planners and professional consultants. It should certainly not be left to the politicians to run it alone – after
all, they can’t even decide on the future of their own parliamentary estate.
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